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Charged Up

Gabelli Funds

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Gabelli Funds
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By Brian Sponheimer, Shawn Kim, Timothy Winter, CFA, José Garza, Cory Fulton, CFA, and Brett Kearney, CFA

This white paper, coordinated among Gabelli Funds’ Automotive, Utilities, Industrials, and International Research teams, seeks to outline, project, interpret and communicate some of the many investing opportunities ahead within the Electric Vehicle charging space provided by the exponential growth expected for EVs over the next decade.

EXECUTIVE SUMMARY

Major industries often grow from humble beginnings.

The first “drive in” gas station in the United States that was designed to sell to the public opened in Pittsburgh on October 31, 1913. The Gulf Oil station on the corner of Baum and St. Clair sold 30 gallons of fuel on the first day at a price of $0.27 per gallon (over $6.30 in today’s terms). At the time, the US auto population was under 600,000, and a driver who needed fuel needed to 1) hop off the seat to access the fuel tank 2) use a dipstick as there was no fuel gauge and 3) crank the gas as fuel pumps were not invented until the late 1920’s.

By 1920, 15,000 gas stations had emerged before ballooning to roughly 200,000 by the end of the “Roaring Twenties.” There are roughly 115,000 stations in existence in the United States today, each with roughly four to eight active pumps – putting the number of active fueling points upwards of 700,000.

Similarities between the dawn of the Automotive Age and those of the Electric Vehicle (EV) Era are myriad. A nascent product, originally purchased primarily by wealthy buyers, finds mass adoption as prices fall and education increases regarding improvements upon the prior model (horse-drawn carriages and Internal Combustion Engine-d vehicles).

In a similar spirit to the one that gave rise to that first Gulf Oil Station, investments by major stakeholders are well underway to provide a network of nationwide charging stations – one that cultivates a welcoming environment for potential electric vehicle buyers and eliminates the “range anxiety” that to this point has been a hurdle for faster EV.

The Edison Electric Institute, an industry trade association, estimate that about 9.6 million charge ports (the fuel pumps of tomorrow) will be required to support 18.7 million EVs in 2030. Of the 9.6 million, 100,000 will need to be “Fast Chargers” capable of rapid (<1 hour) filling, with over 2 million more public chargers at either specified fueling locations (Charging Stations) or at office and commercial locations. Home chargers make up the balance (and significant majority).

Growth in EVs and the charging infrastructure will require considerable coordination among major stakeholders, including the automotive Original Equipment Manufacturers (OEMs), utilities, charging station manufacturers, municipalities and governments.

The massive expenditures required to transform American highways into hard-wired avenues for efficient fuel charging will bring opportunities for investment within the public equity markets. As we have seen in 2020, the market appetite for investments within the EV space is enormous, with share prices  for TSLA, NKLA, and others more than doubling at points. Those companies that will be required to support this growth could possibly see similar treatment in time.

Ex. 1 Sample EV Fast Charging StationClick here to see the graphic. Source: Google Images

This white paper, coordinated among Gabelli Funds’ Automotive, Utilities, Industrials, and International Research teams, seeks to outline, project, interpret and communicate some of the many investing opportunities ahead within the Electric Vehicle charging space provided by the exponential growth expected for EVs over the next decade.

Electrification Driving Expansion of Charging Infrastructure

The timely convergence of increasing regulations to curb emissions, improving battery economics, an increased number of electrified options from every major automaker, and rapidly expanding charging infrastructure has finally brought the automotive industry to a true inflection point in electric vehicle adoption. As a result, we expect global electric vehicle production to grow from 2.4 million units in 2019 to 38 million by 2030 and the total number of electric vehicles on the road to grow from 7.7 million to 168 million over the same period (Table 1). This includes both battery electric/fully electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). Below, we highlight the major growth drivers for electric vehicle adoption that should support rapid expansion of charging infrastructure over the next decade.

Table 1  Global Electric Vehicle Production 2017A – 2030P

Source: Gabelli estimates, EV Volumes, Inside EVs, IEA, McKinsey

Click Here to Read the Full Article

Originally Posted on January 5, 2021 – Charged Up

IMPORTANT DISCLOSURES

This whitepaper was prepared by Brian Sponheimer, Shawn Kim, Tim Winter, CFA, Jose Garza, Cory Fulton, CFA and Brett Kearney, CFA. The examples cited herein are based on public information and we make no representations regarding their accuracy or usefulness as precedent. The Research Analyst’s views are subject to change at any time based on market and other conditions. The information in this report represent the opinions of the individual Research Analyst’s as of the date hereof and is not intended to be a forecast of future events, a guarantee of future results, or investments advice. The views expressed may differ from other Research Analyst or of the Firm as a whole.

As of December 31, 2020, affiliates of GAMCO Investors, Inc. beneficially owned 1.09% of Franklin Electric and less than 1% of all companies mentioned.

This whitepaper is not an offer to sell any security nor is it a solicitation of an offer to buy any security.

Investors should consider the investment objectives, risks, sales charges and expense of the fund carefully before investing.

For more information, visit our website at: www.gabelli.com or call: 800-GABELLI

800-422-3554 • 914-921-5000 • Fax 914-921-5098 • info@gabelli.com

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