Is Moving to Sustainable Energy Profitable?
Tesla, a leader in producing electric vehicles, renewable energy generation, and energy storage is benefiting the environment as well as their investors. Tesla (TSLA) focuses on sustainable energy and proves a favorable return on investment. In addition to an exponential trending stock price, Tesla is taking advantage of the growing popularity and technologies in renewable energy generation and Lithium-ion batteries to build valuable businesses.We’ll be looking at the past 20 quarters to confirm this.
Figure 1 shows the opening, closing, highs and lows in Tesla’s stock using candlesticks. As you can see, the stock prices are up-treading and our forecast for the next two quarters are $451.40 and $466.80, respectively.
One reason why Tesla’s market valuation might be increasing is because their vehicle deliveries have also been increase year after year.
Figure 2 shows Q1 of 2020 had over a 40% increase in vehicle sales from Q1 of 2019, despite the COVID-19 pandemic shutting down production facilities. Furthermore, there is still a lot of space in the industry to grow.
Plug-in cars are growing in popularity, however, pure battery powered plug-ins are making up more of the overall plug-in sales. Figure 3 shows in the U.S., fully electric vehicles are growing faster than electric-internal combustion hybrids.
Batteries are expensive and this creates a challenge for producing batteries for vehicles and energy storage at a reasonable margin.
Figure 4 shows an increase in energy capacity via solar cells over the years. According to Renewable Energy World, a news source for green energy, the estimated world will increase its solar capacity to 722.2 Giga Watts in 2020. Our forecast indicates we will get up to 673 Giga Watts in Q1 of 2020. With all this energy generation, we’ll need batteries to store them. Luckily, our projected battery cost is expected to drop to $133 per kilowatt-hour. According to a study at MIT, we’d be reaching price parity with internal combustion engines at $100 per kilowatt-hour.
So why not create an electric car company? It turns out the auto industry is extremely difficult to break into. Solar, however, might not be. For example, many other companies like NextEra Energy are making a lot of money working on renewable infrastructure. Figure 5 shows the stock closing price for NextEra Energy over the same period. The figure also show Bollinger bands and NextEra actually breaks out of the upper bounds in the past 2 quarters in a row. This usually indicates strength in the stock price.
Summary
Our forecasts of future stock prices, vehicle sales, and energy generation/storage clearly indicates an uptrend. One can argue that car manufacturing in the United States is a difficult and risky industry to break into; however, just renewable energy generation alone can be profitable. For example, another company, NextEra Energy (NEE), has focused solely on sustainable energy infrastructure, and it’s not surprising that NextEra have also increased its market valuation. Even governments around the world are investing in a green future by providing monetary incentives to businesses and individuals to help with researching and purchasing renewable energy equipment. Not only are these companies helping the environment, they’re also making a lot of money too. You should invest too.
References:
www.irena.org (Capacity and Generation)
www.ev-volumes.com (Total World Plug in Vehicle Volumes)
www.nrel.gov (Solar Industry Update)
www.about.bnef.com (Lithium-ion Battery Price Survey)
www.finance.yahoo.com (TSLA Historical Data)
