Toyota Motor Corp (ADR) (NYSE: TM) has announced a new aggressive electric vehicle initiative that includes rolling out 10 new fully EV models in the early 2020s. Toyota may not be the first to the electric vehicle market, but investors can rest assured that it will be a major player within the next decade.
Toyota says it has a goal of selling 1 million zero-emission battery-powered electric and fuel-cell vehicles by 2030. By that time, the company hopes EVs, including petrol-electric and plug-in hybrids, will make up roughly half of its total global sales.
[See: 5 Automakers to Rev Up a Long-Term Investor’s Portfolio.]
“As a mass-market automaker, we need to expand our offering of electric cars,” executive vice president Shigeki Terashi says. “To promote the wider use of EVs, we need to increase our technical development capabilities and address the societal impact of the technology.”
Toyota says it plans to spend more than $13 billion on EV battery development alone.
Toyota’s EV roll-out will start in China, where the government is increasing regulatory pressures on automakers to transition to electric vehicles. In 2016, EVs represented roughly 1 percent of total global auto sales.
Toyota is just the latest auto powerhouse to go all-in on EVs. General Motors Co. ( GM) launched the Chevy Bolt in late 2016, a model that won the 2017 Motor Trend Car of the Year award. Tesla ( TSLA) launched its Model 3 EV earlier this year and expects a major production ramp starting in 2018. Ford Motor Co. ( F) plans to spend $4.5 billion over the next five years on EV development.
The EV boom may serve as a massive long-term investment opportunity. Still, with costs and competition mounting, investors should be careful about how they play it. Legacy automakers have a difficult transition ahead of them, and EV pure-play Tesla must aggressively scale its production to have a chance at competing in the global market.
Earlier this year, Goldman Sachs analyst Kota Yuzawa said the battery market may be the best long-term opportunity for investors.
“The batteries market, which is critical for EVs and therefore a potential source of value-add, will likely expand rapidly through 2040,” Yuzawa wrote, according to CNBC.
[See: 7 of the Best Blue-Chip Stocks to Buy for 2018.]
Goldman named battery play Albemarle Corp ( ALB) and international auto giants Volkswagen and Honda Motor Co ( HMC) among its top EV stock picks.
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Toyota Motor Corp (ADR) (TM) Going All-In on Electric Vehicles originally appeared on usnews.com
