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It's a seismic shift, it'll touch millions of Americans over the next 10 years, and it involves a whole new technology and a whole new approach to a series of old problems.

What is it? The electrification of the automobile.

It's hard not to think of past technological shifts like the dot-com boom when one thinks of the coming mass production of electric vehicles. While internal combustion engines will be with us for a long time yet, they will increasingly be augmented -- and replaced -- by electric motors powered by lithium-ion batteries, a whole new technology that is coming to market in a big way over the next couple of years.

You'd think there'd be some way for investors to profit from that, wouldn't you? How?

It's not such a simple question
There are certainly plenty of startups and a few early stage public companies hoping to become big players in this space. But while entrepreneurs like Tesla Motors (Nasdaq: TSLA  ) CEO Elon Musk make much hay out of the idea that Silicon Valley will out-think and out-innovate Detroit, it seems more likely to me that the long-term winners in this space -- at least at the automaking level -- will be the familiar names that have the deep reserves of automotive development experience and resources.

It's possible that Musk himself realizes the same thing behind the bluster -- witness Tesla's recent alliance with Toyota (NYSE: TM  ) , almost certainly one of those big-name winners -- but Toyota and other global auto giants like Ford (NYSE: F  ) and Hyundai are hardly pure electric-vehicle plays. Tesla is, but it faces some big-time challenges as it seeks to make the transition from cash-burning start-up to sustainably profitable carmaker.

Suppliers might be a better choice
Those big-name carmakers do business with lots of different suppliers, and that's a group that might yield better opportunities. Both Johnson Controls (NYSE: JCI  ) and A123 Systems (Nasdaq: AONE  ) have opened brand-spanking-new electric-car-battery plants in Michigan in the last couple of weeks. These two factories, the first of a wave of EV-related projects aided by a $2.4 billion stimulus program overseen by the Energy Department, were hailed by President Obama -- who called the A123 plant during its opening ceremonies on Monday -- as "the birth of an entire new industry".

That stimulus program provided financing to a total of 48 different companies, many of which are either ventures of much larger, diversified companies -- a Dow Chemical (NYSE: DOW  ) joint venture, Honeywell (NYSE: HON  ) , and General Motors among them -- or startups that aren't (yet) public. Likewise, Johnson Controls -- a "Tier 1" auto supplier with a $19-billion-plus market cap and several non-auto-related lines of business -- is hardly an EV-focused firm.

But A123 is, and this is a firm that warrants closer attention from investors looking for a way to ride the EV boom. A123 is burning cash at a furious rate, as Fool Anders Bylund noted recently, but -- as Anders also noted -- that's not necessarily a bad thing: The company is furiously building production capacity. A123 plans to open a second Michigan factory next year, funded in part -- like the one it opened this week -- by the $249 million grant it received under the stimulus program.

A123's technology is well-regarded, but the company has lost out on opportunities because of a perceived lack of production capacity -- put another way, it's hard for an automaker to take a cash-torching start-up seriously when the alternative is an established big-league supplier like Johnson Controls. A123 has hustled to make up that credibility gap in a big way, with a little help from the government, and its business should accelerate accordingly.

A fast-moving set of targets
The trend toward electrified cars continues to move quickly -- on Monday, a senior Toyota engineer said that the company would introduce 6 new hybrid models by 2012. That's not counting new versions of existing hybrids like the Prius, which is expected to become a "plug-in" hybrid -- meaning that its batteries can be charged without using the engine, making it possible to operate as a purely electric vehicle over short distances -- within the next few years.

Expect more announcements like that in coming weeks. Automakers use the winter show season to present new models and concepts, and I expect this year's shows to yield a bumper crop of EVs and hybrids, including some surprises. Toyota has already said that it will show an all-electric version of its RAV-4 SUV that was developed jointly with Tesla at the Los Angeles auto show later this year. I expect it to have plenty of company -- which should bring further opportunities for investors. Watch this space.

Read more on the possible rise of electric cars:

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor John Rosevear owns shares of Ford, which is a Motley Fool Stock Advisor selection. You can try Stock Advisor or any of our Foolish newsletter services free for 30 days. The Motley Fool has a booming disclosure policy.

Read/Post Comments (5) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 14, 2010, at 4:20 PM, rav55 wrote:

    Electrify cars and rebuild the entire United States electrical grid.

    Electrify cars and instead of burning gasoline we'll burn hundreds of tons of more coal.

    Electrify cars and your electric bill increases by an amount equal to or more than your cost to run your car every month.

    Electric cars are insane.

  • Report this Comment On September 14, 2010, at 4:24 PM, TMFMarlowe wrote:

    @rav55: Think natural gas instead of coal in the longer term, along with some heavy-duty grid upgrades. I don't know if it'll really work that way, but I know that's what the people paid to think about this stuff are thinking.

    Thanks for reading.

    John Rosevear

  • Report this Comment On September 14, 2010, at 5:03 PM, Melaschasm wrote:

    The sad thing is that it takes more natural gas to charge an electric car than to power a CNG car.

    Unfortunately the government has decided that the electric car is the future and is prepared to spend trillions of dollars in subsidies and regulations to make sure its choice is forced upon the people.

  • Report this Comment On September 14, 2010, at 5:21 PM, rav55 wrote:

    When a fuel such as coal or natural gas is consumed to generate energy this conversion is done with a cost. That cost is losses due to heat.

    Whenever is converted from one form to another again heat is generated.

    The conversion of natural gas to electricty has grid losses these losses add up to about 65% of the total energy signature. Now use that electricity to run an electric motor and we have further losses in efficiency.

    The net loss is greater than directly burning fuel in clean efficient internal combustion engines.

    In other words we will burn more natural gas to generate the electricity to recharge the battery to run the electric car than if we just ran the car on natural gas. Obviously we can't run the car on coal.

    This is Physics 101. Check it out.

    Burning gas to create electricity then converting the electricity to mechanical energy. The net efficiency is about 8-12%. Stupid idea. The line losses will be huge!!!

    We'll end up burning more fuel and generate more carbon emissions. Stupid idea.

    There is going to be a huge infrastructure cost associated with electric cars. Not to mention huge utility profits. When do the oil and mining companies start becoming public utility companies?

    It's about as smart as converting all of our corn into alcohol so we can burn that in our cars. While letting people starve.

    And to trust someone else to do your thinking for you is a tragic error.

    We need a clean renewable fuel source: hydrogen.

    The problem is that it takes energy to crack water.

  • Report this Comment On September 15, 2010, at 1:03 AM, dlomax77 wrote:

    The concept of a commuter car boggles my mind, especially if you live less than ten miles from work. Show Wisconsin some love and buy yourself a Trek. The bikes they build in America aren't cheap, but they're less than 5% of what you would pay for an electric car. Fuel costs depend on your diet, but you'd be hard pressed to spend more than $200/yr on maintenance.

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