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
It's possible that Musk himself realizes the same thing behind the bluster -- witness Tesla's recent alliance with Toyota
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
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
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.