Tom Konrad, Ph.D., CFA

Most plug-in vehicles (both pure electric and plug-in hybrids) come with a “level 1” charging station which allows the vehicle to be charged from a standard household outlet.  If your vehicle is a plug-in hybrid with limited electric range, or you don’t drive much, this is likely all you will need.  Otherwise, you will want a “level 2” charging station.

If you are a do-it-yourself-er and like to get into the nitty-gritty, you should read the whole article.  If you just want some quick advice about the best charging station for you, skip to the last section, “Putting It All Together.”

What a Home Charging Station Does

Technically, a home charging station (also known as “Electric Vehicle Supply Equipment” or an EVSE) does not charge your car.  You car has an on-board charger which converts household alternating current to the direct current which is stored in its batteries.

I personally just installed a charging station for my wife’s new Prius Prime plug-in hybrid, and concurrently applied for a grant from New York state on behalf of the Town of Marbletown to install a commercial charging station at my town’s Community Center.  This article is based on that experience and the responses a poll of 20 charging station owners I contacted through Facebook groups and PlugShare, an app that allows users to find and review charging stations, and connect with other plug-in owners.

Before You Begin

Here is the information you’ll need to make your decision.

1. Make/Model of the plug-in you want to charge.
2. Location of the closest electric panel to your parking spot.
3. Your vehicle’s electric range (PHEVs) or the longest distance you expect to drive between charges on a regular basis (EVs)

The make and model of the plug-in let you know the capacity of the vehicle’s on board charger, and the size of its battery pack.  You will need a charger powerful enough to fully recharge the battery between trips, and you will need an outlet or the charging station installed near the parking space that has the capacity to service that rate of charging.

How Fast Of A Charger Do You Need?

If you will only need to charge your car up overnight, you have a plug-in hybrid with limited electric range, or you will not drive very far between charges, you probably don’t need a very fast charger.  Quick charging may only be something you need on long trips, when you can take advantage of the higher charging speeds available at most public charging stations.

Most plug-in hybrids (with the notable exception of the Volt) have limited electric range, meaning they can charge completely in less than 5 hours using the included level 1 (120V) charger plugged in to a standard household outlet.  Most owners of these vehicles will not need a level 2 charging station.

My wife’s Prius Prime is a borderline example.  It has 25 miles of electric range, and can be charged completely in 5-6 hours with a level 1 charger.  I elected to install a level 2 charger for the convenience of being able to leave the factory level one charger stowed in the car at all times, and because there are times when we take the car out more than once in a day.  In this case, a quick charge between trips can make the difference between using gasoline and staying all-electric.  Plus I like gadgets.

The table below shows approximately how much electric range a typical EV that gets 3-4 miles per kWh can recover for charging stations with different capacities.  The number followed by the A is the rated current in amps, the number followed by V is the voltage.  Level 1 charging stations use 120V, while level 2 charging stations use 240V.

The rate at which a plug-in can charge is also limited by its on-board charger.  This charger’s capacity is rated in kilowatts (kW.)  The vehicle’s battery pack is rated in kilowatt-hours (kWh.) A vehicle’s electric range is its efficiency (usually 3 to 4 miles/kWh times the size of its battery pack.)  So a 2016 Nissan Leaf’s 30kWh battery pack and approximate efficiency of 3.5 miles/kWh give it a range of about 105 miles.  The Leaf has a 6.6 kWh on-board charger, giving it a maximum rate of charge of about 20 miles of range per hour, for a complete charge in 4-5 hours using a 30A 240V level 2 charging station.

Most plug-in hybrids have smaller on-board chargers to match their smaller battery packs, as do some pure electric vehicles with smaller battery packs/lower electric range.  Much of the information available on-line says that the Leaf has 3.3kW on-board charger, but all 8 Leaf owners who responded to my survey reported charging times that could only be achieved with a faster on-board charger.

Below is the charger capacity for the most plug-ins on the market today, along with the size of the charger needed to take full advantage of this capacity.  Additional charging capacity is available as an option on some models.

Circuit Size

The final factor which may limit the size of the charging station you need is the capacity of the electrical circuit you will be using.  If you try to charge a car at a rate equal to or greater than the capacity of your wiring, you will flip the circuit breaker.  Unless the circuit is rated for continuous use, you should limit the charging rate to 80% of the circuit’s capacity.

A second reason for charging at slower rates is efficiency.  The electricity lost (called line loss) is proportional to the square of the current (the A or amps number in the charging rate) and  inversely proportional to the capacity of the wiring.  Line losses also increase with temperature, and the lost energy becomes heat in the wiring, further reducing efficiency.  Line losses become more significant the longer the wiring between your main electrical panel and your charging station.  With properly sized wiring, these losses will usually be less than 2 percent of the electricity used.  But 2% can add up given the large electricity consumption of EVs.  35 miles of driving a day in a typical EV uses 3650 kWh over a year.  Two percent of that is 73kWh, or two to three days worth of a typical household’s electricity usage.

Most charging stations can be set to limit charging speed to less than their maximum capacity.  Many plug-in vehicles also have the capacity to limit their charging rates and charging times.  This feature can be used both to keep actual charging rates within the capacity of the circuit, as well as to reduce charging rates further in order to reduce line losses.  Choosing specific charging times (either with your vehicle or some charging stations) can also save you money because of preferential rates from your utility.

If you have to install a new 240V circuit to service your charging station, I recommend installing at least a 50A, 240V circuit, or even a 100A, 240V subpanel for your garage if you can.  Reasonably affordable EVs with large battery packs and powerful on-board chargers such as Tesla Model 3 are likely to be widely available in the next few years.  You’ll want the charging capacity to accommodate your new, long range EV.  If you have a two car household, you may also want the ability to charge two cars at the same time.

Higher capacity wiring will cost you more today, but the extra cost will be a fraction of the cost of the electrical work.  Upgrading your wiring at a later date would involve doing everything over again.  Even if you never need a more powerful charging station, the reduced line losses will help defray the extra cost over time.

Should You Oversize Your Charging Station?

You may find a charging station with the features you want but a higher capacity than you need.  If the rated power of your charging station exceeds 80% of the capacity of your circuit, make sure that you are buying one that has the ability to limit the charging current.

One good reason to oversize your charging station is durability, which my poll respondents felt was the single most important feature. Since no brands have a long history, it’s hard to judge which brands are likely to be the most durable.  However, it is a good bet that a charging station rated to supply 40 amps of current is likely to last a long time if it is only used to charge cars at 15 amps.

Features

I included a question about features in my poll.  Here are the ones my respondents found most important:

Durability, a long charging cord, charging speed, cost, and being outdoor rated were among the most valued features.  One I neglected to ask about was the charging station having a plug as opposed to being hardwired.  Charging stations with plugs don’t cost much more than those without, but even if they are too large to be truly portable, it makes them easier to take with you if you move.

Some features may have gotten lower ratings in my poll because they are only useful to some users, even if they are essential to the users who want them.

• An outdoor rating will be essential if your parking space is outdoors, but it will be irrelevant if you park in a garage.
• The ability to control charging times will be important if your car does not have this feature itself- but only if your electrical utility gives rewards or preferential rates for avoiding charging during peak demand.  That said, utility rates for plug-ins are changing, and you may need this feature tomorrow even if it is superfluous today.

Safety Certification

Intertek and Underwriter’s Laboratories are Nationally Recognized Testing Laboratories provide safety certification for EV charging stations.  If your charging station has one or both of these safety certifications (the ETL or UL logos, respectively), you can be assured that the product line has undergone rigorous (and expensive) safety testing.  One of these certifications will be required for a direct-wired EV Charging station to pass an electrical inspection.  However, and EV charging station with a plug will only require an electrical inspection for the wiring to the outlet.  Safety certification is also required by most government rebate programs for electric vehicle chargers.

Buying a charging station without such a safety certification does not mean it is unsafe.  In fact, charging stations are primarily safety devices to ensure that the vehicle’s on-board charger can access household current safely.  I did an internet search, and only found two reports of fires that could possibly be linked to electric vehicle charging after trying several variations on my search terms.  In contrast, a search for “hoverboard fire” quickly produces reports of “half a million” fires and many videos.

Of the two possible EV charging station fire reports I found, one could not be directly linked to the charging station in question (a UL listed Siemens model.)  The other fire started near a home charging station of unknown brand which had been installed by the owner.  Since we don’t know the brand of the charging station, we can’t know if it had a safety certification, but improper installation could easily have caused the fire.

Brands

While few people have more than a couple years experience using charging stations, my poll respondents had this to say about the following brands:

Top Recommended Brands:

• ClipperCreek: Recommended by more respondents than any other brand.
• JuiceBox:  Probably the best options in terms of power and features for the price.
• ChargePoint Home
• Bosch
• Tesla
• Siemens/Versicharge
• GE Durastation

Mixed Reviews:

• Aerovironment (some re-branded by Nissan): Expensive, but a good warranty. One (of four) had it break right before the warranty expired.  He was unimpressed with their customer service, but said he thought service had gotten better in recent years.
• Audi: Expensive to install, but easy to use.

My Top Picks

• Duosida 16A: $289 on Amazon
  A basic portable charging station with a long cord and a great price.  Not designed for wall mounting.  Not safety certified.
• ClipperCreek 16A, 24A, 32A, and 40A: $402, $538, $601, and $895 on Amazon.
  A well-rated charging station with a long cord and a reputable brand.
• GE DuraStation 30A: $397 on HomeDepot.com
  A powerful, no-frills charging station from a recognized brand. Maximum current can be adjusted to 30A, 24A, 16A, or 12A using a jumper.
• JuiceBox 40A: $499 at eMotorWerks
  The least expensive 40A charging station available.  Maximum current can be set by adjusting trim-pots inside the enclosure.  UL listed in 2017.
• JuiceBox Pro 40A and Pro 75A: $599 and $899 at eMotorWerks
  Full-featured, high-power charging stations at a low price.  Wi-fi enabled. Can be adjusted with a smartphone app to charge at any lower current required. UL Listed in 2017.

(prices include shipping)

I had personal experience with eMotorWerks (JuiceBox) support through eBay, where I bought a refurbished JuiceBox Pro 40.  I found them very slow to respond, and had not reached a resolution after a week.  But given that mine was a cut-price refurbished unit (and their prices are amazing to begin with) I still give the brand my highest recommendation.

I contacted eMotorWerks and asked them to respond to the previous paragraph.  Here is their response:

“We appreciate the endorsement of our products, and are working diligently to fully staff and train our support team. Our sales have nearly doubled at the end of 2016 due to accelerated growth in EV sales (record 25,000 EVs sold in December, nearly twice the previous year) and successful programs we recently launched with our utility and Community Choice Aggregation partners. We’re working to further grow our support team and deliver top-notch service to all our customers.”

After the first version of this article was published, eMotorWerks solved my problem to my complete satisfaction.

If you want top-notch service, ClipperCreek and ChargePoint Home have good reputations according to my poll respondents.  I do not know if growth is straining their customer service departments.  You will pay $100-$400 extra for similar models from these vendors compared to eMotorWerks, but you may consider the extra expense worth it, especially if JuiceBox has not yet received its UL safety certification when you care buying your charging station and this concerns you.

Putting It All Together

Although this is a rather technical article, choosing a home charging station does not have to be complex.  Here are the essential steps:

1. If you do not drive much or your vehicle’s electric range is less than 20 miles, a level 2 charging station is probably not worth the cost.  Try using just the factory level one charger for a while.  Otherwise:
2. Use Table 2 to determine the charging station capacity your vehicle can use.
3. If you are doing your own electrical work, go back and read the whole article.  Otherwise:
4. Purchase a charging station from my top picks (above) with a rated capacity at least as high as given in Table 2. If you are relying on a government rebate program to pay for part of the cost, make sure that the model you choose qualifies for the program.
5. Have an electrician or three give you quotes to install a “240 volt(V) 50 amp(A)” circuit to your parking space and install your charging station.  You can also ask them for a quote to install the minimum recommended circuit for your vehicle from Table 2, but the savings are not likely to be significant.  You will probably be better off with a 240V 50A circuit in the long run.
6. Have your electrician install the charging station, and adjust the charging station’s maximum current to not overload the circuit. The adjustment should not be needed unless you opted for the cheaper electrical circuit.
7. Charge your car quickly at home.

The prices and specific models mentioned in this article are based on what was available at the start of 2017, and will change.  The advice about charging station and circuit sizing should be more durable.

Giving Back

After you install your charger, I encourage you to let the occasional plug-in driver charge at your home.  You can do this with PlugShare.com and the PlugShare app (Android, iTunes) which is a great resource for finding both public charging stations and plug-in owners like yourself who want to may electric driving as worry-free as possible by extending the network of public stations.

My own charger is available on the PlugShare, and I’m looking forward to meeting the first plug-in driver I can help with a charge.

The post An In Depth Guide To Buying and Installing a Home Electric Vehicle Charging Station appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

The market for lithium ion batteries is expected to reach $46 billion by 2022.  That represents 11% compound annual growth over the next six years.  Few other markets if any are growing at such a feverish pace.  The adoption of electric cars is the center of the excitement, but the proliferation of smartphones, tablets and other electronic devices also plays a part.  Suppliers of critical battery materials such as lithium, cobalt and graphite are salivating over potential sales to battery manufacturers.

Graphite with its strong conductivity and heat-resistant qualities is a perfect material for the anode component of a battery.  A large electric vehicle battery can require as much as 55 pounds of graphite, although the typical family car probably requires around 22 pounds to 40 pounds of graphite.  Indeed, the typical lithium ion battery destined for electric vehicles requires more graphite than lithium.

According, to Avicenne Energy, a consulting firm focused on supply chain economics, the battery sector  –  transportation as well as storage batteries  –  is expected to require as much as 290,000 metric tons of flake graphite by the year 2025.  This compares 118,000 metric tons of graphite used in 2014 for batteries.  The graphite must be 99.5% pure to qualify for battery use, but graphite developers can charge a higher price to pay for the purification process.

It is no surprise then that graphite miners in particular see a bonanza as Tesla, Ford and Toyota and others roll out one electric car series after another.  The market opportunity has inspired several developers back into the field.  China controls about 75% of the global graphite production, much of which is synthetic graphite manufactured from petroleum coke.  However, there are known reserves of natural graphite in North America, Australia and Europe.

Natural flake graphite in particular is coveted for battery applications.  Crystalline flake graphite is composed of flat, plate-like particles with irregular edges.  It is found in layers or pockets in metamorphic rocks and sometimes in massive accumulations in veins or lenses.  There are other graphite types, such as those called ‘lump’ or ‘amorphous’, that are lower in purity and occur in less commercially useful particle sizes.  Graphite of all types is put through some beneficiation process to remove contaminants, improve particle size and enhance purity.   Processing costs can have a significant impact on profitability for a graphite mine developer.

The next few posts will take a closer look at several graphite mining companies that have in recent years accelerated development of graphite resources.  Besides processing costs we will look at resource quality, extraction and transportation requirements.  With demand rapidly expanding we will probably find all the graphite developers are exude confidence in commercial success.

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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by Paula Mints

When two companies with negative financials and high debt marry a good response to the nuptials is … Huh?

When Toto pulls back the curtain in the Wizard of Oz to reveal that the Wizard is just a normal man with no special powers the Wizard says: Pay no attention to the man behind the curtain.

In the case of the proposed stock acquisition of SolarCity by Tesla pulling the curtain would reveal two debt ridden companies with cash flow problems.

Just the Facts Please

The facts are: two companies with high debt and consistent net losses have joined their net losses and debt to enjoy the synergies offered by Tesla’s (TSLA) electric car and Powerwall Lithium Ion battery technologies with SolarCity’s (SCTY) residential/commercial lease business model and its Silevo crystalline cell technology.

Other facts include that SolarCity has experienced setbacks with its module assembly/cell manufacturing ramp up and optimistic announcements aside are likely far away from com-mercializing its technology.

Once SolarCity’s PV cell/module technology is commercial it will be competing in a market with significant downward price pressure. Also, given that China’s PV cell/module manufacturers are ramping capacity in countries that are not subject to import tariffs competition on price will get a lot more painful in the near future.

Also to be considered is that with demand for solar leases slowing SolarCity has announced that it will compete in the highly competitive utility scale space, a segment of the PV market that is highly capital intensive on a much bigger scale.

Finally (or, really not finally) the company’s reliance on debt renders it highly vulnerable.

Now to Tesla: facts include consistent net losses, high debt and a residential/commercial battery product that is not widely deployed and is quite expensive.

Both companies have liability/asset ratios over .50, which means that a higher proportion of each company’s assets are financed by debt.
So … just where is the synergy in combining two companies into a massive, debt-laden, clean technology powerhouse?
The proposed acquisition DOES make sense for SolarCity, which can be viewed as the weaker party. For Tesla, it only makes sense when thought of as a lifeline for SolarCity.

Table 1 (click for larger version) offers total revenues, net losses and the Liability/Asset ratio for SolarCity and Tesla from 2010 through 2015.

Tesla is not the only company to recently make interesting acquisition decisions. SunEdison, currently in bankruptcy, went on a buying spree with the goal of creating a massive clean technology powerhouse and now finds itself selling assets and seeking a busi-ness-savior-marriage of its own.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here.

This article was originally published in the June  30 issue of  SolarFlare, a bimonthly executive report on the solar industry, and is republished with permission.

The post Tesla and SolarCity: When Acquisition Strategies Run Amok appeared first on Alternative Energy Stocks.

Doug Young 

Bottom line: Tesla will announce a joint venture production facility in Shanghai within the next 1-2 months, and could see its China sales pick up sharply after its more affordable Model 3 reaches the market next year.

Just a week after Disney (NYSE: DIS) launched its newest theme park in Shanghai, media are saying that new energy car superstar Tesla (Nasdaq: TSLA) is also eyeing China’s commercial capital as the location for a new production base costing up to $9 billion. We should note from the start that the potential partner mentioned in the reports, the Shanghai government-owned Jinqiao Group, has denied the signing of a memorandum of understanding (MOU) for such a deal. But in this case I trust the source of the story, Bloomberg, more than the Chinese officials who have a track record of denying reports that later turn out to be true.

This particular investment plan has been in the headlines for much of this year, though Tesla has been quick to always say that it will only make such an investment if it can find the right partner and market conditions justify such a move. A major breakthrough appeared to be near last month, when a senior Tesla executive met with a high government official in charge of the new energy car sector and the pair later released photos of their meeting. (previous post)

All that said, let’s review the latest developments that include both details of the potential plan and also Jinqiao Group’s denial. According to the Bloomberg report, Tesla has signed an MOU to build a manufacturing plant in Shanghai’s Pudong New District, making the city the front-runner to host the long-discussed production base. (English article; Chinese article)

Under the plan, Tesla would provide half of the investment for the plant, or up to 30 billion yuan ($4.5 billion) of the total cost of around $9 billion. Jinqiao Group would provide the other half. Other places that are still vying for the plant include the interior city of Hefei in Anhui province, and the city of Suzhou about an hour’s drive from Shanghai.

The Bloomberg report cites a representative of one of Jinqiao’s listed units saying that the parent company hasn’t signed any MOU or other documents about a Tesla joint venture factory. (English article; Chinese article) The fact that Bloomberg decided to run its article despite the denial leads me to believe that a deal is really happening in Shanghai, though perhaps there’s no actual signed MOU just yet.

Aggressive Suitor

The fact of the matter is that Shanghai is quite aggressive when it comes to courting cutting-edge famous brands like Tesla. The city just opened its state-of-the-art Disneyland last week, and the latest reports are pointing out that the reported new Tesla factory would be worth nearly twice as much as the $5.5 billion price tag for the Disney resort.

Shanghai has also been working aggressively to build up a charging infrastructure for electric vehicles (EVs), in a bid to jump-start Beijing’s stalled program to promote the industry. That program includes not only building charging stations throughout the city, but also working aggressively to get residential property management companies to permit apartment dwellers to install such stations in their parking spaces at home.

Tesla zoomed into China 2 years ago on a flood of positive publicity, fueled by Beijing’s emphasis on the technology and also the celebrity power of company founder Elon Musk. But it stumbled badly after that due to lack of infrastructure, poor marketing and also problems with China’s broader incentive program to promote the sector.

This latest move to localize production, combined with Tesla’s recent introduction of a more affordable model priced at $35,000, seem to indicate the company may be regaining some of the momentum it lost after its fast start 2 years ago. Accordingly, I expect we could see a formal announcement of the new joint venture in the next month or two, and the company’s China sales could pick up sharply when the new more affordable Model 3 becomes available here next year.

Doug Young has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies. He currently lives in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

The post Tesla Considering Shanghai For New China Plant appeared first on Alternative Energy Stocks.

Doug Young

Bottom line: Strong response to Tesla’s latest EV in China and a major new solar plant plan from SolarReserve reflect Beijing’s strong promotion of new energy, which is also creating big waste by attracting unqualified companies to the sector.

A series of new reports is showing how Beijing’s strong support for new energy technologies is benefiting both domestic and foreign companies, as China tries to become a global leader in this emerging area. But the reports also spotlight the dangers that come with such aggressive support, which often leads to abuse of subsidies and other preferential policies that can lead to big waste and market distortions.

One of the reports centers on US new energy car superstar Tesla (Nasdaq: TSLA), and quotes an executive saying that China has become the second largest market for its newest and first relatively affordable electric vehicle (EV). The second report comes from the solar energy sector, and has US solar plant developer SolarReserve LLC in a major new partnership to build more than $2 billion worth of solar farms in China.

While both of those developments look positive, and reflect big government incentives on offer, the third news item highlights the darker side of Beijing’s largess. That story comes from leading financial news magazine Caixin, whose investigative report shows how many of China’s smaller automakers have become addicted to grants and other subsidies for new energy car development and rely on such money for their profits.

Let’s begin with the Tesla story, which comes as the company tries to gain some traction in China after a poor start 2 years ago. Following positive reviews and strong initial orders for its new Model 3, costing just $35,000, Tesla’s Asia chief Ren Yuxiang is saying in an interview that China has become the second largest market for pre-orders for the new car, presumably after only the US. (English article; Chinese article)

Ren didn’t give any figures, but Tesla previously said it had received 400,000 pre-orders for the Model 3, which won’t be available in China until sometime next year. One Chinese media report also points out that Tesla has said it is exploring setting up a manufacturing plant in China, and that local reports have indicated that plant would be in the city of Suzhou not far from Shanghai.

New Solar Power Plants

Next there’s the solar plant news, which comes in a report that says SolarReserve and local partner coal producer Shenhua (HKEx: 1088) will jointly spend up to 15 billion yuan ($2.3 billion) to develop solar farms in China. (English article) Projects developed by the pair could have up to 1,000 megawatts of capacity, which is quite a large amount.

We’ve seen many similar initiatives to build solar power plants in China in response to Beijing incentives and directives, but this is one of the largest I can recall involving a foreign company. That’s significant because many Chinese builders have little experience in the sector, and may be taking their action more to please the central government than to earn actual profits. By comparison, this new partnership should be far more commercially focused, giving it better chances of success.

Finally there’s the Caixin investigative report, which saw a reporter review many companies’ latest financial statements and uncover how reliant some smaller automakers have become on Beijing incentives to develop new energy cars. (Chinese article) The report points out that many of the companies would be loss-making if they didn’t have the government support.

I’ve never heard of any of the companies named in the report, which reflects the fact that China’s auto industry is highly fragmented with dozens of small players that would never survive in a more mature market. Many of these companies probably should have closed or merged by now due to stiff competition. But they have discovered that Beijing’s largess can prolong their lives for a few more years, as they develop new energy cars that will probably never make it to market.

Doug Young has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies. He currently lives in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

The post Chinese Green Subsidies: When Lifting All Boats Becomes Bailing Them Out appeared first on Alternative Energy Stocks.

Doug Young 

Bottom line: Beijing should promote cutting-edge companies like Tesla that can help advance its new energy agenda, while abandoning ones like Yingli that use old technology to make cheap copycat products.

Two green energy stories were in the headlines last week, spotlighting China’s drive to become a global leader in the new technology and also the right and wrong ways to achieve that aim. An item involving US electric vehicle (EV) powerhouse Tesla (Nasdaq: TSLA) represented the right approach, with reports that the company might near a deal with Beijing to build a manufacturing plant in China. Meantime, former solar panel heavyweight Yingli (NYSE: YGE) was in the wrong approach column, announcing that its ill-conceived model of using old technology and cheap prices to do business had pushed it to the brink of insolvency, despite ongoing local efforts to rescue the company.

Beijing should take note of these 2 examples and do more to promote companies like Tesla that can develop cutting-edge technology for use in widely-respected products that the market wants. At the same time, it should abandon copycats like Yingli that don’t innovate and can only compete by offering cheap products using old technology.

In keeping with that approach, the government should finally pull the plug on companies like YIngli by letting them fail, while at the same time giving even bigger support to innovators like Tesla. Such a policy may cause some short-term pain due to plant closures, layoffs and lost investment for the copycats. But it will ultimately leave China with a field of healthier, more potent companies that can help it achieve its goal of becoming a global new energy leader.

China has made development of green industries a top priority over the last decade, with the aim of developing cutting-edge technologies that can be used both at home and exported abroad. That drive has gained added urgency in recent years as the nation grapples with worsening pollution, the result of years of breakneck growth with only minor attention to environmental protection.

One of Beijing’s earliest focus areas was the solar panel sector, whose products create pollution-free electricity using sunlight. Thanks to a wide range of incentives including tax reductions, cheap loans and low-cost land rights, the nation quickly built up a manufacturing complex that now produces more than half of the world’s solar panels.

Lack of Experience

But many companies that entered the field had little or no experience in the area, and instead relied mostly on cheap, older technology to produce low-end panels that were most attractive for their low prices. One of the biggest players to use that model was Yingli, whose cheap and relatively low-tech panels allowed it to quickly grow into the world’s largest solar panel maker.

But that strategy has sputtered due to a prolonged industry downturn created by too much capacity, and Yingli announced a year ago that it was running into serious financial difficulties. The company is now struggling to pay off its debt, and last week said there was “substantial doubt as to its ability to continue as a going concern” as it posted a loss of about 5.8 billion ($900 million) yuan last year. (company announcement)

While Yingli’s situation looked dire, things were much better for Tesla, which has previously said it would consider manufacturing its popular cutting-edge electric cars in China if given the right incentives. Tesla’s story was in the headlines late last week when its Asia chief Ren Yuxiang met with Xin Guobin, a vice minister from the Ministry of Industry and Information Technology (MIIT), which oversees the new energy auto sector. (Chinese article)

Both sides were eager to publicize the meeting, releasing photos of the men sitting together, heating up talk that the pair were closing in on a deal to build Tesla’s first manufacturing facility outside its home US market. Tesla’s ride into China hasn’t been easy mostly due to infrastructure and marketing issues, but its actual cars have been well received for their strong performance and cutting-edge technology. The company took a major step towards making its high-end products more affordable for average car buyers with the release last month of its latest car, the Model 3, which retails for a relatively affordable $35,000 before tax incentives.

Beijing should be commended for working hard to bring Tesla’s technology and manufacturing to China, which could ultimately help to promote similar development of China’s own domestic sector. At the same time, the government finally appears to be losing patience with Yingli after some quiet attempts to revive the company, and should work to conduct an orderly wind-down for this failed low-tech template for development in the fast-moving and fiercely competitive solar energy sector.

Doug Young has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies. He currently lives in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

The post Right About Tesla, Wrong About Yingli appeared first on Alternative Energy Stocks.

Doug Young

Bottom line: A new report spotlighting suspicious sales by BYD shows that last year’s EV explosion in China was fueled by people seeking to pocket government subsidies.

A story from China’s new energy (electric) vehicle space is shining a spotlight on the challenges companies are facing after becoming too reliant on government support. It is a twisted tale involving electric car maker BYD (HKEx: 1211, OTC:BYDDF), and shows how its boom in sales last year may have been largely due to big government rebates for buyers.

BYD experienced a rocky road over the last few years as its dream of a future filled with new energy vehicles failed to take off. That seemed to change last year, as new energy vehicle sales suddenly exploded at the company backed by billionaire investor Warren Buffett. BYD and industry boosters said the sales explosion showed that Beijing’s years of support for the sector was finally bearing fruit.

But lately a much darker story has emerged, showing that much of the explosion was fueled by opportunists simply looking to pocket some of the big government rebates being offered to new energy car buyers. Now a new report from the respected Caixin is spotlighting one such case involving 3,000 electric cars that were purchased between 2013 and 2014 to become taxis in the city of Nanjing. (Chinese article)

I’ll admit I’ve read the story several times and am still not sure what exactly happened in this convoluted tale. But the bottom line seems to be that many of these cars never got put into use, and some 240 remain in BYD’s Shenzhen warehouses to this day even tough they were ready for delivery back in 2014.

The case seems to center on a BYD dealer who later killed himself and left behind a note that detailed a large amount of unpaid bills related to the Nanjing order. BYD last month said that it was owed 30 million yuan ($50 million) related to the case, which obviously isn’t huge and won’t have a huge impact on the company. But the case hints at the kinds of fake buying that were taking place more broadly to get the government subsidies. That kind of fraud has prompted Beijing and local governments to sharply reduce or even eliminate many of those incentives this year.

Doug Young has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies. He currently lives in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

The post Some BYD Buyers Wanted Subsides, Not Electric Vehicles appeared first on Alternative Energy Stocks.

Doug Young

Bottom line: Trina’s new loan and BYD’s uncertain outlook for EV sales this year reflect continued reliance of new energy technology companies on state support, which could pressure them as government incentives get retired.

Two new energy stories are in the headlines today, reflecting the progress but also the continued reliance on government support that this up-and-coming group of companies faces. That particular reality isn’t new, though some who were hoping the industries would become commercially independent more quickly may be disappointed. But more important, this reality could challenge many of the companies in the next 2-3 years in the face of disappearing support from governments that believe they have already given enough incentives to this slowly-developing group.

The first development has solar panel maker Trina (NYSE: TSL) announcing $143 million in financing for a new plant in Thailand, with all of the money coming from local lenders that almost certainly have government ties. The second has electric car maker BYD (HKEx: 1211; Shenzhen: 002594; OTC: BYDDF) reporting annual results that showed a surge in its EV business last year thanks to government incentives, setting the stage for a possible rapid slowdown this year as those incentives get set to retire.

Let’s begin with Trina, whose new Thai plant is aimed at producing solar panels that will be exempt from anti-dumping duties in the US and similar duties likely to come from Europe later this year. In that context the launch of the new factory looks like good news, as it will help Trina to avoid potentially serious fallout that would have come with the loss of sales in 2 of its most important markets.

Trina says the new Thai plant has just formally begun production with 500 megawatts of annual capacity for modules, and 700 megawatts for finished solar cells. (company announcement) Trina also announced $143 million in financing from China’s Minsheng Bank (HKEx: 1988; Shanghai: 600016) and Thailand’s Siam Commercial Bank Public Co to pay for and operate the plant.

To call this particular loan government-backed would be slightly misleading, since Minsheng is technically a private lender. I’ll admit I’m less familiar with Siam Commercial Bank. But I expect that both companies are private institution with close state ties, which is quite common in this kind of developing economy.

A better sign of true commercial viability for this project would have been financing from some big western lenders. But in this case it’s not clear if Trina could have secured such financing. And it’s also quite likely that even if it could get financing from such sources, the terms wouldn’t be as favorable as the ones it’s getting under this new deal.

Global EV Leader

Next let’s look at BYD, which has just announced annual results that show its profit leaped 6-fold and revenue jumped 40 percent last year, as it bounced back from a major company overhaul. (company announcement) BYD officially became the world’s biggest new energy car seller last year thanks to a surge in sales in its home China market, with sales tripling during the year to about 58,000 units.

BYD was once a stock superstar after billionaire investor Warren Buffett bought 10 percent of the company in 2008. But it has lost much of its luster since then after its new energy cars failed to quickly gain traction. Even Buffett seems to have lost interest, and his share of the company has dropped to 9 percent as he was diluted by BYD’s own new share issues to raise cash.

BYD doesn’t break out its new energy vehicle sales by country in the new results, though it says that China’s share of its overall revenue grew to a overwhelming 90.2 percent in 2015 from 86.5 percent the previous year. A big part of that most likely came from surging electric car sales. But Beijing recently discovered that many electric car buyers were making their purchases simply to get the government incentives, and had no intention of actually driving the cars.

Realizing that, Beijing has moved quickly to retire most of the incentives this year, and BYD acknowledges that the industry will be driven more by fundamentals than government incentives. That could translate to a sharp slowdown or even contraction in BYD’s new energy vehicle sales this year, since it’s not at all apparent that very many people are actually interested in such cars.

Doug Young has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies. He currently lives in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.. He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

The post Trina and BYD Grow With State Support. How Will They Do Without? appeared first on Alternative Energy Stocks.

by Doug Young

Bottom line: BYD’s EV sales are likely to see strong growth based on government-supported buying in China this year, but could slow sharply in 2017 if China’s economic slowdown accelerates.

Chinese electric vehicle (EV) maker BYD (HKEx: 1211; Shenzhen: 002594; OTC:BYDDY) shot into the headlines in 2008 when investment guru Warren Buffett bought 10 percent of the company. But it has struggled to find a mass audience for its cars since then, at times raising doubts about its future. That seems to be changing recently, as a nascent surge in its home China market has quietly begun to charge up the business, bringing some excitement back to the company.

Now one of BYD’s biggest backers, the man who first introduced the company to Buffett, is quietly building up his own stake in BYD, and disclosed that his LL Group recently bought more shares to boost its stake to 8.24 percent. (HKEx announcement) That’s up from 6.3 percent of BYD’s H-shares that LL Group, formerly known as Himalaya Capital, held at the middle of last year, and is a sign of growing confidence by LL Group founder Li Lu.

BYD’s EV sales do indeed seem to be gaining some new traction recently, helping it take the spot as the world’s top EV seller last year. But the big footnote to that victory was the company’s heavy reliance on its home China market to win that position. That’s an important distinction, since EV buying in China is heavily driven by government-linked customers who are trying to fulfill Beijing’s ambitious targets for new energy vehicle sales.

Such buying is driven by target-setting rather than real commercial demand, meaning there’s no guarantee that many of BYD’s China car sales won’t end up sitting parked in garages rather than out on the road. What’s more, the company’s recent robust China sales could easily slow sharply if the nation’s economic slowdown accelerates, since EV buying would become a lower priority in such an environment.

BYD’s Hong Kong-listed shares doubled in the first half of last year, amid a broader Chinese stock market rally. They later gave back most of the gains as China’s stock markets underwent a big correction from last June, though they still trade around 20 percent above their year-ago levels.

Booming China Sales

Much of BYD’s stock movement has admittedly been in tandem with China’s broader stock market, so let’s instead look more closely at some of the latest company data and other trends that excited Li Lu enough to boost his stake in the company. The company sold 61,722 plug-in vehicles last year, easily beating out global leaders Tesla (Nasdaq: TSLA) and Nissan (Tokyo: 7201), which each sold around 50,000.

The surging sales prompted BYD to recently upgrade its initial projections for its 2015 profit, saying it now expects the figure to rise 481 percent from 2014 levels. It had previously projected 435 percent growth. (company announcement) In the revision announcement, BYD specifically cited “explosive growth” in China for new energy vehicles in the fourth quarter.

At the same time, BYD founder Wang Chuanfu has made it clear in recent interviews that he doesn’t plan to try to export his cars in big numbers anytime soon. That means the company will be dependent on China for its EV sales for the foreseeable future, and hints that BYD’s numerous pilot programs around the globe in both western and developing markets aren’t going anywhere fast.

At the end of the day, it’s quite likely that BYD will do well for at least the next year, as Chinese buyers continue to purchase its vehicles at a brisk pace to help Beijing meet its clean energy vehicle targets. But I do expect the China sales could slow sharply in 2017 as China’s economy slows more sharply, and it’s unlikely that BYD will be able to offset that growth by relying on foreign markets.

Doug Young has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies. He currently lives in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.  He writes daily on his blog, Young´s China Business Blog, commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, The Party Line: How The Media Dictates Public Opinion in Modern China.

The post BYD Increases Profit Projections On Accellerating EV Sales appeared first on Alternative Energy Stocks.

by Debra Fiakas CFA

After the market close Tuesday, AeroVironment, Inc. (AVAV:  Nasdaq) is scheduled to report financial results for the quarter ending October 2015.  Management is holding conference call with investors and analysts directly following the announcement.  It is going to be an interesting call.

AeroVironment has some crowing to do.  Hyundai recently tapped the company to provide electric vehicle charging stations at its dealerships for the 2016 Sonata plug-in hybrid model.  Sonata drivers will also have the option to buy the company’s TurboCard charging system or the wall-mounted EVSE-RS charging station.  Hyundai is the seventh car manufacturer to choose AeroVironment’s charging solutions.

AeroVironment has forged a new automotive relationship, but that might not mean a big jump in sales.  Demand for electric cars has declined along with gas prices.  Tesla is the only electric car that has not experienced a decline in unit sales.

Hyundai has not been intimidated and is expanding its electrification line-up.  The plug-in variant of the Sonata hybrid is the most recent addition.  The 2016 Sonata has an internal combustion engine augmented by an electric motor that feeds power to the front wheels.  Pure electric power gets the Sonata off to a good start and then transitions to the internal combustion engine.  The car has a larger lithium-polymer battery pack than most of the hybrids that makes it possible to reach 60 miles per hour in eight seconds.

Image result for aerovironment uav imageAeroVironment is not entirely dependent upon Hyundai or any of the other car manufacturers.  If questions about electric car demand get too uncomfortable, management can change the subject and talk about the company’s recent new order to one of its unmanned aircraft systems.   The U.S. Marine Corps is paying $13.0 million for one of the company’s Puma AE aircraft, which can be used for a remote scouting system.

The company’s mix of products and services may seem a bit eclectic, but generates solid results.  In the most recently reported twelve months the company recorded $254.6 million in total sales, of which $12.4 million was converted to operating cash flow.  The company has managed to build up cash to $217.5 million.  Cash flows are so strong management apparently sees no need for leverage.  There is no debt on the balance sheet.

The clutch of analysts who have published estimates for AeroVironment seem to think there is growth in the company’s future, but not the sort of growth the company experienced even just a year ago.  The estimates for the quarter ending October 2015 reflect a net loss of $0.09 per share on $57.7 million in total sales.  The loss situation is apparently perceived as a temporary situation, with profitability restored as early as the January 2016 quarter.  The current fiscal year ending April 2016 is shaping up as a transition year, but fiscal year 2017 is clearly expected to be a year of growth and profits.

Confidence in the future has apparently caught up with traders in AVAV.  The stock registered a particularly bullish formation in a point and figure chart a week ago called a ‘triple top breakout’ in a point and figure chart. The same chart suggests the stock has developed sufficient momentum to reach the $34.00 price level.  

Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. 

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