Out of the ashes of the economic meltdown, the automotive industry is revving up to integrate clean technology with the promise of satisfying consumer demand and improving the bottom line.
The creative demise that had the auto industry on the brink of bankruptcy has created new opportunity for clean technology venture and start-ups that can adapt and innovate in the automotive market. The two-year, 40% decline in American auto sales between 2006 and 2008 has led to drastic cuts in capacity and output.
Clean Technology Investing Gains Momentum
In the face of the pullback, venture capital investors picked up the pace of their investments in the transport sector, committing record amounts to electric vehicles, power-trains and components, and advanced batteries. Total investment in the sector accounted for a third of all clean technology new funding during the second quarter.
Many of these start-ups will succeed in producing new components and vehicle innovations, however the most likely exit for investors will be eventual buyout by larger manufacturers, due to the obvious barriers to new vehicle market entry.
Biomass-to-Power Gains Investor Attention
Other sub-sectors that look to be gaining investor interest include Biomass-to-power, particularly for the southeastern US which lack wind and solar resources, yet have substantial biomass feed-stocks. Biomass, unlike wind and solar, is a relatively dependable energy platform and can be used for base demand, much like coal-fired generation. Biomass plants, however, require large-scale capitalization, and will likely find funding through large infrastructure players and utilities rather than the venture capital markets.
Efficiency
Industrial Energy Efficiency represents the low-hanging fruit in carbon savings. Companies offering energy efficiency innovations now look to be attractive targets for venture dollars.
Smart Grid Technology - Electrifying Potential
Finally, grid-level energy storage continues to be the Holy Grail that can transform wind and solar from peak level load source to base load. High energy density and high power density make flow batteries a promising approach. A flow battery is a form of rechargeable battery in which electrolyte containing one or more dissolved electroactive species flows through an electrochemical cell that converts chemical energy directly to electricity. Vehicle-to-grid also shows longer term potential as electric vehicle market penetration evolves along with smart grid technology.
Green Technologies: The Emerging Frontier
As companies take advantage of market trends and jump on the new emerging technologies bandwagon, investment dollars will continue to follow the future. And investors will seek to find companies that exploit green technology breakthroughs, particularly in the three key emerging sectors most likely to outperform the market are clean technology, nanotechnology and energy. Most are micro-cap stocks. Research shows that micro-caps have traditionally delivered some of the biggest returns in the market, often surging more than 100% when these companies achieve a major milestone. Yet ironically, these stocks are among the least covered by analysts.
Blake Desaulniers has been in research and analysis for financial publications for 25 years. His expertise is in identifying trends and emerging market opportunities in micro-cap stocks for clean technology, nanotechnology and energy sectors. His Financial Profiles website and newsletter help investors find little-known companies whose share price is poised to explode by exploiting an important trend or technology breakthrough.
