Investors shift up a gear in clean car revolution

Investors shift up a gear in clean car revolution

Investors in infrastructure, smart technology and robotics have been tipped as the winners in the clean transportation race.

Against a backdrop of legal challenges against generators of dirty air caused by diesel cars, the growth of Chinese manufacturing of electronic vehicles (EVs) and the development of technology, investors looking to benefit from clean energy have more ways to invest than ever before.

A panel of specialists across the fields of law, statistics and asset management highlighted the challenges and opportunities facing investors to delegates at The Future of Transportation, in London, hosted by socially responsible investment company Impax.

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Justin Winter, portfolio manager and director for Impax Asset Management, said: "We want to invest in companies that will make the move to a less polluting economy.

"There are risks in a market where such innovations are being largely disrupted - for example, demand for oil could be affected - but there is a lot driving change and not just in traditional western economies.

"It's not a question of whether innovation such as electronic vehicles will become more prevalent, but when. We see, for example, China playing a critical role, as the government tries to address its large carbon footprint and to create a strong model of auto manufacturing."

There are also opportunities in terms of charging stations for electronic vehicles, smart roads, technology-driven solutions such as Uber and an evolution in business models for utilities, which provide the grid that powers charging stations, for example.

However, there may be red flags for investors when it comes to picking companies involved in these disruptive technologies.

For example, Mr Winter said there was reason to examine carefully the various manufacturing companies' use of cobalt in making batteries.

This is because some companies may be reducing their operating costs by using cobalt which has been mined in the war-torn Democratic Republic of Congo, rather than sourcing it more ethically. 

Therefore, Mr Winter says by paying attention to the corporate governance of companies involved in any of these sectors, you can avoid such potential risks and be able to benefit from long-term, well-managed companies with strong corporate governance.

According to panellist Michael Wiltshire, global head of analysis for Bloomberg New Energy Finance, government intervention and consumer behaviour is also helping to drive these changes, and in turn pushing down the prices of new technological solutions to environmental problems.

The "price parity effect" between conventional and green vehicles has already happened in countries such as Norway and, as more people become aware of the rising quality and lowering cost of such items, the shift will be more prevalent elsewhere.

"Consumers do not buy overnight just because it is cheaper, but because it is better", he said. "By 2040 we think we will see 50 per cent of light duty vehicle sales being electronic vehicles."