Two lithium-ion battery failures for The Boeing Company (NYSE: BA) has effectively grounded its new 787 Dreamliner and the problems are starting to impact its share price, but what about the share prices of electric car stocks like Tesla Motors (NASDAQ: TSLA), ZAP (PINK: ZAAP) and Echo Automotive (OTCQB: ECAU) that also use similar technology? To begin with, it should be pointed at that teething problems are nothing new for new aircraft and so far no one has been injured. The Boeing Company and its investors should also be glad that a few lithium-ion battery failures for the 787 Dreamliners aren’t as serious as what happened to the De Havilland Comet roughly a year or two after their debut back in the 1950s when three suffered catastrophic metal fatigue – leading to fatal accidents. The Boeing Company is only down around 0.42% since the start of the year, but its also falling 1.25% in today’s premarket trading. Otherwise and over the past five years, The Boeing Company is only down around 4.3% plus its worth noting that the stock is yielding around 2.60%.
Nevertheless, some are already comparing the Boeing Company’s new 787 Dreamliner to the Chevy Volt which experienced several lithium-ion battery fires in government crash tests and its only a matter of time before investors remember that electric car stocks like Tesla Motors, ZAP and Echo Automotive also run on batteries. So how have these electric car stocks faired since the news about the 787 Dreamliner’s problems broke?
Starting with Tesla Motors, it designs, develops, manufactures and sells luxury electric vehicles and advanced electric vehicle powertrain components plus it owns its sales and service network. The good thing that can be said about Tesla Motors is that at least its cars or rather their batteries have not started any fires. Moreover and despite its history of other problems, Tesla Motors’ stock seems more airworthy than the 787 Dreamliner as its up 29.8% over the past year with most of that return happening after Obama’s reelection and up 79.8% over the past five years. Since the start of the year, Tesla Motors is also up 1.9%, but given the 787 Dreamliner’s battery problems, its bound to be under some scrutiny soon – if not by investors, then by consumers. After all and if the battery fails or if the owner fails to keep it charged, the vehicle becomes a brick.
Meanwhile, ZAP is a Chinese company headquartered in Santa Rosa (where research is also done) that owns a majority interest in Zhejiang Jonway Automobile Co., Ltd., or Jonway Automobile. ZAP designs and manufactures gasoline and electric vehicles plus automobiles in a broad array of products (SUV, van, truck, motorcycle, sedan, scooter, ATV, 3-wheel, vehicle integrations, charging stations and related EV infrastructure technologies). For me, ZAP’s business model makes more sense than the Tesla type of electric car companies as its targeting city delivery trucks and vans used by university campuses, government and corporate markets in China and the United States – in other words, businesses and government entities who want to save money (if there is such as a thing as government entities who want to save money, in China perhaps…). However and on Friday, ZAP fell 8% and the stock is down 12.7% since the start of the year. Its longer term performance has not been great either – no doubt due to its China connection.
Finally, Echo Automotive offers the EchoDrive™, a bolt-on easy-install system that will convert existing fleet vehicles to electric assists in order to reduce their operating expense:
Echo Automotive’s EchoDrive™ system makes more sense economical than buying a completely electric vehicle as an existing fleet can simply be converted. Likewise and should the electric portion fail, the vehicle reverts back to its pre-conversion operating capabilities – meaning its less risky than going out and buying an electric vehicle that will reverts to a brick should the battery fail. Echo Automotive is also up 26% since the start of the year – so its not being impacted by the 787 Dreamliner problems.
The Bottom Line. It doesn’t look like the Boeing Company’s 787 Dreamliner problems have spilled over to impact electric vehicle stocks like Tesla Motors, ZAP and Echo Automotive for investors, but do keep an eye on any customer reaction against anything expensive with an electric battery in it.