This week, we dive deeper into another of True Alpha’s six thematic investment verticals that we believe is ripe for investment: Transportation of the Future.
Trains, planes, automobiles– all modes of transportation that have had great impact on our society, increasing the mobility of both people and goods around the world. Since the start of human civilization, transportation has evolved to bring us from the invention of the wheel, to aircraft, to space travel. This impact is not all positive, however, as the Industrial Revolution-era technologies that brought us modern-day transportation are the same that go hand in hand with the pollution of our planet. Cars, trains, and boats were increasingly powered by fossil fuels, which when burned, release carbon dioxide into the atmosphere [1].
Since 1970, global emissions from transportation have more than doubled, and in 2019, transportation accounted for 29% of greenhouse gas emissions, with light duty vehicles (i.e. cars), making up half of total contribution [1]. This increase in GHG emissions has put pressure on governments to intervene, from introducing fuel charges and taxes to making it easier to buy zero-emission vehicles [2].
Governments are not alone in taking action to reduce transport-derived CO2 emissions and reduce our reliance on fossil fuels for transport. According to McKinsey, investors have spent almost US $330 billion since 2010 on companies targeting ACES technologies: automation, connectivity, electrification, and smart mobility [3]. About 25% of this capital has been invested since 2019 alone, and two thirds has gone to autonomous vehicles and smart mobility [3]. Transitioning transport into the future is not just about manufacturing more electric vehicles, but also about developing more sustainable battery technology, improving charging networks and grids, and increasing access to sustainable mobility for the general population. In all, future-proofing transportation and mobility is a multi-trillion-dollar industry that is attracting significant investment, as companies step up to meet this technological challenge [4].
At True North, we have identified Transportation of the Future as a key investment theme that we believe yield high returns as well as impact on our planet and society. We’ve highlighted a few companies in Transport from our trading universe that represent the future of transport: Plug Power, Livent Corporation, ChargePoint Holdings, and Li Auto.
Plug Power (NASDAQ:PLUG).
Founded in 1997 and headquartered in New York state, Plug Power develops hydrogen fuel cells for the electric mobility markets in North America and Europe. In October 2021, the company announced a partnership in a landmark study to “decarbonize air travel and airport operations with green hydrogen” [5]. As of Jan 25, PLUG’s market cap is US$11.6B [6].
Livent Corporation (NYSE:LTHM)
Livent Corporation is a fully integrated lithium manufacturer, selling performance lithium compounds that are primarily used in batteries. The company got its start in the lithium market in 1940, and in 1991, supplied Sony with lithium raw material for its first lithium-ion batteries that were used in its camcorders [7]. LTHM’s market cap as of Jan 25 is US$3.6B [8].
ChargePoint Holdings (NYSE:CHPT)
ChargePoint Holdings provides charging networks and software/cloud solutions for electric vehicles across the United States. The company targets businesses who want to offer EV charging to their customers/employees, fleets, and residential customers. CHPT’s market cap as of Jan 25 sits at US$4.1 billion [9].
Li Auto (NASDAQ:LI)
Headquartered in Beijing, Li Auto describes itself as a leader in China’s electric vehicle market [10]. The company is a designer, developer and seller of premium eSUVs. In December 2021, Li Auto delivered over 14,000 EVs, and total deliveries in 2021 increased 177% compared to 2020 [11]. As of Jan 25, 2022, LI’s market cap is US$27 billion [12].
To learn more about True North and Transportation of the Future, please contact Fund Manager, Kai Chen (kai@truenorthimpact.com)
[1] Environmental Protection Agency - Transportation Greenhouse Gas Emissions
[2] Government of Canada -
[3] McKinsey - Mobility’s future: An investment reality check
[4] KPMG - Future of Mobility
[5] Plug Power - Plug Partners with Airbus
[6] Yahoo Finance - PLUG
[7] Livent Corporation
[8] Yahoo Finance - LTHM
[9] Yahoo Finance - CHPT
[10] Li Auto
[11] Forbes - Great Speculations
[12] Yahoo Finance - LI
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