Filed Under: ,
Tickers in this Article: tm, f, ener, hmc, sanyy, cvx, ge, gm
If you're old enough to remember, there's a moment near the end of the classic 1985 film "Back To The Future" when the eccentric character of Doc Brown zooms out of nowhere in his amazing time-traveling De Lorean and proceeds to quickly re-fuel it by cramming a handful of egg shells, a banana peel and other bits of assorted trash into the car's mysterious converter unit before whisking the hapless Marty McFly (played by Michael J. Fox) off though time to the amazing future world of 2015, where kids zoomed around on gravity defying hover-boards.

If Marty and Doc Brown had stopped a few years shy of their time travel target year, and landed in the 2006 of today, they might have found themselves scratching their heads wondering why we're still traveling around in cars powered by hopelessly out-dated internal combustion engines, and paying $3 a gallon for the privilege. Come to think of it, that's a question that every driver in America might want to ask.

If there's anything that stands a chance of coming close to the sci-fi visions of a future without the need of gasoline, the prime candidate would have to be the hydrogen fuel cell.

Long touted as the perfect long-term solution for powering automobiles by assortment of research grant academics, think tank eco-visionaries and proto-type building venture entrepreneurs, the hydrogen fuel cell offers the promise of zero emissions and the possibility of ending America's reliance on uncertain foreign sources of oil.

Unfortunately, the day when we'll all be able to run our cars on hydrogen won't be happening any time soon. At a recent European conference, representatives from the world's major automakers conceded that the internal combustion engine will still be with us for a quite a few decades yet – albeit in more efficient, less polluting forms and increasingly paired to electric batteries in the popular hybrid configuration.

Industry players are predicting global sales of hybrids to hit between 2 and 2.4 million units a year by the 2012-2015 time-frame, with market leader Toyota (TM) accounting for at least 1 million of those units. Fuel cell-powered cars are not expected to hit the showrooms until 2020 and should still take another ten years to capture a just 10% share of the auto market.

So, if fuel cells for cars are not quite ready for prime time, are there any ways to cash in on the projected growth in hybrids? While the obvious answer is to buy shares in the auto companies that have taken the lead with this technology, such as Toyota or Ford (F), a less well known potential beneficiary of this trend is Energy Conversion Devices (ENER).

Energy Conversion Devices operates a joint venture-based business model that makes sense as a prudent approach to spreading the risk when developing emerging technologies. With investments in light weight solar panels, hydrogen fuel storage systems, advanced optical memory, and high capacity nickel metal hydride (NiMH) batteries, it's clear that the company is not short on ideas. Joint venture deals in place with the likes of Honda (HMC), Sanyo (SANYY), Chevron (CVX) and General Electric (GE) also shows that some major global heavy weights like the company's ideas enough that they are prepared to bet money on them.

While most of these activities can be still classed as early-stage and are only pulling in modest amounts of license fee-based revenues at this point, it's in batteries that the company has its best hope of realizing a real business breakthrough. Though a 50/50 joint venture with Chevron, the company manufactures NiMH batteries – currently the most prevalent batteries used in hybrid vehicles.

The company scored a major coup last year when, through a court ruling, it won the right to charge Sanyo and Panasonic royalty payments for their use of NiMH battery technology. If you own a Ford Escape or Honda Accord hybrid, you'll note the Sanyo-supplied batteries under the hood. More recently, a direct deal was struck between the company's joint venture and General Motors (GM) to directly supply NiMH battery systems to the new Saturn Vue Green Line SUV, which will hit the showrooms this summer.

Before you call your broker on this one, be advised that the company is not expected to show a profit either this fiscal year, or the next – that's just the way it goes for emerging tech plays. Still, the shares are off almost 35% from their peak in mid-May and this may be a good entry point for the patient investor who doesn't mind a bit of risk in their portfolio.

If you do wind up being a shareholder, you might even be convinced to go all the way and take the family out in your new Saturn hybrid SUV to check out a nice summer movie like Al Gore's eco-lecture on the perils of global warming; "An Inconvenient Truth". Heck, you may even feel less guilty while you're watching it.

comments powered by Disqus

Trading Center