The broad opportunity in the electric vehicle space represents one of the few investment themes almost guaranteed to drive enormous investment returns over the next two decades. For younger investors able to ride out cyclical volatility in high-beta investments, exposure to this space is a must.
But the devil is in the details.
In other words, the only way to lose in a surefire theme like this is to invest in companies that don’t end up being an important part of the ecosystem in the space over time, which can happen for several key reasons.
One company that may offer a path around these pitfalls while still representing enormous upside growth potential in a unique niche with a very strong IP foundation is KULR Technology Group Inc (NYSE:KULR).
Avoiding the Pitfalls
So, if the transition to electric vehicles as the dominant form of auto transportation is a surefire winner as a thematic premise, how can investors with capital in related stocks stand to lose over time?
There are several ways an electric vehicle stock could end being a long-term dud.
For example, a company may get overleveraged and run into fiscal and financial problems and fail to compete for capital on even terms with competitors. Or it might occupy a sub-group niche that carries too many competitors all vying for the same piece of the pie. Or it might never really have been a legitimate player in the first place – a pretender just looking to sell shares through attachment to a hot market theme.
The other problem to avoid is to put all your eggs into a basket that has already discounted massive growth potential for years to come. One might make a case that this could apply to Tesla Inc (NASDAQ:TSLA). TSLA is already trading with a market cap that represents the sum total of every other major auto manufacturer in the world except Toyota Motor Corp (NYSE:TM). In other words, it is already discounting the EV dominance we may see years down the road.
To avoid all of these potential pitfalls, investors should focus on building a diversified exposure footprint in the EV space, with small and mid-sized names involved in vehicle technology, charging infrastructure, battery manufacturing, battery safety, and materials mining. One should also try to avoid names with no established proprietary IP and no recognizable research partnerships to avoid the pretenders.
Within these niches, interesting names include Albemarle Corporation (NYSE:ALB), Plug Power Inc (NASDAQ:PLUG), Blink Charging Co (NASDAQ:BLNK), and Nio Inc – ADR (NYSE:NIO). These grant exposure to batteries, charging, vehicle technology, and materials mining.
But one area that may have the least competition on this list is battery safety technology. And one stock that fits this niche as well as the prescriptions above is KULR Technology Group Inc (NYSE:KULR).
KULR: Light Competition, Heavy Credibility, Massive TAM
For a little background, KULR Technology Group develops, manufactures and licenses next-generation carbon fiber thermal management technologies for batteries and electronic systems.
The gem in this mix is the company’s proprietary technology for preventing heat-induced catastrophic damage in EV batteries. This includes the company’s two core products: its Passive Propagation Resistant (PPR) battery design (cooler and safer battery module or pack) and its Thermal Runaway Shield (TRS) (battery enclosure).
The company also continues to shore up its IP protection, recently being granted its third full patent on its TRS technology in May 2021.
The technology behind these products was developed in partnership with NASA – and you can’t get a more recognizable or respected research partner than that one. This last point is important because it speaks to industry awareness of engineering standards: NASA won’t go into space with anything that hasn’t been proven to the nth degree to be reliable in its functionality.
This credibility factor is supported by more than just its research relationship with NASA. KULR has already built custom heat management technology for two NASA JPL space missions (Mars Perseverance Rover and the mission to put a human back on the Moon’s surface by 2025) and its tech is currently in use on the International Space Station. KULR has also already won over 30 NASA contracts, and has inked deals with the DoT and USAF.
In other words, KULR is building its business around proprietary IP that has the NASA seal of approval and is already being used in space as well as by the US Dept of Transportation and the US Air Force. That represents a huge head-start and gives KULR a major advantage when it comes to gradually building market share as a force in battery safety in electric vehicles.
As a side note, the other major application of this technology is in 5G devices, which is another surefire winner in terms of secular growth opportunities for long-term investment results.
This point is important.
According to the company, its technologies are used in electric vehicles and autonomous driving systems, artificial intelligence and cloud computing, and energy storage and 5G communication technologies. In other words, there is also lateral diversification gained through shares of KULR given its exposure to multiple major secular growth themes.
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