Electric car and crude oil
Bloomberg reported that Tesla (TSLA) and Chevy could start manufacturing an electric car with a range of 200 miles. The new electric vehicle would be priced near $30,000. Other car manufacturers like Ford (F), BMW, Nissan, and Volkswagon (VLKAY) are investing billions in this technology. The revolution to maximize the use of renewable energy isn’t limited to cars. Solar technology is also attracting billions of dollars in investments. Transportation accounts for a significant amount of crude oil’s (USO) demand. The electric car will diminish the demand for crude oil. OPEC predicted that the electric car will account for 1% of total car sales worldwide. The above development will surely drive the number to a higher trajectory.
Solar energy still on its way
The Paris climate agreement aimed to minimize the use of non-renewable energy. It’s paving the way for new technological advancement in this field. Countries such as the US, China (FXI), and India (INDY) have abundant sunshine. They can use solar energy to meet domestic demands. Investors must note that these countries are important crude oil consumers. They represent a sizable part of the world’s population.
Solar energy power, stored in lithium batteries, can fuel electric cars. The above graph shows the performance of the Guggenheim Solar ETF (TAN) compared to crude oil.
In the next part, we’ll discuss Russia’s diplomacy in Asia.