The electric car market has been thriving for years now. The UK government has been consistently subsidising electrically powered vehicles (whether full electric powertrains or hybrid vehicles) and have been encouraging the growth of the market.
However, a couple of pieces of recent news could have a significant effect on both the market for electric vehicles in the UK and the utility market.
National Grid Concerns
Firstly, the National Grid has announced that it may struggle to power all of the electric cars that are expected to be found on Britain’s roads in the next few years.
This is likely to have a significant impact on the market for power providers, and it’s likely to be a very positive outcome going forwards.
The implication behind the announcement is that the country’s power infrastructure needs investment, and utility companies (such as the National Grid PLC, SSE PLC and United Utilities Group PLC) will see a significant proportion of this investment.
Of course, investment means that the potential for the company will be much higher, and the energy use that electric vehicles will bring utility companies could be an incredible investment.
Another piece of news set to impact both of these markets is the shutdown of Honda’s plant in Swindon.
Whilst this won’t have as much of a fundamental impact on the utility side of the markets, any investment in Honda might see something of a dip in form.
Undoubtedly they will expect to move this production capacity elsewhere, but it doesn’t initially spell good fortune for Honda in the UK, and it may be something of a warning shot for the rest of the car market in the UK.
Ultimately, this is mixed news that has a simple short term solution. Rather than panic-selling your stocks in car companies, you have to understand that it is effectively a forecast of the success of electric cars in years to come.
In order to properly weather the potential storm in the car industry, you might want to invest in utilities whilst they receive investment in the medium term, returning to car companies when you believe that any uncertainty is clear.