Searching for the sustainable investment opportunities
Tesla’s now legendary 2020 run may be the most eye-catching manifestation of EV enthusiasm, but there are other, perhaps subtler, ways of investing into the space.
Murata is a Japanese maker of electronic components, and the world leader in the manufacture of multi-layer ceramic capacitors (MLCCs) components, which are essential to storing electric charge and controlling current flow in a circuit. Within the automotive space, Murata has a 65% global market share of MLCCs, a dominant position underpinned by the fact that its components are highly reliable and durable and can operate under the sorts of high heat and stress that occur in a vehicle. Murata stress tests its MLCCs at 200°C – more stringent conditions than any of its competitors.
The electronics in an electric vehicle are far more sophisticated than in an ICE vehicle, and the number of MLCCs per vehicle is correspondingly higher. Just within the powertrain itself, it’s estimated that an electric vehicle has 3000 MLCCs, versus closer to 600 in a basic ICE vehicle. Modern automation technology layers on another 1000 MLCCs. It’s estimated that a top of the range Tesla, with its industry leading electronics and automation capabilities, has as many as 20,000 MLCCs.
With many industry experts now calling for electric vehicle penetration to hit 30-40% of new sales by 2030, we are talking about a massively expanded, addressable market for a company like Murata with a dominant global market share and strong competitive moat. In our view, these are the sorts of companies without the name recognition of Tesla, but which are none the less poised to capitalise on and facilitate one of the great sustainable mobility transitions of our lifetime.
We believe another potential way to play the sustainable mobility transition is on the materials side. Umicore is a global materials technology and recycling group. It is a leading supplier of materials that help support clean mobility across the full range of vehicle drive trains:
» It supplies battery cathode materials to full electric vehicles, as well as plug-in hybrids
» It supplies electro-catalyst and battery cathode materials to fuel cells
» It supplies emissions control catalysts to ICE vehicles
Umicore is the market leader in supplying cathode materials used in lithium-ion batteries, and its materials have a direct impact on cost/performance ratio, charging speed, as well as safety. As demand for high-quality, high-performance lithium ion batteries ramps up enormously over the next several decades, we believe Umicore could be a key facilitator through its high-performance materials.