Even though it would be wrong to suggest that the supply of oil around the world is currently at dangerously low levels, there is no doubt that eventually (some predict over the next 50 years) we will see oil supplies around the world fall substantially and a growing need to depend more upon alternative energy sources. As a consequence of this particular development the electric car market is certain to become more popular around the world with many believing that ultimately the electric car market, and other eco-friendly powered vehicles, will smash the monopoly currently held by the petrol/gasoline market. In readiness for this eventual occurrence it seems as though some of the oil rich countries of the world are now looking to invest into the electric car market as a future hedge.
So what exactly is going on?
While the name Tesla Motors continues to grab many of the headlines in the electric car market it is a little-known fact that back in 2009 luxury car manufacturer Daimler acquired a 10% stake in the business. The two car companies have been working together on technology for the future and there are plans for the introduction of Daimler electric Smart cars in the short to medium term. However, it looks as though Tesla Motors has attracted the interest of Middle Eastern investors who are interested in becoming involved in the operation.
Aabar Investments has been confirmed as the buyer of a 4% stake in Tesla Motors from Daimler. This sale of part of Daimler's stake in Tesla appears in some way to be connected with Aabar Investments $2.7 billion investment in Daimler which resulted in the company taking a 9.1% stake. The two largest shareholders in Daimler are now Middle East-based and with the largest stakeholder in Aabar Investments reported to be the International Petroleum Investment Company we are starting to see the emergence of a shift of power.
How will this work in the future?
Even though Daimler is central to this story there is no doubt that Tesla Motors is the jewel in the crown of the electric car market. However, it is not yet clear how the Middle Eastern investors would look to participate in the future of Tesla Motors and indeed whether there is a potential conflict of interest.
The situation could go one of two ways, either the new investors into Tesla and Daimler could use these companies as a means to expand their own investment into the electric car market or they could in some way attempt to stifle the development of vital technology in the sector. While sceptics will suggest that they will look to delay the introduction of electric cars as late as possible these two investment companies have a history of investing for profit and investing for the future.
Funding for the electric car market
While the emergence of such well-known names behind Tesla Motors is very welcome to see, together with potential access to significant investment funds, the company appears to be fully funded at the moment after receiving a $465 million low-interest loan from the US government's Energy Department. Even though ultimately the funding will be used to expand operations in the US, thereby introducing significant job prospects, it should also allow the company to push ahead and drag the rest of the electric car market forward.
It is also worth noting that while Tesla Motors grabbed the headlines with regards to its low-interest loan from the US government there were further investments made with Ford Motor receiving $5.9 billion and Nissan North America a further $1.6 billion to develop and market their own brand of electric vehicles.
Could the United Arab Emirates be the next big electric car market?
The two invest companies which have stakes in Daimler, with Aabar Investments also obtaining a direct stake in Tesla Motors, have strong connections with the United Arab Emirates. This particular part of the world depends heavily upon oiling income and for some time the leading authorities have been looking at ways to diversify away from this dependency in the future. There is a growing feeling that the United Arab Emirates is looking to push itself forward as an eco-friendly electric car friendly market which could in due course attract significant investment.
When you consider that Tesla has only been around for a few years the chance to crack the Middle East market appears to be on the horizon, something which could ultimately transform the company.
Could the electric car still be mothballed?
While there is a suggestion that some of these oil based investment companies could look to delay or ultimately mothball any developments in electric car technology, many people believe the sector has moved too far out of the shadows to return again. It would seem more sensible from a financial viewpoint, as well as a business viewpoint, to push the likes of Tesla Motors and enjoy the fruits of success which look likely to follow.
Even though there will always be scepticism regarding the electric car market it does appear at this moment in time that developments and investment by governments around the world have gone too far for the sector to disappear without trace again. Many believe that the matter came to a head over the last 12 months with the rising price of oil which ultimately impacted upon the worldwide economy and highlighted the global dependence on the black gold.
While the Aabar Investments, Daimler and Tesla Motors triangle offers the potential to build on the excellent start made by Tesla Motors, do not expect this to be the last significant investment in the sector. Even though Tesla is currently leading the way there are many other start-up companies making good progress and attracting the interest of significant investors.
How ironic that it could turn out to be oil money which brings the electric car market to life and ultimately opens up the sector to the mass market. The signs are there, even though there is much work to be done, and many people seem to be in something of a rush to make use of the move towards eco-friendly products and eco-friendly vehicles, before a new trend comes along!