Season 3, Post 29: Quiz time
Your one and only question is the following: what do electric vehicles and plant-based burgers have in common?
The answer: they’re both getting better the whole time. As improvements to these products occur, so adoption levels should increase. This intriguing analogy was made to us by the Chief Executive of Meatless Farm, Morten Toft Bech, in a recent conversation your author had with him. We concur. There are miles to run (no pun intended) with regard to both these future trends.
Begin with electric vehicles (or EVs) and it’s great news that there are now over 10m of them on the world’s roads compared to just 17,000 at the start of the century (per the World Economic Forum). But why aren’t there more? Many would contend that it’s only a matter of time, given that most developed world governments have announced plans to phase out the sale of new petrol and diesel vehicles within the next 20 years. However, exactly when consumers will make the transition remains to be seen. A recent US survey found although two-thirds of Americans believe electric vehicles to be good for the environment, a similar percentage are reluctant to buy one owing to concerns over cost. 34% also cited potential lack of reliability as a concern. Another UK study found that the most common reason given for not buying an electric vehicle related to a lack of fast charging points (cited by 37% of respondents), followed by range (35%) and cost (33%).
Looking ahead, we expect both vehicle prices to fall, and infrastructure to improve. By way of progress already achieved, consider that the price of lithium-ion batteries has declined by 97% since 1991. This matters, since the battery is an EV’s largest cost component. As they come down further, some projections suggest that EVs could cost the same as gas-powered cars by 2023. Similarly, the density of charging infrastructure has improved massively (by an estimated seven times in the last five years, per the IEA) and many countries around the world, from China to the Netherlands, have committed to substantial build-out plans. There is much more still to be done, particularly in the US, where charging density is markedly lower than in Europe or Asia.
Turning to plant-based meat alternatives, walk into any decent supermarket and you will see just what an established presence they have become. Almost all fast-food chains will also now likely feature at least one plant-based option. However, most studies suggest that the current value of the plant-based meat market is just 1% of the total meat market. Furthermore, if consumers have a bad experience with a novel product in this category, it may take them 12-18 months before they revisit again, according to the CEO of Meatless. What needs to change? “We have to get closer to meat” is the answer provider by Morten. Innovation means product quality (think both taste and texture) is constantly improving. Larger volumes and scale efficiencies should see the price gap between meat and plant-based options narrow over time. We will be revisiting this topic in much more detail later in the year.
The Future Trends Blog is taking a summer break next week and will return at the start of August.
22 July 2021
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
Alex Gunz, Fund Manager
The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document.
The document is protected by copyright. The use of any trademarks and logos displayed in the document without Heptagon Capital LLP’s prior written consent is strictly prohibited. Information in the document must not be published or redistributed without Heptagon Capital LLP’s prior written consent.
Heptagon Capital LLP, 63 Brook Street, Mayfair, London W1K 4HS
tel +44 20 7070 1800
email [email protected]
Partnership No: OC307355 Registered in England and Wales Authorised & Regulated by the Financial Conduct Authority
Heptagon Capital Limited is licenced to conduct investment services by the Malta Financial Services Authority.
GET THE UPDATES
Sign up to our monthly email newsletter for the latest fund updates, webcasts and insights.