No matter whom you’re voting for this November, one thing is clear — $4 gasoline isn’t good for anyone’s pocketbook.

Automakers have been slow to offer up alternatives beyond the concept cars and the only marginally more efficient hybrids they’ve been pushing out of their factories for the last few years. That is, until now.

Slow reactions among car manufacturers have opened up a huge market for those willing to try something different; An alternative that’s already matured enough to put in production. An alternative that can promise zero-emissions and enough oomph to whiz by Priuses on the interstate. That technology is electric.

Now’s the Time to Invest in Electric

Electric cars aren’t a pipe dream for Americans any longer. They’re a feasible technology that you can expect to see gracing the garages of suburbia sometime soon. Don’t think that driving electric is a wild departure — in the early days of the automobile most cars were electric. Now with immeasurable advances in motor and battery technology, electric cars can be built to accommodate the daily commute of more than 75% of Americans.

You can bet that small companies are rushing in to develop the cars of tomorrow. An article in the well-known venture capital blog, Venture Beat, talks about 30 startups planning on releasing at least one consumer electric vehicle. But don’t think that all of these companies are created equal. In fact, there’s one cheap stock that wasn’t even on the list that has the potential to take electric into the mainstream in the next couple of years.

Their car is no slouch. According to the manufacturer, “[Our car] is designed to move more than 75 percent of America’s daily commuters without a single drop of gas. That means for someone who drives less than 40 miles a day, [it] will use zero gasoline and produce zero emissions.”

Don’t worry if you’re planning a road trip, though. The car is also equipped with more conventional equipment (like an engine that can take gas or E85 ethanol) in case you choose to drive more than those 40 miles.

Guess Who?

Would you be shocked if I said the company was General Motors? That’s right, the stalwart carmaker is developing what looks like one of the most promising electric vehicles of tomorrow — the Chevy Volt.

If you’re surprised that I would refer to such a behemoth of American industry as cheap — almost in penny stock territory — don’t be… GM’s seen tough times of late that have pushed its share price down to single digits last week. GM’s set to make some moves with the Volt.

After all, electric cars are nothing new to them.

The GM EV1 was the first modern production electric car, debuting in 1996. But despite the acclaim of its owners, the EV1 program was scrapped; an electric car was a harder sell for a country with gas prices at $1.36 per gallon. Not so anymore.

Buy or Bye Bye?

But put your broker on hold…not so fast — GM’s got more than one blemish that makes it worth taking a closer look. For starters, the company has a fairly tumultuous existence ever since the Japanese entered the auto scene in the 1980s. More recently, its major shortcomings include a mind-boggling $15.5 billion loss in the second quarter of 2008 (that’s two times the stock’s market cap). Now with an economy in trouble, GM looks to be the next in line for the bailout train.

GM’s stock is one to watch closely in the next 12 months. If GM continues to devote resources to developing and marketing electric cars, there’s no telling where we could see this stock in the near future.

Cheers,
Jonas Elmerraji
September 23, 2008

Jonas Elmerraji

A big-four public accounting alum, Jonas Elmerraji brings his readers extensive expertise in small-cap stocks and broad market moves. Elmerraji’s interest in the market started with an investing course in elementary school – today he holds a degree in financial economics from UMBC and specializes in blending fundamental and technical analysis. Elmerraji has contributed to Forbes, TheStreet.com, and Investors Business Daily among others. He is managing editor of the Penny Momentum Trader, and a co-editor of Penny Stock Fortunes.

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