Is This the Key to Investment Success?by Aaron Tyrrell, Editor...

Is This the Key to Investment Success?
by Aaron Tyrrell, Editor Money Morning Australia

In May last year I saw a report on Galaxy Resources [ASX: GXY] ? a lithium miner from Ravensthorpe, WA.
I must say, I was excited. It seemed like we had reached a tipping point ? where people were desperate to cut down pollution and beat the rising oil price...
And, like magic, the share price started to climb.

The New York Times was writing about lithium. People were talking about the Nissan Leaf, Chevy Volt and Toyota Prius...Dan Denning wrote in Money Morning about an article he read that said: ?China?s pursuit of hybrid and electric cars could, ?impose the manufacturing line on the rest of the world,? creating huge demand for lithium dioxide.?

The stage seemed set for auto manufacturing giants to fight for sales in the clean-car wars. And early investors were set to clean up. Galaxy, was sitting on 14.3 million tonnes of lithium ore. It?s the key to the lithium-ion battery ? the power source of electric and hybrid vehicles.
It seemed such a rare chance for investors. It was like being given a time machine to go back and invest in the Ford Motor Company before the invention of the internal-combustion engine. Or the discovery of oil. And ? to make the story even sweeter ? there were whispers of ?Peak Lithium? in the air. As far as I could see, you would?ve been crazy not to back one of the only ?arms dealers? ready to supply the combatants in the clean-car revolution.
And at $1 a share, you were laughing.

Here?s a snippet from the report...
?It?s easy to dismiss electric cars as a fad but the revolution is on its way...
?29 March 2010: China?s BYD Auto?s F3DM hybrid becomes available to the public in the city of Shenzhen, China ? Shenzhen plans to have 24,000 on the road by 2012 and 100,000 by 2015.
?31 March 2010: Toyota Prius remains the best-selling car in Japan and the world?s top-selling hybrid. 27,000 Priuses were sold in February in Japan alone.
?1 April 2010: Nissan begins taking orders for its new electric ?LEAF?. 9,300 were pre-ordered before 31 March.
?Nissan wants to roll out 50,000 electric cars by the end of 2010 and mass produce them globally by 2012.
?The US Department of Energy loaned Ford Motor Co. $5.9 billion to make plants in Illinois, Kentucky, Michigan and Ohio to produce fuel-efficient cars.

?The time to buy your stake in an ?electric-arms? dealer is now ? before the market works out the true value of this opportunity!?
But after reading this article on Zero Hedge this morning, I?m glad this report never saw the light of day.
Because the market still has no clue about how valuable this resource could be.
The manufacturers are to blame. They can?t make a product people want... or one a mass market can afford.
These vehicles cost $40,000+ and at the most travel up to 350 km on a single charge. That means you?d break down between Melbourne and Mildura ? and have a few-hour delay while your battery charged. You might make it along the Great Ocean Road... but only if you drove like an old lady in perfect conditions.
It seems like the market for these vehicles are Green crusaders or Hollywood stars with money to burn. You know the kind, more intent on making a statement or boosting their Green cred than actually driving.
And how many of them can there be?
It just goes to show even great ideas make bad investments, if you get the timing wrong.
I was sure clean cars were ready to go... and profits would flow... but almost a year later, the future is not certain.
That means, before you invest, you should do everything you can to make sure you get the timing right.
Aaron Tyrrell
for Money Morning Australia