The sustainable boating market is still nascent, thanks to a tough economic climate for companies and technological challenges such as developing the lighter-weight batteries that are needed to run the boats’ more powerful electric motors. But like EVs, electric-powered boats are increasingly ready for open waters. The electric boat market alone is expected to grow to $7.7 billion by 2030, more than doubling the current market.
So how can investors play the growing sustainable boating space? Citi Leisure and Travel Analyst James Hardiman suggests Brunswick (BC).
“They have a regular business between their boats, their engine business, and then their parts and accessories, which are sort of the cash cows, right, and that allows them to invest in future technologies, and ultimately future-proofing their business,” Hardiman says about Brunswick’s investments in sustainable boating technologies, specifically electrification.
Sustainable fuels, like eFuels, are another green alternative poised to play a role in the future boating industry. “There’s about 12 million registered power boats in the United States today that are going to rely on liquid fuels for quite some time,” says Jeff Wasil, Director of Environmental Health and Safety Compliance with the National Marine Manufacturers Association. eFuels work with traditional boating infrastructure while providing reliable power, which makes it a viable option not only for existing recreational boats but also for larger cargo ships.
Check out the full episode of Next, which includes a hands-on with Brunswick’s Mercury Avator line of electric outboard motors.
Video Transcript
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- The future of sustainable boating is rapidly approaching. Electrification is taking center stage, but e-fuels and hydrogen technology are also looking for a piece of the pie as the boating industry goes green.
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- All right, so let's break down where things stand right now. We want to bring in James Hardiman, he's Citi leisure and travel analyst. We also have Jeff Wasil, he's director of Environment Health and Safety Compliance for the National Marine Manufacturers Association.
Great to see both of you. James, let's talk about what this means for investors, for those out there who are very interested and maybe betting on this move here as we talk about the transition for electric boats. What companies should investors keep in mind that are leading the charge?
JAMES HARDIMAN: Sure. So you know, one of the biggest, if not the biggest boat manufacturer in the world, Brunswick Corporation. From the-- from the names that we look at, it's certainly at the forefront of electrification. And you know, I think it's still in its very early stages at this point.
And I think all of the marine companies, the marine stocks are really sort of struggling to get through this macro-- whatever this is, the headwind downturn. But think as we look forward further into the future as we sit here today, there are a number of sort of low voltage power propulsion options.
Those are typically going to be for smaller boats. I think as we look out to the future, there's an opportunity to get electrification into some much larger engines, right? The whole concern about battery, energy density is certainly an issue today.
And so a lot of the propulsion electrification, right? Electric outboard engines are just extremely expensive. We've seen some cool sort of concept vehicles along those lines. But from a consumer perspective, way too expensive today. But the hope is that over the next 5 to 10 years, they'll take up a much bigger chunk of the market.
- Hey, James. With the sort of the reach of a bunch of different types of public boating companies is Brunswick. Is it their size that kind of gives them the advantage? Is it their strategy with autonomous and things like that you like there for them?
JAMES HARDIMAN: For sure. The size helps them. I mean, they have a regular business between their boats. Their engine business, and then their parts and accessories, which are sort of the cash cows, right? And that allows them to invest in future technologies, and ultimately, future proofing their business. And so that's where you're going to see a lot of these investments made in new technologies. And certainly, this electrification strategy.
- So Jeff, looking at beyond recreational, I know you don't necessarily do work with the commercial side. But do you think stuff like hydrogen or e-fuels is good for-- let's say, tanker ships, and big industrial mass power boats that are on the water for extended periods of time.
JEFF WASIL: Yeah, absolutely. I do and because of the energy density issue, boats require a lot of energy to move through the water. It's a factor of roughly 10 compared to a car. So to pack that kind of energy density into batteries, it can be difficult for a lot of the vessels. And like I said, it's not-- certainly, electrification plays its role, but sustainable marine fuels plays a big role for two reasons.
Number one, we talk about there's about 12 million registered power boats in the United States today that are going to rely on liquid fuels for quite some time. And the second thing you talk about is on the commercial side going across oceans with large cargo that requires an enormous amount of energy. So those are really two reasons why we'll see liquid fuels, and specifically sustainable marine fuels play a huge role in our industry moving forward as well.
