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Sustainable investing: Subsidized bubble or long-term opportunity?

Sustainability is on everyone's lips, including when it comes to investments. But is the hype surrounding green technologies justified? Or is it a subsidized bubble that could burst? We spoke with financial expert Zsolt Janos about the opportunities and risks of sustainable investments.

The political situation and its effects

The broader political climate, particularly in the US, significantly influences the evaluation of sustainability investments. Zsolt Janos emphasizes: "Investments in these areas are certainly being reassessed now. It would have been sensible to ask earlier how viable a business model is without this massive government support."

Many sectors have only been able to establish their market position due to subsidies and political pressure. Janos cites the subsidies for electric cars in Germany as an example. After the sudden discontinuation of these subsidies at the beginning of 2024, demand collapsed dramatically. This illustrates how vulnerable some green technologies are to political decisions.

Tesla and the USA: An ambivalent relationship

The relationship between Elon Musk and Donald Trump is being closely watched. While Trump opposes electric vehicles, he is planning to relax regulations regarding automated mobility, which could benefit Musk. Janos notes that Musk's public appearances are concerning and could have a negative impact on his marketing, as is already evident in the declining sales figures.

Electromobility: Cost structure and reality

Electric cars are often criticized for their high prices. Janos explains that about two-thirds of registered electric cars are purchased by companies and made available to employees. Only one-third are privately purchased. The reason: subsidies and tax advantages. "For example, there are no tax benefits if you have a company car and also use it privately." If these advantages were to disappear, it would have a serious impact on demand.

Another point: Electric cars have fewer components than combustion engine vehicles, but are often just as expensive or more so. This is due to the business models of the automotive industry, which are geared towards maintaining high margins for as long as possible.

Investment strategy: Core-satellite approach

Should investors reduce their investments in green technologies? Janos advises against it. Core-satellite strategy. A core investment forms the basis, supplemented by satellite investments in niche areas.

• Core investment: Stable, broadly diversified investments in established companies (blue chips) that generate profits and pay dividends.
• Satellite investments: These are areas with potential returns, but also higher risk. Here, capital sums are more strongly influenced by politics and media narratives.

Depending on risk tolerance, the ratio between core and satellite investments should be adjusted. Conservative investors focus more on core investments, while more dynamic investors can make more satellite investments.

ESG and other relevant factors: What investors should pay attention to

Janos recommends critically examining buzzwords like ESG or sustainability. The crucial question is: Is the business model itself sustainable? Are products being produced that would be in demand even without subsidies? Subsidies ultimately mean that the next generation will have to foot the bill.

Products that exist solely due to government subsidies are not sustainable. Investors should ask themselves this critical question, as political frameworks can change rapidly.

Fazit: Chancen nutzen, Risiken minimieren

To benefit from sustainable technologies without taking unnecessary risks, investors must critically evaluate each investment: Is it a core or a satellite investment? In the core sector, the likelihood of the trend prevailing in the long term is higher. In the satellite sector, one must be prepared for changes in the market or political situation.

The most important question remains: How viable are the business models without cross-subsidies?

Disclaimer: This article is for informational purposes only and does not constitute investment advice.

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