EVs

Irish inhaling magic clovers

The Irish government is looking to ban new petrol and diesel car sales from 2030 in its ‘Climate Action Plan‘. One would imagine many car dealers will go out of business because the product offerings will be so slim and global supply won’t be there. Sadly the document contradicts itself too. Not to mention that Ireland’s contribution to global CO2 is only 0.000012%.

On page 33, the report drills holes in itself when it states,

Solar PV, some electrification of buses, and biofuel blending are identified in 2030 the NDP scenario but are not showing as cost- effective in MACC. Despite MACC analysis these technologies may remain in plan given other factors (e.g., exchequer cost, ease of implementation, need for public sector leadership)

So it is a poorly thought out plan to begin with such caveats.

For transport the manifesto denotes,

Accelerate the take up of EV cars and vans so that we reach 100% of all new cars and vans are EVs by 2030. This will enable achieving our target of 950,000 EVs on the road by 2030. This means approximately one third of all vehicles sold during the decade will be Battery Electric Vehicle (BEV) or Plug-in Hybrid Electric Vehicle (PHEV)

Hang on a minute. In its own document on page 24 it hopes for at least 500,000 EVs on the road. Thats almost half what is mentioned in the exec summary! Which is it? Hoping no one reads this rubbish?

Make growth less transport intensive through better planning, remote and home-working and modal shift to public transport.

That will work. Just tell companies to keep people working from home. Why not get people to grow their own vegetables so they don’t need to drive to the supermarket?

Increase the renewable biofuel content of motor fuels

On page 33 under volumes, it mentions nothing. Just the E10 and B12 biofuel mix plans. Maybe Germany holds clues.

The German authorities went big for bio-fuels in 2008 forcing gas stands to install E-10 pumps to cut CO2. However as many as 3 million cars at the time weren’t equipped to run on it and as a result consumers abandoned it leaving many gas stands with shortages of the petrol and gluts of E-10 which left the petrol companies liable to huge fines (around $630mn) for not hitting government targets.

Claude Termes, a member of European Parliament from the Green Party in Luxembourg said in 2008 that “legally mandated biofuels were a dead end…the sooner It disappears, the better…my preference is zero…policymakers cannot close their eyes in front of the facts. The European Parliament is increasingly skeptical of biofuels.” Even ADAC told German drivers to avoid using E10 when traveling in other parts of continental Europe.

• Set targets for the conversion of public transport fleets to zero carbon alternatives

It is unlikely that Public transport is a swing factor. The hope is to have 1,250 electric buses by 2030. Even then it has concerns it may not hit the plan.

It is scary to think countries are willing to submit to the altar of this green madness. The word “public leadership” should cause people to run for the hills. For such a minuscule impact on the climate, Ireland is about to kill its competitiveness to protect against what? 55% renewable target with a huge uplift in EVs and an extra 600,000 households using electric heating, 400,000

The most interesting thing is that in the 2019 Irish budget, the spending ceiling for “Communication, Climate Action and Environment Group” is €391m out of total expenditures of €59.25bn or 0.6% of its budget. Note this ministry will max out at €391m for 2020 and 2021. How much will be achieved on the Climate Action Plan if resources aren’t going to plug the infrastructure gaps?

As much as the “woke” nature of the plan here is betting it misses by a country mile on dates and achievements. In the history of government led climate initiatives, failures far outweigh successes. Don’t forget Ireland gets 5% of tax revenues from fuel excise. So once consumers save the planet they can expect an EV tax to slug them instead.

Bjorn Lomborg points to cold facts of global warming

Bjorn Lomborg has written a powerful piece in the Weekend Australian which looks at the “cost” of climate emergency driven policy. It makes a complete mockery of the people who tell us we must save the planet with their prescriptions. Although CM has made the assertion many times that politicians make promises which are so unaffordable for so little return that it makes no economic sense. The hypocrisy of signatories is also telling.

Some of the choice quotes,

After New Zealand made its 2050 zero emissions promise, the government commissioned a report on the costs. This found that achieving this goal in the most cost-effective manner (which strains credulity because policy seldom if ever manages to be cost efficient) would cost more than last year’s entire national budget on social security, welfare, health, education, police, courts, defence, environment and every other part of government combined. Each and every year.

To replace a 1ha gas-fired power plant, society needs 73ha of solar panels, 239ha of onshore wind turbines or an unbelievable 6000ha of biomass...We often hear that wind and solar energy are cheaper than fossil fuels, but at best that is true only when the wind is blowing or the sun is shining. It is deeply misleading to compare the energy cost of wind or solar to fossil fuels only when it is windy and sunny

Most people think renewables are overwhelmingly made up of solar and wind. Nothing could be further from the truth. Solar and wind contributed only 2.4 per cent of the EU total energy demand in 2017, according to the latest numbers from the International Energy Agency. Another 1.7 per cent came from hydro and 0.4 per cent from geothermal energy…In comparison, 10 per cent — more than two-thirds of all the ­renewable energy in the EU — comes from the world’s oldest ­energy source: [burning] wood.

Today, fewer than 0.3 per cent of all cars are electric, and even if we could reach 200 million electric cars in 2040, the IEA estimates this would ­reduce emissions by less than 1 per cent. That is why, in the face of years of failure, politicians have continued doing one thing: making ever bigger promises.

The promises made in Rio de Janeiro in 1992 and in the Kyoto Treaty in 1997 fell apart. A new study of the promises made under the Paris Agreement finds that of almost 200 signatories, only 17 countries — the likes of Samoa and Algeria — are living up to them, and these are succeeding mostly because they promised so little. But even if every country did everything promised in the Paris Agreement, the emission cuts by 2030 would add up to only 1 per cent of what would be needed to keep temperature rises under 2C.

Fail

Interesting article on Bloomberg discussing the obvious outcome of Sweden’s plan to get more EVs on the grid. As most hair-brained climate alarmist governments have a desire to outdo each other on the virtue signaling scale it often leads to poorly thought out decisions which end up costing tax payers a fortune.

Bloomberg’s Jesper Starn wrote,

Demand for electricity in Stockholm and other cities is outgrowing capacity in local grids, forcing new charging networks to compete with other projects from housing to subway lines to get hooked up.”

We’ve been here so many times before. Take Germany in bio-fuels.

The German authorities went big for bio-fuels in 2008 forcing gas stands to install E-10 pumps to cut CO2. However as many as 3 million cars at the time weren’t equipped to run on it and as a result consumers abandoned it leaving many gas stands with shortages of the petrol and gluts of E-10 which left the petrol companies liable to huge fines (around $630mn) for not hitting government targets.

Claude Termes, a member of European Parliament from the Green Party in Luxembourg said in 2008 that “legally mandated biofuels were a dead end…the sooner It disappears, the better…my preference is zero…policymakers cannot close their eyes in front of the facts. The European Parliament is increasingly skeptical of biofuels.” Even ADAC told German drivers to avoid using E10 when traveling in other parts of continental Europe.

Spain perhaps provides the strongest evidence of poorly planned subsidy execution. In 2004 the Spanish government wanted to get 1GW of solar under its feed in tariff over 4 years. Instead it got 4GW in 1 year meaning its budget exploded 16x and it had €120bn in tax liabilities over the course of the promise. In the end, the government reneged on the promises it made because it couldn’t afford it. So much for the assurance of government run programs.

Not to mention the overproduction that has often been created by subsidies. When the subsidies are withdrawn, we see fierce cost cutting which buries prices and sends many producers to the wall which was the experience of the last cycle. Take a look at India’s once largest wind power producer Suzlon. At the peak $425 a share. Now $4.35. 90% up in smoke.

To think Bill Shorten wanted 50% EVs by 2030. Clearly Australian voters disagreed.

If governments can’t sustainably raise living wages without regulation, cheaper energy prices act like a tax cut so sticking with coal, gas and nuclear make far more sense than the life experience of sharp price increases thanks to green madness.

Here is betting Sweden doubles down on green madness to remain “woke”

Tesla is good at digging holes

Tesla shares have rebounded from the $180s so CEO Elon Musk has come out of the woodwork suggesting mining might be on the agenda to lock in its future battery supply.

Tesla might be adept at digging financial holes for itself but we shouldn’t think that will turn it into an efficient miner.

Just typical Musk banter.

Woke Vic Police should have called the LAPD before selecting EVs

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Victoria Police is renowned for its commitment to inclusion and diversity. Who could forget the push for segregated sessions in the recruitment drive? Stands to reason the coppers have introduced the Tesla Model X to the fleet to show “green” credentials. The point of a police car is instant dispatch when required to attend to a crisis situation, from thwarting a terrorist in the Melbourne CBD or rushing to a domestic dispute. It won’t look good when the police have to wait for the fast charger at the base to provide enough juice to make it the scene of the crime. Now that Hazelwood coal-fired power plant has been closed, good luck waiting on renewable energy to charge these cars for practical police use. Don’t be surprised when the shortcomings force a rethink.

What will they tell Victorians? “Sorry, in our quest to save the planet you’ll have to wait another 3 hours before we can attend to your domestic violence dispute. Bear with us. The car is on the charger!

In 2016, the LAPD bought $10m worth of BMW i3s to show its commitment to climate abatement. Sadly, the cars went largely unused as they were unsuited for police work.

CBS reported,

LAPD Deputy Chief Jorge Villegas said of the purchase, Money well worth itIt’s all a part of saving the Earth, going green … quite frankly, to try and save money for the community and the taxpayers.”

But sources say some personnel are reluctant to use the electric cars because they can only go 80-100 miles on a charge. And the mileage logs we obtained seem to back that up.

From April 2016 when the project started through August 2017, we found most of the electric cars have only been used for a few thousand miles…And a handful are sitting in the garage with only a few hundred on them.

Like this one in service since May 27, 2016, with just 400 miles on it!

That’s an average use of 6 miles a week!

With the monthly lease payment of a little more than $418, this one costs taxpayers over $15 a mile to use!… It just doesn’t make any sense!”

CM one posted this question to someone from the NSW St Johns Ambulance with respect to discussions about EV ambulances. He said unequivocally,

We have Webasto heaters in our cars in the colder areas. Running off the diesel they can operate 24/7 if needed. If we don’t have them some of our equipment doesn’t work like our tympanic thermometers, the blood glucose reader and then there is the problem of having cold fluids in the car. This is a problem if we are giving these IV because we can make a patient hypothermic if it’s cold. Then there’s just the general environment inside the cab. It needs to be warm in winter.

That is the point. Emergency services need to be able to operate on call. 5 minutes to fill up with gasoline or diesel means that efficient utilisation and dispatch is guaranteed for at least 500km+.

If end users have to weigh having their lives saved or rescue the planet, it is a no brainer which they will choose. We already know that Tesla P100Ds have done 167,000km in CO2 before they’ve left the factory. “To Protect after Charging” should be emblazoned on the doors.

Tesla: Catching a falling knife

Tesla is breaking down. So many discipled pundits are looking at the company stock falling into “good value” territory. Good value is always relative. Sadly buying Tesla now is catching a falling knife.

It reminds CM of a time when Fuji Film dominated flat screen TV TAC films. It held 40% market share. Yet the market was shrinking and new competitor products were able to combine two films in one, dispensing with the need for TAC altogether. Yet analysts would crow at 40%. CM said 40% of soon to be nothing will be nothing.

Tesla’s valuation at $180 is ridiculously high compared to other auto manufacturers. Tesla still misses the two most important ingredients to profitable car companies – production efficiency and distribution. It has neither the first and has chopped back on the last. Digital dealerships are just not feasible especially given the nightmare quality or Tesla cars.

Big money is dumping. T Rowe Price has exited. fidelity following suit. Musk’s musings now carry little weight. Promises of stupendous Q2 volumes and making cars with ridiculously short ranges for Canadians to get the benefit of subsidies smacks of desperation.

This company, if it could, is running on the smell of an oily rag. The inability to rally back up above $200 with any conviction is showing the rattled confidence of existing holders. It’s like finding out you’ve been given the employee of the month award from your boss and you’re the only staff member. It carries no significance.

CM holds to the $28 fair value price from the 2017 report. That is CM’s optimistic scenario. So much for funding secured at $420.

Ding dong the switch is dead

Morgan Stanley has finally lowered its bearish scenario on Tesla from $97 to $10. CM wrote in October 2017 that the shares based on production of 500,000 vehicles was worth no more than $28 (refer to report page 5). That was based on rosy scenarios. Sadly CM thinks Tesla will be bought for a song by the Chinese. Maybe $4.20 a share instead of $420 “funding secured” levels.

The stock breached $200 yesterday for the first time since late 2016.

Morgan Stanley analyst, Adam Jonas, has still kept its base case scenario at $230 per share. His bull case is $391.

Where is the conviction? To drop a bear case target by 90% must surely mean the base case is far lower than presently assumed.

Jonas must assume the bear case is actually the base case. Sell side brokers love to hide behind scenario analysis to cop out having to get off the fence. His compliance department probably prevents him from realizing $10 is his true heart.

Tesla was always playing in a market that it had no prior experience. It is not to say the products didn’t have promise. The problem was the execution. Too much senior management turnover, missed targets, poor quality and too many Tweets from Musk.

The amount of bad press arising from a lack of service centers has driven customers to moan on social media at its amateur approach. The fragile dreams of being an early adopter are being shattered. Cash burn remains high and deliveries remain low. Some pundits think Tesla orders are under real pressure in 2Q 2019.

The recent all share deal with Maxwell Technologies has seen those holders -20% since the transaction a few weeks ago. CM argued how a company with such revolutionary technology could sell itself for all shares in a debt-ridden loss making like Tesla? If the technology was of real value PE funds would have snapped it up or at the very least made a bid in cash. That none was made speaks volumes about what was bought.

All of the arguments hold true in the above link, “Tesla – 30 reasons why Tesla will be a bug on a windshield

Tesla below $200 after a successful cap raise is not a good sign. It’s the faithful slowly tipping out. Await another imaginary Musk-inspired growth engine to be announced shortly to try prop up the stock price. Yet the momentum will continue to sink. The market is losing confidence in Musk. The 1Q results were diabolically bad.

Major holder T Rowe Price has stampeded out the door. The stock is too risky. Musk is a brilliant salesman but he has bitten off more than he can chew.

CM always thought that Toyota selling its Tesla stake was a major sign. Acknowledging that under the hood the company possessed no technology that Toyota didn’t already own.

Watch the free fall. The Tesla stock will be below $100 by the year end.

(CM does not hold Tesla stock)