#chargingstation

Buhahahahaha

In 1999, CM was told by the pro-EV lobby that electric cars would be 10% or the market by 2010. In 2019 EVs are struggling to nudge 1.3%. If EV’s have managed to achieve much more than 10-12% by 2035 it will be a miracle.

10 reasons it will be highly unlikely:

1) Australia sold just over 1.15m cars in 2018. In 2008, SUVs comprised 19% of total sales. Today 43%. So much for the unbridled panic about catastrophic climate change if consumption patterns are a guide.

2) Australian fuel excise generates 5% of total tax revenue. It is forecast to grow from $19bn today to $24bn by 2021. If government plans to subsidize then it’ll likely to add to the deficit, especially if it lobs $5,000 per car subsidies on 577,000 cars (50% of 2018 unit sales in Australia).

CM has always argued that governments will eventually realize that moving to full EV policy will mean losing juicy ‘fuel excise’. Point 16 on page 19 for those interested.

Cash strapped Illinois has proposed the introduction of a $1,000 annual registration fee (up from $17.50) to account for the fact EVs don’t pay such fuel taxes. Note Illinois has the lowest investment grade among any other American state and has to allocate 40% of its budget just to pay outstanding bills. It is also home to one of the largest state pension unfunded deficits per capita in the country.

3) cash for clunkers? If the idea is to phase out fossil fueled powered cars, surely the resale/trade in values will plummet to such a degree that trading it on a new EV makes no sense at all. False economy trade where fossil fuel owners will hold onto existing cars for longer.

4) Global EV production is 2.1m units. Looking at existing production plans by 2030, it is likely to be around 12mn tops on a conservative basis. Australia would need want 5% of world EV supply when were only 1.2% of global car sales. Many auto makers are committed to selling 50% of EV capacity into China. So Shorten will be fighting for the remaining pie. No car makers will export 10% of all EV production to Australia without substantial incentives to do so.

Don’t forget Alexandria Ocasio-Cortez also intends to get every fossil fueled powered car off the road in a decade. The US has 270 million registered vehicles, the overwhelming majority being petrol powered. The US sells 16-17mn cars a year (sadly slowing). Therefore in the US, 16 years would be required to achieve that target.

5) Ethics of EVs. To save the planet, the majority of cobalt to go into making the batteries comes from African mines which use child slave laborers. There is a moral scruple to keep a virtue signaling activist awake at night!

Not to worry, Glencore has just announced last week it is closing its cobalt capacity in DR Congo which will flip the market from surplus to deficit (at 1.2% global market share). Oops.

6) EV makers aren’t happy. In Europe there are over 200 cities with EV programs but none are alike. In the quest to outdo each other on the virtue signaling front, car makers are struggling to meet such diverse requirements meaning roll outs will be slow because there is no movement to standardize.

7) EV suppliers aren’t convinced. Because of the above, many EV suppliers are reluctant to go too hard in committing to new capacity because global car markets are slowing in China, US, Europe and Australia. High fixed cost businesses hate slowdowns. Writing down the existing capacity would be punitive to say the least. New capacity takes a minimum of 2 years to come on line from conception.

8) The grid! In the UK, National Grid stated that to hit the UK targets for EVs by 2030, an entirely new 8GW nuclear plant would be required to meet the demands of EV charging. Australia can barely meet its energy needs with the current policies and doubling down on the same failed renewables strategy that has already proved to fall well short of current demand ex any EVs added to the grid.

9) in 1999 automotive experts hailed that EVs would make up 10% of all vehicle sales by 2010. In 2019 EVs make up around 2.5%. So 9 extra years and 75% below the target. The capacity isn’t there much less consumers aren’t fully convinced as range anxiety is a big problem.

10) charging infrastructure is woefully inadequate. Await another taxpayer dollar waste-fest. Think NBN Mark II on rolling EV chargers out nationwide. The question then becomes one of fast charger units which cost 5x more than slower systems. If the base-load power capacity is already at breaking point across many states (Vic & SA the worst) throwing more EVs onto a grid will compound the problem and drive prices up and potentially force rationing although people look to Norway.

Norway is a poor example to benchmark against. It is 5% of our land mass, 1/5th our population and new car sales around 12% of Australia. According to BITRE, Australia has 877,561km of road network which is 9x larger than Norway.

Norway has around 8,000 chargers countrywide. Installation of fast chargers runs around A$60,000 per unit on top of the $100,000 preparation of each station for the high load 480V transformer setup to cope with the increased loads.

Norway state enterprise, Enova, said it would install fast chargers every 50km of 7,500km worth of main road/highway.

Australia has 234,820km of highways/main roads. Fast chargers at every 50km like the Norwegians would require a minimum of 4,700 charging stations across Australia. Norway commits to a minimum of 2 fast chargers and 2 standard chargers per station.

The problem is our plan for 570,000 cars per annum is 10x the number of EVs sold in Norway, requiring 10x the infrastructure.

While it is safe to assume that Norway’s stock of electric cars grows, our cumulative sales on achieving plan would require far greater numbers. So let’s do the maths (note this doesn’t take into account the infrastructure issues of rural areas):

14,700 stations x $100,000 per station to = $1,470,000,000

4,700 stations x 20 fast chargers @ A$60,000 = $5,640,000,000 (rural)

4,700 stations x 20 slow chargers @ A$9,000 = $846,000,000 (rural)

10,000 stations x 5 fast chargers @ A$60,000 = $3,000,000,000 (urban)

570,000 home charging stations @ $5,500 per set = $3,135,000,000 (this is just for 2035)

Grand Total: A$14,091,000,000

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)

Mercedes – “grant us tech neutrality“

As CM has argued for over two years – let the industry have full technological freedom (point 13, page 15) to hit government vehicle emissions targets. Mercedes Benz is requesting the same as they have no plans to phase out diesel or petrol by 2039 because “no one knows which drivetrain mix will best serve our customers in 20 years”. The free market is a funny thing – it works well.

How many renewables companies were sent to the wall thanks to generous subsidies that brought overproduction to a market the government couldn’t afford to sustain?

If the Green New Deal bans air travel…

…CM looks forward to catching a train to Hawaii.

Alexandria Ocasio-Cortez also intends to get every fossil fueled powered car off the road in a decade. The US has 270 million registered vehicles, the overwhelming majority being petrol powered. The US sells 16-17mn cars a year (sadly slowing). Therefore in the US, 16 years would be required to achieve that target. That’s before taking into account auto maker EV capacity.

Global EV sales were 2.1mn last year. So her plan would take 128 years. That’s unfair as capacity would grow. Let’s assume auto makers could conceivably increase capacity by 2m every 2 years (plants take 2 years to build and those poor Congolese child slave laborers will be run off their feet digging for cobalt to go in the batteries) then conceivably 30mn.cumulative EV units could be built over 10 years. That’s 11% of her goal. Let’s not forget the fossil fuels required to power auto factories to satiate this plan not to mention the steel that goes into the bodies.

Global auto production is c.80mn units. That assumes that the world’s auto makers will snub the ROW to meet her demands.

Socialist mathematics is never quite up to the task. Is Ocasio-Cortez was a true patriot she’d demand GM, Ford & Tesla be the sole products that consumers are allowed to buy to support domestic jobs. They’ll need them because she’ll be causing the lay offs of a shed load of Boeing line workers if planes are banned.

When she finally gets into the Oval Office we should look forward to her catching Ground Force One from 1600 Pennsylvania Avenue Station to travel the country and tell Americans how much better things have become.