#EV

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

Uh Oh! Tesla’s next big problem

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Glencore reported on p33 of its half-yearly results that it is suspending its cobalt mining in the DR Congo. It noted that, “Mutanda’s economic viability has deteriorated since the update provided at the 2018 Results presentation in February 2019

Note that Mutanda provided 25kt of cobalt, a vital ingredient in making batteries for electric vehicles (EV). In Darton Commodities ‘2018-2019 Cobalt Market Review,’ it forecast total global cobalt supply of 140kt in 2020 vs. total global demand of 132kt. Knocking out Mutanda will push the market into 19kt deficit.

For a company like Tesla that is trying to ramp volumes at lower/discounted prices, higher raw input prices will only make life harder in making sustainable profits.

How lucky we are that Bill Shorten never got his 50% EV sales by 2030 plan into effect.

XR excels in its own stupidity again

Extinction Rebellion (XR) truly take the cake in terms of not understanding their cause very well. Six XR activists were arrested for blocking one of London’s biggest concrete suppliers.

Did it occur to these Mensa members that massive slabs of concrete are required to form the base to anchor wind turbines to? Concrete is also used to ground solar panels. Perhaps more coking coal and bauxite to make steel or vast amounts of toxic materials that go to make solar panels and batteries should be encouraged?

One protestor said,

We have to pause and recognise the harm it is causing both locally and globally; locally with the dust in the air our children breathe and globally with the inextricable CO2 emissions involved which are destroying the world.”

Yet again proves this is just a religion where the disciples believe any old tosh that is thrown their way. No attempt to see reason. Just block traffic and cause more CO2 to be emitted. Well done on all counts. The laziness of the cause is exposed on a daily basis.

These people should be forced to pay damages to those they disrupt. Why should the concrete company or builder be forced to bear externalities created by these people?

Noosa Shire declares climate emergency

Noosa Shire has declared a climate emergency! So frightened are residents who stand to have their houses submerge below the waves that this house is a whisker from a fire sale at $5.2m! Many others just like it!

Has the $112m council got that little to do that it must indulge in this stupidity?

Contained within the 2017/18 Annual Report there is a section that looks at ‘Excellence as a Council’

It reports,

Top performing services were Waste Management, Customer Service, Disaster Management, Community Safety, Management and Supervisory Officers, Quality of Elected Council and Financial Management; and

Areas for improvement included Parking, Facilities, Economic Development/Local Employment, Road Maintenance, responding to the Community, Road Construction, and Providing Leadership and Advocacy.”

It doesn’t seem that a climate emergency is a concern of local residents.

So scared are local and future residents that the council approved 98.5% of the 503 development applications put forward. Hardly the actions of people fleeing for their lives.

The council reports 1,518,164 general waste bins 740,725 recycling bins 360,312 garden bins were collected with 131,000 visits to the tip.

Is Noosa Council paranoid of being thought of as a pariah if it doesn’t join the group think brigade of 650+ cities virtue signaling?

Perhaps we shouldn’t be too critical and celebrate Noosa Council’s climate efforts with the “one” EV charging station at Cooroy in 2018! Maybe it can champion the installation of 2 charging stations in 2019. A 100% uplift in climate commitments!

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.

High Net Worth Flipocrites

True colours shine brightly in Warringah. There is no questioning the resounding victory of Independent Zali Steggall over climate dinosaur Tony Abbott. She told us the people of Warringah wanted action on climate change. Let’s see if she can prosecute the case to her constituents now by suggesting the installation of wind farms all across the shorelines of the electorate. When these high net worth individuals work out the damage to property values, they will quickly grow an acute case of NIMBY (not in my back yard) itis.

Price analysis conducted in Germany by Sunak and Madlener (2014) found that the asking prices for properties whose view was strongly affected by the construction of wind turbines decreased by 10–17%.

The #WindFarmsForWarringah movement is garnering the signatures to rub the noses of the coastal elites. Undoubtedly buyers remorse will sink in less than a week after her election. She now holds a dead seat. It was only ever to remove Abbott.

Luxury SUV driving hippies abound in Warringah. They maybe virtue signalers of the highest order but they will quickly put personal wealth protection ahead of the environment as already evidenced by their consumption patterns.

Or are they yuppies? When was the last term we heard that terminology?

Maybe a new word is needed for these people – flipocrites?

Apple to buy Tesla? Is Tim Cook on autopilot?

If Apple truly stumped up for Tesla that would make two companies that are complete novices at auto manufacturing. It would be the Apple Lisa of the auto world.

Worse for Apple it would signal that the world’s largest company is completely out of creative ideas and its existing product line up was truly approaching stall speed. It already is but and the lack of transparency only adds to doubts.

Rumours circulated that Apple considered a $240/share purchase back in 2013. 6 years ago Tesla was full of hope. Now the stock is full of hype. It has been a litany of disasters from fatal crashes, production hell all the way to complete wishful thinking on Level 5 autonomous driving which Israeli company Mobileye, a leader in the field, believes is decades off.

Let’s assume a $240 per share deal was done. Apple would pay around $40bn and assume another $12bn or so in debt.

The most dangerous strategy for highly successful companies is to throw spaghetti at a wall and hope some sticks. Tesla is by no means an overnight repair job. It needs the skills of Toyota to turn it around. Don’t forget Apple has no manufacturing expertise as its products are all built by 3rd parties. Toyota rescued Porsche several decades back and Lockheed Martin called in the production efficiency king to help build the F-35 Joint Strike Fighter better.

It reminds CM of the time Hoya bought Pentax back in 2007. Such was the earnings dilution against the incumbent high margin business, hunting for growth sent Hoya shares down 50% soon after the deal. Hoya was completely dominant in glass photomasks. Yet the $1bn merger of a 2’d tier camera/optics maker was thought of by the founder’s grandson as a total failure and divested many divisions.

Losses continue to mount at Tesla, senior management departures are a revolving door and demand is slowing. The recent cap raise sees investors well under water. The Maxwell Tech deal looks a dud for the management to accept an all share rather than an all share deal (if the tech is so leading edge).

If Apple truly wanted a car deal, it could buy an established maker like Fiat Chrysler with decades of production expertise and global reach for half the price. Not to mention a wide choice of vehicle styles to broaden the appeal to customers.

Although the history of car mergers, even between industry players, has led to some pretty disastrous outcomes. Daimler overpaid for Chrysler so badly that its shares cratered 80%. BMW bought Rover from Honda. Fail. Even Land Rover had to be sold by the Bavarians. Ford ended up selling most of its Premier Automotive Group stable – Aston, Lincoln, Jaguar, Land Rover and Volvo. Just Lincoln remains.

Tech companies meddling in the automobile sector reveals a graveyard of sad stories. Korean analysts jumped for joy when Bosch sold out its stake in the Li-ion batteries JV SB Li-motive. How could a Korean tech company proclaim to have a better read on the global auto industry than Bosch, a supplier to the major auto makers for over 100 years? Panasonic is already kicking itself hrs over the Tesla deal and management is highly unimpressed with Musk after his disparaging remarks made about production.

Have investors ever wondered why Tesla has no mainstream suppliers? Many are obscure parts companies from Taiwan. More established auto suppliers have been burnt by experiments before and they’ll only sign up for makers who have much better prospects and track records.

If anyone thinks Apple buying Tesla makes sense they need their heads read. The last 6 years have detracted value. Pre-pubescent fund managers who have never seen a cycle might see the value of millennial nirvana but the damage to Apple would be considerable. Just because Apple has been so successful doesn’t mean it won’t make mistakes. Tesla would be a disaster. It is in the product creativity blackhole of following the path of Hoya. It would be better to flutter at a casino.