#EV

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.

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)

Zali, best ask Lisa Wilkinson for Jacinda’s number. You might need it

Zali Steggall proclaimed she would fight for her signature campaign promise – “climate change” – and hold the government to account on the environment in her victory speech. She won her seat in CM’s own electorate of Warringah. That is democracy. No, CM did not vote for her. The result stands, despite a despicable campaign against the incumbent which included leaving faeces outside his office.

Sadly for Steggall, the broader Australian public repudiated climate change given the terrible performance of the Greens and Labor who pushed this cornerstone uncosted agenda. Climate evangelist Independent Dr Kerryn Phelps lost her seat of Wentworth despite the same endorsement from former UN climate chief Christina Figueres. Julia Banks also fell despite receiving the global warming high priestess’ praises. Climate change wasn’t the key issue for those wealthy latte-sipping constituents across the harbour in Wentworth, just as they weren’t for Warringah.

Steggall had one role – to oust the 25-year incumbent former PM Tony Abbott. She succeeded. It was a mission unlike any other seen in Aussie politics. She had 1,400 people to help her. “Vote 1 Zali Steggall” placards adorned many doors in CM’s neighbourhood. CM always thought sticking an Abbott poster outside one’s house would incite an act of hatred. On election day we got proof of that, including a stabbing. Alex Turnbull even called Abbott a “terrorist”. If there were more terrorists like him we would have fewer bushfires and fewer deaths at sea. Imagine if he accepts the Ambassador to the US role. ScoMo can hardly pick Julie Bishop especially after Bill Shorten endorsed her. CM digresses.

Although Steggall denied the role of activist group GetUp! during the campaign, she has now acknowledged its role. She said,

I think some of [GetUp!’s] aspects have been divisive … but on the other hand, they have raised the profile of climate change…They are here to raise awareness of issues and, for me, that is part of democracy. We are all the better for having­ the variety of issues and debate and opinions at the table.

GetUp! didn’t get much bang for the $13.5mn outside of Abbott. Peter Dutton in the seat of Dickson, Queensland and Christian Porter in the electorate of Pearce, Western ­Australia both increased their margin. GetUp!’s other targets – Greg Hunt, Kevin Andrews and Josh Frydenberg in Victoria as well as Nicolle­ Flint in South Australia, suffered swings against them but all kept their seats. Perhaps they may feel better knowing Clive Palmer won nothing with his $60mn advertising blitz although already Labor sooks are complaining this was indirect spending on the Libs campaign.

In 2022, if Steggall chooses to run, it is unlikely she’ll get anywhere near that level of backing. She is a one term MP. The Liberals will put forward a new candidate who isn’t Abbott. Like Sharma in Wentworth, the Liberals should retake the seat. Steggall won’t have 1,400 volunteers to support her. Nor $13.5mn in GetUp! Backing. If Morrison gets a majority then her vote will be useless in the lower house. She will have served her purpose. If she has any chance of winning she’ll need to trade in the Nissan Pathfinder.

Steggall might do her best to push climate change in parliament for her luxury SUV loving constituents but it will be to no avail. Her biggest global warming sponsors, Labor, will be desperate to find a leader to pull them back from the left. Sadly the first two candidates – Plibersek (who has now stepped away) and Albanese – are of the left and the third suggestion is Jim Chalmers, who was a principle advisor to Rudd. Even Chris Bowen has announced he might run. If they have to bring a new platform, it can’t be the politics of envy and class warfare nor loony uncosted climate change targets nor identity. A new Labor leader will have a lot of trouble reuniting such unmitigated failure in opposition.

The irony is that if Labor scales back the extent of renewable energy targets and emissions then how much of a crisis could it have been at the time of the election? It either is or it isn’t and to try to suggest to Australians that the cost of doing nothing was so high, they didn’t buy it. Who could forget when former PM Kevin Rudd said climate change “was the greatest moral challenge of our generation” in 2007? It wasn’t long after that his ETS was scrapped. Flimflam.

Steggall might say, “I think what was rejected was Labor’s economic policy“. That is true but it was also Labor’s climate change policies which were inextricably linked to people’s pocket books. She might reflect on how many seats that are now blue that weren’t decades ago. They are the aspirational voters, just like that poor chap that lost his job for asking Shorten about tax relief for those on $250,000. Those who don’t want the government in their pocket. Steggall’s electorate is highly affluent. They can weather storms far better than the average Joe.

Maybe Zali Steggall should catch up with Lisa Wilkinson at the Avenue Rd Cafe in Mosman and ask for NZ PM Jacinda Ardern’s direct line because they will both be wondering why PM Scott Morrison isn’t returning either of their calls!

Go woke, go broke

Yet another example of why CM has cancelled his FT subscription. Where is the critical reporting? This article by Pilita Clark doesn’t critique the ridiculous movement by corporates to virtue signal but falls in line with the stupidity.

Maybe the best metaphor for the woke corporation is parsley. It often looks nice as a garnish but 99.9% of us push it to the side of the plate and leave it to be thrown away.

Corporate hypocrisy is everywhere.

Take Josh Bayliss, CEO of Virgin Group. He says,

“It’s definitely true that right now every one of us should think hard about whether or not we need to take a flight.”

Why doesn’t he close down the airlines in the portfolio? Instead of waiting for his customers to grow a conscience and do the right thing why not force their choice? The obvious answer is that it’s hypocritical.

Airlines operate on about 70% capacity load factor break even so if Virgin flights end up being half full he’ll only end up spewing more or less the same CO2 per flight and go out of business. British Airways, EasyJet and Ryanair will welcome Virgin’s virtue signaling. Go woke, go broke.

Qantas has the world’s largest carbon offset program yet only 2% of passengers elect to pay. That’s the extent of the belief in global warming.

Blackrock’s chief Larry Fink said his asset manager needs to do more than just make money yet it only backed 10% of the climate related shareholder proposals. Why? Supposedly because they would crush profits. All talk, little walk.

BP surprisingly helped prevent a carbon tax it openly launched support for. A fossil fuel company trying to undermine a carbon tax? Wow. Who’d a thunk?

UK shadow chancellor John McDonnell has said Labour would seek to delist companies from the London Stock Exchange that didn’t meet their climate change commitments. In order to meet that, will that mean a child daycare company will be burnt at the stake for not brainwashing kindergarten kids? Will there be a minimum pot plant to child ratio?

How would regulations impact the myriad of different businesses that would trigger being dumped from the LSE? What standard would be applied? CM is betting corporates jus need to “file” a governance statement on climate change which no one will read. As long as 100% of companies file, nothing will happen.

Pretty easy to avoid too. Companies could list on Nasdaq or the Singapore exchange to avoid the regulations and still raise capital. Did you think of that Mr McDonnell? No because it is all about being woke and there are plenty of alternatives to dodge stupid policy. Capital is global.

Pilita Clark closes her article by saying,

“Yet the climate debate is shifting and I am willing to bet that companies failing to match their green claims with solid action face far greater risks than they ever have before.”

Like much of the climate religion, few hard facts are ever presented except the date we are all supposed to die. Even then that is an ever-shifting goal post. We can be assured that when 2028 arrives all of a sudden we’ll have another 12 years to do something. A bit like the joke where a patient asks his doctor how long he has to live and is given an extension so he can pay his bill.

The ever-growing tide of the “woke” corporation is going to thwart ingenuity and entrepreneurship. It is corporate suicide to pander to this nonsense. It is not for companies to bang on about their wonderful commitments. Customers and shareholders can decide for themselves. Maybe if companies listened to both groups they would find profits go up. People are growing sick and tired of being told what to do. How to think.

The world is littered with corporate wokeness backfiring. The irony is much of it is self-inflicted. By trying to create false images of virtue, the results have been disastrous.

P&G had to write off billions from its Gillette brand for the toxic masculinity campaign. Before the campaign Gillette was ranked 7th out of 45 health and grooming brands. After, rock bottom.

There is almost a wave of corporate fear twisted by a minority of social activists like Sleeping Giants which create false narratives about public perceptions of evil companies. There is a flip side.

Chick-fil-A was established by Southern Baptists. They don’t ram their Christian beliefs at all in the restaurants. Activists tried to boycott the fast food outlet because one of the directors personally didn’t support same-sex marriage. Guess what, store numbers have doubled and revenues tripled over the last decade.

Chick-fil-A states it’s mission is, “To glorify God by being a faithful steward of all that is entrusted to us. To have a positive influence on all who come in contact with Chick-fil-A.”

Chick-fil-A is notable by its closure on Sundays, Thanksgiving and Christmas. So people are well aware ofthis corporate backing its religious beliefs.

There is a difference between founding a company on certain beliefs and concocting them to ride a wave of hijacking social movements. Customers are aware of the difference.

Virgin Group can wax lyrical about its concerns in trying to save the planet but the only woke thing would be to shut down. Pushing the guilt back on its customers shows how hypocritical the airline is.

To be honest it gets tiring waiting in corporate lobbies watching flat panel TVs advertising all of the wonderful community things they do. 99% of the transaction with any corporate will be driven by the ability to deliver goods and services, not supporting tree planting. It is not to diminish charity or good intentions, rather to cut back on acting as though they’re angels to avoid being put on an imaginary naughty step that doesn’t exist.

Perhaps CM should recommend a portfolio of non-compliant ESG companies. When the market sells off, all the passive money in ESG compliant names should well underperform those that don’t. Perhaps an asset manager should establish an ETF with a basket of companies that just provide product or service rather than garnish it with lashings of corporate virtue. Here is betting it would be a contrarian winner.