EVs

This is why governments should shut up

FNF Media has always held that the brains that brought ABS, airbags, lane departure warning and so on do not require lectures from politicians about which technology must be adopted.

Did any of the above technologies arrive from the will of a government department? No. So when we heard that governments around the world were trying to ban fossil fuel cars we were disappointed.

All governments needed to do was say that we want zero emissions by 2040 and you have total technological freedom as to how to hit those targets. Necessity is the mother of invention.

F1 has this mindset firmly in its sights. It realizes that the noise is part of the thrill. Listen to Formula-E and you’d be forgiven for thinking you’d stepped into a Dyson vacuum cleaner showroom with all the models switched on at once.

According to Motorsport Magazine,

Formula 1 is looking to introduce two-stroke engines that run on eco-fuel by the middle of the decade, as it develops plans to become carbon neutral.

The proposal is said to make the sport greener than electric racing series, such as Formula E, while still using internal combustion engines — with improved sound.

Current F1 hybrid engines will be replaced by a new specification of power unit from 2025 or 2026. It will play a significant role in Formula 1’s project to become carbon neutral in 2030.

The new engines are likely to remain hybrids but powered by synthetic fuel, made by combining hydrogen with carbon captured from the air, using surplus green energy.

As well as the cars, this e-fuel could power the planes that carry the cars and equipment to races, making a big dent in the sport’s carbon footprint.

Research presented at the conference showed that electric racing cars could be responsible for twice the level of carbon emissions as hybrid racing cars, because of the amount produced when building the batteries.”

Just proves that humans have the power to ignite passion into solutions. We don’t need politicians, many who have shorter expiry dates than UHT milk, to push policy prescriptions without the slightest understanding of the very industry they seek to regulate.

Tesla worth more than major brands with 1,046 years of combined experience

Wonderful to see Wall St bull at its finest. Trip Chowdhry of Global Equities Research put a 2030 price target of $4,000 on Tesla or around 10x the current price.

Amazing to think that he believes that Tesla would be worth 25% more than Toyota, VW, BMW, Daimler, Ferrari, Honda, Nissan, Mazda, Ford, GM & Fiat-Chrysler combined.

Sure, that’s plausible. Who wouldn’t believe that the industrial might of the aforementioned world’s most respected brands – with a combined 1,046 years of production expertise – will be worth less than a company who is led by a dope smoking CEO who cares little for corporate governance?

That isn’t to say innovation and disruption can’t end a millennia of progress. The only problem is the market fails to realize is that Toyota invests 10x what Tesla does in electric vehicle R&D every year and had its research geeks develop solid state lithium ion batteries for fun.

Tesla Cybertruck maybe a Faux by Faux but should sell well

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Tesla released its pick-up truck this week. Polarising is one word for it. Almost every motoring hack and stock analyst slammed it.

CM thinks Musk had to be bold. Although CM can’t stand Tesla on pretty much every level, especially governance, this truck could do very well. It may not pull the heartstrings of the Mid West pick up loving Trump voters but it will have a market.

The type of people that who will buy it will never use them for hauling loads of machinery or logs. The heaviest payload will be two grande caramel lattes with extra shots. This is a car which people who were thinking of a Model S will buy this instead.

It’s the perfect car for a virtue signaling world where one wishes to stand out and be noticed. It is a Faux by Faux. It screams look at me and it won’t be long before a Ford & GM make bold statements of their own.

So well done Elon. The order numbers will tell the picture of received wisdom and may do much better than many anticipate.

Pure genius. And the broken glass just got him 1,000,000s more hits on social media.

This can only end in tears

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As Sweden’s economy slows to the worst economic growth rate in 5 years under a negative interest rate policy, one would think the Swedish Central Bank (Riksbank) would be seeking to prudently manage its asset book on the basis of appropriate risk/reward as opposed to lecturing Australia and Canada on their respective carbon footprints. What we are witnessing is yet another discrete move by authorities to manipulate markets based on fantasy rather than fact.  The hypocrisy is extreme as we shall discover.

While the Riksbank should have complete freedom in how it wishes to deploy capital, we should view this is a pathetic sop to the cabal at the European Central Bank (ECB). Since when did central bankers become experts on climate change? The RBA is no better. Deputy Governor, Guy Debelle, gave a speech in March 2019 on the risks posed by climate change which based prophecies on the data accident-prone IPCC and Bureau of Meteorology. Why not seek balance? Easier to fold to group think so as not to be outed as a pariah. Utterly gutless. Our own APRA is also pushing this ridiculous agenda on climate change reporting. It is willful negligence.

While it is true that on a per capita basis, Australia and Canada’s emissions are higher than the global average, why doesn’t the Riksbank give us credit for lowering that amount 11.4% since 2000? Even Canada has reduced its carbon emissions by 7.3% over the last 18 years. Admittedly Sweden’s emissions per capita have fallen 21.9% according to the IEA. Greta will be happy.

Why hasn’t the Riksbank taken China or India to task for their 169.9% or 94.7% growth in CO2 emissions respectively? There are plenty of oil-producing nations – Qatar, UAE, Bahrain, Saudi Arabia and Oman that have worse per capita outcomes than Australia or Canada. Do these countries get special dispensation from the wrath of the Riksbank? Clearly.

The US has pulled out of the Paris Climate Accord. If the US has marginally lower emissions per capita (15.74t/CO2-e) than Australia (16.45t/CO2-e), isn’t a double standard to write,

The conditions for active climate consideration are slightly better in our work with the foreign exchange reserves. To ensure that the foreign exchange reserves fulfil their purpose, they need to consist of assets that can be rapidly converted to money even when the markets are not functioning properly. Our assessment is that the foreign exchange reserves best correspond to this need if they consist of 75 per cent US government bonds, 20 per cent German and 5 per cent British, Danish and Norwegian government bonds.

Essentially Riksbank commitment to climate change is conditional. The US which is responsible for 13.8% of global emissions can be 75% of holdings. Australia at 1.3% can’t. No doubt sacrificing Queensland Treasury Corp, WA Treasury Corp and Albertan bonds from a Riksbank balance sheet perspective will have little impact on the total. In short, it looks to be pure tokenism. The Riksbank has invested around 8% of its foreign exchange reserves in Australian and Canadian central and federal government bonds. So perhaps at the moment, it is nothing but substitution from state to federal. Why not punish NSW TCorp for being part of a state that has 85%+ coal-fired power generation?

At the very least the Riksbank admits its own hypocrisy.

The Riksbank needs to develop its work on how to take climate change into consideration in asset management. For instance, we need a broader and deeper analysis of the issuers’ climate footprint. At the same time, one must remember that the foreign exchange reserves are unavoidably dominated by US and German government bonds. The Riksbank’s contribution to a better development of the climate will, therefore, remain small. This is entirely natural. The important decisions on how climate change should be counteracted in Sweden are political and should be taken by the government and the Riksdag (parliament).

Still, what hope have we got when Benoît Cœuré, member of the Executive Board of the ECB, lecturing those on “Scaling up Green Finance: The Role of Central Banks.” He noted,

2018 has seen one of the hottest summers in Europe since weather records began. Increasing weather extremes, rising sea levels and the Arctic melting are now clearly visible consequences of human-induced warming. Climate change is not a theory. It is a fact.

Reading more of this report only confirms the commitment of the ECB to follow the UN’s lead and deliberately look to misallocate capital based on unfounded claims of falling crop yields and rising prices (the opposite is occurring) and rising hurricane and drought activity (claims that even the IPCC has admitted there is little or no evidence by climate change). Sweden is merely being a well-behaved schoolboy.

Cœuré made the explicit claim, “The ECB, together with other national central banks of the Eurosystem, is actively supporting the European Commission’s sustainable finance agenda.

CM thinks the biggest problem with this “agenda” is that it risks even further misallocation of capital within global markets already drowning in poorly directed investment. It isn’t hard to see what is going on here. It is nothing short of deliberate market manipulation by trying to increase the cost of funding to conventional energy using farcical concocted “climate risks” to regulate them out of existence.

Cœuré made this clear in his speech,

once markets and credit risk agencies price climate risks properly, the amount of collateralised borrowing counterparties can obtain from the ECB will be adjusted accordingly.

What do you know? On cue, Seeking Alpha notes,

Cutting €2bn of yearly investments, the European Union will stop funding oil, natural gas and coal projects at the end of 2021 as it aims to become the first climate-neutral continent.

All CM will say is best of luck with this decision. Just watch how this kneeling at the altar of the pagan god of climate change will completely ruin the EU economy. The long term ramifications are already being felt. The EU can’t escape the fact that 118mn of its citizens (up from 78m in 2007) are below the poverty line. That is 22% of the population. So why then does Cœuré mention, in spite of such alarming poverty, that taking actions (that will likely increase unemployment) will be helped by “migration [which] has contributed to dampening wage growth…in recent years, thereby further complicating our efforts to bring inflation back to levels closer to 2%.

Closer to home, the National Australia Bank (NAB) has joined in the groupthink by looking to phase out lending to thermal coal companies by 2035. The $760 million exposure will be cut in half by 2028. If climate change is such a huge issue why not look to end it ASAP? This is terrible governance.

Why not assess thermal coal companies on the merits of the industry’s future rather than have the acting-CEO Philip Chronican make a limp-wristed excuse that it is merely getting in line with the government commitment to Paris? If lending to thermal coal is good for shareholders in 2036, who cares what our emissions targets are (which continue to fall per capita)? Maybe this is industry and regulator working hand-in-hand?

The market has always been the best weighing mechanism for risk. Unfortunately, for the last two decades, global central bank policy has gone out of its way to prevent the market from clearing. Now it seems that the authorities are taking actions that look like collusion to bully the ratings agencies into marking down legitimate businesses that are being punished for heresy.

This will ironically only make them even better investments down the track when reality dawns, just as CM pointed out with anti-ESG stocks. Just expect the entry points to these stocks to be exceedingly cheap. Buy what the market hates. It looks as though the bureaucrats are set to make fossil fuel companies penny stocks.

Can we defund SBS too?

This isn’t journalism. This is alarmist quackery for the sake of it. Venice has been subject to flooding for centuries. While the floods in Venice now are the highest for over 50 years, it still means that floods were higher in 1966. Let that sink in. Presumably it wasn’t climate change driven back then.

One can only imagine what a Venice Council could possibly do to combat climate change? Perhaps ruin the skyline with wind turbines and solar panels atop the roofs of the Rialto Bridge or San Marco Square?? To alarmists, no amount of tokenism is too little. Claim a climate emergency and show how worthy you really are.

No matter what the Venice Council does to “combat” climate change it will have no effect. Maybe the gondola union can indulge in some crony capitalism and demand that the €7.50 Vaporetto passenger ferries are banned so they can charge €150 to go from Santa Croce to Piazza San Marco instead. At least gondolas are zero emission vessels.

The SBS needs to grow up and deliver proper well reasoned content for the $400m in taxpayer funds it receives.

A colossally poor comparison, as usual

As ever the Climate Council of Australia rarely gets numbers right. Now they are benchmarking electric cars against Norway as a “leader”. While all these wonderful benefits might accrue to Norwegians, Norway is a poor example to benchmark against. Not to mention Wilson Parking won’t be too keen to join the party without subsidies.

Norway 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 charging 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 Shorten’s dud election plan would have required far greater numbers. So let’s do the maths (note this doesn’t take into account the infrastructure issues of rural areas where diesel generators power some of the charging stations…shhhh):

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 2030)

Grand Total: A$14,091,000,000

Good to see the Climate Council on message with thoroughly poorly thought out comparisons. That’s the problem with virtue signaling. It rarely looks at total costs. Never mind. Tokenism to them is worth it. Not to mention a Swedish study funded by the left leaning government in Stockholm which showed the production of the batteries to power EVs did the equivalent of 150,000km in CO2 before it has left the showroom. That’s not woke.

A deadly problem: should we ban SUVs from our cities?

Activists, including one wearing a Angela Merkel mask, outside the Frankfurt International Auto, holding signs reading ‘gas guzzling vehicles off the road’ and ‘Stop petrol and diesel’.

More junk journalism from The Guardian. Why can’t the paper make sensible commentary on the auto industry? Essentially it pushes a narrative that we should ban SUVs, a long term growth market for automakers because they advertise the segment too much. Shame on trying to act in the interests of shareholders. The article encourages the movement to push for a ban of SUVs in cities. Why? The socialisation of transport!

The article makes the early assertion that passengers are 11% more likely to die in an SUV accident than a regular passenger car. Unfortunately, it cited an article written 15 years ago. In that time, SUVs have evolved leaps and bounds. A far greater proportion of SUVs are made using a monocoque chassis as opposed to the old ladder frames. Even those SUVs with ladder chassis hold 5-star safety NHTSA ratings in 2019:

2019 Jeep Grand Cherokee – 5 star (ladder) vs 2004 Jeep Grand Cherokee – 3 star

2019 Ford Expedition – 5 star (ladder) – 2004 Ford Expedition – 5 star

2019 GMC Acadia – 5 star (ladder) – 2007 GMC Acadia – 4 star

2019 Toyota RAV4 – 5 star (monocoque) – 2004 Toyota RAV4 – 4 star

2019 Mazda CX-9 – 5 star (monocoque) – 2007 Mazda CX-9 – 4 star.

Some may recall in the early 2000s when the Ford Explorer/Firestone tyre rollover incident killed 261 people. Since then, carmakers have installed so many safety items – passive and active. Automatic braking, lane departure detection, forward collision warning, electronic brakeforce distribution (which prevents rollovers). SUVs are safer than ever, including pedestrian facing features.

Never mind the huge leap in safety. Let’s shame the automakers and buyers instead.

The Guardian noted, “In Germany, in 2018 they spent more on marketing SUVs than on any other segment; they actually spent as much as they spent on other segments together” says Stephan von Dassel, the district mayor of Berlin-Mitte. “This is not some accident that people suddenly are really into these cars, they are heavily pushed into the market.”

Wow, so carmakers actually made a sensible advertising budget allocations and convinced new buyers to voluntarily select their SUVs. Those wicked capitalists. They should be burnt at the stake for being in touch with their customers. Perhaps politicians could learn from the carmakers about being in touch with their constituents?

The Guardian then noted the following,

In Europe, sales of SUVs leapt from 7% of the market in 2009 to 36% in 2018. They are forecast to reach nearly 40% by 2021. While pedestrian deaths are falling across Europe, they are not falling as fast as deaths of those using other modes of transport.

So even though the sales of these vehicles have skyrocketed, pedestrian deaths are falling. Reading the paper published by the Insurance Institute for Highway Safety, stated

“A total of 5,987 pedestrians were killed in crashes in 2016, accounting for 16 percent of all crash fatalities. The number of pedestrians killed each year has declined 20 percent since 1975…”

Surprisingly, The Guardian waits till the end to point the finger at the pet issue facing SUVs – emissions.

“Transport, primarily road transport, is responsible for 27% of Europe’s carbon emissions. A decade ago the EU passed a law with a target to reduce carbon emissions to 95g/km by 2021 but a recent report by campaign organisation Transport and Environment highlights what is calls it “pitiful progress”. “Sixteen months from before the target comes into force carmakers are less than halfway towards their goals,” the report adds. The car industry faces hefty fines in Europe of €34bn in a few months for failing to meet emissions targets.”

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How is it that diesel engines, the increasingly preferred powerplant in SUVs, have had emissions cut 97% over the last 25 years? That is monumental progress.

Yet why have legislators tried to ban petrol and diesel cars and looking to force adoption of dirtier EVs which have done 150,000km equivalent CO2 emissions before leaving the showroom? Because ideology distorts reality. Even Schaeffler AG, an auto supplier, admitted it is almost impossible for automakers to comply with the different demands of over 200 cities in Europe with EV rules. No common standards and the quest of woke city councils trying to outdo each other on being climate-friendly. Then governments need to consider the 5% of total tax revenue that fill the coffers they would be giving up, although already in the US, Illinois is looking to impose a $1,000 a year EV tax.

Shouldn’t the EU and other countries face the realities that consumers (taxpayers) like the utility these SUVs provide for their individual needs over and above saving the planet? Shouldn’t politicians realise that consumers make conscious decisions when making the second largest purchase for the household?

One can absolutely bet that if some maker came out with a Hummer sized EV, these cities that want to ban SUVs from driving in them would grant the monster truck an exemption and special parking zones.

Julia Poliscanova, director of clean vehicles and e-mobility at Transport and Environment, says regulators must step in to force car manufacturers to produce and sell zero-emission and suitably sized vehicles, for example, small and light cars in urban areas.”

What if consumers don’t want to buy small and light cars? Force car makers to produce cars their customers don’t want? That is a winning strategy. If carmakers must sell zero-emission vehicles, why on God’s earth are politicians with absolutely no engineering pedigree dictating technology to the experts? Why not let necessity be the mother of invention? If carmakers can get fossil fuel-powered vehicles to be zero-emission and keep their brand DNA at the same time, imagine the billions that could be saved on reckless waste rolling out often unreliable charging infrastructure? Maybe then carmakers could build cars its customers wanted and make money to literally fuel the economy. Politicians would still be able to virtue signal! Win-win.

Maybe the modus operandi is to socialise transport. Poliscanova said, “Smart urban policies are also key to drive consumers towards clean and safe modes…Mayors should reduce space and parking spots for private cars and reallocate it to people and shared clean mobility services.

That is the ticket – force everyone off the road. That is a sure vote winner!