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Cars are all going electric

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dspp
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Re: Cars are all going electric

#80967

Postby dspp » September 13th, 2017, 11:02 pm

o2000,

I'm with you that electric-whatever is the way its going: rail, road, er possibly sea and air (later). Plus of course fixed grid decarbonisation and demand reduction.

But the extent to which there is a network effect is important to separate out from a simple scale effect, and first mover advantage* in e-cars is important. I would argue that Tesla has the latter two but that the former is not so relevant. Scale effects will diminish as others reach scale, and first mover advantage is I think already diminishing. Absent strong network effects the emergence of a single dominant firm is most unlikely.

For this reason I think Tesla is overpriced (it is nose bleed levels) and I avoid as an investor, however much I wish to see the totality of Musk's businesses succeed.

Arguably a better play in e-vehicles is to buy into the status quo manufacturers when their valuations are most bombed out. Ideally picking survivors of course. My personal pick would be Ford if I were making one.

In general terms I am struggling to identify e-anything plays that are suitable for the private investor for their intrinsic investment value, as opposed to being simple frothy momentum plays.

regards, dspp


* in the sense of being the first new-entrant with sufficient capital once the key bits became available, i.e. well-timed clean-sheet entry

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Re: Cars are all going electric

#80976

Postby odysseus2000 » September 14th, 2017, 12:17 am

dspp
Arguably a better play in e-vehicles is to buy into the status quo manufacturers when their valuations are most bombed out. Ideally picking survivors of course. My personal pick would be Ford if I were making one.


The biggest positive for the existing car makers is how many folk they employ. This is a strong political card and has resulted in some government support such as how GM was saved by the Obama administration.

The question that I struggle with is whether the existing model of folk buying a car, running it for several years, then buying another will continue as the main market. Already we have many cars leased, not owned and if self drive becomes practical will anyone want to own a car if they can get transport easily and quickly. E.g. if someone is commuting they might only need a single occupant vehicle, if this is available as computer driven and safe it would cut down on congestion and cost. When the same person wanted to shop a slightly bigger car might be needed or maybe online will become so extensive that shopping as we know it will go out of fashion. For a family vacation a bigger car could be requested, used and then used by someone else. One might say that ownership and driving are so ingrained that we won't give up our cars, but if the insurance for human drive becomes many times that for machine drive the incentive may become overwhelming to have machine drive. If any of this happens the current manufacturing model looks to me to be out of date and although it would cause many folk to lose their job if it ceased, one has had many similar transitions in the past: Cotton mills in Lancashire, coal miners, Canals, Rail roads,ship building, steel making,...
None of this may happen, or it may happen quickly. Impossible to have any clarity, but if some huge transition does come everything that we now take as the way things are can change.

These types of potential large secular change always come with extreme valuations and for many investors this is too much risk with too much danger of an equity price melt down at some inconvenient moment as happened around the turn of the century. Anyone investing/trading these types of things has to accept the risk or do other things and the latter is likely the safest and most sensible course for most.

Regards,

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Re: Cars are all going electric

#80986

Postby odysseus2000 » September 14th, 2017, 7:33 am

When Google ipo-ed in 2004 there were bitter memories of the stock market crash of 2000 and a general loathing and mistrust of tech. Later when Google bought Youtube it was seen by many as yet more evidence that Google was run by idiots.

The history of the business is an interesting read:

https://en.wikipedia.org/wiki/History_of_Google

In the latest 2017 (June) wiki list of market caps it is number 2 below Apple:

https://en.wikipedia.org/wiki/List_of_p ... ation#2017

Googl current market cap is around $652b, with revenue of $90b, price to sales of 652/90 = 7.2 and is profitable with earnings of around $20b, cash of $94b and debt of $4b

Tesla is capitalised at $61b with a revenue of $7b, price to sales of 61/7 = 8.7 with losses of around $600m, it has $3b in cash, $10b in debt.

Long term buy and hold investors in google have done great:

https://twitter.com/0_ody/status/908214216447987712

Price has gone from 50 to 950 = 19x in 13 years

Anyone who bought google and held onto it has been richly rewarded. This does not imply that someone doing that with Tesla would also be so rewarded, but so far they have been:

https://twitter.com/0_ody/status/908215723876634625

Price has gone from 20 to about 360 = 18x in 7 years

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Re: Cars are all going electric

#81026

Postby dspp » September 14th, 2017, 10:10 am

odysseus2000 wrote:Anyone who bought google and held onto it has been richly rewarded. This does not imply that someone doing that with Tesla would also be so rewarded, but so far they have been


You are quite right that if these companies succeed then they make fantastic returns for those who invest early at the right price. But would you advise widows & orphans to invest a significant sum ? Surely not. Yet the returns from just a few companies dominate the market. This to me is a signal that for most investors the way to access this is via index trackers, that of course must be a relevant index. No point investing in FTSE-100 as they don't do all this sort of stuff, it has to be USA or China*.

Someone I know took a punt a while back on Tesla. I chose VWRL. The difference between us is that they have much greater wealth and so can withstand the hit if it goes pear-shaped. Me, I would prefer the patient path with a fraction of my VWRL being in these nosebleed companies safely away from my direct vision.

I also note that in many of these industries trying to analyse the supply chain for high margin undervalued opportunities just does not work. The engineers on the inside of the top tier have already done that, and if they haven't then the buyers do. Of course there will be exceptions but they are very scarce. So it does become a question of who are the top tier winners in the various sectors. That's russian roulette played against people on the inside in Silly Valley who have better liquidity and better info. Good luck if you go there.

regards, dspp


*mmmm that reminds me about what we were trying to build in the EU, a properly integrated fully featured continent-scale economy, but I digress

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Re: Cars are all going electric

#81053

Postby odysseus2000 » September 14th, 2017, 11:53 am

dspp
You are quite right that if these companies succeed then they make fantastic returns for those who invest early at the right price. But would you advise widows & orphans to invest a significant sum ? Surely not. Yet the returns from just a few companies dominate the market. This to me is a signal that for most investors the way to access this is via index trackers, that of course must be a relevant index. No point investing in FTSE-100 as they don't do all this sort of stuff, it has to be USA or China*.


Everything depends on the investor.

There is no universal answer as everyones situation is different.

Someone who has no interested in investment but who believes in the stock market is likely best with a low charge index tracker (likely in the US although exchange rates can hurt) or a portfolio of large blue caps, the sort of stuff that Pyad discussed in his HYP which was designed as a no meddle cash generator, but this won't suit some people and equities also won't suit some people.

On these boards I am just putting ideas and comments that are relevant to what I am interested in. I strongly advise no one to follow what I do, but it is often useful to get comments back that cause me to think and perhaps move in a different direction and hopefully something of what I write about will be of interest to others.

There are many ways to make money in equities and many many more ways to lose money. Ever investors has to study and choose what suits them. Anyone who doesn't want all the work of studying equities or who can't handle the emotion of seeing money taken away, is likely better not to bother with equities. There are many other alternatives such as ones own business, property... etc

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Re: Cars are all going electric

#81055

Postby TUK020 » September 14th, 2017, 12:02 pm

I don't think the direction of travel is in doubt.

I read somewhere (can't quote source, and wouldn't swear that I have remembered the figure correctly) that 70% of all new mopeds sold in Shanghai are electric. So if you look at key indicator/early adopter markets, things have already reached tipping point to go electric.

What is in doubt, is the speed of changeover in this market. There are significant obstacles to be overcome to make the total ownership package make sense to the majority of folks.

I have off road parking at home. For me to go electric, I would need to have charging infrastructure at home (and at work), and if there was any reasonable take up in my street, the local electricity distribution network would need reinforcing. Just in the UK, there are billions of £ of local distribution infrastructure that would need to be invested to allow a significant % of vehicles to go electric. I am not talking about generation capacity, just the wires connected your house to the grid. For the large numbers of vehicles in cities and towns that are parked on road, this complication gets, well, even more complicated.

Solutions to nitty gritty problems like this will determine the adoption rate of electric vehicles. For the electrification of manufacturing power a century ago, this took decades to feed through in terms of adoption

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Re: Cars are all going electric

#81064

Postby odysseus2000 » September 14th, 2017, 12:49 pm

TUK020

I have off road parking at home. For me to go electric, I would need to have charging infrastructure at home (and at work), and if there was any reasonable take up in my street, the local electricity distribution network would need reinforcing. Just in the UK, there are billions of £ of local distribution infrastructure that would need to be invested to allow a significant % of vehicles to go electric. I am not talking about generation capacity, just the wires connected your house to the grid. For the large numbers of vehicles in cities and towns that are parked on road, this complication gets, well, even more complicated.

Solutions to nitty gritty problems like this will determine the adoption rate of electric vehicles. For the electrification of manufacturing power a century ago, this took decades to feed through in terms of adoption


Yes, it is a huge opportunity for vendors of wiring and contractors that can safely integrate this into urban environments and the use to which super charger stations can contribute and how convenient it will all be.

The question is who will get this business and how will it be handled legally and commercially with councils often owning the paths and roads, but there have been charging points at motorway stations for years now and the local Asda has them too.

I suspect putting in the charging infra structure will be a lot faster than the initial roll out of electricity which was a very much larger project done with out the convenience of modern power tools or modern plastic cables. New houses can now have plumbing installed in half a day, a procedure much more complicated than putting in a charging point, so I would not be surprised if an entire street could not have charging points installed in a day. For comparison the installation of roof top solar panels with all the roof work and wiring is usually over in a few hours.

Regards,

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Re: Cars are all going electric

#81067

Postby kiloran » September 14th, 2017, 1:05 pm

TUK020 wrote:I have off road parking at home. For me to go electric, I would need to have charging infrastructure at home (and at work), and if there was any reasonable take up in my street, the local electricity distribution network would need reinforcing.

I think it is an error to define the problems based on today's technology. Technological development can progress at an incredible rate, and I could easily imagine that in 20 years we won't be thinking of such a charging infrastructure, we'll have batteries that can be charged in a matter of minutes and our current petrol and diesel filling stations will become battery charging stations. Drive up, plug in, wait 2-3 minutes and drive away (after paying, of course!)

--kiloran

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Re: Cars are all going electric

#81072

Postby odysseus2000 » September 14th, 2017, 1:16 pm

kiloran
I think it is an error to define the problems based on today's technology. Technological development can progress at an incredible rate, and I could easily imagine that in 20 years we won't be thinking of such a charging infrastructure, we'll have batteries that can be charged in a matter of minutes and our current petrol and diesel filling stations will become battery charging stations. Drive up, plug in, wait 2-3 minutes and drive away (after paying, of course!)


All of this may come to pass, but for now its whether a good business can be made with the technology we have now and can said business generate enough capital to be able to upgrade to any newer technology that comes along.

The history of technology has always been that the folk who find something good enough and better than what was and who can sell it make big profits. As I see things, even if there are no new battery technologies, the 18650 lithium cell installed in banks of thousands gives a car with better performance than the alternative petrol, diesel or hybrid.

So with what we have now there is a potential huge change in global transportation and with that comes potential large investment returns but of course also large risk.

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Re: Cars are all going electric

#81082

Postby Urbandreamer » September 14th, 2017, 2:11 pm

odysseus2000 wrote:As I see things, even if there are no new battery technologies, the 18650 lithium cell installed in banks of thousands gives a car with better performance than the alternative petrol, diesel or hybrid.


Just so that folks know. Back in the day the 18650 battery was mostly used in laptops. I suspect that the fact that the 18650 battery was mass produced for that market is what caused Tesla to choose it.

Tesla is moving to the 2170/21700 format for the new model because they believe it will be the *cheapest battery in the world.
https://evannex.com/blogs/news/tesla-s- ... more-power

*cheapest per KWh.

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Re: Cars are all going electric

#81092

Postby odysseus2000 » September 14th, 2017, 2:47 pm

urbandreamer
Just so that folks know. Back in the day the 18650 battery was mostly used in laptops. I suspect that the fact that the 18650 battery was mass produced for that market is what caused Tesla to choose it.

Tesla is moving to the 2170/21700 format for the new model because they believe it will be the *cheapest battery in the world.
https://evannex.com/blogs/news/tesla-s- ... more-power

*cheapest per KWh.


Yes, as I understand it, the 18650 (18 mm in diameter, 65 mm long) was chosen as it was an existing technology that Panasonic knew how to make.

As far as I know the model S and X will still use this cell.

Of the 18650 cells (not Tesla ones, just generics for my experiments) I have examined there are significant differences in performance and life

The power wall and model 3 will use the 21700 (21 mm diameter, 70 mm long) which has been developed from the 18650 with claimed better storage and performance etc.

All these batteries, again as far as I know, do not have protection circuitry built in and rely on external fuses in case of internal shorts and are charged up to their high limit and discharged to their low limit via the onboard charging circuits.

Clearly the margin on the model 3 will critically depend on the cost and reliability of the 21700 they have developed with panasonic and presumably this will be the cell used in the soon to be launched electric trucks. This to me looks to be a very interesting market as probably an electric truck will not need the massive and costly gearbox that diesel trucks have and will thence be cheaper and a whole lot easier to drive either by man or computer.

Regards,

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Re: Cars are all going electric

#81108

Postby dspp » September 14th, 2017, 4:21 pm

odysseus2000 wrote:Everything depends on the investor. There is no universal answer as everyones situation is different.

Someone who has no interested in investment but who believes in the stock market is likely best with a low charge index tracker (likely in the US although exchange rates can hurt) or a portfolio of large blue caps,........

On these boards I am just putting ideas and comments that are relevant to what I am interested in. I strongly advise no one to follow what I do, but it is often useful to get comments back that cause me to think and perhaps move in a different direction and hopefully something of what I write about will be of interest to others.

There are many ways to make money in equities and many many more ways to lose money. ......

Regards,


Thank you and fully agree. Your subject picks and the discussion including the many different points of view are most interesting.

regards, dspp

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Re: Cars are all going electric

#81119

Postby odysseus2000 » September 14th, 2017, 5:11 pm

Interesting new tests for diesel cars. Failure stops the car from being sold in the UK

https://www.petrolprices.com/news/live- ... s-testing/

The way the politicians are targeting diesel suggests to me that manufacturers will stop making them long before the 2040 cut off point.

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Re: Cars are all going electric

#81358

Postby moorfield » September 15th, 2017, 2:49 pm

Certainly I expect we will see a move to largely electric/hybrid in urban areas, but I don't think we will see the end of diesel engines altogether. I simply can't comprehend how a whole raft of agricultural and heavy transport vehicles could ever operate practically on electric engines given their weight, tasks and locations they operate - that is a point I regularly don't see discussed in the government and technology propaganda. I'm surprised by the Land Rover announcement - the likes of John Deere must already be spotting a hole in their market. As usual our behaviour will be nudged by how our vehicles will be categorized and taxed in the future ...

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Re: Cars are all going electric

#81364

Postby Urbandreamer » September 15th, 2017, 3:25 pm

moorfield wrote:Certainly I expect we will see a move to largely electric/hybrid in urban areas, but I don't think we will see the end of diesel fuel altogether. I simply can't comprehend how a whole raft of agricultural and heavy transport vehicles could ever operate practically on electric motors given their weight and tasks they perform - that is a point I regularly don't see discussed in the government and technology propaganda. I'm surprised by the Land Rover announcement - the likes of John Deere must already be spotting a hole in their market. As usual our behaviour will be nudged by how our vehicles will be categorized and taxed in the future ...


Well, I personally don't expect to see a total end to deisel in my lifetime. However as for agricultural vehicles, when did you last see a steam traction engine employed on the land?

And as for John Deere, you didn't try a google before forming an opinion did you?
https://www.youtube.com/watch?v=TJOyITolHUk

I think that we should recognise and accept that farmers are only going to buy and use EV's if there is a advantage in doing so though.

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Re: Cars are all going electric

#81369

Postby odysseus2000 » September 15th, 2017, 3:44 pm

moorfield
Certainly I expect we will see a move to largely electric/hybrid in urban areas, but I don't think we will see the end of diesel engines altogether. I simply can't comprehend how a whole raft of agricultural and heavy transport vehicles could ever operate practically on electric engines given their weight, tasks and locations they operate - that is a point I regularly don't see discussed in the government and technology propaganda. I'm surprised by the Land Rover announcement - the likes of John Deere must already be spotting a hole in their market. As usual our behaviour will be nudged by how our vehicles will be categorized and taxed in the future ...


But is your comprehension based on the engineering or prejudice? Sure we have used diesel engines for a long time for heavy work, but was this because they were ideally suited to the job or because there was no alternative?

It is not that long ago that US heavy transport ran on petrol and when Henry Ford was getting going he was told by experts that electric engines were the obvious choice for horse less carriages. Battery technology let down electric engines, now that we have much better batteries it looks to me like electric will become the traction engine of choice for most things. Once folk get into the mind set of charging machines over night, many of the concerns about under-range will go away and the benefits of the very high torque at low rpm electric traction will turn people away from diesel and petrol engines.

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Re: Cars are all going electric

#81459

Postby dspp » September 16th, 2017, 11:41 am

odysseus2000 wrote:Interesting new tests for diesel cars. Failure stops the car from being sold in the UK

https://www.petrolprices.com/news/live- ... s-testing/

The way the politicians are targeting diesel suggests to me that manufacturers will stop making them long before the 2040 cut off point.

Regards,


I am in hire cars about two weeks a month due to my travels. It used to be that they were largely diesel. Now they are more commonly petrol. In fact I can't remember the last one which was diesel. Since hire cars turn over quickly and the buyers are very residual-sensitive in making their purchasing decisions they are likely a leading indicator. It seems to me that the move is accelerating. However that is purely based on my personal observation.

regards, dspp

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Re: Cars are all going electric

#81920

Postby odysseus2000 » September 18th, 2017, 11:00 pm

dspp
I am in hire cars about two weeks a month due to my travels. It used to be that they were largely diesel. Now they are more commonly petrol. In fact I can't remember the last one which was diesel. Since hire cars turn over quickly and the buyers are very residual-sensitive in making their purchasing decisions they are likely a leading indicator. It seems to me that the move is accelerating. However that is purely based on my personal observation.


Thank you for that useful insight which ties in with my experience.

For my last two hires I wanted a diesel, but all Enterprise had was petrol.

Still the fuel economy of the petrol engines was surprisingly good based on my previous experience of petrol engine hires, so I didn't have anything to complain about.

There are still plenty of diesel pumps at my local filling station, but it would not surprise me if the number of diesel pumps slowly declines over the next few years.

Regards,

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Re: Cars are all going electric

#87337

Postby odysseus2000 » October 11th, 2017, 9:04 am

One of several interesting developments in electric cars:

https://mobile.twitter.com/mashable/sta ... 77/video/1

If the performance is anything like claimed it represents a step change in capability. There are many other ideas in this technology, with both Airbus & Boeing are looking at this type of technology for short to medium haul, but have been arguing that current lithium battery technology isn't good enough, this suggests maybe it is.

Regards,

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Re: Cars are all going electric

#132362

Postby odysseus2000 » April 15th, 2018, 6:03 pm

China developing toads that charge your car as you drive:

https://www.bloomberg.com/news/features ... n-the-move

Regards,


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