Shorting ICE

[jhm]

tell me how this looks please
KWH of EV batteries

Great! It's interesting that kWh tripled in 2014. The cumulative kWh are telling too.

Tesla 8.6 GWh

Nissan 2.9 GWh
GM 2.6 GWh
BMW 1.1 GWh

Ford 805 MWh
Toyota 365 MWh
Kia 101 MWh
Porsche 54 MWh
Hyundai 42 MWh
Mercedes 20 MWh

So only four EV makers are at the GWh scale in the US market. Some small automakers could be forgiven for not being at the giga level, but Toyota is clearly not keeping up.

Just to catch up with Nissan, Toyota would need to step up kWh production 8 times. I find myself wondering will Nissan ultimately eclipse Toyota is total vehicle sale as the sun sets on ICE. Of course, to dig into that it would help to look at global sale of plugin vehicles. Even so, looking at just the US market reveals capabilities in a demanding market. It's about putting forward compelling products that explore the potential of batteries. Yeah, we could include hydrogen FC, but the numbers are trivial. Nissan is 3 doublings ahead of Toyota.

Likewise we could compare GM and Ford. GM is about 1.7 doublings ahead of Ford, 2.6 GWh to 0.8 GWh. It's easy to let all the baggage around their respective ICE business cloud the comparison. But purely in the EV market, GM appears to have a substantial lead over Ford.

I'm talking in terms of doublings. In a market with exponential growth doubling about every 24 months, competitors need to double every 24 months just to keep up. But if you're Toyota needing to double 3 times just to catch up with Nissan, that is a very tall order. Even for Ford to double 1.7 times to catch up with GM is a major challenge. For the EV industry as a whole 5 more doubling get to 30% market share of new vehicle market. And 7 doubling obliterate ICE. This race is measured in doublings, and the next 5 doublings will be decisive.

 

[winfield100]

Great! It's interesting that kWh tripled in 2014. The cumulative kWh are telling too.

Tesla 8.6 GWh

Nissan 2.9 GWh
GM 2.6 GWh
BMW 1.1 GWh

Ford 805 MWh
Toyota 365 MWh
Kia 101 MWh
Porsche 54 MWh
Hyundai 42 MWh
Mercedes 20 MWh

So only four EV makers are at the GWh scale in the US market. Some small automakers could be forgiven for not being at the giga level, but Toyota is clearly not keeping up.

Just to catch up with Nissan, Toyota would need to step up kWh production 8 times. I find myself wondering will Nissan ultimately eclipse Toyota is total vehicle sale as the sun sets on ICE. Of course, to dig into that it would help to look at global sale of plugin vehicles. Even so, looking at just the US market reveals capabilities in a demanding market. It's about putting forward compelling products that explore the potential of batteries. Yeah, we could include hydrogen FC, but the numbers are trivial. Nissan is 3 doublings ahead of Toyota.

Likewise we could compare GM and Ford. GM is about 1.7 doublings ahead of Ford, 2.6 GWh to 0.8 GWh. It's easy to let all the baggage around their respective ICE business cloud the comparison. But purely in the EV market, GM appears to have a substantial lead over Ford.

I'm talking in terms of doublings. In a market with exponential growth doubling about every 24 months, competitors need to double every 24 months just to keep up. But if you're Toyota needing to double 3 times just to catch up with Nissan, that is a very tall order. Even for Ford to double 1.7 times to catch up with GM is a major challenge. For the EV industry as a whole 5 more doubling get to 30% market share of new vehicle market. And 7 doubling obliterate ICE. This race is measured in doublings, and the next 5 doublings will be decisive.

Please remember a number of points
1) this is a FIRST pass at creating this, so i need to tweak and check for errors.
1a) I got the sizes of the batteries from http://evadc.org/wp-content/uploads/2017/02/EVInfoSheet-20170123.pdf and a few other places
1b) I didn't put any battery size (yet) for Honda as they seem to have abandoned, like the Honda Fit
1c) I made gas/electric yellow only in batteries
2) It's from Inside EV's
3) I'm not sure if it is only US sales
4) I need to go over it again to confirm all the numbers
5) Google doc's did't copy all the dratted functions ie =sum(Col/row to col/row)
6) soon after 6/1 I will update 2017 sales (note if you multiply by 3 you can get a very rough estimate of what is going on)
7) since i got back to Washington DC/Rockvile Maryland area for a visit, i have swung by the Service center every day, starting wednesday last week, there was a large pulse of deliveries Thursday most are gone (one had a VIN of 196,xxx)
8) I am a "spaghetti programmer" I dont write "pseudo code" first, i just create on the fly., thus things may seem "disjointed" "why did he forget that thing..."

 

[TheTalkingMule]

Fields out as CEO @ Ford.

Ford Motor is replacing Mark Fields as CEO - Ford Motor is replacing Mark Fields as CEO

Lack of vision.

 

[winfield100]

Fields out as CEO @ Ford.

Ford Motor is replacing Mark Fields as CEO - Ford Motor is replacing Mark Fields as CEO

Lack of vision.

Note guy replacement is autonomous vehicles guy

 

[Oil4AsphaultOnly]

Note guy replacement is autonomous vehicles guy

Since it's pretty clear that the Ford Board is clueless and will probably sink the company, any suggestions on how to short such an iconic brand? My moral compass says to not do it, but I feel like the board needs to be taught a lesson.

If there was a day to short F, today would be it, while there's euphoria over "new blood"?

 

[jhm]

Please remember a number of points
1) this is a FIRST pass at creating this, so i need to tweak and check for errors.
1a) I got the sizes of the batteries from http://evadc.org/wp-content/uploads/2017/02/EVInfoSheet-20170123.pdf and a few other places
1b) I didn't put any battery size (yet) for Honda as they seem to have abandoned, like the Honda Fit
1c) I made gas/electric yellow only in batteries
2) It's from Inside EV's
3) I'm not sure if it is only US sales
4) I need to go over it again to confirm all the numbers
5) Google doc's did't copy all the dratted functions ie =sum(Col/row to col/row)
6) soon after 6/1 I will update 2017 sales (note if you multiply by 3 you can get a very rough estimate of what is going on)
7) since i got back to Washington DC/Rockvile Maryland area for a visit, i have swung by the Service center every day, starting wednesday last week, there was a large pulse of deliveries Thursday most are gone (one had a VIN of 196,xxx)
8) I am a "spaghetti programmer" I dont write "pseudo code" first, i just create on the fly., thus things may seem "disjointed" "why did he forget that thing..."

Understood. It's all provisional.

Even so there are orders of magnitude differences here. So even as numbers tighten up, the high level view may well hold up.

Thanks for taking a stab at this. It really is a lot of work to get this sort of thing completely accurate. Nothing but respect.

 

[jhm]

Fields out as CEO @ Ford.

Ford Motor is replacing Mark Fields as CEO - Ford Motor is replacing Mark Fields as CEO

Lack of vision.

At the annual meeting on May 11, Mr. Fields said Ford was capable of staying competitive in the current market for new vehicles, while also "keeping one foot in the future" of an industry heading toward autonomous, battery-powered cars.

Sure, this is like having your feet on two different icebergs.

During Mr. Fields's three-year tenure — a period when Ford's shares dropped 40 percent — he came under fire from investors and Ford's board for failing to expand the company's core auto business and for lagging in developing the high-tech cars of the future.

So the shareholder expectation is that it is possible to do both. Core auto business (good ol' trucks) AND high-tech future thingamabobs. This is nigh impossible for any CEO. If you don't deliver on growing ICE business, it doesn't matter how far you got on future tech. Eventually all ICE business will shrink, and CEOs will be punished wasting too much effort on autonomous or electric vehicles which won't come close to replacing the glory day profits of a few years ago.

 

[SW2Fiddler]

No one on here should try to star in "The Big Short 2" in shorting ICE companies, it's not worth it.

But if it's anything like the original, it will get better and better on every re-watch.
I'm just stock and LEAPs. Not enough guts for big short plays.

...But I have a sideline appetite for that spicy spicy schadenfreude...

Carry On

 

[Waiting4M3]

I suspect using the same money to buy TSLA will net more than shorting any ICE companies, in short, mid and long term.

 

[Jonathan Hewitt]

I suspect using the same money to buy TSLA will net more than shorting any ICE companies, in short, mid and long term.

I think you will be right, but by diversifying your portfolio some (long TSLA, short ICE) you may be able to achieve lower volatility in your portfolio. For example, if (when?) a macro event occurs that knocks down shares of TSLA and ICE, you will lose money on TSLA and make money on your ICE short. The great thing here (other than losing less money than 100% long TSLA) is that you can close out some of your short ICE position at a nice profit and move that money into TSLA at a better price than TSLA was before the macro event. I'm not advocating one way or the other but it's good to keep in mind that each person has different investment objectives, time frames, and trading abilities so no one strategy will be one size fit all.

 

[ValueAnalyst]

Some traditional automakers will not survive the transition to EVs.

What ICE makers will fail?
When do they become short targets?

There's some big money betting on them catching up.

Why tie up your capital and limit your upside to 100% by shorting a 5x P/E co, when you can invest in an innovative leader on the long side?

 

[Dynastar]

I suspect using the same money to buy TSLA will net more than shorting any ICE companies, in short, mid and long term.

In all seriousness, I'd focus more on Tesla, but if it looks like the writing is on the wall and the market has not reacted....

 

[Bangor Bob]

So the shareholder expectation is that it is possible to do both. Core auto business (good ol' trucks) AND high-tech future thingamabobs. This is nigh impossible for any CEO. If you don't deliver on growing ICE business, it doesn't matter how far you got on future tech. Eventually all ICE business will shrink, and CEOs will be punished wasting too much effort on autonomous or electric vehicles which won't come close to replacing the glory day profits of a few years ago.

Honestly, the only place to grow the ICE business today is China (and you will need lots of NEV's to play there), India (and you have about 10 years before that ICE market fizzles out), and by conquest from other brands. We're just a few years away from ICE not even being a zero-sum game anymore, but becoming lose-lose. Seems like Ford's Board is utterly unprepared for this reality.

ICE+autonomous is a total non-starter. The per-mile cost of fuel is more than per-mile capex+opex on an autonomous EV (if Tony Seba isn't completely out to lunch on that part.)

 

[theschnell]

Somewhat related, I think the time may be right, unless you think the train already left the station, to short autoparts stores. Think about it, they had massive profits from 2009 forward because people were driving old junky cars they were trying to keep running. Fast forward to the past 3 years and new car sales have been through the roof, used car prices getting lower, so folks can upgrade a better used car, and junkers finally going to the junk yard instead of being repaired. Autozone, Advance auto, O'Reilly auto all down 15 - 20 % over the last 6 months. But why would the downtrend be temporary? Even if a recession looms, it takes several years for the car market to age again. And I don't anticipate a recession too soon. Then as electric vehicles become mainstream, their fate is sealed. I need to research which one is the most highly leveraged. I think this could be a very good play. What do you guys think?

 

[winfield100]

vaguely related to this, Plastic models of ICE engines, V6, V8, etc

 

[TheTalkingMule]

GM dips after reported suit alleges diesel pickups are rigged to pass emissions tests - GM dips after reported suit alleges diesel pickups are rigged to pass emissions tests

Yikes.

 

[jhm]

GM dips after reported suit alleges diesel pickups are rigged to pass emissions tests - GM dips after reported suit alleges diesel pickups are rigged to pass emissions tests

Yikes.

Hmm.

"GM charges a premium of approximately $5,000 for diesel-equipped vehicles over
comparable gas vehicles," the suit said.

Perhaps someone can explain to me why truck buyers are willing to pay a $5000 premium for a diesel drivetrain.

This should challenge some of our ideas about EVs needing to achieve cost parity with gasmobiles. Apparently there are substantial segments that are willing to pay a $5000 premium for the drivetrain of choice. This proves that parity is not required.

 

[Weezer Fan]

GM dips after reported suit alleges diesel pickups are rigged to pass emissions tests - GM dips after reported suit alleges diesel pickups are rigged to pass emissions tests

Yikes.

Came to see if this was here. The shorts for GM may win bigot.

 

[tander]

What about Fiat/Chrysler? I think next year or so might be a good time to start a small short position in one of these old established ICE automakers, the trick is to find out which company is the most exposed to this change.

Without doing the homework, that's what first comes to mind for me too. Between the reliability ratings, diesel stuff, and safety they already have poor marks before adding in electric and self driving. But then again for many Jeep buyers they don't care much about that stuff so it would probably take some more homework.

 

[tander]

Hmm.



Perhaps someone can explain to me why truck buyers are willing to pay a $5000 premium for a diesel drivetrain.

This should challenge some of our ideas about EVs needing to achieve cost parity with gasmobiles. Apparently there are substantial segments that are willing to pay a $5000 premium for the drivetrain of choice. This proves that parity is not required.

I was just talking to and admiring the utility of a guys truck while camping last weekend (my sedan with not much cargo room and 4.5 inch clearance comes up pretty short in some ways). His big thing was how much towing capacity his diesel had.