Shorting Oil, Hedging Tesla

[winfield100]

no one mentioned the actual fragility of the O&G business in the above few pages

1) remember Texas freezing over due to electrical problems, due to mostly fossil fuel plant problems few months ago
2) remember Texas broiling about 10 years ago, same problems
3) a major east coast of US gasoline shortage (due to we can’t sell it because we can’t charge for it so you can’t have it)
4) 20% of US under giant heat wave
5) ?Shell? selling Permian basin oil ?rights?

jolts like that may just speed up transition ,
plus a car is just a lawn ornament or planter without fuel, on blocks.

 

[gavine]

There will be a constant push and pull on the cost side, we're already seeing EV and solar price increases as demand for raw materials skyrockets. The Oil & Gas ecosystem has been maturing for almost two centuries but has been anything but a smooth ride, and I'd expect the same for alternative energy. People tend to be hugely optimistic and the reality tends to be very different.



CDs hold far more data than records and tapes and come with other real benefits. For people who see vehicles as just a means of getting from Point A to B, what benefits do electric vehicles offer that would spur crazy adoption?

My daily driver right now is a 2007 Chrysler Sebring with 240,000 km on it. The thing costs me nothing to maintain aside from a few oil changes per year and brakes/tires, the latter which would also be the case with an EV. Cars are depreciating assets and people with some financial acumen buy used and drive until the vehicle can drive no more. I don't think many will be rushing out to replace a reliable low-cost ICE vehicle with something that will cost tens of thousands and be financed over years, it just doesn't make sense.

I'm fully on board with the transition, I just think people are being massively optimistic about the timelines. There are too many variables and too many potential hurdles to overcome, my bet is that things will not unfold as smoothly as people hope.

Many people in the USA only keep their cars for 3 years (on a lease). So, as more EV choices become available, more and more of those people will choose an EV for their next car.

 

[mspohr]

It’s Too Late To Avoid A Major Oil Supply Crisis | OilPrice.com

The level of capital investment in oil exploration and production in the last few years has been far too low, and now it is likely too late to avoid a supply crisis

oilprice.com

 

[Dave EV]

EVs are much cheaper to operate and maintain. A 12 year old ICE car is just one repair away from the junk yard when it can be replaced with a zero maintenance, low operating cost EV.

For the lifetime of the vehicle, I'm not so sure. Every single ~10 year old EV right now is due for a battery replacement, except for the Model S and maybe the original Spark EV with A123 batteries. Most Model S owners are complaining about significantly reduced Supercharging speeds.

The average age of vehicles on the road today is 12 years old. It's not uncommon to drive an ICE for 20 years, but I suspect that we are a generation or two of EVs away before we get to the point where EVs can run 20 years and still maintain 80% capacity.

We need those million mile batteries, Tesla! And we need cost effective battery pack replacements or refurbishments.

Note that despite the somewhat limited life of an EV compared with an ICE - the EV is still significantly more environmentally friendly over each vehicle's useful life.

 

[Oil4AsphaultOnly]

For the lifetime of the vehicle, I'm not so sure. Every single ~10 year old EV right now is due for a battery replacement, except for the Model S and maybe the original Spark EV with A123 batteries. Most Model S owners are complaining about significantly reduced Supercharging speeds.

The average age of vehicles on the road today is 12 years old. It's not uncommon to drive an ICE for 20 years, but I suspect that we are a generation or two of EVs away before we get to the point where EVs can run 20 years and still maintain 80% capacity.

We need those million mile batteries, Tesla! And we need cost effective battery pack replacements or refurbishments.

Note that despite the somewhat limited life of an EV compared with an ICE - the EV is still significantly more environmentally friendly over each vehicle's useful life.

The Nissan Leaf, which is notorious for poor battery life, have been getting battery replacements by their owners, and in most cases with larger (and more durable) capacity packs from crashed newer Leaves. Needing a replacement battery pack (which can be recycled) doesn't render the entire vehicle as scrap.

 

[TheTalkingMule]

The Nissan Leaf, which is notorious for poor battery life, have been getting battery replacements by their owners, and in most cases with larger (and more durable) capacity packs from crashed newer Leaves. Needing a replacement battery pack (which can be recycled) doesn't render the entire vehicle as scrap.

Yeah, and I would argue that concern doesn't even apply to anyone buying a Tesla(or most EVs) today. Even if a pack went bad in 10 years on a Model 3 bought today, the replacement pack will be peanuts by 2031. Maybe $4k including simple labor? And that then buys you 20 more years of life.

The 2013 buyers might have some mild headaches coming, but not a 2021 buyer.

 

[TheTalkingMule]

It’s Too Late To Avoid A Major Oil Supply Crisis | OilPrice.com

The level of capital investment in oil exploration and production in the last few years has been far too low, and now it is likely too late to avoid a supply crisis

oilprice.com

They've been saying this since 2015. Meanwhile, the global glut grows ever larger.

We're probably at about 70-80% of reasonable global production capacity today and 60% of maximum potential production(if sources like Iran/Venezuela came online). And global demand peaked in 2019.

This narrative is paper-thin.

 

[mspohr]

Get Ready for a Massive Paradigm Shift in the Auto Sector - CleanTechnica

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News! The dream of an electric car future began to crystallize in 2010. That’s the year Tesla went public. Soon after, Tesla introduced its Model S sedan. By 2013, the company finished the year selling just 22,000...

cleantechnica.com

“On the one hand, such rapid growth seems hard to believe in an industry as large, complex, and slow-changing as the auto industry. On the other hand, tech transitions aren’t slow once a technology becomes cost-competitive. The fabled S-curve of tech adoption looks much more like a steep rise than an S.”

 

[SmartElectric]

“On the one hand, such rapid growth seems hard to believe in an industry as large, complex, and slow-changing as the auto industry. On the other hand, tech transitions aren’t slow once a technology becomes cost-competitive. The fabled S-curve of tech adoption looks much more like a steep rise than an S.”

In my life time: I worked from age 13 on a farm to buy a $2000 computer at age 16. My friends bought cars with that same money. I was one of only 3 kids out of 1200 in my school to own a personal computer at that time. A handful more families had computers that parents bought for work/etc, around 20/1200.

I grant the cost curve of battery packs isn't dropping like computers, YET. It's only one thing left, battery cells, the rest (motors, pack, charger, control electronics) of the EV components are now inexpensive for any company to integrate into a car. When there is only one area to reduce price, focus on that area and mass manufacturing will solve that problem at scale.

 

[mspohr]

In my life time: I worked from age 13 on a farm to buy a $2000 computer at age 16. My friends bought cars with that same money. I was one of only 3 kids out of 1200 in my school to own a personal computer at that time. A handful more families had computers that parents bought for work/etc, around 20/1200.

I grant the cost curve of battery packs isn't dropping like computers, YET. It's only one thing left, battery cells, the rest (motors, pack, charger, control electronics) of the EV components are now inexpensive for any company to integrate into a car. When there is only one area to reduce price, focus on that area and mass manufacturing will solve that problem at scale.

Battery prices are below$100 kWh (at least for Tesla) which is the point where EVs become competitive with ICE.
(I even bought 30 kWh for $100 / kWh this year.)

 

[winfield100]

Battery prices are below$100 kWh (at least for Tesla) which is the point where EVs become competitive with ICE.
(I even bought 30 kWh for $100 / kWh this year.)

OT
@mspohr
where please? may need a nice battery for a boat

 

[mspohr]

OT
@mspohr
where please? may need a nice battery for a boat

I ordered these.

4pcs Rechargeable Batteries Solar System Lifepo4 3.2v 230ah 280ah Battery 300ah 302ah Cells Battery Lifepo4 - Buy Lifepo4 280ah battery Lifepo4 300ah lifepo4 Product on Alibaba.com

4pcs Rechargeable Batteries Solar System Lifepo4 3.2v 230ah 280ah Battery 300ah 302ah Cells Battery Lifepo4 - Buy Lifepo4 280ah battery Lifepo4 300ah lifepo4 Product on Alibaba.com

www.alibaba.com

Take a few months to arrive. They all tested good.
(Lots of other sellers with similar.)
I paid $86 each. Price has gone up.

 

[winfield100]

I ordered these.

4pcs Rechargeable Batteries Solar System Lifepo4 3.2v 230ah 280ah Battery 300ah 302ah Cells Battery Lifepo4 - Buy Lifepo4 280ah battery Lifepo4 300ah lifepo4 Product on Alibaba.com

4pcs Rechargeable Batteries Solar System Lifepo4 3.2v 230ah 280ah Battery 300ah 302ah Cells Battery Lifepo4 - Buy Lifepo4 280ah battery Lifepo4 300ah lifepo4 Product on Alibaba.com

www.alibaba.com

Take a few months to arrive. They all tested good.
(Lots of other sellers with similar.)
I paid $86 each. Price has gone up.

OT
thanks

 

[ItsNotAboutTheMoney]

Yeah, and I would argue that concern doesn't even apply to anyone buying a Tesla(or most EVs) today. Even if a pack went bad in 10 years on a Model 3 bought today, the replacement pack will be peanuts by 2031. Maybe $4k including simple labor? And that then buys you 20 more years of life.

The 2013 buyers might have some mild headaches coming, but not a 2021 buyer.

Manufacturers don't want to sell replacement packs and will try to prevent use of alternatives. Unless there are strong right to repair laws in place by then, it's still going to be expensive.

 

[gavine]

crashed newer Leaves

I always wondered of the plural for Nissan Leaf was "Leaves". Mystery solved.

 

[Oil4AsphaultOnly]

I always wondered of the plural for Nissan Leaf was "Leaves". Mystery solved.

Don't take my word for it. That's just grade-school habits kicking in. We're enough in the weeds that I don't think it'll matter though, since the only people that care would naturally know what you're talking about based on context.

 

[Oil4AsphaultOnly]

Manufacturers don't want to sell replacement packs and will try to prevent use of alternatives. Unless there are strong right to repair laws in place by then, it's still going to be expensive.

Nissan officially discourages this, but what they're learning is that this is very much the start of an aftermarket industry. Don't be surprised if replacement battery packs start to appear at your nearest SEMA show.

 

[jhm]

@AndreP, welcome to the thread! It's good to have a fossil investor here. I'd be curious what year you expect oil production or consumption to peak. From the beginning of this thread we've pretty much have expected peak consumption to happen by 2025, but have discussed factors that may adjust the peak.

Additionally we have long recognized that the peak is far enough off that it need not be driving factor in the near term performance of oil companies. Moreover, whether oil companies are profitable through the peak or not depends critically on how much the industry might over invest in production. Overproduction kills profitability even though it can drive oil prices low enough to sustain growth in the quantity consumed. The thing that is most difficult for the oil industry is to increase total revenue; you can sell more volume at unprofitable prices or sell less volume at higher prices. In recent years, oil companies have become more fiscally responsible, but perhaps the Covid-19 recovery could bring heedless drilling back into fashion.

So let us know when you expect the peak to happen and whether you think the industry will return to overproduction or exercise more financial discipline. Cheers!

 

[jhm]

After Blowing $300 Billion, U.S. Shale Finally Makes Money

Marathon Oil Corp. used to represent everything that was wrong with U.S. shale: enormous debtloads, lavish executive pay and a seeming willingness to spend whatever it took to boost output. The company hemorrhaged money, and the stock plunged 84% from a peak in 2014 through the end of last year.

www.bloomberg.com

Hey, 3 more years like 2021, and US shale might just generate some long-term FCF. Or it could just go crazy pumping again and return to burn cash.

 

[TheTalkingMule]

When did they release 2021 FCF numbers? Bloomberg has no shame!