Getting Something For Nothing

I just contracted to buy all the gasoline I want at 24 cents a gallon. No, I have not struck oil in my backyard, or come into an inheritance from a long lost Kuwaiti relative. That is the de facto price that PG&E is billing me for a full charge on the all-electric Nissan Leaf that will be delivered to me in December.

That works out to $1.20 to recharge a vehicle that will transport me 100 miles, at the price of five cents a kilowatt hour. That compares to the $15 I currently pay to top up the tank on my conventional gasoline engine driven car. This is less than half the 11.8 cent/hour I pay to run the rest of my appliances, and a tiny fraction of the 40 cent/hour peak rate I pay to run the air conditioner in the summer.

PG&E has exactly one engineer to talk to its 10 million customers about this ground breaking new technology, and after much effort, I managed to get him on the phone. I asked who was paying the subsidy? Were those profligate bastards in Washington involved? He answered that there was no subsidy, that power sold at night was cheap because there was no other market.

So I inquired as to who was paying for all of the equipment upgrades, like the new transformers and power lines that were needed? Do I sense the heavy hand of Sacramento? He replied that there was no capital cost because the same infrastructure that delivered power to me during the day would be used to power my car at night. Only a couple of bucks would be spent on the installation of a new “time of use meter”.

Of course, they have subsidized the hell out of the Leaf itself. The car that is costing me $22,000 here in California sells for $32,000 in Japan. That beats the hell of the Chevy Volt, which is expected to hit the market at $42,000 and only goes 40 miles on a single charge. I know we’re supposed to be cutting the deficit by eliminating handouts like this. But you’ll only take my subsidies by prying my cold dead hands away from them. Take someone else’s subsidies, not mine! It is the American thing to do these days.

Shortly after our conversation, a technician came out to visit me. The good news is that the installation of a new 50 amp circuit breaker for the EVSE charging dock (see below) was going to cost only $750, half of which is tax deductable. This is a simple inverter which converts the AC off the grid into DC to charge the battery. Since the charging dock will have a 25 foot cable with a SAE standard J1772 universal plug, it can be used to top up a Leaf, a Volt, or any other electrical vehicle that comes down the pike. It is also over engineered to handle triple the Leaf’s load demand to accommodate future upgrades with heftier battery packs.
It was quite entertaining chatting with the tech, drawing as much as I could from an ancient electrical engineering course I took in college. Some of his customers were “extreme” environmental early adopters, with bidirectional “time of use” electric meters that allow their solar panels and wind mills to make them net suppliers of power to the grid. My new PG&E (PGE) smart meter actually scored poorly on its SAT test, as it was still awaiting some future upgrade to become fully functional. He then pinned a life sized poster of my new charging station to the wall in the appropriate location, presumably so we and our gardening tools can learn to live with it.
As he left, he thanked me for taking the technology a long awaited leap forward. Wow! When was the last time someone thanked me for my business?


He did mention that one unanticipated problem had arisen. My ears perked up. Many wealthy Tesla Roadster owners in Los Altos Hills were impressing so many girlfriends with rides that they were requiring multiple daytime recharges, even though they promised to recharge only at night. Not only did this send their electricity bills through the roof, it was causing problems with the grid as well. I guess its all part of the teething process, a cost of making the great leap forward to the next generation. Who knew that Match.com would be involved?

I never thought I’d get something for nothing, but it looks like this time I will. That is, as long as the damn car works, and my kids don’t run the battery down playing rap music all night. For a glimpse at the future and further insights into this amazing technology, please visit Nissan’s Leaf website at https://www.drivenissanleaf.com/ .

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.