The EV Delusion Crumbles: Major Automakers Are Out!
Source: Insider Newsletter Issue 191
FLIP FLOP
It’s almost like there’s something wrong with the idea of EVs. I can’t put my finger on it. Maybe it’s the fact that when you trot down to your neighbourhood EV dealer, stopping for a soy latte and some tofu, you’re buying an expensive iPhone on wheels (and we all know what the resale value of a 5 or 10-year old iPhone is like).
You tell yourself you’re excited to be saving the planet as you power the bad boy up with some vegan electricity subsidised by the pronoun compliant guvmint, but now those subsidies are now being pulled (governments are bankrupt — surprise), and your vegan electricity is being imported from Indonesian coal mines and it’s costing a lot more than your old planet killing V8 supercharged testosterone-boosting muscle car and you’re pissed. Or maybe it’s the cost? Or maybe most people just don’t appreciate being forced to switch their car because the alphabet people say so?
It could be any of these things, but you know what? If you ask me, it’s quite simple. It is this very simple metric by which so much of human behaviour can be deduced. When it comes to buying isht, what folks want is a high quality item at a reasonable price and one that is more competitive than alternatives. The fact is that when it comes to their wallet nobody gives a pig’s arse about saving the planet. And THAT, my friends, is where the EV fraud stumbles, trips, and then jarringly smashes its face into a brick wall of reality.
And this brings us to our beer-drinking, bratwurst-eating friends — some of the best designers and manufacturers of cars ever. The Germans, specifically, Audi, who are doing a massive U-turn on electric vehicles. DROPPING their earlier goal of producing only electric vehicles by 2026. And they’re not the only ones.
Audi puts big EV push on the back burner
CEO Gernot Döllner told Bloomberg. “In the end, we decided to spread it out to not overwhelm the team and the dealerships.
Hahaha! That’s what he actually said to Bloomberg, but you know what he’d say to his mates down at the local beer hall? He’d tell them what an insider in the European automotive industry told us over a year ago — that there is bugger all demand for these stupid things and that many of the European auto manufacturers were going to land up being stuck with unwanted inventory… and some would probably “not make it through.”
Speaking of “others.” Mercedes Benz are also doing the same. They are bailing on EVs and instead are ramping up production of ICEs.
Mercedes-Benz delays electrification goal, beefs up combustion engine line-up
The company now expects sales of electrified vehicles, including hybrids, to account for up to 50% of the total by 2030 – five years later than its forecast from 2021, when it aimed to hit the 50% milestone by 2025 with mostly all-electric cars.
And perhaps most curious of the bunch: Apple. After 16 years of teasing entry into the EV market, Apple just bailed on their long-awaited electric car.
After 16 Years, Apple Abandons Work On Electric Car
One other thing worth mentioning is that Apple sits on a gobsmacking $162 billion in cash. And even with all that cash, they decided to pass on the “EV revolution.”
What to make of all this? As we like to say around here, everyone is a greenie until it hits their pocket. It seems to me that maybe, just maybe, Audi, Mercedes, and Apple have figured out that EVs are not the silver bullet they were promised to be.
And speaking of Apple, guess what they’re focusing on instead…
Many employees from the Special Projects Group (SPG), responsible for the car, will transition to the artificial intelligence division led by executive John Giannandrea. Their focus will shift to generative AI projects, aligning with the company’s evolving priorities.
Why, AI, of course. Which brings me to…
CONTRARIAN SIGNS IN TECH
The recent AI-fueled rally in Magnificent 7 Magnificent 2 lured many investors from the sidelines and converted even the most hardened “growth” sceptics (short sellers).
Meanwhile, contrary signs abound…
James Packer bets big on US tech stocks
Billionaire James Packer has more than doubled his investment in the US sharemarket to just shy of $US800m ($1.2bn), taking massive bets on the future of Facebook and chipmaker Nvidia.
The headlong dive into tech and the sudden reshaping of his portfolio has seen about a quarter of his wealth moved into three listed companies – Mark Zuckerberg’s Meta Platforms, Nvidia Corporation and software behemoth Adobe.
The overhaul has also resulted in Packer dumping the majority of his previous stock holdings in 24 companies across financial services, hospitality, tourism and private equity-led funds.
But far and away the biggest movement has been Packer’s newly-purchased stake in Meta, owner of Facebook, a play worth $US223.5m.
You don’t hear of billionaires investing in the likes of Exxon, Chevron, Haliburton, or Peabody and the like!
Ah, those contrary signs get even stronger!
Stocks don’t get included into the Dow when they are out of favour. In fact there are numerous studies out there that show, beyond reasonable doubt, that stocks added to the Dow tend to UNDERPERFORM while those dropped from the index OUTPERFORM. Who Woulda thunk it?
In fact, just as I was writing this issue, I came across the following…
Exxon getting dropped might be the best case in point as it perfectly highlights the sentiment around energy investments. Exxon was booted from the Dow in September 2020. And guess when the best time to buy it was…
Look at how it’s taken off since then.
Now, on their own we wouldn’t get all excited about each of these little contrary signs. But when you treat them like the attendee list at Davos and line them all up against a wall, they collectively become a strong form contrary sign — even more so when you consider the below chart that shows energy is the most uncorrelated sector to tech. In other words, the best place to hide when tech stocks buckle is in fact energy.
