COVID19 has killed EV investment
It didn't take the goldfish consumer of this world long to forget the natural disasters of 2019, fast forward a year and it feels like groundhog day.
I hear one of the most important public relations sayings less and less today. It used to be a hallmark that PR professionals lived by back in the 1980s, "no publicity is good publicity". The reason, though, that we hear it less and less is because in the age of globalisation and social media the saying is irrelevant. If you want an issue or message to be heard? You have to scream it at the top of your lungs. If you don't? It's just white noise lingering in the background.
That theory is no truer than the case you can make for climate change right now. Last December we were screaming, jumping up and down and pillaging over climate change. The 2019 Californian and East Coast Australian bushfires combined with a bunch of other natural disasters had brought it front of mind globally. And suddenly it hadn't just become a major issue politically but in the corporate world as well. Organisations were making carbon-neutral commitments left, right and centre and the media were reporting on them as if the companies were patron saints.
And then COVID19 happened, and for the past 6 months, we've had diddly squat not just politically but economically as well. In fact, COVID19 hasn't just slowed everything down, it's killed the climate change discussion point altogether. It's like last December the world had a common enemy and today we're just fractionalised trying to deal with one global f**k up at a time. Ironically these are things that can all be fixed well in advance including COVID19.
What I want to talk about today though is electric vehicles and COVID19. And the story is not good. COVID19 has brought EV research, development and sales to a grinding halt. Part of the slowdown is a severe lack of stock because electric vehicles are so new in most cases that factories need to be retooled and new supply lines need to be opened. But once the pandemic loomed? Those supply lines shut up shop which means that the factories had no way of actually retooling.
We're now left in this state of limbo where pure EV manufacturers like Tesla, Lucid and Rivian are finding ways to push on but the big guys like Volvo, BMW, Audi and Mercedes are pushing all of their big-time volume electric vehicles back month on month. And let's be frank here, whilst I love Tesla, Lucid and Rivian vehicles? I doubt they're going to herald the winds of change in automotive. They were the pioneers who showed the big guys where opportunity was.
But thing is? The big guys still need to dive in that pool of opportunity. Until they do that, the pioneer and niche EV manufacturers are going to struggle on as just that. And with almost 52 automotive manufacturers (in Australia anyway) vying for the same chunk of the market, there is little hope for any of them coming to the party in volume. To put that in perspective, in Australia there are only 6 competing parent companies for biscuits and they get daily sales. Car manufacturers get on average one sale every 4-5 years from a customer and they have almost ten times the competitors.
The other thing issue for EV evolution that COVID19 has created is a political one. Prior to COVID19 world governments were looking for funding, stimulus and policy solutions to climate change. Once again right now that has by-en-large been put on hold (with the exception of California's announcement yesterday). In fact, world governments are now stressing far more about fiscal issues than world-destroying issues.
The reality of that barrier to entry though is that electric vehicles could genuinely be a part of the COVID19 solution and not this random off to the side beggar looking for cash. Here in Australia for example part of the stimulus is tax breaks for small business owners when it comes to purchasing assets for their businesses. Why can't you do something like remove our infamous luxury car tax for electric vehicles? Or better still, why not remove the fringe benefits tax for business owners on electric vehicles? LCT makes for a full extra 15% in pricing on vehicles over $68k and FBT is almost 30% on all assets purchased by a company for personal staff use.
It's obviously a state-controlled issue in the US but is there any reason that the US Federal Government can't put forward a stimulus cheque to anyone looking to purchase an EV? I mean the bulk of higher volume EV manufacturers nowadays are located within the US so providing that stimulus would theoretically help not just the common person but the manufacturers as well. And I'm not just referring to the Teslas and Rivians of the world, Ford has just announced their new F-series trucks are going to be electric vehicles and then there's the fated Nikola/GM partnership. While I know that partnership is rotten to the core surely GM have the right intentions at heart there? Partner up with a decent fuel and battery developer and create long-range, fast EVs.
I have to be frank though with the first US presidential debate looming in under an hour and a half I haven't heard any talk of climate change policy from Biden or Trump. In fact, the only thing I've heard being talked about is COVID19 and economic stimulus. One thing that both parties have held up over the past month and one thing that the American people sorely need right now. And I'm not just saying that from a market, medium enterprise and large corporation point of view. My heart goes out to small American business owners right now because most of them are getting nothing in the way of support. Australian business here has stimulus such as job keeper which allows the business to run in a semi-normal fashion even in shutdown. But Americans have absolutely nothing.
So what comes next worldwide with climate change and EV? I can't really say until we have more information on a COVID19 vaccine. In fact, sustainable practices seem to have been totally put on hold until COVID19 is over. Is the market going to rush into renewable energy products after that? I hope so. But I doubt it. While habits in many cases are being changed for the better during the COVID19 pandemic one of them which hasn't been touched is electric vehicles and without fiscal stimulus to support change? It'll be much the same story moving forward.
With any luck though once supply routes and factories are permanently open again? The vehicles we're all really waiting for like the Polestar 2, the Rivian R1 series, the Ford F electric series and the luxury manufacturers plethora of hybrid and electric SUVs can start rolling off the production lines and win hearts and minds worldwide. Without that? We're stuck with the same century-old technology that's been ruining the planet for the same time it's been utilised.
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