ATOM Award of the Month, February 2020

It is time to award a new ATOM AotM, and the first one somewhat coincident with the newly published version 2.0 of the ATOM publication.  This one has been discussed elsewhere on this website, but at the moment, it is perhaps the single biggest disruption in the global economy.  

First, a small story.  Photovoltaics (PV) is actually my first exponential technology, and what made be aware of the concept in a time when even 'Moore's Law' was not a household term and Intel was a very small company.  When I was 10 years old, I wrote a 5th grade paper (about 800 words) on exponential improvement of solar cells of about 5% a year.  It predicted cost-effectiveness in the 'early 21st century'.  The paper was a hit and was submitted to a contest that all the elementary schools submitted papers to, and I was taken, along with a number of other 5th graders from the Cleveland area to an event where the Mayor of Cleveland at the time (George Voinovich) meets the children and does a photo op.  We didn't understand any of that, but each child got a framed certificate. 

Sure enough, as the decades passed, PV did become cost effective in the early 21st century.  It has been a subject on this website for a long time, and while we often point out how many technologies have failed to meet industry-derived projections, as you can see from this old 2007 article, a US DoE chart thought PV installations in the US would be merely 15 to 30 GWs.  In reality, the 2020 number is about thrice the upper bound of that projection, at 80-90 GWs, with over 3% of US electricity generated through PV.  Even better, the world average is higher than the US average, and the world total continues to grow in excess of 25% a year.  Remember that this ATOM advancement is tied to the advancement of electric vehicles, as not merely is crude oil being replaced with electricity.  For many countries, the oil was imported, while the photovoltaic electricity is generated domestically.  This is a victory against OPEC, as imports from OPEC are being replaced with domestic energy.   

As we recall Swanson's Law, the 40-year trend is consistent (note that both axes are logarithmic).  While it took decades to get up to 3% of world electricity consumption being through PV, the jump from 3% to 12%+ will not take longer than a few years.  The inflection point is here, and the dollar impact is among the biggest of any ATOM transformations currently underway.  Even more than the dollar impact, it is the multiplier effect of these specific dollars given where the shift is being generated.  

(Images from Wikipedia and Our World in Data.  Click to enlarge).  

The best part about solar, which is not true of wind power, is that the poorest countries in the world are in fact the ones with the greatest solar intensity, and are thus the most suitable for solar.  Much has been written about why cold-weather cultures have done better than hot-weather cultures on average, but now the very resource that was not being monetized can be monetized.  By contrast, wind power, while good, is both slower-advancing and most applicable in countries that are already wealthy, and so does not have quite the same multiplier effect.  This map of solar intensity indicates where the greatest utility of photovoltaics can reside (image attribution, GNU Free Documentation License v1.2).    

The absolute lowest-prosperity countries are still too disorganized to take advantage of this, but even the third quartile is well-prepared to rapidly increase PV installations and move away from oil imports.  In the near future, it will seem quite absurd that people were importing their energy from thousands of miles away.  

 

Related :

The End of Petrotyranny - Victory

The End of Petrotyranny

Solar Power's Next Five Game-Changing Technologies

A Future Timeline for Energy

Why I Want Oil to Hit $120 per Barrel (epic 2007 article)

 

Related ATOM Chapters :

3.  Technological Disruption is Pervasive and Deepening

 

  

 

Comments

[Geoman]

Just got back from a guidance meeting today for our subdivision. 5 solar contractors biding for our homes, promising bulk cost reductions (around 10%) depending on how many houses sign up. Whole system costs around $12k installed, with a 10 year payback and a 25 year warranty, and includes the federal tax rebate. About $2.90 a watt. Power costs are $0.20 kwh locally.

My contribution to the selection committee was to make sure people were NOT doing this to save the environment. If you want to save the world you can spend your money lots of ways. Do this because it simply makes good economic sense.

I live at high latitude, so I can power my house entirely around three months a year. Unfortunately, there are several months a year where my output would be essentially zero. Still and all, savings are around $1,200 a year.

[Drew]

This will be one of those quietly accepted singularity advances, like of course you have an always on the internet computer in your pocket.

[Kartik Gada]

Drew,

Perhaps even more so, since most people won't even actually see the Solar farms.

Plus, the biggest effects are in tropical countries that were trapped into having to import oil. Replacing imported oil, for them, has a huge multiplier effect.

[Kartik Gada]

Geoman,

My contribution to the selection committee was to make sure people were NOT doing this to save the environment. If you want to save the world you can spend your money lots of ways. Do this because it simply makes good economic sense.

Good! Environmental solutions are only really solutions if they make economic sense. Otherwise, they end up causing a worse situation than what existed before the 'solution'.

From the world map above, you can see the relative solar intensity of your location. If it makes economic sense even in your zone, then it makes sense in all zones of equal or higher sunlight.

[Drew]

Assuming the 25% growth rate continues, solar power should double roughly every 3 years. This leads to a 16 fold increase in solar power around 2032, when the electric car population will be in place. You can see why Exxon has slid to 8th place for the world's most valuable companies. As KG mentioned earlier, like the cell phone the difference will be biggest in poorer countries that skip the in-between steps of technology build out (gas stations, etc.). It will be a literally quiet change in wealthier countries when we stop hearing engines.

[Geoman]

Kartik - If it doesn't make economic sense it won't happen. Not at a scale that makes any difference.

Honestly I have been holding out for the Tesla solar shingles. The idea being that the cost of the solar is a bonus to replacing your roof - any time you re-roof you just choose solar shingles over regular shingles for a very small premium. But I figure I'll do the panels now and add the solar shingles later. Most of the wiring stuff will be done by then anyway. I might get 6 months a year free power that way. Heck, add an electric car and I might be driving for free.

"Exxon has slid to 8th place for the world's most valuable companies."

That slide is attributable to much more than just solar. Really it is fracking. I just can't overemphasize the change that has happened in the last 10 years due to fracking. Our supply of hydrocarbons at a price >$80 is essentially infinite. We will never run out. I've seen estimates that are literally off the charts - hundreds of years of demand. Don't believe me - look at what has happened with Russia, Iran, Venezuela, and Libya. For various reasons there have been huge real and threatened disruptions in supply. Yet prices have remained relatively stable worldwide - between $40 to $80 per barrel. Why? Because fracking means any single supplier can be easily replaced.

Fracking has really only taken off in one country (the U.S.), in a few areas (Texas, North Dakota, and Pennsylvania). California and New York have huge untapped shale resources. Also Michigan and other states. The U.S. tapped it's shale, and not even all of it, yet it changed the world. I recently read an article where shale plays in Namibia dwarf the U.S. As they do in China, Russia, Poland, the middle east, Argentina...there is no incentive now to develop those resources, but if the U.S. ever runs low on shale resources, there are huge new resources to tap in other countries.

I tell people, think about all the oil and gas deposits we have ever produced in the history of Earth. Now imagine we have 2-3 other entire Earth's with exactly the same amount of resources left to tap. It is that much more shale brings to the table.

64% of our oil usage in the U.S. goes to transportation, mostly cars. Imagine a 30% cut in overall oil demand. Electric cars have the potential to very rapidly cause that to happen.

Big oil companies - think of them as big capital accumulators. They were necessary to tap increasing remote and difficult to develop sources of oil. Shale plays, for now at least, have been easy to develop. In Texas they are in already developed oil fields with fully depreciated infrastructure in place. Development costs were very low, making Exxon's massive overhead a detriment - most of the shale development was by small agile low overhead companies.

Once the easy shale is used up in 10-20 years, long term shale plays may require the behemoths like Exxon to get involved, but long term we might see oil demand falling due to electric cars. So there really is no function for the big oil giants right now.

Our recent confrontation with Iran was a huge wake up call. Oil, as a weapon, is dead. The bluff has been successfully called. Close the Straight of Hormuz? Okay. So do it. Go ahead. You'll just make the U.S. richer, accelerate shale development, and even more rapidly expand the market for electric cars. Each result is to Iran's detriment, and cannot be reversed once they occur.

Weirdly I think this change will help many of the countries of the middle east. Many have had socialistic economies and totalitarian governments where oil profits have papered over economic failures. That won't be possible going forward.

[Drew]

I agree with your description of the big oil companies as capital accumulators (and capital managers) and that role not being needed now in that part of the energy field. Which makes me wonder in what other fields (banking?) that may soon be true. In Ben Thompson's Stratechery blog he talks about Aggregators - who "collect a critical mass of users and leverage access to those users to extract value from suppliers" - Examples are Google, Facebook, Amazon, etc. They are accumulators and managers of relationship capital. Also thanks for the reminder that the oil infrastructure was already in place in Texas, so it isn't just geology and regulatory regime that makes it such a leader in fracking.

[Kartik Gada]

Geoman,

64% of our oil usage in the U.S. goes to transportation, mostly cars. Imagine a 30% cut in overall oil demand. Electric cars have the potential to very rapidly cause that to happen.

Not just that, but about 15% of oil is used just in the extraction, transportation, and refinement of oil. Hence, even small reductions in demand have a cascade effect.

Our recent confrontation with Iran was a huge wake up call. Oil, as a weapon, is dead. The bluff has been successfully called.

Twice, in the last few months, was over 5% of world oil supply disrupted. And both times, there was virtually zero effect on oil prices and the stock market. The same event prior to 2015 would have caused oil to rise from $100 to $130. Instead, nothing happened.

[Geoman]

Oil prices are the dog that didn't bark. To paraphrase Sherlock Holmes.

It is funny - we have lived in a certain mindset so long...it is hard for people to fathom the sheer depth of the change. The middle east really doesn't matter all that much to us in the West. No more than any other part of the world.

Utilities and cities need to wake up - every parking meter/public parking slot could be a charging station. The city makes money off the parking AND the charging. Every electrical substation could have a place to charge up - easy money. There is no reason the charging stations need to be on street corners.

Gas stations will hang around for decades, just getting slowly fewer and further between.

[HB]

I have to admit that I installed solar panels on my house all the way back in 2003. Not because they were that efficient at the time. Not because I wanted to save the world. But because they were free. Back in 2003 naive California voters paid me $4.20 per watt in subsidies. They just could not wait for more efficient panels another 15 years to save the post-singularity world from 2C of warming. By doing the not so difficult installation myself the entire system was essentially free to me though it costed California tax sheep almost $12,000. Did the subsidies accelerate the technological development? Probably by a small amount. Did they distort the overall progression of the ATOM? Most likely yes, thus net effect was most likely negative like most top-down technological development directives.

Geoman,

Oil could still be absorbed by other uses (eg plastics and aviation) which are now being crowded out by transportation. I don’t have much insight into the elasticity of oil demand outside the transportation sector. There may also still be sizable use for hydrocarbon in transportation, though I suspect that in pitchfork style democracies (US is converging more and more towards that model too) once gasoline cars become a minority there will be an effort to ban them. That may push oil use to other freer locales.

Finally, I get the impression you all seem to be discounting hydrogen as a fuel? Why is that? Is it because chemical energy seems so passé? All electric cars today essentially still store their energy in chemical form in the lithium ions.

[Geoman]

Your solar story is too funny. I have friends in California who did the same thing - laughing all the way to the bank. Suckers.

I look at oil as % usage. In the U.S. 70% is transportation. Gasoline is 45%. Another 15-20% is diesel. The rest (5%) is planes and trains and ships.

Plastics are maybe 4% of the total usage. A 25% increase in plastic production results in only a 1% increase in oil used.

Hydrogen has loads of problems that don't get talked about much. The easiest way to make it is from natural gas, which doesn't really solve your global warming problem. So why bother? In fact, natural gas is a much better energy carrier than hydrogen - more stable, easier to handle. Why not just convert cars to natural gas and skip the middle man?

Hydrogen can also be made from splitting water - but that is a very energy hungry process.

The biggest problem with hydrogen is the hydrogen itself. It is a very small atom, meaning it can escape even the tightest confinement through the smallest holes. It can actually seep through certain solid metals. It is also not very compressible, meaning it is hard to store a lot in a tank. It is absurdly hard to do refills. You'll never get more than 100 miles of range out of hydrogen cars for this reason. New rockets (Space x, Blue origin) are moving away from hydrogen/oxygen reactions toward methane/oxygen for this very same reason - they get less power, but methane is so much easier to handle.

Anyway, you start stacking up all the negatives, and you realize batteries, which ultimately can be charged at your home, are a much better option.

Ask yourself this - why don't they take wind and solar power, use it to split water, store the hydrogen, then pass it back through a fuel cell? That way they could make the renewable energy dispatchable.
Because it is monstrously expensive and inefficient. Doing the same exact thing, but running a car, works out to the same incredibly low efficiencies. Alternately storing that renewable power in a battery results in multiple times greater efficiency and much lower cost.

Of hydrogen cars Elon Musk has said "Success is simply not possible." they are only about 1/3 as efficient as electric vehicles - and that ratio is pretty much baked into the laws of physics.

[Kartik Gada]

Geoman,

Anyway, you start stacking up all the negatives, and you realize batteries, which ultimately can be charged at your home, are a much better option.

Indeed. It is only a matter of time, even though the US will be a laggard in EV adoption.

Gas stations have already fallen by half since the 1980s, and gas stations occupy prime land.

Even if charging takes 20 minutes, that is fine, as the charging stations just have to partner up with Starbucks, Peet's, and grocery stores. It is always going to much more decentralized than gas stations.

To me, the fact that 15% of oil is used just in the extraction and transportation of oil itself is the obvious red flag.

Home charging is just obvious. This is one of the many reasons hydrogen was never really an option.

Parking lots at work will also have charging, especially at tech companies. This will become a very standard perk.

Lastly, note that the increase in electricity consumption from EVs will not overload the grid (or save PG&E), despite what some clods think, since the reduction in electricity usage from LED bulbs has already more than offset that.

In CA, 5-6% of new cars sold are EVs, so let's see.

[Geoman]

"Parking lots at work will also have charging, especially at tech companies. This will become a very standard perk."

Exactly. Roof over the parking lot and cover it with panels. Keep the snow and rain off, keeps the car cooler. It doesn't even have to be free, charge say, half the going rate, maybe $0.07/kwh. Then all the upgrades (the roofing and panels) pay for themselves. It can cost the company nothing in the end to add the perk.

"Lastly, note that the increase in electricity consumption from EVs will not overload the grid (or save PG&E), despite what some clods think, since the reduction in electricity usage from LED bulbs has already more than offset that."

Electrical usage at night goes is about HALF what the grid is designed to deliver. That is a lot of slack in the line. All you have to do is cut the rate between midnight and 7 AM to encourage people to use the timer function for charging, problem solved.

And this actually helps utilities - ideally you want your large capital assets used to the maximum degree. The more they sell, the cheaper each unit of energy can become, and the more money they make. Everyone wins.

Eventually we'll need more generation...but an awful lot of EVs need to be on the road before that happens. We have at least 10 years...maybe much longer.

[HB]

“Hydrogen can also be made from splitting water - but that is a very energy hungry process.“

I thought it was just as hungry as storing the energy as chemical energy in the battery. I think it’s from hydrogen back to electricity that the efficiency is only 40-60%, compared to batteries where around 97% of the energy is retrieved as electricity. A fuel cell is essentially a battery with hydrogen fuel as opposed to the lithium ion fuel, albeit with lower efficiency apparently. Charging is almost instant though. I wonder if we might find a way to just quickly transfer lithium ions back into the batteries some day, or a fast battery swap. Indeed if recharging time becomes around 15’ then it will be almost negligent.

[Fatcat]

Slow charging times for EVs can be solved with standardized swappable batteries. The problem is that this requires a network effect or huge initial investment. If an EV car has part of it's batteries as a swappable unit, your charging time can be as short as filling up a gas tank. That would work fine for city buses with fixed short route. What doesn't work well is to leave an expensive car/bus/truck charging for a few hours during business hours. There was an attempt like that in Israel but it failed due to poor adoption. I hope that failure wasn't due to an inherent problem to this approach but rather done bad business decisions.

[Fatcat]

@HB
there are flaw batteries. You can drain and change the electrolyte. But to use it on cars you have to find a clever way to plug and secure the pipes that will drain and poor the corrosive liquid. And to make sure some stupid human doesn't contaminate the electrolyte. Could be useful in controlled environment like utility veggies l vehicles of a factory on an airport. The price might be step, though...

[Kartik Gada]

Again, I cannot emphasize enough how valuable it is for poorer countries (including China) to be less dependent on imported oil.

Oil has a single worldwide price (Brent Oil), and hence a poor country does not get any Purchase Power Parity effect at all. Many of the average people in poor countries can barely afford to consume even a single barrel of oil a year, especially when oil was $100. By contrast, electricity has elements of local (PPP) pricing, and even more so for Solar, which, as I mentioned, works better in tropical countries anyway.

Many countries have paid for their own enslavement. Many Pakistanis and Bangladeshis work in Gulf petrostates as near-slave labor, *because* their home countries have great poverty partly caused by the crushing cost of oil imports. China, too, kept the one-child policy going longer than it wanted to because of the crushing cost of importing oil.

[Geoman]

Of all the forms of slavery, energy slavery is the most pernicious.

But there are no bad peoples, no bad countries. Any country can be a raging success. There are only bad governments, and to some extent, bad cultures. For most countries bad government policies make all the observable difference in outcomes. We've run this experiment numerous times - identical countries, with identical people, coming to vastly different outcomes due to bad government. It always comes down to one thing - government interfering in the economy, and not doing the things it was meant to do, like enforcing laws and contracts.

7,348.7 MW. That is how much hydro power is currently under construction in Pakistan. That will all come on line in the next 5 years, much of it in the next 2 years. Their total demand is 33,000 MW. So they are adding 20% more electricity in the next 5 years - hydrocarbon free. Of course they'll be paying the Chinese for that power for the next 30 years....

For a Tesla, you can plug it into a standard socket and get 30 miles of range per night - enough to top off for most morning commutes. Using a 240 socket, you can get a full charge each night. A supercharger gives you full range in an hour. They are working on faster recharge, but so far, less than 10% of the charging for Teslas happens outside the home. So the charging infrastructure doesn't matter all that much. I suspect they'll just be chargers ...everywhere. Everywhere you park a car will be a place to hook into the grid. You will always be "topping up". Then it just won't matter - no need for battery swaps and charging time won't matter.

Heck, the tesla cyber truck is proposing to have solar panels in the bed cover, which automatically add 15 miles of range each day. The light year one promises 30 miles a day in sunny weather from solar panels embedded in the hood and roof.

[Kartik Gada]

Geoman,

I suspect they'll just be chargers ...everywhere. Everywhere you park a car will be a place to hook into the grid.

True, but remember that parking spaces themselves will be greatly reduced, as per our 2032 vision. A lot fewer cars, all self-driving Ubers, and hence only parked long enough to charge.

Massive strip mall parking lots will be totally gone.

But once overnight charging is enough for a full day's charge, that is plenty.

[Kartik Gada]

Geoman,

The jump in battery efficiency might cause a major rise in EV sales, as we have discussed before. This greatly curbs oil consumption in countries that import oil.

Add solar to the mix, and the worst days for oil may be yet to come.

Recall an earlier ATOM AotM, where I said that commericial/govt vehicles are the inflection point. There are 800,000 police cars, 210,000 USPS vans, etc.

[Geoman]

But we are past the point where battery efficiency matters that much - they are certainly efficient enough. A 400 mile range is better than 300 mile, but both are more than sufficient for most people. I think anything over 200 miles or so is just a bonus.

I think electric police cars and delivery trucks will be the next big thing. Just think of all the maintenance costs that will be saved by using a vehicle with only a small fraction of the parts, and built in computers that tell you precisely what the problem is.

One great advantage of EV car makers, especially Tesla, is they can sell their batteries separately for home, or even utility scale storage projects, without much modification. Tesla is also working out how to stamp the entire car body out of one sheet of metal. fewer parts means more automation is possible, shorter supply chains, easier repairs...Tesla is trying to build a car that will drive 1 million miles with minimal maintenance. It sounds crazy, but electric equipment, designed well, basically lasts forever.

On a gas powered car what usually fails? I'd say, seals cause most failures. Seals leak fluids, then you get metal on metal, overheating, and failure. What if you had a car with no seals, and no fluids? No gas, oil, or antifreeze? No transmission fluid, no power steering fluid? You vastly reduce the pathways to failure.

[Kartik Gada]

The multiplier effect of Energy slavery is very high.

The uniformity of batteries across more than one use is a crucial element of mass-adoption, but is also an ATOM disruption, as it lowers all associated costs.

The fact that EVs may last 500,000 miles is another thing that will force usage into self-driving Ubers instead of private ownership (by 2032).

Getting back to solar, this is, in dollar terms, the single biggest ATOM disruption of our time is this. Entire percentage points of world electricity demand are shifting to Solar, on top of the bias towards this generation being in tropical (i.e. poorer latitudes).

[HB]

That type of auto-mobility looks like a bright future. Consistent with the long term fantastic future most of us on these pages see for ourselves and our descendants.

For me the electric car will become a choice when its recharging time is an easy 30’ anywhere there is a gas station today, batteries last over 200k miles without degradation and the entire car costs 30k. To me that is the parity point. I happen to not care whether I can get 0-60mph in 12 or 2 seconds. Until then, I’d like to retain the choice to spend the money I earn propelling humanity towards its exponential growth in whatever way I choose. And I’d like to leave things unimpeded for other technologies to even leapfrog and disrupt the electric cars which are now becoming conventional disruptors.

That parity point may or may not happen, soon or later. As I have said before, just because overall human advancement is rather consistently exponential, does not mean that every pocket of technology and micro trend flows some sort of Moore’s law. The enduring winning technologies ultimately prove themselves in the open market, without mandates, subsidies, punitive taxes on competition, politics and grand five year collective government plans. And these innovations are made by motivated people, not people pigeonholed and conscripted in the central planning mandates of a neo-authoritarian ecological planet, working half their lives just to repay a 1945 1400sqf wreck house in San Francisco in the name of “saving the hills”. They paint the flags green and they’re no longer swastikas. How easily are they tricked — once again.

In spite of the wonderful technology, most of the talk about these automations is politics, and increasingly so. Politics, central planning and mandates, on behalf of people who cannot — just cannot — control their innate desire to a centrally planned self-righteous centrally planned planet. They just cannot let technologies mature in a free open market, lest we suffer another half, oh terrible, degree of warming in our post-singularity future. That is pathetic and precipitates a great antipathy towards moralistic electrification mandates and the like.

[Kartik Gada]

HB,

We had the same discussion in the past :

https://www.singularity2050.com/2018/12/atom-award-of-the-month-december-2018.html#comments

On the subsidies point, yes, EVs should have to stand on their own in the free market, and at this point, they mostly do.

But on the charging point :

For me the electric car will become a choice when its recharging time is an easy 30’ anywhere there is a gas station today

Except that an EV can charge overnight at home while a person sleeps, or at a person's workplace while they work. In this way, the accessibility of energy for propulsion is already far better than gasoline.

[Geoman]

"For me the electric car will become a choice when its recharging time is an easy 30’ anywhere there is a gas station today, batteries last over 200k miles without degradation and the entire car costs 30k. To me that is the parity point."

Tesla Model 3 is $39,000. The gas station is your garage, literally feet from where you normally park it (only 10% of all EV charging is outside the home). The battery has an 8 year or 120,000 miles warranty. But Musk says that a Model 3’s body and drive unit can last up to 1 million miles while the battery can last 300,000 to 500,000 miles and he says that battery module replacements will be made available. So we are literally $9k from you goal. If you took into total cost of ownership (electric cars require vastly less maintenance) that $9k disappears pretty quick.

So we are awfully close to meeting or exceeding all your quite reasonable criteria. It's why my next car (within 5 years) will be electric. But I first have to drive the wheels off what I have. That damn Toyota mini-van I bought when the kids were small just won't quit - 16 years old, 177k miles, and I've done virtually zero repairs. Now the kids are long gone to college. But it just will not die. ARGH! It's my own fault - I refer fixing to buying new, and when something has a low cost of ownership I can't part with it...

"people who cannot — just cannot — control their innate desire to a centrally planned self-righteous centrally planned planet."

I just wish more people understood the concept of emergent intelligence. It is vastly more powerful, fairer, faster, smarter, more productive, than any conceivable combination of individual humans centrally planning anything will ever be.

[Kartik Gada]

Geoman,

That damn Toyota mini-van I bought when the kids were small just won't quit - 16 years old, 177k miles, and I've done virtually zero repairs. Now the kids are long gone to college. But it just will not die. ARGH! It's my own fault - I refer fixing to buying new, and when something has a low cost of ownership I can't part with it...

That is good! If it holds out two more years, the new EVs of that time might have 20% better battery efficiency. Try to get the minivan past 200K.

I, too, have an old Honda Civic as a second car. It is a 2006 model, so also 14 years old. But at only 105,000 miles, it is nowhere close to the end, and this being CA, the weather never wears on the car. I suspect it will last at least two more years, and perhaps much more.

In the US, there will be a glut of used ICE cars since the demand for them will shrink. The price will plunge, and many will have to be sold in Mexico and Central America where there is still demand elasticity below $5000 for used ICE cars. Actually, my next car may or may not be an EV, as there will be tons of two-year-old Mercedes and BMW units that are 50% below the price of when they were new.

[HB]

Yes, I am aware that my parity point is not far. In that $30k cost I did account for the lower maintenance because the typical value of the cars I drive is in the $10-20k range, typically bought used. I see myself going to my first EV in the next five years or so, but I see myself retaining at least one ICE for long trips. Especially as they undergo fast depreciation, useful to keep them as backups and for those situations where EV are less practical. I often drive long distance. I like the freedom. I know it’s “politically irresponsible”...

With politically correct admiration towards SpaceX and the like I wonder which political correctness will prevail: The admiration towards the “green” innovators like Musk, or the political condemnation of those who burn a lot of fuel for a 2 hour tourist trip into space? It will be an interesting conflict as all these “green” virtue signaling billionaires cannot resist the temptation to experience space. They will probably buy self righteous carbon offsets so that their one two hour trip into space will increase carbon pricing at the margin and prevent one thousand Bangladeshis from visiting their grandparents in another town.

[Kartik Gada]

HB,

For you, the next few years will be very good. Many existing ICE cars will depreciate quickly, as they will be in oversupply relative to a shrinking percentage of new-car demand. 90 million ICE cars have been sold in the US in the last 5 years, and 2020 and 2021 will see another 36 million in two more years. After this, many ICE cars will be 50% devalued by the three-year mark. Those buying new ICE cars today at $35K may find that in 3 years time, it is worth only $17K. This favors a buyer like you. I, too, may yet buy one more ICE car for this reason.

Latin America will see a boom in lightly used US ICE cars that are now worth just $5000.

[HB]

Thanks for the reassurance.

Hopefully this topic is almost exhausted for now so hopefully I will not seriously hijack this thread ... but ...I think that in order to experience the undoubtedly wonderful future, we must first survive the present.

So I’d like to ask the significant intellect that frequents these pages:

With US market CAPE ratios around 30 and a socialist supported by close to 50% of the population, shouldn’t we as individuals be seeking some sort of put options? I started a significant reallocation to emerging markets some time ago as I had a hunch we would get to the point we are today, but that is not enough. I immigrated to this country more than thirty years ago and have never felt so uneasy for America’s longer term competitiveness prospects in an ever faster growing world. Our growth rate has already been down to half the world average for some time now, and our dream seems to be to become Europe, a continent stuck in secular structural one percent growth to slow extinction, and nobody seems to worry about the cliff this represents. It’s February. There does not seem to be a lot of time left to establish put options just in case. And if so, what put options? I feel that electric cars can wait, but this cannot.

[Kartik Gada]

HB,

I actually am familiar with a Hedge Fund that addresses these problems by converting volatility into added returns and offsets the cost of puts, and has a 5-year track record. With your permission, I would like to send you a deck. I will send it after the end of Feb, as Feb is doing very well for the Fund due to the volatility.

Is the email in your profile the one you can receive emails at?

Let me know.

-Thanks

[HB]

Thanks. I’m quite interested. You can use the email on this message.

[Kartik Gada]

OK. You will see a deck sent to you in early March.

[Geoman]

My solar power update after meeting the installer:

1) Panel costs are so low that adding or subtracting a few panels doesn't make a whole lot of cost difference. And panel costs are unlikely to decline much further - they are getting close to the components materiel costs. 18%+ efficiency. Q cells.

2) At my high latitude, the plan is really to cut electric usage to zero for 3-4 months per year. December to February produces next to nothing.

3) Wi fi hook up downloads all power production data to the cloud and you can track your usage.

4) He recommended against batteries - says prices are still dropping rapidly, and they would make more sense in 3-5 years.

5) He used a drone to LIDAR my house. Predictive software determines the best possible placement of the panels for maximum power generation.

Anyway, interesting meeting. Costs are likely to be quite reasonable.

[Geoman]

Regarding a possible Bernie win, don't count on it. I'll be generous and say he'll get 30% of the vote. There is a curious phenomena occurring - Bernie attracts a lot of energy from far left progressive groups. But those groups only represent a fraction of the total electorate. The democrats want the energy, but not a Bernie candidacy. So they have been playing a very dishonest game, not fully vetting Bernie, or saying anything bad about him. Once he is the nominee, all that stuff will come roaring out. Any poll that shows Bernie can win today does not take into account all the bad things that will be exposed if he wins the nomination.

Also, I'd say, likely, Bloomberg goes independent. I'm mean, why not? What does he need the party for? And he positively hates Bernie. He can spend a couple billion $ without batting an eye. And he knows he'll get 50% of the Democrats. If he can get 50% of the independents, and 20% of Republicans, he can win it with 40% of the vote.

So 2/3 chance you get someone friendly toward capitalism at the helm.

That said, a worldwide recession is likely - I think China is going to take much longer than most people think to recover. It's all going wrong over there - authoritarianism, WuFlu, trade, Hong Kong protests, etc. It'll get worse - once global supply chains shift, I doubt they will ever shift back.

[Jack]

Now oil seems more likely to hit $20 or lower. Will this hinder solar power? Or will fracking companies be destroyed and Russia + Saudi-Arabia will be laughing with higher prices down the road?
Will renewables face a bankruptcy wave?
Is this maybe the reason TSLA is going down rather than the virus?

[HB]

Personally I don’t think that Russia and Saudi Arabia can take down fracking permanently. The moment RU and SA limit production again and prices rise the frackers will return. Yes that process of return has some more inertia in a free market, for now. But if RU and SA want to keep yo-yoing the oil market then the frackers will divert some of their profits to an emergency fund to ride it out. Yes, that would mean lower longer term profits for frackers but also for RU and SA. So who blinks first in the end? Especially for SA where half a of GDP comes from oil. For the US fracking is just a small number.

The same general argument can be made about almost any form of attempt to gain permanent market share by dumping. The dumping country can only achieve temporary victories. In my view these are either doomed attempts and/or they just exist in the conspiratorial minds of protectionists but seldom work in practice.

Just some thoughts.

[Geoman]

"I don’t think that Russia and Saudi Arabia can take down fracking permanently." Me neither. There is fallacy that fracking is hard. What allowed fracking to succeed was combining advancements in a number of technical fields. Those fields continue to advance absent fracking. And fracking was being done largely in existing oil fields with existing infrastructure. That infrastructure is not going away. So the elements of fracking will remain in play indefinitely, willing and able to come roaring back should conditions change.

The Saudis and Russians may be playing a different game - monetize the oil before the market collapses. With electric cars the market for oil could see real and deep cuts. In the U.S. 40% of all oil goes to gasoline alone. Oil in the ground is worthless, better to pump it and sell it now at $30/barrel then later for $0/barrel.

Just a thought...maybe this has nothing to do with fracking.

[Kartik Gada]

Jack,

Oil will eventually get back to $40, but will not easily go much above that.

This has no effect on Solar. It has a minimal effect on EVs, since gasoline prices are so corrupt that they have effectively taken the cost of oil out of gasoline prices. In the 90s, when oil was $20, gasoline was $1.10. Now, with oil at $20 again, gasoline in the Bay Area at least is $3.30. That means it will never be below $3 again, and thus not slow EV adoption.

They are trying to tax electricity too, but that is where solar comes in.

[Jack]

It is more likely that WTI will hit $1.
This time the excess credit of the Fed has not oversupplied housing but oil rigs.