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Tales From The Future
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I look at value and contrarian ideas as well as emerging technologies worldwide, both on the long and short side. I also like to discuss the influence of monetary policy on stock markets. I usually do not engage in short-term trading and myopic analysis (quarter by quarter, without looking at... More
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  • ICar Ahead? New Entrants In The (Automated) Electric Vehicle Space 2 comments
    Feb 18, 2014 5:01 AM | about stocks: AAPL, TSLA, GOOG, NSANY, RNSDF

    If you read my earlier entries on electric vehicles (EVs) you may have noticed that I'm quite skeptical of rapid success and high market penetration - the "EV revolution" propagated by many EV enthusiasts could turn into a slower EV evolution requiring about two decades (see here for more details).

    Nevertheless, I'm convinced that EVs and PHEVs* will play an important role longer-term in private transport. Private transport may be the wrong term, however. I'm convinced that we should call it "Automated Personal Transport" in about 10-15 years from now.

    I'm also convinced that these two trends will enable new entrants and make life very hard for existing auto companies, namely:

    - EVs will enable new car makers (namely Asian companies with skills in electronics and battery technology) to enter the sector. Former auto suppliers (example: Wanxiang who just bought the remains of Fisker Automotive for PHEVs or NEVS in Sweden/China with Saab for future EVs) who forward integrate or large consumer electronic companies and Asian conglomerates with battery IP (example: Samsung or Panasonic cars in a few years?) could be among those entering the transportation sector.

    - EVs coupled with automated/driverless transport could also see IT companies entering the car market. GOOG's research with automated, robot cars is well-known. A technology analyst penned a letter in late 2013 suggesting Apple should buy TSLA (I don't believe in this rumor, especially since TSLA shares have almost increased 900% since the talks appeared to have taken place in early 2013 **). The skill set needed for car manufacturing in this future, say 2025, is very different: Steering and parking software, navigation and entertainment systems, remote diagnosis, OTA updates etc.

    - Driverless transport and car pooling networks could result in a significant drop in car ownership in 10-20 years. Apart from car enthusiasts, many people would just rent a car on demand (using their smartphone) aka "robot taxi" as needed. These cars would automatically return to a recharging stations and wait on the next caller requesting a car. Needless to say that this will have big implications for taxis, car/truck fleets, home delivery services and similar transportation and service industries.

    This favors new IT entrants over existing car companies who will also have to deal with shrinking dealer networks (EVs require less repeating service and maintenance than traditional ICE cars, taking away recurring revenue and profit margins from traditional auto dealers).

    Speaking of current auto makers, I see Nissan-Renault best suited to take advantage of these two long-term trends (EVs and automated cars).

    In contrast to TSLA, Nissan and Renault shares are also very modestly valued in my opinion. See my earlier Instablogs for more details.


    * Namely PHEVs and electric cars with "range extenders" achieving about 50-60 miles in pure-electric mode. Looking at typical commuter routes and daily usage, such cars can achieve 80-90% of daily chores in pure electric mode without the need for a heavy and expensive battery. Without getting into too many technical details, a light (80-100 kg total) rotary engine (aka Wankel engine) could be ideal for such cars. Both Audi and Mazda are again experimenting with rotary engines as range extenders for electric vehicles.

    ** AAPL could be one of the investors in the TSLA battery factory or another collaboration (iOS in the car), these more modest scenarios makes more sense in my opinion.

    Disclosure: I am long AAPL.

    Additional disclosure: I'm also short TSLA

    Themes: cars, evs, automated cars Stocks: AAPL, TSLA, GOOG, NSANY, RNSDF
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  • Tales From The Future
    , contributor
    Comments (4079) | Send Message
    Author’s reply » TSLA CEO Musk just talked about autonomous cars in a BB interview:




    I do think that other companies (especially GOOG and Nissan) have very strong expertise in the field with similar development timeframes (2020-2025), so I don't agree with the assessment that TSLA is the global leader in this field.
    20 Feb, 04:00 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (4079) | Send Message
    Author’s reply » Another good overview on the evolution of robotic cars (featuring a very optimistic chart from Mojomotors that I don't see becoming reality that quickly) can be found here:


    Robo-cars, Uber Will Save Us Billions, Keep Us From Crashing And Put An End To Waiting At The DMV

    5 Aug, 01:35 AM Reply Like
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