Road Runner

Berkshire Well Positioned for Buffett's Prediction on Electric Cars

Davewmart, You may be right which would cause a faster adoption of electric vehicles.


On Nov 22 06:07 PM Davewmart wrote:
> Road Runner:
> Your prediction for the likely part of the US vehicle fleet which
> will be electric in 20 years is based on affordable oil and the fleet
> size staying around the same as it is at present, with presetn usage
> patterns.
> The figures I gave from the Uppsala report of an absolute reduction
> in oil supply would indicate much reduced use in the US, as China
> and so on will want their share.
> This means massively increased US prices.
> What would the size of teh US fleet be with oil at $5gallon? At $10gallon.
> At $20gallon?
>
> It seems likely that there will be a lot fewer cars in the US in
> 2030 than now, and that most of those will be electric.
> *Please note that these figures are based on the IEA rexerve estimates,
> the figures which are used by Governments throughout the world, and
> only differ in their output rates by assuming that exploitation rates
> remain constant, whereas the IEA assumes greatly increased rates
> for unexplained reasons - 'cough' - political influence- 'cough'

Berkshire Well Positioned for Buffett's Prediction on Electric Cars

I am very optimistic about electric cars, much more so than most people. But there is no way that all cars on the road will be electric in 20 years. I think Warren was exaggerating to make a point here.

I think that in 20 years, China will have somewhere between 60% and 80% electric cars because most of their people are starting from no cars, and the government is pushing hard for electric cars. Also, companies like China-based BYD will be able to push its electric cars in China more than outside the US.

It the US, if 40% of cars are electric in 20 years, it will be a phenomenal success. I don't see electric cars becoming price and performance competitive with engine/transmission cars for 8 to 10 years. But, when they do, there will be strong consumer demand because of high gas prices and performance. I'm looking forward to driving a car that doesn't take 1 second to decide what gear to be in when I press the gas pedal at a light.

Even, when electric cars become popular, it will take 15 to 20 years to rotate into electric cars. People won't just dump their old cars for a new one immediately. So I'm looking for 30 years to get to 70% plus in the US.

Berkshire Well Positioned for Buffett's Prediction on Electric Cars

DLB40, You are making a logic mistake. You are comparing a fuel to a technology. If the fuel supply is cut off, then the US comes instantly to a halt. But, if the batteries and electric car components, like rare metals in motors, is cut off, will can still use the ones we previously purchased. The US economy doesn’t come to an instant stop. We have time to adjust.

You are comparing apples and oranges.


On Nov 22 12:53 PM DLB40 wrote:
> Batteries will only change our dependence on Overseas oil from the
> Oil cartel ,to dependence to China and their Battery cartel. BTW
> please check on the pollution from battery component mining and the
> battery production pollution. Net gain for the USA is Zero. Natural
> gas is ours. Net gain to the USA 100%

Berkshire Well Positioned for Buffett's Prediction on Electric Cars

Gandalph, Your link is to a John Peterson article. John Peterson is not some authoritative person on electric cars. He is just a lawyer that is arguing his pocketbook. He cherry-picks and misinterprets information. He gets huge amounts of criticism that he and his groupies just blow off.

Who are you going to believe - Warren Buffett who has a long, proven track record of great insight into the future, or John Peterson? Please everyone, take John Peterson with a grain of salt.


On Nov 22 12:13 PM Gandalph wrote:
> Please refer to:
> seekingalpha.com/artic...?
>
> It is a very clear explanation of why the electric vehicle is a terrible
> idea. Recently books have been written on scientific illiteracy in
> our society. If people writing these articles had the most rudimentary
> knowledge of physics and thermodynamics, this folly would just go
> away!

Readers Pick the Top 20 5-Year Horizon Stocks

TheHague, Don't lose faith in Wal-Mart. Wal-Mart hasn't performed this year simply because it is considered a "defensive stock”, a safe place to put money during tough economic times. Well, during 2009, money shifted out of defensive stocks into potential high growth stocks as the threat of economic catastrophe abated. It has little to do with how Wal-Mart, as a company, is performing. It’s just natural stock rotation.


On Oct 18 09:18 PM TheHague wrote:
> WMT? Nice try! I just sold my shares that I bought in March! I can
> now buy into them cheaper than they were when I bought them! I gave
> up! Their last Div. was not that great! I tried to believe, but some
> thing is not right there! I don't know what it is but it ain't cool!

Readers Pick the Top 20 5-Year Horizon Stocks

I'm impressed by the quality of this list, and how it reached down into some stocks that I didn't think were in the minds of the general investor community, like AONE and BYDDY.PK. Plus, it listed stocks that are truly (not stuck-in-the-mud like Microsoft and Yahoo) innovative companies that are “pushing the envelope” on the technology front like GE with green technology, like Google with search, operating system, and “cloud computing” technology, and like Apple with mobile Internet technology.

A123 Systems (AONE) and BYD of China (BYDDY.PK) are head-to-head competitors in the plug-in vehicle battery market. They both make the Lithium Iron Phosphate (LFP or LiFePO4) battery which, when the manufacturing is perfected, will be the ideal battery for vehicles, in my opinion. These are the clearly, in my opinion, the leaders in the quickly emerging LFP battery market. A123 seems to be the high quality player, and BYD seems to be the high quantity player. BYD is an established player with non-LFP batteries so it is well established and profitable. A123 is a startup with only one product – its LFP battery. I see investing in A123 as very speculative but potentially very profitable.

As a side note, if Japan wants to pull itself out of its 2 decade economic stagnation, one of the best things it could do is let Wal-Mart “run wild” in its country. Japan’s retail system is very inefficient. There is a lot of job protection going on. Wal-Mart would cause many jobs to be lost, but it would spur economic growth via a much more efficient retail system that would deliver goods to its citizens at a much lower price. This would leave money left over in people’s pockets that would lead to a higher consumption of other products increasing the economy.

Another Reason to Get Excited About Electric Cars

Ravi, Bingo! You got it exactly right.

I implore all of you readers to study the connections between peak oil, oil’s main use as a transportation fuel, how battery technology is a key to solving the peak oil problem, how electric cars are fun to drive and will be highly accepted by the American consumer, the future large growth of solar, the explosive growth of emerging markets, China’s ambitions to be an alternative energy leader, China’s ambitions to be a first world country, the extraordinary and ambitious leader of BYD, the revolutionary battery technology of Lithium Iron Phosphate (LiFePO4) that BYD uses, the 10s of thousands of engineers that BYD employs, etc.

When you connect all these “dots”, you will probably have an epiphany about the future of energy. The peak oil problem is very solvable with little negative impact to the world economy.

And, you may realize that BYD will probably be at the center of this revolution. That is probably why Buffett still wants to increase his share in BYD.

Only by connecting all the “dots” is it possible to understand why I am so optimistic about the future of energy. You must see the big picture. Energy use, especially in transportation, in 20 years is going to be dramatically different than today.

I’ve commented extensively on Seeking Alpha about all these subjects. Reading my comments will give you a jump-start in understanding how all these subjects will connect to create the coming energy revolution.

China Is Pulling Ahead on the Environment

knight, The Chinese are also building nuclear power plants, along with hydro-electric dams, solar farms, and wind farms. They are taking the right approach which is to move forward on all fronts. Then, whatever technology works best can receive increased funding. I wish the US could be so practical, but the extremists on the left and right are more interested in bashing whatever the other side likes than in finding the best approach.

I like nuclear since out buddy to the north, Canada, has a good supply of Uranium. But, I hesitate on going full speed on nuclear because of the huge up front costs (like $10 billion a pop) and lengthy lead time (like 10 years). This is a huge financing burden for a utility. I don’t want another Bonneville Power debacle of 1983.

This financing issue is why I am looking forward to new nuclear power designs that are in development. Some are supposed to cost less and be faster to implement. There might even be some future investment opportunities in nuclear if a design catches on as the new best design.


On Sep 03 01:16 PM knight wrote:
> Only real way to do this is Nuclear energy. Wind and Solar are still
> decades away from being viable.

China Is Pulling Ahead on the Environment

Oilsands - Bingo! You hit some points exactly right.

First, local corruption is a big problem in China. I see it as the next focal point for dissention, protests, and possible riots. The earthquake a couple years back showed the world how bad local corruption is. Many were killed, especially children, from sub-standard construction allowed via local government kick-backs from construction companies. The Chinese government must start putting pressure on local corruption or face uprisings. It will be interesting to see if the central government has the will to battle with local government. The central government could risk opposition to its power from resentful organized local officials.

Second, the advent of personal communications via the Internet, cell phones, texting, etc. has made it difficult for central governments to suppress freedom of speech. Freedom of speech is a backbone principle of a democracy. Without it, a democracy can easily become a dictatorship that controls the media to promote the ruling party and “bad mouth” any opposition.

I believe this is what has happened in Mexico for decades and is happening with a vengeance now that the drug cartels seem to be running Mexico. I just heard another news story where a Mexican reporter was intimidated to flee to Canada. One of his partners in Mexico was killed.

Look at Iran for how personal communications is not allowing the sham election to be solidified by the news media in peoples minds as legitimate.

Personal communications is also letting it be known to many people in China that local corruption is a problem everywhere in China.

Go freedom of speech! Keep the pressure on the oppressors!


On Sep 03 01:09 PM oilsands wrote:
> Thanks for a good article, Shaun.
> Road runner, you have made good points. Chinese people work hard
> and save money. The irony is that there is a better climate for the
> small business in China than here. That alone is a condemnation of
> what is going on here in the USA.
> The labels people use blind them to reality. Our government is also
> a seat of corruption. Our ancestors risked a great deal to come here
> and fought for the right to criticize and change governments. <br/>The
> Chinese government has many challenges ahead of it. Local corruption
> is one of the worst. As people there gain access to the internet
> and information, there will be increased pressure to counteract this
> problem, among others.
> I find it disheartening that we are dragging our feet on moving to
> alternate energies, making ourselves energy independent, and ending
> our support of people in the middle east who hate us.

China Is Pulling Ahead on the Environment

One more thing I would like to add to my comments above since Seeking Alpha is a stock investment board. The reasons I gave above are why I am investing in Chinese companies and not Indian companies. I see China being the world’s growth story for the next couple of decades. It will grow much faster and provide better investment opportunities than the other emerging markets.

China Is Pulling Ahead on the Environment

I agree that the Chinese government does brutal things to keep its people under control. I don’t condone that at all.

What I am saying by calling the Chinese government a “benevolent dictatorship” is that it is managing resources such to continuously increase the living standards of its citizens – all 1.3 billion of them (ouch). This is in great contrast to many democracies (supposedly the best form of government) around the world that mismanage their economies which leads to little increase in living standards for average people.

How about Mexico where highly corrupt one party rule has done little except waste its oil reserves to make a few people very healthy. Or how about India, another democracy, that is corrupt and bureaucratic to the bone. I saw a 60 Minutes report a number of years ago that estimated about 40% of the economy is black market. It is probably the same today. Hundreds of millions of people in India have no electricity. Is there any effort to alleviate this – no.

At least in China, the government has the power, will, and economic resources to progressively improve life for common people.

As for the Tiananmen Square Massacre. I believe (I have no hard facts on this) it was the wake-up call for the Chinese government. When they saw one man holding grocery bags standing down a column of tanks on world-wide television, they realized that they must invest in the future of average people or risk revolution.

This shows another thing about Asian cultures – maintaining “face” is huge. Just like how the Chinese government was embarrassed by Tiananmen Square, it was very motivated to put on a good face for the 2008 Olympics. The Chinese want very much to be a first world country.


On Sep 02 11:41 PM 1madboomer wrote:

> What was benevolent about the 'Tiananmen Massacre' or the bloody
> put down of the 'Xinjiang protests'? Does a benevolent government
> detain, imprison and execute dissidents for nothing more than opposition
> to policy? That being said, each time I have gone to China I have
> noticed an improvement in air quality. the water quality, however,
> leaves much to be desired.

China Is Pulling Ahead on the Environment

I agree that rampant corruption in China, especially at the local level, is going to hold back economic growth. And, it risks dissention and even riots. It is well known by average people that there is large amounts of local corruption.

We will see if the central government can curb local corruption. My guess is they will to some extent because there is going to be a growing outrage about it.


On Sep 02 04:51 PM jerrydd wrote:

> The corruption in and out of the gov is so large RE isn't likely
> to make much difference for 30-50 yrs.

China Is Pulling Ahead on the Environment

Instead of saying "Only strong-arming vested business interests will accomplish this like you said ..." above, I meant to say "Only a strong-arming government will accomplish this like you said ".

China Is Pulling Ahead on the Environment

You are right on the mark with this story. Well written too.

Don't let the naysayers about China slow you down. There are many people in the US that just don't want to believe that a strong centralized government (a “benevolent dictatorship” as I have previously called the Chinese government) can be a better government than a democracy in certain situations. Now is one of those situations in the world, and especially in China. The world needs to transition from an oil and dirty-coal (we may be able to burn coal without pollutants and huge CO2) economy to an alternative energy electric economy. Only strong-arming vested business interests will accomplish this like you said “To get around the objections of the power brokers who benefited from the soot-belching status quo, the central government cannily used the 2008 Beijing Olympics and 2010 Shanghai World Expo to break down their resistance.”.

In the next 20 years, China is going to have a bigger gross domestic product than the US, and it will have leapfrogged the US in developing an alternative energy electric economy because its “benevolent dictatorship” government can make big changes happen that “gore the ox” of big interests. Sure, in 20 years, China will still be generating huge amounts of energy from coal, and it will be importing large amounts of oil, but it will be the world leader in alternative energy production and percent of plug-in electric vehicles, and it will be well on the path to a low-CO2, low-pollutant, renewable energy future. The US will be importing Chinese technology to catch up.

For those of you that think the alternative energy electric plug-in vehicle economy will be an economic burden that will slow down growth, you are too near-sited. It will be just the opposite. This is what the Chinese government seems to know that many in the US miss. Now that oil is expensive, there has been a big new push to develop alternative energy technologies. These technologies are advancing at a rapid pace, especially solar and battery technology. The Chinese are heavily promoting these technologies intending on being the leader in them just like the Japanese of decades ago promoted car technology and became the leader in it. Want proof? Look at the all the Chinese solar companies like STP, TSL, YGE, etc, that are driving down solar prices, and the uber-aggressive battery and car company BYD.

PHEVs and EVs: Plugging into a Lump of Coal

John, Please address the issues I brought up instead of diverting the conversation.

On Sep 01 01:20 AM John Petersen wrote:
> RoadRunner, I write about facts as they are in 2009 and you want
> to talk about conditions as they might be in 2030. Current facts
> are fairly easy to ascertain and future conditions are not. As of
> today. speaking solely in terms of CO2 abatement, HEVs enjoy a price
> advantage of roughly $60 per ton over PHEVs and EVs. While PHEVs
> may get to a point where they are sitting on the zero line, that
> will not change the comparison with HEVs which will simply offer
> a larger advantage arising from a higher oil price. As PHEVs and
> EVs become cheaper, energy efficient solutions like HEVs become more
> profitable. The relationships are locked in place.
>
> For the last couple weeks I've been pretty technology agnostic. For
> purposes of this particular analysis the type of battery doesn't
> matter and the primary issue is "if we have a given quantity of batteries,
> what type of electric drive gives us the best bang for the buck in
> terms of (a) cost savings to owners, (b) contribution to fuel efficiency,
> and (c) CO2 abatement." The answers are the same if the batteries
> are NiMH, lithium-ion or my favored lead-carbon. PHEVs and EVs sound
> good in the telling but are an immense waste of resources.
>
> I look at the energy storage sector from the perspective of an investor
> who is trying to pick stocks that will outperform both the market
> and others in their sector. It takes very little experience with
> market dynamics to know that stocks swing from being "in favor" to
> being "out of favor" fairly rapidly. When that happens the out of
> favor stocks rise while the in favor stocks fall. Currently companies
> like Ener1 and Valence are maintaining market values that are several
> years ahead of their business fundamentals while the lead-acid sector
> has fallen to very low levels. As a result, Ener1 which has annualized
> sales of $30 million trades at roughly 1.5x the market value of Exide
> which has annualized sales of $2 billion. As the market comes to
> the realization that both companies have a bright future, Ener1 is
> likely to fall and Exide is likely to rise. That's simple value investing
> as practiced by Warren Buffett.
>
> While we're on the topic of Buffett, he bought his interest in BYD
> at a price of roughly 1.3 times sales and paid $1.12 per share. Since
> BYD has been profitable for years, it was probably a smart buy. Today
> BYD is trading at close to $6 because many investors think "following
> Buffet" is a good strategy. What they ignore is that paying 5x Buffet's
> price is a very high risk strategy. For their investment to double,
> Buffet's has to increase by 1000%. Given the events that have transpired
> over the last year, I wouldn't encourage anybody to buy BYD because
> it's already had a monster run-up in price and is likely to either
> remain flat if the business continues smoothly or fall off if it
> gets rocky. Warren will come out a winner in any event because he
> almost always does. The followers who pay a much higher price per
> share may not be as fortunate.