“In most parts of the world today, solar is the cheapest source of new power generation. So why hasn’t the world switched the plug to solar just yet?”
The only thing holding back the world from going 100% solar is the battery. “MIT researchers estimated battery costs must sink to $20 per megawatt hour if we ever want to switch 100% to solar power.”
Buffett is investing in a solar farm that will store electricity in batteries for $13 per megawatt hour (MWh). That’s $7 less than MIT’s threshold. Combined with generation, the solar farm’s electricity will cost $33 per MWh. That’s $37 less than the $70 for natural gas.
Massive change is coming.
People all over the world are going to switch to solar, not just to make the world greener, but to make their wallets greener.
“The best news for investors, we are still in the early innings of this energy revolution. While the Invesco Solar ETF rallied 51% last year, it’s still down 88% from its highs…In the grand scheme of things, it has barely budged. With so much room for growth, solar stocks could easily double, triple, quadruple, or better in the coming years.”
There are many ways to invest in solar. There are many panel manufacturers, installation companies, financiers of solar installations, solar farm companies such as Warren Buffett’s, etc. But there are mainly just two inverter manufacturers: Enphase (which I own) and SolarEdge. This is similar to smartphones where there are mainly just two smartphone makers, Apple and Samsung. Another way to play solar is with Tesla, which is making batteries for utility companies and solar roofs.
You can make a lot of money if you know something that others do not.
Tesla makes the best car in the world, but the world does not know it yet. Over the next 10 to 15 years, there is going to be a lot of blood on the streets, and it is not going to be Tesla’s blood.
Here are the top reasons that Tesla will crush or bankrupt many companies:
1. Best Car in the World
I started researching Tesla in early 2019 and determined that it makes the best car in the world. Hence I bought the stock in early June 2019. On August 2019, Jack Rickard stated: “Tesla makes the BEST automotive vehicle on the planet, barring none, in all respects, including SAFETY. It is just the best car ever built. And I would challenge anyone to demonstrate even partially that this is not so.”
This is corroborated by:
Model 3 won:
Detroit News Magazines 2018 Car of the Year award
Car of the year by Popular Mechanics March 2018 Automotive Excellence awards
AutoExpress Car of the Year 2019
Automobile Magazine 2018 Design of the Year
Model S won:
2013: Motor Trend’s Car of the Year
2019: Motor Trend’s Ultimate Car of the Year – the top Car of the Year in seven decades of publication and naming a car of the year every year since 1949.
As Jack Rickard pointed out, Motor Trend makes its money from advertising, largely from car and parts makers. Tesla does not spend any money on advertising.
2. Fastest Car on the Road
Tesla’s Model S can beat the Lamborghini Aventador in a quarter mile. This is embarrassing…for the Lamborghini.
Tesla’s price is a fraction of Lamborghini’s price.
Scheduled to be released in 2020, the Tesla Roadster is the fastest production car based on several metrics. It can go 0 to 97 km/h or 60 mph in a blistering 1.9 seconds. Yet, its price of US$200,000 is a fraction of Bugatti’s price of US$3,000,000.
For most of my life, my dream car was a Lamborghini or Ferrari. Now, I think they are obsolete. I would never buy one. Supercar owners are now facing a real risk that their cars will devalue after the Roadster comes out. If you know a supercar owner, you should warn them of the risk of keeping their cars.
According to CleanTechnica : “Previously, the top two cars ever tested were the Tesla Model X and Model S. So, with the newly announced data, Tesla owns the top 3 spots.”
There are multiple factors that make the Tesla car safer. One of them is that the centre of gravity is lower because the battery is at the bottom of the car. Consequently, it is much harder for the Tesla to roll over. Due to its structure, the frame collapses less.
Electricity is far cheaper than gasoline. You no longer need to spend time and money every week to go to a gas station. You simply plug it in when it is parked in your garage.
According to Tesla, there are 20 moving parts in a Tesla, versus 10,000 moving parts in a gas car. Even if a gas car has only 1,000 moving parts, that makes the gas car much more prone to failures, maintenance and repairs. With an electric vehicle (EV), there is no more need to replace the radiator fluid, spark plugs, engine and transmission oil, gaskets, filters, etc. Even Tesla’s brakes last longer because most of the time, the braking is done by the motors’ regenerative braking.
5. Smartest Car
Tesla cars can park themselves. That alone makes it smarter than other cars.
However, Tesla’s cars can drive itself on the highway.
Smart Summon is not elegant but is making improvements in each software update.
You can control most aspects of your car, including summoning it, on your smartphone app.
On a regular basis, the software in the car is updated over the air with additional features. Recent updates enabled the car to recognize stop signs and traffic lights. A prior update added Netflix, YouTube and some games.
It is hard or impossible to think of another car that improves after you buy it.
This can be a separate reason on its own. However, due to the difficulty of achieving full self-driving, this is a “maybe” and “nice to have”.
This video from Tesla shows self driving, but it is not released to their customers’ cars and it is not capable of city driving.
This is a complex topic and would require several articles to explain. In summary, several companies are racing to build the first self-driving cars. Waymo is the first company to have robotaxis but they are not truly self-driving because they are geo-fenced to a certain district in Phoenix. Some claim that Tesla is in the lead because its fleet of 400,000 cars are sending back videos of billions of miles of driving to feed the neural network, whereas Waymo has millions of miles.
Whoever achieves self-driving will be able to make robotaxis. Whoever makes robotaxis will make billions of dollars and seriously disrupt the world.
6. Governments are an Existential Threat to Gas Cars
Governments around the world are planning to ban gas cars. Here is the list:
China: Ban announced on 2017 but no date set yet.
Costa Rica: 2050
Sri Lanka: 2040
United Kingdom: 2035
China is the world’s largest market for new car sales. It is also the world’s largest EV market.
This is a huge threat to gas car makers and one of the reasons for the very cheap valuations of GM’s, Fiat Chrysler’s and Ford’s stocks.
Governments will force consumers to buy EVs. The leader in EVs is Tesla. Therefore, governments are forcing consumers to buy Tesla.
Tesla’s lead against competitors are in several areas:
Most people drive approximately 30 miles per day, which means that their EV’s range is more than enough, because they can charge their cars each night in their garage. Despite this, most new buyers have range anxiety with EVs. They want to know that they can charge their cars on the road. Tesla has a worldwide network of destination chargers and super chargers, that are years ahead of competitors and are still growing.
Sandy Munro is an industry and car expert, as he is paid to take apart cars to provide insights to car and parts makers. He praises the Tesla car on several aspects and explains why the Tesla motor is superior to other EV motors.
Most car makers spend billions of dollars on advertising. Because Tesla makes a superior product and Elon Musk’s huge social media following, Tesla does not spend any money on advertising. Despite zero advertising, Tesla’s bigger problem is with production (supply), not demand. According to this news report:
54% of Canadians are willing to go electric. 10% of Canadians are certain to go electric. Yet, only 3.5% of cars sold in Canada are electric. Why? “there’s not enough supply to [meet] demand”
Provinces are starting to coerce car makers to sell EVs. There is a LONG runway before all gas cars are replaced. In fact, EVs are still in the “early adopter” stage of the S curve.
Hydrogen versus Electric
Some companies are trying to make hydrogen fuel cell vehicles (HFCV). Tony Seba provides reasons why HFCVs will not be able to compete against EVs:
EVs are three times more energy efficient than HFCV
You need to build a multi-trillion dollar hydrogen delivery infrastructure.
Hydrogen is not renewable.
Friends do not let friends buy gas cars.
Friends do not let friends start careers in declining industries. Read my article about the industries that Tesla will hurt or destroy.
This article explains why I think Tesla is a great business with the potential to seriously disrupt many companies and industries.
This is not a recommendation to buy the stock, especially given that the stock has already had a huge rally in the past eight months. On a short term basis, I have no idea where the stock is going. It can continue rallying or it can drop 50%.
In 2018, my neighbour asked for a stock recommendation. I mentioned Enphase when it was trading at approximately $6. Shortly afterwards, it dropped approximately 33% to ~$4.
I recommended Roku to my neighbour when it was trading at approximately $44. Shortly afterwards, it dropped 38% to ~$27.
In the long run, the stock usually correlates to the business metrics. Enphase is now trading at ~$32. Roku is now trading at ~$130. But there is no guarantee of this, especially in the short term.
According to Jack Rickard, Tesla will destroy these industries:
According to Warren Redlich, a car-accident lawyer, Elon Musk will hurt or destroy the following industries if he makes Robo Taxis:
However, robo taxis will take another one to 10 years to come out, depending on who you believe. The predictions above are predicated on robo taxis mostly and partly on Elon Musk’s Boring Company and SpaceX.
Among Berkshire Hathaway’s biggest holdings are:
Geico (car insurance)
Santa Fe (railroad)
Robo taxis do not even need to come out to affect Berkshire Hathaway’s stock. If enough investors fear that robo taxis will disrupt Berkshire, it will suppress Berkshire’s stock.
I think this is why Uber and Lyft, which have been growing revenues like crazy, is in the dumps with their stocks. I could be wrong, but I think enough investors fear that Uber and Lyft will be put out of business by robo taxis, which is why their stocks are suppressed. Therefore, I would avoid stocks in the above industries.
Uber and Lyft are HUGE DISRUPTERS of the taxi industry. Yet, these DISRUPTERS will be DISRUPTED. Rarely has any disrupter been disrupted so quickly. Cars disrupted horses. But it will be over a 100 years before gas cars are disrupted.
If Elon Musk comes out with Robo Taxis, he will be the biggest disrupter in history and will be the real “Iron Man”.