Credit deflation and the reflation cycle to come (part 2)

[DurhamBorn]

4 hours ago, JMD said:

I am a big investor in the oilies, so this is a genuine question.

What about the risk of governments across the world such as US/Biden one, of pumping lots/most of their MMT money into the renewable sector? Such policies will buy these governments votes, show them too be the 'good guys' and pacify people (whilst they become more authoritarian in other sectors/areas, which is my personal fear). Anyway, might the renewable sector then be in prime position to absorb the oilies - which is i guess the opposite of what you propose might happen - helped of course with new US/Biden type clean energy legislation which favors the renewables. 

Or are my fears 'Western centric', and China/India real-politik will override the silly notions of the West, and its arrogant climate morality (and ironically shortsighted, because if global warming is a real thing then the solution imho is the use of tech to achieve carbon sequestration).

 

You can bank on the fact they do.In fact if you go back to page one of this thread on HPC is was predicted then.It was obvious governments would push massive green investment as a way to get out of a big slump/dis-inflation.My road map on oil and gas has those as cross market drivers that add lubrication to the fiscal pulse the CBs are pumping.

Electric use will grow fast,but the grids needs base load and that will be gas.Asia will need massive amounts.The green sector will cause a bubble,and everyone knows it.The problem they have is the bubble it creates wont be in green energy,it will be in oil and gas companies,the very things everyone has sold.I dont think iv ever seen a better contrarian and macro set up.

[Google247]

4 hours ago, Democorruptcy said:

It wasn't tongue in cheek but admit I wasn't thinking they would weigh so much! Battery sizes seem to have reduced over time so I assumed the same would become true of car batteries.

Integrity is a good point. I took my car battery out to recharge it and haven't been able to use the Radio/CD player since! I don't know the security code and the youtube video of pulling the dashboard apart to get the serial number off the back didn't enthuse me.

 

Nio (chinese tesla) have a battery swap program apparantly.

No need to wait for the car to charge, drive up and have the battery swapped for a full one in 3 minutes

[Chewing Grass]

2 minutes ago, DoINeedOne said:

https://twitter.com/BorisJohnson/status/1328995962736570371

 

 

 

My arse, all the money has been spent this year, unless he prints us into oblivion and steals everyone’s retirement, it ain't going to happen like planned.

[feed]

54 minutes ago, JMD said:

Yes i do find the subject interesting. Actually, going beyond the EV discussion, I woudn't mind supermarkets becoming a larger part of the economy. Maybe they can take over from the failing shopping centers/high streets. Not an ideal solution i know, but compromise is important and they are private innovative companies (and which i think was partly your point?). So if were making government policy i'd favor supermarkets over companies like Amazon... just need to implement a decent corporate tax policy to help things along.

I do think they understand the need to draw in customers.  I look at a large Sainsburys and what they’ve added over the years in store, but I’m not sure if there is much hope for them taking old shopping centers. When Sainsburys bought argos, they dumped all of the high street real estate and brought it instore.  But who knows, the model for grocery is changing too.

But really my point on EV’s was about the business model.  I think many people see EV’s as a continuation.  It will be like ICE, but with EV’s.  That’s not whats happening.  The technology isn’t driving the change, the environmental noise isn't driving the change. The Autos want to change the business model.  If you force people to use a new product you can force a new business model on them with that product.  EV is just the product that does that.  

Today for the autos, the majority of the profit is from initial sale, some profit from parts and service in the early life that decreases as the vehicle ages. Nothing at EOL.  High marketing costs for sale of new vehicles.  Autos make a profit on the vehicle for maybe 5 of the 10 years it’s on the road but after those first 5 years, it becomes competition against new sales. 

The future with EV. Profit from leasing and maintenance of the vehicle for all of its life, with a refurbish or recycle and profit from secondary markets at the current regions EOL.   

Contract the EV for 5 years, pull it and replace it at a 10% contract increase. But most importantly EV’s remove the worse of the competition – old vehicles.   And you have to replace them every 5 years – because efficiency, or pollution or technology changes or something.  It's moving cars to tech and a service model.   

So for those people thinking they’ll just run old ICE in the new world.  They’ll not and that’s not because they're ICE v EV. It’s because they’re own vs lease.    

And all of this means that the infrastructure model needs to be thought of as different from todays. 
 

[AlfredTheLittle]

2 minutes ago, Chewing Grass said:

My arse, all the money has been spent this year, unless he prints us into oblivion and steals everyone’s retirement, it ain't going to happen like planned.

Funny how they allocate 4 billion for a green revolution, having just spent 40 billion on covid testing! 

[DurhamBorn]

4 hours ago, Cattle Prod said:

I heard Marin Katusa say this on a recent Macrovoices podcast, in the context of access to capital. In that the renewable companies will be able to access the capital, and the oilies won't. I think it's a fair challenge to the self reinforcement we are giving ourselves here and worth considering.

What I can't get past though is the world collapsing first due to unsustainably high oil prices. And if they no one will lend to the oilies, they can finance out of cash flow which will be huge. This theory is predicated on 2 assumptions: 1) permananet demand loss and 2) no coming supply problems. 

They are all looking the wrong way.You wont be able to borrow anything for less than 5%,more likely 7% minimum by later in the cycle.Green companies wont be able to re-finance.The MSM etc think the CBs can keep printing but they cant.They can print hard for around another 12-18 months,then not a cent or penny more as they chase inflation for the whole cycle.

My road map is clear on this.Rates are going up the whole cycle.

Another thing is that they will over build wind farms etc.The real money will be made by the companies making the hydrogen from the cheap nighttime electric.That will be big oil.BP will build a big plant on Teesside,Shell in Holland etc

[Democorruptcy]

7 minutes ago, Google247 said:

Nio (chinese tesla) have a battery swap program apparantly.

No need to wait for the car to charge, drive up and have the battery swapped for a full one in 3 minutes

Thank you, that must have silenced the doubters.

https://www.nio.com/news/nio-power-completes-500000-battery-swaps

NIO Power Milestones
December 16 , 2017	Power Swap debuts at NIO Day 2017
May 20, 2018	NIO opens its first battery swap station in Nanshan High Tech Industrial Park, Shenzhen
November 15, 2018	NIO launches 18 battery swap stations a long the G4 Beijing Hong Kong Macau Expressway
December 15, 2018	NIO launches 8 battery swap stations along the G2 Beijing Shanghai Expressway
April 15, 2019	NIO Power Swap receives Red Dot Award: Product Design 2019
August 24, 2019	NIO awards the first owners of its products a lifetime of free battery swap services
May 20, 2020	The 131st battery swap station opens, the first in Foshan
May 25, 2020	NIO Power completes the 500,000th battery swap at the power swap station in Shanghai Auto Expo Park

 

[Loki]

12 minutes ago, feed said:

own vs lease.    

"You'll own nothing, and you'll be happy"

 

 

 

[feed]

13 minutes ago, Loki said:

"You'll own nothing, and you'll be happy"

 

 

 

Exactly.  They're not joking.

[Chewing Grass]

Private rather than business leasing only became viable from 2008 onwards because of the graph below.

Cars are not houses and have about 10 years of real world value in them with maintenance, wear and tear.

Break even is interest rates at 5% as the car retains enough value, at 6% if you keep the car for 6 years you are better off buying.

If interest rates hit 8% (70s/80s to mid 90s) leasing is dead.

Covid money printing will tip us back to the 1970s and that was when we were going to get supersonic travel, shorter working week, mag-lev trains, high-speed rail, early retirement etc etc.

Politicians were promising everything (Jam tomorrow) back then but in reality most people got nothing out of it.

 

[Google247]

41 minutes ago, Democorruptcy said:

Thank you, that must have silenced the doubters.

https://www.nio.com/news/nio-power-completes-500000-battery-swaps

NIO Power Milestones
December 16 , 2017	Power Swap debuts at NIO Day 2017
May 20, 2018	NIO opens its first battery swap station in Nanshan High Tech Industrial Park, Shenzhen
November 15, 2018	NIO launches 18 battery swap stations a long the G4 Beijing Hong Kong Macau Expressway
December 15, 2018	NIO launches 8 battery swap stations along the G2 Beijing Shanghai Expressway
April 15, 2019	NIO Power Swap receives Red Dot Award: Product Design 2019
August 24, 2019	NIO awards the first owners of its products a lifetime of free battery swap services
May 20, 2020	The 131st battery swap station opens, the first in Foshan
May 25, 2020	NIO Power completes the 500,000th battery swap at the power swap station in Shanghai Auto Expo Park

 

Just watched the video of it... very impressive. 

I wonder if the other ev manufacturers will implement the same tech... or whether nio have a patent over it

[The Idiocrat]

54 minutes ago, Google247 said:

Nio (chinese tesla) have a battery swap program apparantly.

No need to wait for the car to charge, drive up and have the battery swapped for a full one in 3 minutes

There was an Israeli company that tried the battery swap thing and burnt through a huge amount of venture capital. Suspect they were too early to market. They could only get Renault to suppor their battery swap methid:

https://www.theguardian.com/environment/2013/mar/05/better-place-wrong-electric-car-startup

 

 

[feed]

24 minutes ago, Chewing Grass said:

Private rather than business leasing only became viable from 2008 onwards because of the graph below.

Cars are not houses and have about 10 years of real world value in them with maintenance, wear and tear.

Break even is interest rates at 5% as the car retains enough value, at 6% if you keep the car for 6 years you are better off buying.

If interest rates hit 8% (70s/80s to mid 90s) leasing is dead

How do people finance a purchase.  Borrowing money either way is borrowing money.  And a lost cost monthly price is easier to sell than a lump sum bank loan with a fat APR attached to it.   

[Chewing Grass]

16 minutes ago, feed said:

How do people finance a purchase.  Borrowing money either way is borrowing money.  And a lost cost monthly price is easier to sell than a lump sum bank loan with a fat APR attached to it.   

Many didn't, back in the day you bought a 5 year old car that was starting to rust, by 10 years old they were 10% the price of a new one, the engines were nearly worn out (bore wear from over-fuelling) and structurally rotten.

A 3 year old car retailed at 50% the new price, the sweet spot was buy at 3 sell at 5 if you weren't into maintenance.

Personal loans were generally cheaper than car finance which was expensive.

Anyone who started driving in the last 20 years has done it in a low interest rate environment which is why anyone can lease a Merc.

Most cars that are perceived as quality (German) are sold above their real worth and low interest rates are the only reason Europe still manufactures cars. French cars do not have perceived value even though they are just as good at doing their job reliably but demand has tanked.

In 10 years most people will be driving Chinese cars just like by the time the 1970s was out 90% of motorbikes in the UK were Japanese.

 

[AWW]

Exactly. New Audi RS6 is north of £100k once you've added some options. Yet you still see quite a few driving around. Nobody is paying £100k for them. Without cheap finance they'd be half that price.

[AWW]

Once you add finance to anything, the price gets ludicrous. Look at the price of a bloody Glastonbury ticket these days (not that I'd go now that it's a full on BBC/woke/Corbyn love in)

[Errol]

5 hours ago, jamtomorrow said:

Read or heard something just this last week along the lines of replacing sodium vapour lamps with LED is at least part of it - the reduced current draw frees up current carrying capacity in the street lighting network which is then repurposed to charging.

You won't be allowed to park on the street, obviously, so presumably they are contemplating having wires running back to the driveway?

[feed]

28 minutes ago, Chewing Grass said:

Many didn't, back in the day you bought a 5 year old car that was starting to rust, by 10 years old they were 10% the price of a new one, the engines were nearly worn out (bore wear from over-fuelling) and structurally rotten.

A 3 year old car retailed at 50% the new price, the sweet spot was buy at 3 sell at 5 if you weren't into maintenance.

The problem with that model is that the auto companies don't make any profit from it and there isn't anyone with any weight in the industry that wants to continue with it.  

And this. 

Long term, ICE cars are done.  Hence the 2030. They'll be replaced almost entirely by EV's, which will be mandated to be maintained via manufacturer.  Most people will not own, those that have ownership will be via a lease type contact.  But most will hire when needed or use lift share type services.  Many people will simply not drive. 

Short term ICE cars will be taxed off the road, to make way for the change.  

 

[Chewing Grass]

1 minute ago, feed said:

Many people will simply not drive.

Wrong, there will be the sort of car you hire to go on holiday, a day out or cart kids around in. Then there will be two seat runabouts with 60-80 mile range that are not carrying a big battery around. This will only need 1/4 - 1/6 the battery capacity of a current 300 mile EV.

This will be your everyday car, it wont need touch screens, self driving or any other fancy gizmos, it will be the 21st century equivalent of a Peugeot 106, will cost about 12K, have a 7 year warranty and will be made in China.

Yes your German SUV will be scrapped (if you had one) and its place on the drive (if you have one) will be taken by two little Chinese EVs with space to spare.

Baojun's E100 boasts a 29-kilowatt (39-horsepower) electric motor that propels the electric car to a top speed of 62 mph.

The E100 will go 155 kilometers (96 miles) on a single charge and the lithium-ion battery pack can be fully recharged in 7.5 hours.

https://www.greencarreports.com/news/1112088_baojun-e100-gms-tiny-two-seat-electric-car-for-china

[DurhamBorn]

52 minutes ago, Chewing Grass said:

Many didn't, back in the day you bought a 5 year old car that was starting to rust, by 10 years old they were 10% the price of a new one, the engines were nearly worn out (bore wear from over-fuelling) and structurally rotten.

A 3 year old car retailed at 50% the new price, the sweet spot was buy at 3 sell at 5 if you weren't into maintenance.

Personal loans were generally cheaper than car finance which was expensive.

Anyone who started driving in the last 20 years has done it in a low interest rate environment which is why anyone can lease a Merc.

Most cars that are perceived as quality (German) are sold above their real worth and low interest rates are the only reason Europe still manufactures cars. French cars do not have perceived value even though they are just as good at doing their job reliably but demand has tanked.

In 10 years most people will be driving Chinese cars just like by the time the 1970s was out 90% of motorbikes in the UK were Japanese.

 

Yep cars were crap then.Rings worn within a few years and petrol creeping down into the oil making bearing wear and piston big end failure common.Of course fuel injection and common rail sorted most of the problems out of having a rich mix.My 15 year old PUG has pretty much zero engine wear,rings,shells,nothing.No smoke at all.I treat the fuel system every 6 months and also add treatment every 2nd fill,i use DAE fuel system conditioner.Have a good few bottles,independants might sell it.

[Loki]

13 minutes ago, Chewing Grass said:

Yes your German SUV will be scrapped

Banger racing those pieces of over-priced over-sized Teutonic shit is the one thing I'm genuinely looking forward to in the clusterfuck decade.

[DurhamBorn]

27 minutes ago, feed said:

The problem with that model is that the auto companies don't make any profit from it and there isn't anyone with any weight in the industry that wants to continue with it.  

And this. 

Long term, ICE cars are done.  Hence the 2030. They'll be replaced almost entirely by EV's, which will be mandated to be maintained via manufacturer.  Most people will not own, those that have ownership will be via a lease type contact.  But most will hire when needed or use lift share type services.  Many people will simply not drive. 

Short term ICE cars will be taxed off the road, to make way for the change.  

 

They wont be taxed off the road.The Tories will lose every red wall seat they won if they stick to the 2030 date.Boris is an idiot.He has zero understanding of how people on under £25k a year earn a living.They need 2nd hand cars at £5k,many need 2nd hand cars under £1k to be able to get to work.ICE cars will be on UK roads in 30 years,and in big numbers.There will be a huge market if they stick to it in 2030 in Calais where people buy ICE cars and drive them home.If not the EU somewhere else.I can buy a car anywhere and ship it in.

[geordie_lurch]

4 hours ago, AWW said:

They're only too heavy for people to change. I could foresee driving over a cradle that drops the battery out of the floor then driving forwards onto a machine that lifts a new battery into place.

Or, the machines we travel around in become smaller and lighter, more akin to a Renault Twizy or a BMW C1, with batteries that humans can lift and carry.

Musk demonstrated something like this years ago but it seems they never actually delivered this like a lot of things they demo

 

[feed]

24 minutes ago, Chewing Grass said:

Wrong

You're projecting the past and not taking the change in demographics into consideration.  
The average age for a new car owner in the US is 53.  The under 30's don't want to own.  

[feed]

9 minutes ago, DurhamBorn said:

They wont be taxed off the road.The Tories will lose every red wall seat they won if they stick to the 2030 date.Boris is an idiot.He has zero understanding of how people on under £25k a year earn a living.They need 2nd hand cars at £5k,many need 2nd hand cars under £1k to be able to get to work.ICE cars will be on UK roads in 30 years,and in big numbers.There will be a huge market if they stick to it in 2030 in Calais where people buy ICE cars and drive them home.If not the EU somewhere else.I can buy a car anywhere and ship it in.

The major EU auto manufactures are stopping producing them in region.  Importing them from outside the EU will be heavily tariffed.  Use of older models will be heavily taxed. If you want to run one in the EU, you'd better be wealthy. 

Tories or labour aren't going to have much to say about it.