by Anton Wahlman
automotive analyst and journalist asks a pertinent
question on the future of electric vehicles if
global warming turns to cooling.
questions that have never been asked, but the time
is ripe for discussion!
There are two
tail risks to the electric vehicle (EV) market that could be
more devastating than anything else.
To be sure, I
believe these two tail risks are less than 50% likely. But
they're also not zero. You have to take them into
consideration for your valuation thesis.
The first risk is
the electromagnetic radiation coming from EVs. These battery
and electronic systems are far bigger than cell phones.
We do not know
what future studies will conclude, after people have been
exposed to high-power EVs for many years and decades.
The other risk is
global cooling. If CO2 causes 'global warming,' wouldn't logic
dictate that a new ice age means we must heavily tax or
outright ban electric cars?
There are two things that
could bring a "sudden death" to the future of electric cars.
These are the
market-impact equivalents of an giant asteroid hitting hitting
Earth, extinguishing all life.
The first of these two threats is any evidence of harmful
electromagnetic radiation from sitting in an electric car.
Let's be clear:
I have no certain
evidence that this is or will be a problem. I'm just saying that
it's not clear that this issue has been investigated deeply
enough, and not recently enough.
Sitting on top of a giant
battery, ranging from 16 kWh to as high as 100 kWh or even 200 kWh,
is at least enough to make someone suspicious.
Consider the magnitude of
a cell phone, which one tries to keep at least a foot or two away
from the vital organs of the body whenever possible.
car has the potential to be many decimal points more potent.
I have tried to see if the studies conducted to date are any good.
It's not obvious one way or the other. Maybe this will all turn out
to be fine. I sure hope so! But the probability that it might not,
is a non-zero probability.
How long until we
discover the long-term effects of things that
that could be a decade or two out - Maybe longer
Imagine the scandal - Congressional hearings, and worse - if it
turns out to be that,
sitting on top of
EV batteries cause cancer
government policies caused people to buy EVs through
subsidies, mandates and other incentives
That would really be
I have no idea how this will play out, but if you start seeing the
government and other actors looking into this to any significant
extent, look out below.
The risk is 100%...
If this happens, EVs will
be viewed as radioactive by the population, and sales would go to
zero, no matter how large the subsidies are.
Electric cars would be
the new cigarettes
Here are three articles that could get you thinking, and ask for
The other issue is
We are currently seeing some of the coldest weather in
decades. I imagine this is temporary and that things will continue
to fluctuate up and down, just like they have done since the
beginning of time.
If so, probably no big deal.
if it doesn't? - What if we're entering a "mini ice age?"
The argument by the
global warming cultists has been that
causes the Earth to get warmer, and this is somehow bad (I don't see
why that necessarily follows, but let's go with it).
Well, if climate change
is bad, and the weather is now turning colder:
Wouldn't their logic
dictate that we should maximize CO² output in order to
reduce or eliminate the new ice age?
If so, why should the government subsidize electric cars?
why shouldn't the government just ban all electric cars?
Again, this is an unknown that in my view isn't even 50% likely.
world's temperature is most likely going to stay approximately the
same, as it has done for a long time already.
But just in case it gets
colder, the logic that has driven government policy to this point,
would have to reverse and perhaps tax EVs heavily or outright ban
Electric cars would be the new diesel.
To see an example of how the winds of fortune could change on this
subject, consider the December 28, 2017, tweet by the president of
the United States of America:
"In the East, it
could be the COLDEST New Year's Eve on record.
Perhaps we could use
a little bit of that good old Global Warming that our Country,
but not other countries, was going to pay TRILLIONS OF DOLLARS
to protect against. Bundle up!"
impact - Tesla (TSLA)
If either of these two things happen, the risk is to those companies
most exposed to electric cars.
There is no company more exposed than
Tesla. With its high market cap and essentially total exposure to EVs, it stands to lose the most. It would be completely wiped out.
These tail risks are probably below 50% in terms of probability. But
they are not zero.
You have to take them into consideration,
thinking of these tail risks as a form of put option.