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September 4, 2019 | Porsche: “The Turning Point has Arrived for Electric Vehicles”

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

Contrary to what the Porsche CEO says below, sustainability does require some compromise: 8 billion people on earth need to manage and share finite resources more efficiently and with less waste than when there were just 3 or 5 billion people.

The move toward electric power is a key part of this transition.  As usual, expensive early models are how all new technology spreads from early adopters to mainstream. Tesla’s lead in this area has prompted all the other major auto companies to focus their attention and resources now on catch up.  In just one decade, legacy automakers have gone from dismissing EV’s as a fad, to proclaiming that the turning point to EVs has arrived.   Here is a direct video link.

Hand in hand with this transition is a massive investment cycle requiring billions in capital expenditures to fund this next big shift in energy and transportation.

Shareholders who have grown accustomed to quick compensation in the form of dividends and share buybacks that boost rapid earnings growth and share prices are likely to be sorely disappointed. This transition is not a quick and easy turnaround, and traditionally fat profits on pick-up trucks and SUVs will be under pressure as automakers work to roll out EV versions of their most popular brands.  See An all-American pickup fight is revving up:

“Pickup trucks accounted for 33% of U.S. sales at GM, Ford and Fiat Chrysler in the second quarter, according to Wards Intelligence, up from 30% for the same period last year. They probably generate a much bigger share of profits

…Tesla’s truck project will likely keep pressure on the Detroit Three to invest billions of dollars in electrifying their pickups. This is a fight that will only get more expensive for investors in the years ahead.”

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September 4th, 2019

Posted In: Juggling Dynamite

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