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How to get Canada's oil to export markets?

Then I wonder what VW is up to?


Paywall free version: https://archive.ph/PxM0v
I wouldn't hold out a lot of hope for VW's EV plans. The new regime in charge is dramatically slowing their investment in their transition to the EV market. I once thought VW was going to be one of the surviving OEMs, now I'm not so sure. I think Hyundai will make it. I think most of the Japanese OEMs are toast (they are stubbornly refusing to give up on hydogen, which is DOA in passenger vehicles). Of the NA OEMs, maybe Ford will make it. GM feels doomed.
 
I think most of the Japanese OEMs are toast (they are stubbornly refusing to give up on hydogen, which is DOA in passenger vehicles). Of the NA OEMs, maybe Ford will make it. GM feels doomed.
I think the concept of the privately owned passenger vehicle will be dead by 2050-60. The government won’t want people owning and operating their own vehicles.
 
Then I wonder what VW is up to?

the best place to build a factory is clearly wherever you can swindle politicians for tax breaks.

I used to think this too. Post Ukraine invasion, however, security of supply is important. As is a relatively clean and cheap grid to reduced embedded emissions. Canada offers this. Any tax breaks mostly just sweeten the deal. But it's way more than tax breaks. Or the Pentagon wouldn't be interested in Canadian mineral extraction:


I wouldn't hold out a lot of hope for VW's EV plans. The new regime in charge is dramatically slowing their investment in their transition to the EV market.

I get that this is the narrative that is going around the EV fan circles, but their slow down lines up very much just trying to match resources and grow their EV business more sustainably and holistically. Just look at all the issues with software they are having. If they don't slow down, they are going to have much bigger issues later. It's unfortunate that this is portrayed as some kind of change of ideology.
 
I get that this is the narrative that is going around the EV fan circles, but their slow down lines up very much just trying to match resources and grow their EV business more sustainably and holistically. Just look at all the issues with software they are having. If they don't slow down, they are going to have much bigger issues later. It's unfortunate that this is portrayed as some kind of change of ideology.
You have to balance this risk with being too slow to change. Taking until 2030 to launch a dedicated EV platform sounds like Nokia or Blackberry releasing an Android phone 8 years after the iPhone. The legacy OEMs seem to be skating for where Tesla is now. They are going to be completely shocked by what Tesla is able to do from the high end, and blindsided by cheap Chinese imports. There will be nowhere to hide.
 
Taking until 2030 to launch a dedicated EV platform sounds like Nokia or Blackberry releasing an Android phone 8 years after the iPhone.

I don't know where people come up with this stuff. VW already has a dedicated EV platform:


They've also developed one for all their premium brands:


What they have slightly delayed is a unified electric platform across their entire portfolio:


They are going to be completely shocked by what Tesla is able to do from the high end, and blindsided by cheap Chinese imports.

Tesla is more interested in profit than market share. As such, there's always going to be a need for everything less than the entry luxury market that Tesla plays in.

2-3 years ago I would have agreed with the Chinese taking the bottom. Now? Geopolitics is going to sink their ambitions. Especially in developed countries.
 
Tesla is more interested in profit than market share. As such, there's always going to be a need for everything less than the entry luxury market that Tesla plays in.

2-3 years ago I would have agreed with the Chinese taking the bottom. Now? Geopolitics is going to sink their ambitions. Especially in developed countries.
I'm not sure what makes you arrive at this conclusion. Tesla is very clear about wanting to scale to be the world's largest automaker by the end of the decade. They aspire to grow their production 10x their 2023 production estimate of 2.1M vehicles to 20M by 2030. In the interim, it is only logical that they address smaller markets as those are the ones where their supply can meet demand. Trying to make a Corolla competitor off the bat would have only resulted in demand wildly exceeding what they can produce in the near term.

I think the IRA in the US will make that market very challenging for Chinese EV makers. Europe much less so. Once IRA becomes untenable (ie, most of the market is EVs and $7500 subsidies become unaffordable) then that artificial barrier will fail to keep Chinese automakers out. It is inevitable that Chinese automakers become global players, short of some total collapse of China. I suppose that is not impossible but I wouldn't bet on it.
 
Delaying the SSP by 4 years until 2030 is not a 'small' delay. This is a disruptive change in the auto industry, and the 2020s will be decisive. Trying to slow-roll the change while you have a disruptive competitor like Tesla scaling aggressively is a recipe for disaster. The idea that the legacy OEMs can catch Tesla whenever they feel like getting into the game (feel like they have sufficiently sweated their stranded investments in ICE technology) means they will be too far behind to be competitive on cost, performance, ecosystem, etc.
 
I'm not sure what makes you arrive at this conclusion. Tesla is very clear about wanting to scale to be the world's largest automaker by the end of the decade. They aspire to grow their production 10x their 2023 production estimate of 2.1M vehicles to 20M by 2030. In the interim, it is only logical that they address smaller markets as those are the ones where their supply can meet demand. Trying to make a Corolla competitor off the bat would have only resulted in demand wildly exceeding what they can produce in the near term.

I think the IRA in the US will make that market very challenging for Chinese EV makers. Europe much less so. Once IRA becomes untenable (ie, most of the market is EVs and $7500 subsidies become unaffordable) then that artificial barrier will fail to keep Chinese automakers out. It is inevitable that Chinese automakers become global players, short of some total collapse of China. I suppose that is not impossible but I wouldn't bet on it.
Unless they plan to be 'ghost manufacturers' for others, a challenge for China will be setting up a corporate distribution network in many western democracies; a continuation of the Huawei syndrome.
 
I'm not sure what makes you arrive at this conclusion. Tesla is very clear about wanting to scale to be the world's largest automaker by the end of the decade. They aspire to grow their production 10x their 2023 production estimate of 2.1M vehicles to 20M by 2030.

Your estimate is exactly why I hold this view. Tesla's growth in absolute terms is still aiming for a minority of the total global auto market. What they are aiming to do is dominate the premium segment (Audi, BMW, Mercedes, Lexus, etc). That's what that 20M share is. Somebody still has to make cars for the people that buy a Toyota Yaris or a Dacia Spring.

I think the IRA in the US will make that market very challenging for Chinese EV makers. Europe much less so. Once IRA becomes untenable (ie, most of the market is EVs and $7500 subsidies become unaffordable) then that artificial barrier will fail to keep Chinese automakers out. It is inevitable that Chinese automakers become global players, short of some total collapse of China. I suppose that is not impossible but I wouldn't bet on it.

I don't think a lot of people are aware of how much sentiment is changing and has changed in the last few months. The EU has just started targeting carbon border tarrifs at China. And NATO just declared China a global security challenge. In that environment, it's naive to believe that Europe will just let China take over a major industry in Europe responsible for 7% of GDP and 10% of manufacturing jobs. Especially after watching what dependency on Russia for energy is doing. Germany is already taking heat for dependency on Russia for cheap energy and China for a ready export market. The EU isn't going to allow such dependencies to develop further. All of that said, I do agree that China is going to displace major brands in the developing world. Even there, there are challenges. Why would Brazil and India let in Chinese imports? Countries that have a large enough market will be far more protectionist going forward. Especially, as they see developed countries themselves pivot in that direction.
 
Unless they plan to be 'ghost manufacturers' for others, a challenge for China will be setting up a corporate distribution network in many western democracies; a continuation of the Huawei syndrome.
Chinese OEMs will pick over the husks of walking dead legacy OEMs. It has started with Volvo and JLR. As much as I like Mazda, I think they're toast. That would be an easy target to obtain distribution in the west.
 
Your estimate is exactly why I hold this view. Tesla's growth in absolute terms is still aiming for a minority of the total global auto market. What they are aiming to do is dominate the premium segment (Audi, BMW, Mercedes, Lexus, etc). That's what that 20M share is. Somebody still has to make cars for the people that buy a Toyota Yaris or a Dacia Spring.

Tesla would need to achieve 100% share of the luxury market to sell that many units. It's not going to happen. They will continue to move down market. They have a strong position on COGS and low SG&A. They are commanding huge margins right now because demand is outrunning their ability to produce. Much is being made of having to cut prices in China, but this was always the plan as they expand capacity.

The low end of the market will be especially displaced by robotaxi. Many people who buy boring econo-boxes will readily convert to robotaxi when that becomes available. Robotaxis operating at much higher utilization and useful life will suck a lot of volume out of the auto market. Fully acknowledging that Tesla is very far from making a Toyota Yaris. But that is a very small part of the market overall. The average new car price in the US in 2022 was nearly $50k.

Toyota Yaris is going to be gutted by Chinese EV version of Hyundai Accent.
 
Trying to get back on topic here.

I personally think the robotaxi stuff is much further out than Musk's rhetoric. But if you believe robotaxis are imminent and that the Chinese are going to flood the world with EVs, on the actual topic at hand, this ain't great for Canadian oil.
 
Trying to get back on topic here.

I personally think the robotaxi stuff is much further out than Musk's rhetoric. But if you believe robotaxis are imminent and that the Chinese are going to flood the world with EVs, on the actual topic at hand, this ain't great for Canadian oil.
Definitely further out than Musk predicts. But by 2030? I would be shocked if it isn't cracked by then. Anyone who has their finger on the pulse of machine learning/AI advancements that have been happening the last few years must know that things are advancing very quickly. A youtube channel I would recommend is Two Minute Papers (https://www.youtube.com/channel/UCbfYPyITQ-7l4upoX8nvctg). I don't know if you have seen Chat GPT, but it is frankly amazing.

Indeed, I think things are grim for Canadian energy (ahem, of the hydrocarbon variety). If they want to fund pipelines, let them. But I think a lot of the resource is stranded and should not be attracting public subsidy for infrastructure.

Perhaps Canada will have a role to play in the future renewable energy/hydrogen chemical economy, but I suspect the high solar potential geographies will have the best competitive advantage there.
 
Definitely further out than Musk predicts. But by 2030? I would be shocked if it isn't cracked by then. Anyone who has their finger on the pulse of machine learning/AI advancements that have been happening the last few years must know that things are advancing very quickly.

I personally don't think we'll see self-driving as Musk envisions (robotaxis) for a very long time. Well beyond 2030. For a whole host of reasons, including regulation. And because we have no way of dealing with all the vehicles with drivers already on the road.

I think a steady slide into increasing automation is far more likely, with lower risk applications first. Maybe something like semis driving the highways unmanned between cities, first. It's not going to be binary, where we suddenly wake up to robotaxis everywhere. I'm looking more for real world applications outside of some geofenced trials as evidence. I don't see much. When I start seeing Walmart or Fedex send semis between Toronto and Montreal on the 401, maybe I'll be able to say we're 5-10 years out from robotaxis hitting the road. At present, I think something basic like that might happen before 2030. Maybe.

Indeed, I think things are grim for Canadian energy (ahem, of the hydrocarbon variety). If they want to fund pipelines, let them. But I think a lot of the resource is stranded and should not be attracting public subsidy for infrastructure.

I think natural gas probably has a slightly better future. We saw what happened in Ukraine. And geopolitical risk is a much bigger deal now. Nobody can bet that hostile actors can be relied on, as energy suppliers.

I agree that oil is challenged. But it's substantially a question of how steep the slope of decline will be. If we are peak oil and then no real decline for a decade, Canadian oil will be somewhat okay. If we see electrification get agressive (and I mean more than just private passenger cars), we might see pullback. But so far despite the EV sectors growth in sales, optimistic predictions still have 800M dino juice burners on the road in 2040. BNEF says in their recent EV outlook that combined, all the EVs in the world (including delivery vans and buses) displace about 1.5 Mbpd of demand. That's a dent. But still not nearly enough to substantially curtail investment in oil and gas. And that comes, just as battery pack prices actually went up for the first time to $151/kWh. Remember, parity with gas cars is said to be around $100/kWh. The current surge in inflation could well have set the transition back 5 years when it comes to EV adoption.
 

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