The EV Revolution
Tony Roth, Chief Investment Officer, Wilmington Trust Investment Advisors
Tom Moloughney, Senior editor InsideEVs.com and host YouTube channel, State Of Charge
TONY ROTH: So, I know I start every podcast by saying I’m really excited about this week’s podcast, but I am truly really excited about this podcast. Over the last couple years, one area that has really affected me with excitement in my own personal life and certainly has spilled into my job and understanding what’s going on in the economy and the energy space and the green energy space is the advent of the electric vehicle.
So, it seemed to me incredibly timely to have a conversation around the changes to the economy due to the electrical vehicle. And we were really fortunate enough to have here today one of my heroes in the space, Tom Moloughney.
Welcome to Capital Considerations, the market and economic podcast that’s fully invested in your success. I’m your host, Tony Roth, Chief Investment Officer of Wilmington Trust.
In my own personal pursuit of the advent of the electric vehicle and trying to figure out things like which cars to buy and which chargers to have installed in my house I was lucky enough to come across a incredibly smart guy named Tom Moloughney. And Tom is a real expert in EVs from a number of perspectives.
Tom is a Senior Editor of the website Inside EVs and he’s also the host of the podcast Inside EVs, which is the largest internet site, a content publisher focusing exclusively on electric cars. Tom has also been covering EVs generally for over a decade, has written numerous publications, including Inside EVs, of course, but also Forbes Green Car Reports and the BMW blog. And where I first encountered Tom was on his YouTube channel, which is called State of Charge.
TOM MOLOUGHNEY: Well, that was a great introduction. Thank you very much. I appreciate it and it’s my pleasure to be here, Tony.
TONY ROTH: Well, I know that you’d, typically be, driving an EV truck or something like that around, some big obstacles out in the desert or I know this isn’t the funnest part of your day or your job. But it’s going to really be, I think, fascinating for us to hear, what your thoughts are on different aspects of the business and the industry as it continues to sort of take over.
And maybe the right place to start, because you’re obviously a car guy, right? You’re not just an EV guy?
TOM MOLOUGHNEY: One hundred percent, always been a car guy.
TONY ROTH: So, when you think about EVs, I mean I, I’m sitting here now in my home and I have three cars because I’ve got a teenage daughter who’s lucky enough to have a car and my wife and I, of course, need cars. So, we’ve got two EVs in the garage and one hybrid gas guzzler. And so, EVs are becoming pretty prevalent. So, when you think about the balance in the marketplace, how much of the fleet, if you will, is EVs today, do you think, Tom? where’s it going? How fast is it changing?
TOM MOLOUGHNEY: Okay. So, in the US electric vehicles represent about 1% of the overall fleet of vehicles on the roads today. But that’s, you know, a lot of those vehicles have been around for a long time and electric vehicles haven’t been. If you want to talk about new car sales in the US, nationwide we’re about at 6% right now, which still isn’t enormous. But when you consider only a few years ago it was under 1%, we’re seeing exponential growth year-over-year. In California, the leader of electric vehicles, they’re at somewhere around 12.5% for 2021 at least. 2022 has been even better.
What we are seeing is an incredibly fast ramp up of electric vehicles being sold, much quicker than what we saw with hybrids 20 years ago. When they started coming out, they took a lot longer to get to 6% penetration than we’ve taken with electric vehicles now. So, that adoption curve, that hockey stick adoption curve, we might be at the very beginning of where we just see it take off over the next five or six years.
Now, globally we’re falling behind some of the other countries. If you take a look at Europe, they’re at I think 13% for 2021. So, they were roughly double what we were at and the – and I know in February overall Europe was, new car registrations were 19% electric vehicles. So that they’re almost at one of every five cars being sold right now and registered in Europe is an electric car.
And if you look over at China, they’re at about, in 2021 they were at I think 13.5% overall. So, they’re kind of on par with Europe. But we’re definitely lagging.
TONY ROTH: So, what’s really interesting about that is we might say, oh, well, we’re not selling more because it’s a supply chain problem. We can’t get enough EVs to sell. And that’s true. But even before we had this sort of latest set of supply chain problems, there wasn’t enough EVs to satisfy the demand. And it feels like there’s been such a change in, at least in this country, obviously in Europe, but just thinking about this country, consumer consciousness as it relates to the environment. And when you take that and you combine the fun of EVs, because they’re on demand power. Their acceleration’s fantastic. They often include a lot of new technology that’s not on the old internal combustion cars and they’re quiet. They’re just sort of different and fun. It feels like something’s changed that has really underwritten this new demand that even goes beyond the higher gas and oil prices that we’re experiencing.
TOM MOLOUGHNEY: Absolutely. And let me ask you a question. You have a Tesla, right?
TONY ROTH: I have a Tesla, but unfortunately, Tom, I’ve had it for two weeks and, unfortunately, it has been in the shop for at least half of that time, because I have a Model X, it’s not like the Model 3 or the Model Y, where they produce so many of them and they have it down. I’ve got one of the more complicated ones I mean every time I look at it, I find something else or that I do something new with it, like supercharge for the first time and the car actually really goes bonkers because the computer chip gets too hot. So, I’ve got a Tesla, but I don’t have the use of it right now.
TOM MOLOUGHNEY: So, that’s unfortunate to hear, first of all. And I’m not as willing to forgive Tesla as you are, quite honestly, because it’s not a new vehicle, Tony. The Model X has been out for many years now. And, you know, it’s all of these problems should have been ironed out.
And I know they did a refresh and there’s a lot of new components in there for the new model, which I’m assuming you have.
TONY ROTH: That’s right.
TOM MOLOUGHNEY: It’s still unexcusable, inexcusable. Tesla gets criticized for quality control and rightfully so. I’ve owned two Teslas. I haven’t had too many problems. I’ve had a couple problems and they’ve taken care of them.
But, it seems like the – it’s more important for Tesla to get the cars out the door than it is to make sure they’re leaving the factory ready for customers. And I can tell you that’s really not the experience with the other manufacturers. It’s something that’s unique to Tesla and somehow they’re able to get away with it and they’ve been getting away with it. It’s not hurting their sales, so that’s how they continue to operate.
But the reason why I asked you if you had a Tesla was why did you buy a Tesla? I know you mentioned earlier a little bit about environmental reasons.
TONY ROTH: Yeah.
TOM MOLOUGHNEY: Well, why did you get a Tesla? I’m just curious about why Tony bought a Tesla.
TONY ROTH: No, that’s a great question. And I wanted to have a car that would be large enough for my family, so an SUV kind of experience. And I wanted a car that would go, you know, the low three to mid-300s from a range standpoint, which is probably way more than I need, in fact, which is a part of the conversation I wanted to have with you later, which is everyone’s so range-obsessed and has such range anxiety. But I’m learning that you don’t really need that much range typically, unless you’re someone that’s road-tripping every week.
And I loved the falcon wing doors. They’re so cool. I ended up buying it, to be honest, after a year-and-a-half wait. So, those are the reasons that I bought a Tesla.
TOM MOLOUGHNEY: Okay. Well, the – what I was really getting at was I noticed you didn’t mention to save the environment.
TONY ROTH: That’s right.
TOM MOLOUGHNEY: And I think the misconception about electric vehicles is that everybody that’s getting them, it’s just because we need to stop global warming, which we do need to try to curtail that. Since we’re talking about the future of electric vehicles, where they’re going, what I want to point out is that that’s not really the reason why most people get an electric vehicle and why electric vehicles are going to dominate.
We’re going to completely transition to electric vehicles. It’s just a matter of how quick that timeline’s going to be. And it’s simply because they’re better vehicles. It’s not because they’re better for the environment. They are just flat-out better vehicles in nearly every way. And the driving experience, the acceleration, the fact that there’s no maintenance.
And I’m going to hit you with one here that you’re going to be surprised about, the convenience of refueling, which a lot of people think that that’s actually a negative. I actually put it in the positive column. And it’s just so much about the electric vehicles are better than conventionally fueled vehicles, that’s why we’re going to transition. It’s not going to be because the government’s forcing us, because they’re giving incentives, because they’re going to save the planet. It’s because it is simple. In the evolution of personal transportation, electric propulsion is better.
TONY ROTH: I feel embarrassed. You’ve called me out on this and you’re absolutely right. And in fact I love the car so much and my other electric car is a Volkswagen ID.4, which I don’t have as much fun driving as the Tesla, but I think it’s a terrific car. And because I’m such an enthusiast now.
So, I’m trying to get my wife to get an electric car, because I just want another electric car. And she has this hybrid gas guzzling car, and she just loves her car. And I’m trying to guilt her into one of these electric cars because I want another car to play with. And the only card I have at my disposal is to try to guilt her that she’s not doing good by the environment, which is the last thing that’s really been driving me to buy these electric cars.
So, Tom, when you think about the actual economic experience, I charge my car at home. I never go to the gas station. I never worry about superchargers, because how often do I drive over 350 miles? Maybe once a year.
So, but when you think about the actual cost of one of – of an electric car over its lifetime compared to an ICE car, internal combustion engine car, this seems like the electric cars, while they save a few dollars on the fuel, the initial outlay seems to be a lot higher. How do you think about that? What do you think the numbers, you know, really look like?
TOM MOLOUGHNEY: So, to get a comparable vehicle, and that’s the key. You have to really get a comparable vehicle. The electric car initial cost is a little higher and that’s why the incentives are helpful right now, offering the federal tax credit and some states have incentives. I don’t think we’re going to need these incentives for more than another five or six years, by the way. I think they’re important now to help bring the initial cost down.
But four or five years from now they should all sunset. We won’t need incentives, because the cost of the vehicles is coming down. We’re get, we’re getting closer and closer to parity with a comparable gas car. Five/six years ago the delta was a lot wider between a comparable gas car and a comparable electric car. But now the ranges are getting longer, they’re charging faster, and the prices are coming down.
You have to look at total cost of ownership. And if you can get, after the incentives, within a couple thousand dollars of a gas car, even if the electric car costs $2,000 or $3,000 more after incentives right up front, you’re going to be way ahead after three or four years. And the refueling is so much less and the maintenance. There’s no maintenance on these cars. If you’ve had the car, you understand that. It’s tires and wiper blades. There’s no oil changes. There’s no tune-ups. You don’t have to worry about I had to replace the catalytic converter on my Toyota.
Like all that goes away. So, overall, the cost of ownership will get a lot less. I mean you would have to pay – let’s say you were to keep the car for five years. The initial price difference would have to be $6,000 or $7,000 at least for you to not be ahead with the electric car, in fuel and oil.
I have a F-150 Lightning that I’m going to be getting in about two or three weeks. It’s being built now. And I did the fuel comparison and easily I will save $2,500 a year on, just on fuel. after three years, you know, I’m at $7,500.
TONY ROTH: Yeah Tom, where I live it, the cost of electricity’s about $0.14 a kilowatt if I have it right.
TOM MOLOUGHNEY: That’s about the rate.
TONY ROTH: So, the battery is about 100, megawatts, whatever it is. It’s 100.
TOM MOLOUGHNEY: Kilowatt hour.
TONY ROTH: So, it costs me about $14. If I went from zero to 100% charge, it would be $14 for 350 miles of range. And when we fill up my wife’s car, which is a hybrid, by the way, so she gets around, I don’t know, 25 or 26 gallons to the mile, it costs probably around, given today’s gas prices around $80 versus $14.
TOM MOLOUGHNEY: So, let’s say you both go through the tank every week, multiply that difference times 52. And don’t forget, you’re driving a bigger, heavier vehicle than hers.
TONY ROTH: That’s right.
TOM MOLOUGHNEY: Well, I don’t know. They’re kind of comparable right?
TONY ROTH: The battery weight I guess is something that I’m trying to get my mind around and understand how that affects everything. But one of the things I wanted to ask you about, Tom, I know you’re not an economist, you’re not a supply chain guru. And I’m really interested to understand, you know, how is the availability of things like lithium, which goes into batteries, and cobalt, which goes into these motors? How is that going to affect the availability of these cars, which is not your expertise?
So, maybe another way to get out of that type of issue is to think about the technology. When you think about the batteries that we’re using today, right, and it’s interesting. If you look at what these batteries consist of, I don’t know what to think. But you actually look at a picture and it’s like lots and lots of AA batteries, thousands of them all spread out, you know, vertically across a grid and that’s your battery.
How fast is the technology changing such that maybe we’ll be using solid state batteries? We won’t need lithium anymore. Or what are your expectations for range and the technology? Where is it going? What are some of the key things that you’re seeing?
TOM MOLOUGHNEY: So, yeah. Solid state batteries are kind of the next breakthrough, and a lot of companies claim that they’re very close to those. But they do still use lithium, the solid-state batteries. But the thing is will we be hooked on lithium forever? I would say no.
We had lead acid batteries for the longest time. We transitioned to nickel metal hydride when the Prius and the first hybrids first came out. That was the best technology.
Right now the soup du jour for batteries is lithium. But I don’t think that’s going to be the case forever. There’s going to be that next best battery technology that comes out. I don’t know what it is yet. It’s probably being developed in a lab somewhere.
But for now, what, what’s, what we’re seeing is more and more companies understand that we need as much lithium as we can and that’s driving more exploration, more resources to get the lithium. I was down in Chile, you know, a couple years ago. They have these giant salt deserts out there that they extract the lithium from.
So with new technology, new markets open up. And where we’re able to capture and get a lot more lithium now than what we could ten years ago because there’s demand for it. So, where does that end? I don’t know. But I have to believe that industry will find a way to supply what it needs to supply.
TONY ROTH: So, Tom, let’s assume for a moment that we actually, hopefully it’s not totally, totally not counterfactual. We do care about the environment, right? And we do care about the, the carbon footprint of and the environmental impact of the car that we’re going to drive. And, unfortunately, it’s not zero even though it’s electric, right? You still have to generate the electricity. You’ve got to engage in mining, which can be very harmful to the people that have to do it and to the earth.
If you think about in some rough sense, if you think about the environmental footprint let’s just say of an ICE car and you compare that to the environmental footprint of an electric vehicle, assuming some reasonable ability to recycle the battery material at the end of the life, right, which by the time these cars are recycled in ten years from now, the ones that are being sold today, I think there’s going to be a lot of capability to recycle those batteries. So, assuming that, how do you think they compare to one another?
TOM MOLOUGHNEY: So, it’s tough because I’ve read so many studies and you’ll find studies that say the electric cars are the worst thing in the world and then other ones that it’s 100 times better than gas cars. And I guess you’ve got to figure out who’s funding those studies to figure out what the results would be.
So, it’s really hard to say. But one of the things that I really like to look at is well to wheels emissions. And the Department of Energy has this site, the Alternative Fuels Data Center, and that really gives us a great snapshot of, it compares fully electric cars, hybrid cars, plug-in hybrid cars, and gasoline cars. And you can actually put in your zip code, and it tells you based on your electricity mix where you live, it’s different for me here in New Jersey than someone who might live in Kentucky where there’s 70% of their electric provided is coal and I really like that because you can see the difference. And in every instance the electric vehicle has the least amount of emissions. Even if you are charging your EV from a 100% coal power plant, it’s it still is better than any gasoline car and at best and a hybrid. Like the best hybrid, a Prius that gets 60 miles per gallon is equal to the electric car under the worst-case situation for the electric car when it’s 100% coal.
But as you know, we, we’re at – I forget exactly where. What are we at nationwide with renewables? It’s growing every year. And I have heard, since I have an – I have a solar array on my house. And I know everybody can’t do that, but I produce my own electricity. You can do that with electric cars. You actually can have a zero-emission car, which you could never do with gasoline.
And don’t forget, when we refine oil, we don’t pump gasoline out of the ground. It actually takes a lot of electricity to refine the oil. So, if you simply took that electricity, I think it’s two- or three-kilowatt hour for every gallon of electricity refined, and you put it in an EV, you can go 10 or 12 miles just on that electricity that it took to refine the gas.
TONY ROTH: That’s a great stat.
TOM MOLOUGHNEY: So, it’s complex. You have to take a whole a look at the entire well to wheels and mining and everything. And any manufacturing is bad for the environment. Let’s face it. If you want to get right down to it, anything we make is not good for the environment. But we have to live, and we have to manufacture.
So, I’d look at it as let’s not make the perfect be the enemy of the good. Electric vehicles are better I believe manufacturing-wise over their lifetime and certainly emission-wise. They’re not perfect, but they’re better.
TONY ROTH: And the, even though that you might have to change the battery after 300,000 or 400,000 miles, certainly the, there’s no reason to think that the expected life of an electric car is going to be less than an ICE car. I mean ultimately an internal combustion engine’s going to wear out. Whereas you can change the battery on an electric car engine and there’s so many fewer moving parts with regard to the motors and stuff which can go a million miles, you’d think that you should be able to get a longer existence out of that electric car than a traditional car.
TOM MOLOUGHNEY: You absolutely should. There’s no vibrations of the internal combustion engine car that over the years kind of like rattles everything apart. And it doesn’t wear out. The battery will wear out. But when the battery does, as you mentioned, you get a few hundred thousand miles out of a battery. It’s not like the battery all of a sudden just dies, unless it’s defective.
What happens is it just get – has less capacity and less capacity. So, even when it gets pulled out of the car, it’s end of life for automotive use, which most people say is about, once it’s about 70% of it’s initial capacity it’s end of life for automotive use. But you still have this big battery pack that has 70% of its capacity.
There’s companies that are already forming contracts, buying, signing deals that they’re going to buy these secondhand batteries eight, nine, ten years from now, because they’re going to use them for secondhand life use, like stationary energy storage. I mean you might be a used Tesla battery pack eight years from now and put it in your basement. And now you, you didn’t have to pay for a brand-new Tesla power wall because you bought a used battery one. And now maybe it’s half the price or even less than half the price.
So, there’s going to be second uses for automotive batteries. And then, when they’re finally retired, I think after 20 years or so, 20-25 years of service, they’re going to be recycled because they still contain that, those lithium and elements that are valuable. They’re never going to end up in landfills.
TONY ROTH: So, one of the things that happened just the last few days, Tom, and we knew this was coming I think based on what’s been happening in Europe and so on, is that Elon announced that the supercharger network here in the US, right, so these are the high-speed chargers that are near the highways all over the country. They really make up the lion’s share of that grid. That he’s going to open them up to the rest of the electric fleet, which as you say it’s 1% of the total fleet.
So, when you think about the idea of owning a car, right, so I have this Tesla that I’m going to need to drive up to Massachusetts a couple times a year and I really worry that I’m not going to be able to charge it on the way up there because as soon as the fleet gets 2%-3%, how am I going to be able to pull in and charge my car anywhere because there are going to be, you know, there’s maybe 15 chargers and there’s going to be 10,000 cars that need to get charged that day on the way up to Massachusetts. Do you see that balance righting itself?
TOM MOLOUGHNEY: So, that’s a great question and it’s something that we talk about on our podcast frequently. Me and the other cohost kind of say we’re in the golden age of electric vehicles now because there’s always open charging stations. There’s not enough cars to fill the charging stations. So, that’s never a problem.
And what we kind of believe, and I agree with this also, but the consensus among my peers is there’s going to be a couple of years where we start to get logjammed at the charging stations where adoption outpaces the ability to install these high-speed charging stations. So, there’s going to be some queues.
And you mentioned earlier once or twice a year you go far. And it might mean that this trip is going to take you a little longer because you’re going to pull over and you’re going to wait 20 minutes before you can plug in and then you’re going to be there 30-35 minutes, maybe 40 minutes. So, it’s going to be an hour stop.
And but what we do believe also is that industry is going to take over, because they’re – once the demand is there, the supply’s going to come. However, it takes a couple of years to get caught up. You don’t just snap your fingers and there’s charging stations in the ground. They – there’s engineering that has to, permits that have to get pulled. Equipment has to get made, installation. I mean it takes months to get a charging station installed. But we think that it’s going to catch up.
TONY ROTH: So, okay. All right. So, acknowledging that there’s going to be a touch period, but the actual infrastructure that we interact with is going to catch up. What about the upstream infrastructure? And by that, I mean the actual generation and delivery of electricity to this entire fleet.
GM is saying that is it 2030, Tom? That’s eight years away. They’re going to be 100% electric sales. And if you think about that and it’s only 1% of the fleet today, how is the electricity infrastructure going to be able to generate enough electricity to charge all these cars all the time?
TOM MOLOUGHNEY: So, I’ve had the opportunity to speak with many public utilities here in the US in my years of covering electric vehicles. And even I did some consulting for some of the infrastructure companies. So, I’ve been able to interact with the utilities whose job it is to provide the electricity.
And let me tell you, Tony, nearly every one of them told us, look, we can provide you with as much power as you need as long as we know it’s coming. The problem is if tomorrow three million cars were sold, like just, boom, they all moved off the lot and everybody drove them home and plugged in, that would be a problem.
But the utilities now are working with the manufacturers to get their data on car EV sales and where they’re being sold and sent to so they can then adjust. If they know your county added 5,000 electric cars last year, that’s where they can put up a new substation. That’s when, that’s where they’re going to invest in improving the grids.
The utilities are very good at providing power. They had this issue in the ‘60s when everybody started getting central air conditioning in the ‘70s, when they had to double the capacity. Everybody had, if you remember, like 30-amp mains in their house in the ‘60s and earlier. And then they had to put in a 20, a 100-amp main. And now, 200 and more amp mains are commonplace.
So, if they know it’s coming, they’ll be able to adjust. And there’s another thing that I want to point out about that, Tony. Electric vehicles, unlike a refrigerator, for instance, that has to run all day, you can shift the load with an EV on when it charges. Now, not when you’re on a road trip. I understand that. You got to charge; you’re on the road. But you live at home. You drive 40-50 miles a day. When you come home, you plug in, and you start charging. But what’s going to happen is we’re going to have smart grids and your grid is going to be able to communicate with your home and say – and you’re going to tell your grid, look, I leave at 8:00 in the morning. I just want my car charged by then. I don’t care when you charge it. And it’s going to be able to shift the load to when there’s excess generation.
That’s another thing that is coming down the road. And all these things combined, also stationary energy storage. The DC fast charging stations are going to have big battery banks that are going to supply that they’re going to be able to trickle charge off the grid so there’s not a sudden demand as soon as people plug in. All these things are going to combine to make the transition to electricity as a fuel not an issue for our current utilities.
TONY ROTH: That’s a great answer and it’s very reassuring, frankly. So, and it’s also sort of intuitive too that it sort of falls in line with the green efforts that we’re making, because right now we calculate roughly 40% of electricity generation comes from either solar, wind, hydro, or nuclear in this country. And as that percentage increases and supplies this increasing demand for electricity, it’ll be increasingly on a proportional basis green in source. So that just fits the underlying premise too of this being a, an environmental trend.Tom, we always say on this podcast that we don’t make, we’re not making any recommendations to buy or sell any stocks. And I’m going to take the liberty to say that you’re not making any recommendations here to buy or sell any stocks. Having said that, I find it fascinating that, you know, when you look at the size of Tesla and you said it well, they’re just getting cars on the road.
And I look at all of these we call them OEM, original equipment manufacturing car manufacturers that have been around forever. And I think that how could the future for Tesla as it relates to automobiles – I know they’re putting a lot of money into robotics and other things. But as it relates to automobiles, it seems as though the degree of competition that’s coming down the road with so many new models and so many new angles on technology, it seems like the road for a Tesla as dominant as they are today could be a lot more challenging.
And I’d love to hear without bashing Tesla per se, but just in general, what’s your sort of take on the trajectory of all these new companies getting into the, this space and how they may fare and what the balance might look like in ten years from where people are going to buy a car. Like, yes, I mean today everyone says, oh, you want an electric car? You buy a Tesla. I just feel like it’s going to change a lot faster than people think.
TOM MOLOUGHNEY: Well, that’s a great question. And I tend to agree with you. That is going to change. But Tesla still does make very good electric, the reason why they sell as many as they do. I know they have some manufacturing issues. The quality control isn’t top-notch.
For instance, I had my last Tesla that I bought that I still own, when I took delivery, it had some problems. But I called service. They made the appointment. They fixed the problems and I’ve had no problem since.
They still make very good electric cars. But they, they’re not going to own like 75% of the US market as they have the past few years with electric vehicles. That simply isn’t going to happen.
But it’s okay, because there’s still, you have to remember as we mentioned earlier, US, we’re at like 6% adoption right now. So, there’s plenty of room for everyone to sell a ton of electric cars. So, Tesla can lose their market share percentage, but continue to have exponential growth. And I mean I think that’s what’s more important to them, how many cars do they sell, not how many cars do they sell compared to how many EVs Ford sells.
So, I think they still have a very bright future to increase production, to add profitability. And don’t forget, they also, they’re the only auto manufacturer that has its own network, a worldwide, comprehensive, high speed charging network that is second to none. And that’s going to be an enormous, enormous profit center moving forward.
As you mentioned, they just announced they’re going to start opening it up to other electric vehicles in the US. They’re not going to be giving them that electric, Tony. They’re going to be charging them.
TONY ROTH: Well, you know, it’s interesting because –
TOM MOLOUGHNEY: They’re going to make money on this.
TONY ROTH: Well, that’s right. I don’t mean to be too cynical here, but I think I’m being a realist. The reason they’re doing this is not because they want to do the right thing. They’re going to get paid by the government to make these available and they’re going to get paid for selling the electricity at a markup.
And so, it’s an opportunity for Tesla to put more cash in its pockets. And, quite frankly, it’s not necessarily great for the legacy Tesla owners out there that are going to have to deal with more congestion.
TOM MOLOUGHNEY: Well, we don’t know that for sure yet because, you know, what it seems like now was originally the thought was that Tesla was going to sell an adaptor to let everybody else use the charging network. So I pull up with my Ford F-150 Lightning. I have to pull out my adaptor that I buy from Tesla and then I plug into their supercharger.
But now, it seems like what – this information just came out this week. Elon mentioned that they’re going to be installing more superchargers but that have the connectors on them that everybody else uses. The CCS combo connector is what it’s called. So, if that’s the case, then we’re not taking up Tesla supercharger spots because these are going to be new stations that are being added in addition to the Tesla stations.
TONY ROTH: Oh, interesting.
TOM MOLOUGHNEY: Now you might say, well, they could’ve just put more Tesla stations in there, you know, so in effect is taking away some of their spaces. But what the plan is to add extra stations that only service the other vehicles.
TONY ROTH: Okay. So, I saw that. I assumed they would retrofit the old ones in the same way. But I guess that’s not necessarily what’s going to happen.
TOM MOLOUGHNEY: Yeah. No. I would be – that would be very surprising if we were to find out that they were going to take some of the existing Tesla connector superchargers and retrofit them with CCS so Tesla customers could no longer use that. That would be very shocking. I believe what they’re going to be doing now is adding new stalls in many of their locations.
Now, this is some – this is not a secret. Tesla has said this in the past. Many of their supercharger locations, most in fact, have the ability to expand. So, they did this knowing –
TONY ROTH: Oh, interesting.
TOM MOLOUGHNEY: When they put six or eight stations in five years ago that, hey, ten years from now we might need 20 stations here. So, they, they’ve, in many instances they’ve worked out deals with the property managers already to say, look, down the road we need to double our size. And if they could, if the property owner could allow it, they’ve already agreed to do that.
TONY ROTH: So, it’s not that. I thought that what would happen is you’d go into a stall, and you could either plug in the Tesla head or the CCS head. I think what you’re describing is something different where you have to go into the appropriate stall for your kind of car, whether it be a CCS stall or a Tesla stall.
TOM MOLOUGHNEY: That is my belief. This is another problem with Tesla, Tony, is they don’t have a public relations department.
TONY ROTH: That’s right.
TOM MOLOUGHNEY: They don’t have a media site. Any other OEM and I mean any other one, I could just reach out to their media site and say, hey, this is who I am. Could you explain what you’re going to do with these charging stations? And I’d get an answer within the hour. But Tesla doesn’t respond to media.
TONY ROTH: Yeah …
TOM MOLOUGHNEY: So, I mean they have a select few people that they will. So, we don’t know. You could be right. They could adding a second connector to the existing stations. I was not under the impression that was going to be the case. But we don’t know, and we have to wait until Musk tweets again about it to find out.
TOM MOLOUGHNEY: It’s really nuts because I mean I’m a, you know, well-established electric vehicle journalist, Senior Editor, Inside EVs.
TONY ROTH: That’s right.
TOM MOLOUGHNEY: And I’m also a customer. I own a Tesla. And I’m not a Tesla basher. I call it down the middle. I criticize them when they deserve criticism and I praise them when they deserve praise, because they do deserve praise for a lot of things, quite honestly.
And it’s really frustrating that I can’t get a question answered that my followers have about their – you know, nothing. I’m not talking about secret questions about future products. Just basic questions about the company I can’t get an answer from Tesla about that. It’s frustrating and I think it doesn’t serve Tesla well.
TONY ROTH: I think that what Tesla is experiencing is they have so much more demand than they do supply at the moment. Their culture has evolved in a way that is, you know, less customer friendly than it would need to be if it was a more mature company that had a more mature market it was serving. So it’ll, I suppose it’ll get there but maybe with some pain over time.
So, Tom, if you could indulge us with one more question, which is the idea of, autonomous cars. As, you know, I have the Tesla, of course and I have the ability it can drive me wherever it wants to go with the full self-driving. And I find it to be radically far from the level four type of experience that every year, year after year Elon says, okay, next year or, no, this year. This year, I’ll be shocked if we don’t hit level four. And I don’t mean to be taking it out on Tesla. It’s any
I feel like the idea that there’ll be cars without steering wheels and pedals. It seems to me to be very far off. The Tesla like, Elon likes to say, well, a car is so much more, autonomous car is so much more reliable than a human being. Well, that may be true but in order for the society to accept that autonomous machine, it has to be not just 99.5 like a human being, but it needs to be 99.99999, because as soon as there’s one mistake then its existence is questioned.
So, what, what’s your sense and your experience? Where do you think we’re going to be in let’s say five years from now to pick a random spot on the horizon as it relates to real autonomous experience? Drive up to Massachusetts and take a nap in the backseat the whole time.
TOM MOLOUGHNEY: So, in your five-year timeline, I, we won’t be at level five autonomy, take a nap, get in the car, tell it to where you’re going and go to sleep. We’re not going to be there. I know Elon sets very aggressive timelines and very aggressive goals. He’s been saying for the last three years that this is the year that we’re going to be doing coast to coast driving without a person could take a nap, full self-driving. And you got to remember, his full self-driving term isn’t necessarily what the industry considered full self-driving, you know, level five autonomy, where you can just go to sleep.
You said you had full self-driving option in your Tesla. I’m assuming you don’t have the beta version that people have out there that really take their hands off the wheel, and it completely navigates from point A to point B.
TONY ROTH: Well, I do. But it doesn’t work very well in my – I mean it – to my point earlier, Tom, it may work 93% of the time. But what that means is that seven out of ten turns if I don’t grab onto the wheel, I’m going to have a decent chance of, you know, either crashing into a car or running somebody over.
TOM MOLOUGHNEY: Yeah. And as you said, seven out of ten isn’t nearly good enough. It has to be 9.99999 out of ten for it to even be considered by anybody. And another issue that Tesla has is, you know, they’re using this camera-only-based system. And so, what do you do when it’s snowing or driving rain? Is it that, will it be that it’s full self-driving in perfect weather conditions but not in inclement weather?
I think full self-driving, level five autonomy is level five autonomy. It means you can get in the car in any circumstances and hop in it and go anywhere and just tell it to take you somewhere. You don’t have to worry about midway through your nap that it starts raining or it starts snowing so now the car can’t do what it needs to do.
It’s very hard for me to see us getting close to that before the end of this decade. In eight, seven or eight years we might start to get close to where we could see when that, when that’s going to happen, where we can just hop in the car, say take me to work and take a nap. But in your five-year timeline, I would be very surprised if we ever were to make that.
TONY ROTH: I concur. And it’s important because it’s not just a convenience. But as Elon has rightly pointed out, it has massive implications for the economy, you know, both positive and negative, frankly, if that type of autonomy exists from a transportation standpoint. And so, we need to prepare for it as investors.
So, Tom, you’ve been incredibly gracious with your time and the conversation here. Just I could go on all day talking about these issues. But let me just summarize I think three key takeaways for our audience today.
One is that electric vehicles are not only a wonderful experience, but they’re also economic when you consider the cost of the vehicle and the cost of the fuel over time and the lifetime in the vehicle. They’re really quite economic.
I have a colleague that has insisted to me for many, many years working together that for her a car is to get from point A to point B and that’s all she cares about. And her husband is a car guy, but she just doesn’t care, as long as she can get from point A to point B safely. And we went to lunch the other day and I wasn’t even in my car because my car’s in the shop. I was in a loaner and so it’s a couple year old Tesla. And we drove to lunch and she’s like, wow, I want one of these. And I said I thought you didn’t care what kind of car you drove?
So, you can’t underestimate I think the aesthetic experience, if you will, the pleasure that you can get if you’re going to spend time in a vehicle like this, which is why folks like me have been converted to car enthusiasts when I was never a car guy. So, that’s the first takeaway is they’re really quite fun and economic and really worth considering.
Second takeaway is that the premise really does seem to bear out around its green benefits to the planet. They’re not perfect. Anything that goes into them is mined out of the ground for the most part and anything that makes them move, go forward, unless you take the electricity out of your, out of the, you know, the rooftop panels like you do, Tom, is going to have some type of carbon footprint. But they are a significant improvement over the status quo, and I think that’s something that’s really important.
I mean you look at countries like China, for example. Cities like Beijing used to be total, you know, smog-infested cities. And one of the reasons they’re not, is because of the percentage of EVs that are on the road. And so, they really have a profound impact on our environment.
And then lastly, I think that there is a lot of concern around how EVs will impact infrastructure and whether the infrastructure will keep up. And that is oftentimes I think a limiter for people on whether they should go ahead and take the plunge and buy an EV. And I think that we feel pretty confident that it’s not going to be a perfect equilibrium that’ll be maintained. But largely speaking the industry is aware of this change, industry being the utilities, the auto manufacturers. And that’s all going to continue to come together in a way where the experience for car owners, even ones that take frequent road trips, should continue to be, you know, pretty reasonable for owners of these kinds of vehicles.
So, with that, Tom, it’s been really a pleasure to have you here today and thank you so much.
TOM MOLOUGHNEY: Thanks for having me. It’s been a lot of fun, Tony.
TONY ROTH: And I want to encourage everybody to go to wilmingtontrust.com for a roundup of all of our latest investment ideas. You can subscribe to Capital Considerations on Apple Podcast, Spotify, Stitcher, or your favorite podcast channel to ensure you get future updates. Thank you again for listening today.
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