Thereâs a growing problem in the auto industry thatâs going to shake up the entire landscape, and Tesla could get screwed in the process⦠[Energy and Capital Header] Practical Investment Analysis for the New Energy Economy Tesla Is Screwed Alex Boulden | Apr 14, 2023 âIt doesnât take much to see that these trends could result in a full-on 'bank run' to abandon gas cars and buy EVs, depending on how unbalanced the supply-demand equation becomes.â â Electrek --------------------------------------------------------------- Dear Reader, There are some big things happening in the auto industry. Thereâs a supply-and-demand problem thatâs going to shake up the entire landscape. And Tesla could get screwed in the process. In fact, it may already be having an effect. Tesla stock recently dropped more than 6% after reporting mundane delivery numbers and an inventory glut. Itâs down roughly 50% from this time last year. [tsla] Even though the delivery numbers were originally reported as a record for the company, investors saw through the smoke and mirrors. It was the excess inventory coupled with price cuts that brought the stock down. Yahoo Finance notes, âIn the trailing 12 months, Tesla has built more than 78,000 [more] cars than it has delivered to customers.â Thatâs not what investors wanted to hear. But excess inventory and supply-and-demand disparity will be felt by all automakers, some say as soon as July. Car prices could drop like a rock in the process, especially for gas- and diesel-powered vehicles. It may sound like a good thing for electric vehicles, but Iâll explain why itâs not below. For some context, all we have to do is look at whatâs going on in China right now. Americaâs $625 Billion "Storage War" Surging e-commerce sales have sparked a massive corporate battle for warehouse storage space. Three "landlords" are collecting millions of dollars from some of the worldâs largest Fortune 500 companies... And sending a dedicated cut of it directly to investors like you and me every single month. [Hereâs how you could start collecting your first payment in the next 30 days.]( A âBank Runâ on Gas-Powered Vehicles A recent article by Electrek paints a solemn picture for the car market. If youâre thinking about buying a new car, you should probably first consider whatâs going on overseas. The article states that hundreds of thousands of gas-powered vehicles are unsellable because of Chinaâs strict new emissions policy that kicks in this July. Thatâs only a few months away. Gas-powered vehicles might quite literally be worth nothing as soon as this summer. The article states: Weâve also seen some drivers, not even high-mileage ones, realize that renting, fueling, and maintaining an EV is cheaper than the continued running costs of using a paid-for gas car. When that happens, the value of the gas car is effectively zero â itâs worse to continue driving it than it is to get a whole new EV. Not only will gas-powered cars be worth nothing, but banks might not touch them in terms of loans and insurance. The article continues: Another reason this is important is that a lot of cars are actually financed with loans. Those loans are backed by the car on the premise that it has some value. When that stops being true, those loans are basically under water. So it will become harder to get one. This dynamic will be interesting to see playing out in places like the U.S. Thereâs basically a car debt bubble forming there. So first, weâve got a car price bubble because inventories are going to skyrocket. Once China stops importing cars from the U.S., car lots will be giving away cars. On top of that, weâve got a car loan bubble because banks wonât issue loans for car buyers. Finally, adding fuel to the fire is the current administration offering tax breaks for new EVs. $6 Billion in Funding Going to a Single Company? Biden has been dishing out funding as if these are his last days on Earth. Heâs handed out more than $2 trillion in funding during his first few years in office. One of his biggest goals is to develop the future of energy. Shockingly, it has nothing to do with fossil fuels OR renewables. A full $6 billion is headed to an industry dominated by one tiny Virginia-based company. A few critical patent approvals means very few others are on the shortlist. And early investors in this game-changing technology could reap a massive windfall. [You need to immediately check this one out for yourself.]( Tax Breaks for the Rich The Treasury recently released a statement detailing the new tax breaks. Treasury Secretary Janet Yellen said: The Inflation Reduction Act is a once-in-a-generation piece of legislation that is lowering costs for American consumers, building a strong U.S. industrial base, and bolstering supply chains. Today, [the] Treasury is taking an important step that will help consumers save up to $7,500 on a new clean vehicle and hundreds of dollars per year on gas, while creating American manufacturing jobs and strengthening our energy and national security. Basically, depending on what kind of EV you buy and whether the âcritical mineralsâ in the battery are mined here in the U.S., youâll get a tax break anywhere from $3,750â$7,500. The White House released a follow-up statement applauding the move, saying, âTodayâs announcement ensures that the clean vehicle credit provided by the Inflation Reduction Act will lower costs for consumers, revitalize our industrial base, and spur manufacturing here at home.â What it's not telling you is minerals like aluminum, zinc, and nickel are on the critical metal list, which are very easy to come by. So itâs not going to have as much of an impact on U.S. manufacturing as it seems. So let's call this what it is: a tax break for the rich who can afford a new EV. But if you think all the government subsidies are going to help a stock like Tesla, think again. Would You Buy One? Letâs think about this situation logically. Car buyers now have three options. First, you can shell out $60,000 (the average price for a new EV) and get a measly $7,500 in tax credits if youâre lucky. Second, you can keep driving your gas-powered car that will be worth nothing once inventories rise to historic levels because of the supply-and-demand environment mentioned above. Third, you can wait and purchase a brand-new gas-powered car for pennies on the dollar when prices crash this summer. This Pill Will âDefine the Next Decadeâ A new medical breakthrough smaller than the size of your pinkie is about to reshape human history. Because believe it or not, this tiny pill can eradicate every single sign and symptom of aging and disease... Which leaves you looking and feeling forever young. Donât believe it? [Check out this proof...]( I think a lot of Americans would agree that theyâre not prepared to buy a new car. Inflation and poor investment returns donât lead to new car purchases, no matter how much money the government throws at the problem. As for Tesla, this isnât going to cause new buyers to rush out and spend money they donât have on a car they donât need. Now, if EVs came with a manual transmission, I might hop on board. New Kid on the Block Here's the rub... There's a new clean-energy vehicle that no one is talking about... And it just made every EV on the road obsolete. This car throws a wrench into everything we've been talking about... Because it does NOT run on batteries. Instead, this car runs on another kind of zero-emission fuel called [âBlue Gas.â]( And the only thing it emits is water so pure that, yes, you can drink it. Even with all the tax breaks in the world, companies that produce electric cars (like Tesla) are about to go down in flames. In fact, in the next few years, experts predict there will be more than 10 million âBlue Gasâ vehicles on the road. The tiny company driving the âBlue Gasâ industry is primed to absolutely shatter any gains ever paid out by Tesla. While the White House and Wall Street play catch-up, you can [see the "Blue Gas" car making Tesla obsolete here](. Stay frosty, Alexander Boulden
Editor, Energy and Capital After Alexanderâs passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. [Check out his editor's page here](. Want to hear more from Alexander? [Sign up to receive emails directly from him]( ranging from market commentaries to opportunities that he has his eye on. [Fb]( [Li]( [Tw]( This email was sent to {EMAIL}. You can manage your subscription and get our privacy policy [here](. Energy and Capital, Copyright © 3 East Read Street, Baltimore, MD 21202. Please note: It is not our intention to send email to anyone who doesn't want it. If you're not sure why you're getting this e-letter, or no longer wish to receive it, get more info [here]( including our privacy policy and information on how to manage your subscription. If you are interested in our other publications, please call our customer service team at [1-877-303-4529](tel:/18773034529).