Happy Thursday friends! Here’s my weekly take on the five most interesting developments in future fuels and vehicles trends over the last week:
The Wall Street Journal reported this week that Tesla surpassed Ford in stock market value (shown in the figure below) as the industry delivered disappointing March sales results, reinforcing widespread investor concern that the profitable U.S. market has plateaued after seven years of growth.
The Journal says that Wall Street has soured on blue-chip auto stocks as discounts to sell cars soar and inventories balloon, fearful that established players are headed into the prolonged downturns that have long plagued the boom-and-bust car business. The report notes that Tesla is among the few companies showing the potential to defy that cycle. Its sales of electric cars, though much smaller than what Ford and GM are selling (see figure below), have skyrocketed in a period when low gasoline prices have sunk demand for other electric vehicles.
Tesla said this week its global sales rose 69% in the first quarter, putting the car maker on the path to meet its goal of 50,000 deliveries in the first half. Still, the report notes, Tesla remains a shaky bet. The 13-year-old company is unprofitable, deeply indebted and delivered just 76,000 cars last year. Its Autopilot mode is untested as a fully autonomous feature and has raised safety concerns. The changing of the guard, at least among Wall Street, reflects a growing belief that internal-combustion engines will eventually be replaced by electric motors as the primary power source for automobiles. I think “eventually” is the key word here.
Earlier this week, EU lawmakers voted 585 to 77 in favor of a draft bill that would bolster EU oversight of the auto industry and allow the European Commission to fine car makers up to 30,000 Euros ($31,923.00) per vehicle for emissions violations. Read more about it here.
GM, along with the U.S. Army, are currently testing hydrogen fuel cell (HFC) vehicles for military applications with its Chevy Colorado ZH2. The advantages for the military, this article from Engadget notes, is compelling: near-silent operation, a low heat signature which will not show up as much on thermal-imaging scans and exportable power. With respect to exportable power, the ZH2 can power facilities such as a hospital, an operating base or even a battery-powered drone. The water vapor produced in the emissions can be filter and used as drinking water. Hydrogen can potentially be manufactured “in theater.”
Over the next year, the military will be testing the vehicle in training maneuvers of the marines and navy special warfare units. The article notes, “The military might seem niche, but when you consider how much governments across the globe pay to protect their citizens, it’s a lucrative market. One that automakers might be wise to explore, at least until the kinks have been worked out.”
Meantime, Fortune reported this week that Daimler is pulling back from HFC development with Daimler CEO Dieter Zetsche reportedly saying at an automotive summit in Germany that declining battery costs have made HFCs uncompetitive with battery electric vehicles (BEVs). However, while Daimler was pulling back Hyundai and Kia were jumping in (or jumping back in, since it originally started R&D on HFCs in 1999) with a new fuel-cell SUV next year that will have an “industry-best” range of 500 miles. Corporate cousin Kia will produce its own fuel-cell vehicle by 2020. So, what’s the deal with HFCs? Will they be eclipsed by EVs? Are they too late in the game? These questions are something I’m researching for Future Fuels Outlook service clients with a report to come later this year.
As sustainable energy experts from around the world gathered at the Sustainable Energy for All Forum in New York this week, REN21 released a report on the feasibility and challenges of achieving a 100% renewable energy future. Read more about it here.
In a first, Neste this week published updated information about all its crude palm oil suppliers on the company’s website. The data covers the entire supply chain, i.e. all companies, mills, and estates that supplied Neste with crude palm oil in 2016. The dashboard website offers information on the suppliers, certification systems used, and certification documentation, and provides access to a map service enabling the users to see the geographical location of the mills.
In addition to the information on the suppliers, the site also offers an update on Neste’s corporate level usage of crude palm oil, as well as its activities and collaborative projects aiming at further developing the sustainability of the company’s supply chain, and supporting the larger scale development within the palm oil industry.
According to Neste, crude palm oil’s role in the company’s raw material portfolio has become less significant in recent years. In 2016, waste and residues accounted for nearly 80% of the company’s usage of renewable raw materials while crude palm oil represented less than 20%. All the crude palm oil the company has used has been fully traceable to the oil palm plantation level since 2007, and 100% certified since 2013, the company says.
Notably, the food industry continues to be the world’s largest consumer of palm oil representing more 71% of the global usage; the biofuel industry accounts for some 16%, and the chemical industry more than 11% according to the U.S. Department of Agriculture.
That fact puts into perspective a move by some parliamentarians in the EU that voted overwhelmingly this week 640-18 to ban biofuels made from vegetable oils including palm oil by 2020, to prevent the EU’s renewable transport targets from inadvertently contributing to deforestation. EU lawmakers are now drawing up amendments to EU legislation which would be legally enforceable if approved by the European commission and council. The proposals could also be included in a palm oil assessment that the commission is expected to publish later this year.
Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.
