'Inconvenient' Fact: Morgan Stanley Says Electric Cars Create More CO2 Than They Save

For all the funds out there looking to fill their portfolio with "environmentally conscious" companies working diligently to avert an inevitable global warming catastrophe that will result in the extinction of the human race, we guess in lieu of their actual fiduciary duties to simply make money for their investors, Morgan Stanley has compiled a list of how you can get the most "environmental healing" per dollar invested. 

As MarketWatch points out, it"s not terribly surprising that of the 39 publicly-traded stocks analyzed, the solar and wind generation companies landed at the very top of Morgan Stanley"s environmentally friendly the list. 

Morgan Stanley identified 39 stocks that generate at least half their revenue “from the provision of solutions to climate change,” something it said was a central component of investing to make a difference, as opposed to just a making a buck.

“In our view, impact investing needs to begin with companies whose products and services have a notable positive environmental or social impact,” wrote Jessica Alsford, an equity strategist at the investment bank.

Not surprisingly, alternative-energy companies ranked the highest in terms of their positive impact, and the “top five climate-change impact stocks” were all manufacturers of solar and wind energy: Canadian Solar, China High Speed Transmission, GCL-Poly, Daqo New Energy, and Jinko Solar.

What is surprising, however, is that publicly traded electric car manufacturers, darlings of the environmentally-conscious Left, were actually found to generate more CO2 than they save.  As a stark reminder to our left-leaning political elites who created these companies with massive taxpayer funded subsidies, Morgan Stanley points out that while Teslas don"t burn gasoline they do have to be charged using electricity generated by coal and other fossil fuels.

This is where Tesla, along with China’s Guoxuan High-Tech fall short.

“Whilst the electric vehicles and lithium batteries manufactured by these two companies do indeed help to reduce direct CO2 emissions from vehicles, electricity is needed to power them,” Morgan Stanley wrote. “And with their primary markets still largely weighted towards fossil-fuel power (72% in the U.S. and 75% in China) the CO2 emissions from this electricity generation are still material.”

In other words, “the carbon emissions generated by the electricity required for electric vehicles are greater than those saved by cutting out direct vehicle emissions.”

Morgan Stanley calculated that an investment of $1 million in Canadian Solar results in nearly 15,300 metric tons of carbon dioxide being saved every year. For Tesla, such an investment adds nearly one-third of a metric ton of CO2.

Ironically, as we recently pointed out, Zero-Emission Vehicle (ZEV) credits (a nicer way of saying taxpayer funded corporate welfare) is pretty much the only "product" that Tesla seems to make money selling and is the only reason they managed to "beat" earnings in Q2.

I"m referring to zero-emission vehicle, or ZEV, credits. California and several other states require that a certain proportion of the vehicles sold by an automaker emit no greenhouse gases. These cars earn the automaker credits, and if they don"t have enough to meet their quota, they can buy extra ones from someone who does. As Tesla only makes vehicles that run on batteries and emit nothing, it usually has a surplus for sale.

The profit margin on these is very high, perhaps 95 percent. The implied $95 million of profit equates to about 58 cents a share. Tesla reported a loss of $1.33 per share this week -- beating the consensus forecast by 55 cents.

This isn"t the only time ZEV credits have played a big role for Tesla. Looking back to early 2013, selling credits has given Tesla"s earnings extra oomph in many quarters, likely taking them above consensus forecasts in some (on an implied basis, assuming that 95 percent margin):

Of course, Q2 wasn"t the first time that ZEV credits played a huge role in padding Tesla"s cash flow...

Ponder that for a moment...as taxpayers we"re actually subsidizing a product (and an eccentric Silicon Valley billionaire) that is bad for the environment...

Government "Flabbergasted" After Elon Musk's Most Bizarre Claim Yet

Elon Musk set the interwebs ablaze this morning when he tweeted out that he somehow got every major city on the eastern seaboard to "verbally approve" a "NY-Phil-Balt-DC Hyperloop" to be built by his Boring Company.

"Just received verbal govt approval for The Boring Company to build an underground NY-Phil-Balt-DC Hyperloop. NY-DC in 29 mins."

"City center to city center in each case, with up to a dozen or more entry/exit elevators in each city."

"Still a lot of work needed to receive formal approval, but am optimistic that will occur rapidly."

"If you want this to happen fast, please let your local & federal elected representatives know. Makes a big difference if they hear from you."

If you want this to happen fast, please let your local & federal elected representatives know. Makes a big difference if they hear from you.

— Elon Musk (@elonmusk) July 20, 2017

City center to city center in each case, with up to a dozen or more entry/exit elevators in each city

— Elon Musk (@elonmusk) July 20, 2017

Of course, if you"re like us, the first question that came to mind after reading those tweets is whether Musk is really just that naive, if he thinks we"re all really just that dumb or if he"s just gone completely batshit crazy...mix of all three?

Now, we don"t have a Masters in Government from Harvard, but we"re almost certain there is no such thing as a "verbal agreement" when it comes to massive public projects that span multiple states and cost billions, if not trillions, of taxpayer dollars.  And while Musk may be permitted to unilaterally make decisions to burn through hundreds of millions of dollars worth of shareholder money at Tesla, municipalities are specifically designed to prevent granting such powers to individuals when it comes to blowing through taxpayer funds.

Not surprisingly, it didn"t take long before various "government" officials took to twitter to point out that they hadn"t the faintest clue what Musk was even talking about...

New York City"s mayoral press secretary apparently wasn"t in the loop...

This is news to City Hall. https://t.co/GmEm0b5C4i

— Eric Phillips (@EricFPhillips) July 20, 2017

also, if you"re stopping by City Hall, please bring a copy of the proposal. That would help. https://t.co/sk6iCM2ymI

— Eric Phillips (@EricFPhillips) July 20, 2017

Meanwhile, the Metropolitan Transportation Authority (MTA) in New York didn"t even know who Elon Musk was...which is not a good sign for that "verbal agreement" getting converted to a "contractual" agreement at any point in the near future.

I just talked to the New York MTA about this. Press aide is so flabbergasted that they"re asking me to spell Elon Musk"s name for them. https://t.co/mLWb4Abfb8

— Nathan Bomey (@NathanBomey) July 20, 2017

But, it wasn"t just New York City that was flabbergasted by Musk"s announcement as government officials from NYC to Washington D.C., and everywhere between, were forced to spend their entire day laughing off calls from anxious reporters about his imaginary project.  Per The Guardian:

“Who gave him permission to do that?” asked a spokesman with the Maryland department of transportation.

“Elon Musk has had no contact with Philadelphia officials on this matter,” said Mike Dunn, the city spokesman. “We do not know what he means when he says he received ‘verbal government approval’. There are numerous hurdles for this unproven ‘hyperloop’ technology before it can become reality.”

A spokesperson for the state of Pennsylvania confirmed that neither the governor nor the state’s department of transportation had been contacted by Musk or his company.

Ben Sarle, a spokesman for the New York City mayor’s office, said in an email: “Nobody in City Hall, or any of our city agencies, has heard from Mr Musk or any representatives of his company.”

“The New York state department of transportation did not give verbal approval for a hyperloop,” said spokeswoman Jennifer Post.

Anthony McCarthy, the spokesman for the Baltimore mayor, Catherine Pugh, said: “Mr Musk’s announcement on Twitter was the first that the city heard of the Hyperloop project. ” However, Pugh said in a statement that she was “excited” to hear about the idea, which could “create new opportunities for Baltimore and transform the way we link to neighboring cities” – if it becomes a reality.

Similarly, LaToya Foster, the spokeswoman for Washington DC mayor Muriel Bowser, said: “This is the first we heard of it . We can’t wait to hear more.”

Does anyone else feel like they"ve seen this proposal somewhere before?

Meet DiDi: China's Answer To Uber

For better or worse, just about everybody has heard of Uber. Over the last few years, the ride-haling company has grown to dominate the market in the U.S. and beyond, currently operating in over 400 cities around the globe - despite significant resistance and outright bans in some places. DiDi, on the other hand, is unlikely to be on your radar. Having bought out Uber"s operations in China last year, the company currently enjoys 95 percent market share in its home country.

As Statista"s Martin Armstrong notes, the infographic below shows if it were to come to a game of Top Trumps, DiDi wouldn"t be such a bad card to hold.

You will find more statistics at Statista

Founded in 2012, and working on the basis of almost $16 billion worth of funding, it has amassed 38.5 million monthly users (compared to Uber"s 40), is active in around 400 cities and is valued at $50 billion.

As illustrated in the Statista report "The Chinese Passenger Car Market Outlook", revenue from ride sharing in China is projected to see a CAGR of 32 percent from 2016 to 2021. Likewise, the number of users is expected to grow by 15 percent.

As Uber begins to falter and face stiffer competition from alternatives like Lyft, it might not be long before DiDi is the biggest ride hailing company in the world.

Gauging The Economic Impact Of Uber

Authored by Andrew Zatlin via MoneyballEconomics.com,

Uber has been in the headlines for all the wrong reasons over these past couple months.

I’m sure you’ve seen or heard the headlines.

From sexual harassment, to discrimination, to “Greyball” – software that helped Uber drivers evade law enforcement.

Everything seems to be imploding for Uber. Amidst all the controversy, CEO Travis Kalanick resigned yesterday.

Yet we should not overlook the major economic impact of Uber (and its main competitor Lyft).

According to Uber and Lyft, there are over 400,000(K) registered active drivers in the US.  

An active driver is someone who has provided at least 4 rides per month.

The number of taxi and limo drivers reached 77K in 2013 – an increase of 18% from 2010. Taxi and limo driver payrolls hit 8K in 2015 and 2016. But dropped to 76K this year… essentially leaving payrolls flat for the last 4 years.

You could even argue the 5% decline in payrolls this year were taxi and limo drivers jumping ship to Uber.

But looking from an even higher view,  we now have 400K part-time contractors.

These part-time contractors are not included in the non-farm payrolls numbers.  So any employment upside is being missed in the government data.

Who Wins, Who Loses?

Uber & Lyft will generate $8 billion (bn) in revenue in 2017.  

The U.S. Taxi industry generates $19B annually (per IBIS World).

This hasn’t changed much even with the advent of the ride-sharing economy.  Which means that Uber is not replacing the taxi industry as much as it is augmenting it by releasing pent-up demand.

Understand that the taxi industry is a local monopoly.  New York, LA, Las Vegas, San Francisco – the taxi rights are owned by individual companies.

The origins of the U.S. regulated taxi industry goes back to the Depression.  

To make ends meet… car owners offered ride-sharing. But supply overwhelmed demand and prices plunged.  

To prop up workers, cities began to regulate the industry in order to limit the number of drivers. They created a limited number of licenses (aka medallions) which they sold.  

Eventually a market emerged for those medallions and some smart business people began to scoop them up. Some became billionaires by doing this.

(The fight against Uber is really a fight between billionaire monopolists and a monopoly-busting service. Banks also have a heavy interest in keeping the taxi industry alive because they borrowed a ton of money to buy up the medallions.)

But limiting the number of licensed taxis also capped the number of rides.

If you’ve been to San Francisco, you know hailing a cab is pointless. There aren’t very many.  

As Uber is showing, massive pent-up demand has existed and is generating $8bn of incremental economic activity that is being distributed across hundreds of thousands of workers.

Is Uber Cyclical (part of a booming economy), Counter-cyclical (part of trying to make ends meet), or a bit of both?

There are full-time Uber drivers but most are part-time drivers trying to supplement their income.

An active economy creates the demand for drivers. But when the economy turns down, we’ll likely see even more drivers but less demand. Unlike the Depression, price regulation will be in place because Uber has to make a profit somehow.

KEY TAKEAWAY: Uber has disrupted the ride-sharing economy. However, the government, banks, and taxi monopolists won’t allow Uber to completely put them out of business… at least for the foreseeable future.

When the economy turns, more people will take up driving (increasing supply) as consumers pull back their wallets (decreasing demand). Prices will drop.

Eventually more regulation will be put in place for companies like Uber and Lyft.

Chicago Cab Industry Collapsing As Medallion Foreclosures Soar

Chicago mayor Rahm Emmanuel has a lot on his plate these days between soaring murder rates, failing pension systems and the worst domestic migration trends in the country as residents see the tax-hike writing on the wall and are moving out of the "Windy City" by the 1,000s.  Now, it seems he can add a failing taxi industry and millions in additional annual tax revenue losses to his list of woes.

As the USA Today points out, the cab industry in Chicago is quickly hurdling toward extinction as nearly 50% of the city"s fleet sat idle in March 2017 and medallion foreclosures in 2017 have already exceeded 2016.

About 42% of Chicago’s taxi fleet was not operating in the month of March, and cabbies have seen their revenue slide for their long-beleaguered industry by nearly 40% over the last three years as riders are increasingly ditching cabs for ride-hailing apps Uber, Lyft and Via, according to a study released Monday by the Chicago cab drivers union.

More than 2,900 of Chicago’s nearly 7,000 licensed taxis were inactive in March 2017 — meaning they had not picked up a fare in a month, according to the Cab Drivers United/AFSCME Local 2500 report. The average monthly income per active medallion — the permit that gives cabbies the exclusive right to pick up passengers who hail them on the street — has dipped from $5,276 in January 2014 to $3,206 this year.

The number of riders in Chicago hailing cabs has also plummeted during that same period from 2.3 million monthly riders to about 1.1 million.

More than 350 foreclosure notices or foreclosure lawsuits have been initiated against medallion owners already this year, compared to 266 last year and 59 in 2015. Since October, lenders have filed lawsuits against at least 107 medallion owners who have fallen behind on loan payments, according to the union’s count.

Meanwhile, the value of Chicago medallions have crashed by 90% in less than four years after peaking at over $350,000 each back in 2013.

The value of Chicago medallions hit a median sales peak of $357,000 in late 2013, just before Uber arrived on the scene in Chicago. In April, one medallion sold for just $35,000, according to city data.

About 39% of Chicago’s medallions are owned by individuals or groups with four or few fewer medallions, while the majority of medallions are owned by companies that maintain large fleets of taxis and lease the permits and vehicles to licensed operators.

"It feels like the city is just watching us collapse," Aikins said. "Right now, there are a few people, the elderly and some others who refuse to take Uber because they are uncomfortable with it, that keep us going. But how many of those people are out there to sustain us?"

Not surprisingly, the cabbie union has done what unions do best by calling on local government officials to prop up the dying industry through tax incentives, measures which should buy them at least another month or two of operation.

The union is calling on the city take several actions to provide relief for the city’s struggling taxi industry, including changing rules so taxi drivers aren’t required to replace their vehicles as often, waive an annual $1,176 per taxi ground transportation tax fee, and eliminating a city medallion license renewal fee that costs owners $1,000 every two years.

“When they opened up ground transportation and taxi market to thousands of for-hire vehicles like Uber, Lyft and now Via . . . taxi driver income has been decimated and owner-operators are unable to keep up with loan payments for their medallions plus their high-operating costs,” said Tracey Abman , associate director at AFSCME. “As a result of that, hundreds of taxi owner-operators are facing foreclosures on their medallions and thousands more foreclosures are likely unless the city takes substantial action to reduce the financial burden on small taxi owners.”

Of course,Chicago cabbies aren’t alone in feeling the pinch.  In New York, ridership in the city’s iconic yellow cabs has fallen about 30% over the last three years. Last year, San Francisco’s Yellow Cab — the city’s largest taxi company — filed for Chapter 11 bankruptcy protection.  Los Angeles taxi ridership fell 43%, and revenue was down 24%, between 2013 and 2016.

Shocking that it is so hard to compete in an industry in which Uber is willing to burn billions of dollars per year to provide your service for a fraction of your operating costs.