Visualizing The Future Of Shipping: Green & Autonomous

Space travel may be exciting, and self-driving cars certainly get a lot of hype.

However, as Visual Capitalist"s Jeff Desjardins points out, there remains a good argument that the world’s oceans – and the ships that roam them – often get overlooked when it comes to advances in transportation technology.

How will shipping change in the coming years, and what trends can we look to for guidance on the future of shipping?

THE FUTURE OF SHIPPING

Today’s infographic comes to us from Futurism, and it gives examples of ships already in production – or in the concept phase – that aim to make activity on the world’s oceans greener and more autonomous.

Courtesy of: Visual Capitalist

How does the future of shipping shape up?

There are two main trends that emerge from these upcoming ships: an increased use of alternative energy and higher levels of automation.

GREENER SHIPS

Fuel accounts for about half of the operating costs of the shipping industry – so the type of fuel used to move ships between ports is paramount. Since the 1960s, heavy fuel oil (HFO) has been the dominant choice for the industry. It’s cheap and plentiful, but it’s also extremely dirty.

Shipping today only produces 3% of carbon dioxide emissions – but it’s areas like sulphur (15% of global total) and particulate emissions (11% of total) that are considered a bigger problem.

As a result, the industry is not only moving to use cleaner oil-based fuels – but some companies are aiming to use alternative energy as well. In the ships above, you’ll see the addition of LNG and fuel cells, as well as the use of solar and wind to help power the future of shipping.

MORE AUTONOMOUS SHIPS

Ships won’t only be powered differently – they will be navigated and steered using artificial intelligence along with the aid of commercial drones.

Rolls-Royce is building an autonomous smart ship right now with Google that will monitor its surroundings in intense detail, while making autonomous decisions on the deep seas.

Autonomous shipping is the future of the maritime industry. As disruptive as the smartphone, the smart ship will revolutionize the landscape of ship design and operations”

 

– Mikael Mäkinen, President, Rolls-Royce Marine

Implementing this technology on the high seas has a longer development cycle than that for autonomous vehicles, but that doesn’t mean the idea is dead in the water.

It just means we’ll have to wait a little longer to see the future of shipping in action – and for now, the prospect of viewing all of the world’s ships in real-time will just have to suffice.

Is U.S. Gasoline Consumption Set To Collapse?

Authored by Tsvetana Paraskova via OilPrice.com,

U.S. individual vehicle miles traveled (VMT) growth has been flat since June 2017, and the potential end of the VMT growth that started in early 2014 may be an indicator of slowing oil consumption, according to government data compiled by Labyrinth Consulting Services, Inc.

(Click to enlarge)

Gasoline is the most consumed petroleum product in the U.S. Last year, motor gasoline consumption averaged about 9.3 million bpd, or 391 million gallons per day - the largest amount recorded and equal to about 47 percent of total U.S. petroleum consumption, data by the EIA shows.

Some 29 percent of all U.S. energy consumption in 2016 was for transporting people and goods from one place to another, the EIA says. Petroleum products provided around 92 percent of the total energy the U.S. transportation sector used last year.

The latest available data by the U.S. Department of Transportation shows that the seasonally adjusted vehicle miles traveled for October 2017 stood at 268 billion miles, a 0.8-percent increase over October 2016, and 0.2-percent growth as compared to September 2017. The cumulative estimate for this year is 2,685 billion vehicle miles of travel.

In its latest Short-Term Energy Outlook (STEO), the EIA said that in November, U.S. regular gasoline retail prices averaged $2.56/gallon, an increase of nearly 6 cents/gal from the average in October, primarily reflecting rising crude oil prices. EIA forecasts the U.S. regular gasoline retail price will average $2.59/gal this month, 34 cents/gal higher than at the same time in 2016. For 2018, EIA expects U.S. regular gasoline retail prices to average $2.51/gal.

Gasoline prices and increases in fuel efficiency are important factors in U.S. gasoline sales that are also highly seasonal, but according to Jill Mislinski at Advisor Perspectives, there are also some significant demographic and cultural dynamics affecting the U.S. gasoline consumption trends.

In a post from November 2017, Advisor Perspectives said that apart from fuel efficiency improvements, declines in gasoline consumption can be attributable in large part to factors such as an aging population leaving the workforce; growing trend toward working from home; social media providing alternatives to face-to-face interaction requiring transportation; a general trend in young adults to drive less; and accelerating urban population growth, which reduces the per-capita dependence on gasoline.  

California Moves One Step Closer To "Mileage Tax"; Could Require Tracking Your Cell Phone Movements

Just a few months after implementing a massive 60% hike in gasoline taxes, raising them from $0.297 per gallon to $0.417, the state of California is now one step closer to implementing a brand new tax that would charge drivers for each mile driven. 

As a quick example of how shockingly misguided such a piece of legislation would be, the logical conclusion here is that poor people who have been forced out of cities like San Francisco, Los Angeles and San Diego due to rising rents would now be forced to incur yet another massive tax for simply commuting into city centers to do their jobs...in essence, in many cases, it would serve as a regressive tax on the poorest families...

So how did we get here?  It all started back in 2014 when California passed Senate Bill 1077 calling for a mileage tax.  The bill kicked off the California Road Charge Pilot Program which sought to design and test various strategies for implementing a mileage tax.

Now, after 3 full years of studying various methodologies for tracking mileage, from requiring a "plug-in" for each vehicle to tracking your smart phone movements to more manual systems that would track odometers, the California State Transportation Agency (CalSTA), according to a newly filed report is officially ready to declare a mileage tax "feasible".  Here"s what they found:

The Road Charge Pilot Program successfully tested the functionality, complexity, and feasibility of the critical elements of this new potential revenue system - road charge - for transportation funding.

 

• Manual options provide the highest degree of privacy and data security, but will in all likelihood be the most difficult to enforce, and could be costly to administer

 

• Plug-in devices are the most reliable options, however as new technology emerges this methodology could be obsolete by the time a road charge program is adopted

 

• More technologically advanced methods, such as the smartphone application with location services and the in-vehicle telematics show great promise, but need further refinement

Of course, as State Senator Scott Wiener points out, a mileage tax will be a huge blow to all the folks that have been coaxed into electric vehicles over the years by tax subsidies which made them more affordable.  While those folks have been able to avoid gasoline taxes, part of the calculus that supposedly makes them "affordable", they won"t be able to avoid a mileage tax.  Per CBS:

But it’s not just a question about money, it’s also a question about fairness.

 

State Senator Scott Wiener and others are saying that when it comes to road taxes, it’s time to start looking at charging you by the mile rather than by the gallon.

 

“If you own an older vehicle that is fueled by gas, you’re paying gas tax to maintain the roads. Someone who has an electric vehicle or a dramatically more fuel efficient vehicle is paying much less than you are. But they are still using the roads,” Wiener said.

 

“People are going to use less and less gas in the long run,” according to Wiener.

 

And less gas means less gas tax, and less money for road repair.

 

“We want to make sure that all cars are paying to maintain the roads,” Wiener said.

Yet another reason for California residents to promptly consider a move to Texas...

Uber Price-Gouges Millennial Passenger $14,000 For 5-Mile Ride

One Millennial in Toronto got the shock of his life last Thursday evening when Uber charged him C$18,518.50 (around US$14,398) for a 5-mile trip from 12 Widmer, ST to 30 The Queensway in Toronto, that should have cost C$12 to C$40.

According to Votethehish’s friend, Emily Kennard took to Twitter and said, “My friend was charged 18K for a 20 Min ride (!), and they are sticking to it. What in the world??? This is insane! @Uber_Support @badassboz @Uber”

My friend was charged 18K for a 20 Min ride (!), and they are sticking to it. What in the world??? This is insane! @Uber_Support @badassboz @Uber pic.twitter.com/RjFihVLKIC

— Emily Kennard (@emilykennard) December 9, 2017

While combing through the dozen of replies to the initial tweet. We stumbled across an interesting interaction where Kennard said, “Uber is not backing down at the moment” from charging C$18,8158.

Uber appears to be shaking up more than the Taxi market in Toronto with its dynamic pricing model. One Twitter user replies, “surge pricing must have been 10,000% that day.”

Frustrated Twitter users voice their concerns for Uber, and even delete the app.

According to the Inquirer.Net, Uber issued a statement saying there was an error in the dynamic pricing model and it has been resolved.

“We have provided a full refund to this rider and apologized to him for this experience. We have safeguards in place to help prevent something like this from happening, and we are working to understand how this occurred,” the statement read.

Less than two weeks ago, we reported on a rather embarrassing moment for Uber, where a trifecta of events including investors drop out of the latest financing round, hackers steal 57 million customer profiles, and another massive quarterly loss are adding to speculation that Uber is a “Dead Unicorn Walking”… (see: Uber Reports Massive $1.5 Billion 3Q Loss As Two Investors Drop Out Of New Financing Round.)

Considering Uber’s statement reads, “we have safeguards in place to help prevent something like this from happening,” in Mr. Votethehish’s case, where were the safe guards?

Unicorn-holed: Softbank Coalition To Buy Uber Shares At A 30% Discount

And the hits keep coming for the unicornest unicorn in all of unicorn-land...

Back in the summer, we suggested - for numerous reasons - that Uber"s next round of financing may come at a significant discount to its current $69 billion valuation.

Overnight, headlines hit that SoftBank was said to have learned of last year"s hidden-to-the-public security breach about a month ago, and may have changed SoftBank’s evaluation of Uber’s shares, WSJ reports, citing people familiar with the matter. As a reminder, in addition to failing to notify users and the public about the information that was exposed, the company paid the hackers $100,000 to delete the data and subsequently had them sign nondisclosure agreements.

Furthermore, ReCode reports today that the city of Chicago is suing Uber for failing to disclose the 2016 breach of 57 million users’ data.

SoftBank was expected to proceed with an offer to buy billions of dollars worth of shares from Uber stakeholders as soon as this week, with a SoftBank-led investors group planning to start to buy at least 14% of Uber from existing shareholders through tender offer "at a steep discount."

Well tonight we find out just how steep that discount is...

Bloomberg reports that SoftBank and a coalition of investors will offer to buy shares in Uber at a price that would value the ride-hailing company at 30 percent less than its most recent $69 billion valuation, according to two people familiar with the matter.

 

The deal isn’t done, however. Shareholders will need to sell at the $48 billion price.

 

While it’s 30 percent less than the current valuation, the offer would represent a significant windfall for many early investors.

 

If shareholders don’t agree to sell in sufficient numbers, SoftBank could raise the price or walk away.

We suspect shareholders will be more than willing to dump their shares to monetize some of their rapidly declining investment or face being truly unicorn-holed.

There Is Just One Thing Preventing Elon Musk"s Vision From Coming True: The Laws Of Physics

When Elon Musk stepped on stage at Tesla’s product-launch event earlier this month, he knew the market’s confidence in Tesla’s brand had sunk to an all-time low since he took over the company a decade ago. So, he resorted to a tactic that should be familiar to anybody who has been following the company: Shock and awe.

While the event was ostensibly scheduled to introduce Tesla’s new semi-truck – a model that won’t make it’s market debut for another two years, assuming Tesla sticks to its product-rollout deadline – Musk had a surprise in store: A new model of the Tesla Roadster that, he bragged, would be the fastest production car ever sold.

Musk made similarly lofty claims about the battery life and performance of both vehicles. The Tesla semi-trucks, he said, would be able to travel for 500 miles on a single charge. The roadster could clock a staggering 620 – more than double the closest challenger.

There was just one problem, as Tesla fans would later find out, courtesy of Bloomberg: None of it was true.

In fact, many of the promises defy the capabilities of modern battery technology.

Elon Musk knows how to make promises. Even by his own standards, the promises made last week while introducing two new Tesla vehicles—the heavy-duty Semi Truck and the speedy Roadster—are monuments of envelope pushing.

 

To deliver, according to close observers of battery technology, Tesla would have to far exceed what is currently thought possible.

 

Take the Tesla Semi: Musk vowed it would haul an unprecedented 80,000 pounds for 500 miles on a single charge, then recharge 400 miles of range in 30 minutes. That would require, based on Bloomberg estimates, a charging system that"s 10 times more powerful than one of the fastest battery-charging networks on the road today—Tesla’s own Superchargers.

 

The diminutive Tesla Roadster is promised to be the quickest production car ever built. But that achievement would mean squeezing into its tiny frame a battery twice as powerful as the largest battery currently available in an electric car.

 

These claims are so far beyond current industry standards for electric vehicles that they would require either advances in battery technology or a new understanding of how batteries are put to use, said Sam Jaffe, battery analyst for Cairn Energy Research in Boulder, Colorado. In some cases, experts suspect Tesla might be banking on technological improvements between now and the time when new vehicles are actually ready for delivery.

 

“I don"t think they"re lying,” Jaffe said. “I just think they left something out of the public reveal that would have explained how these numbers work."

While Jaffe seems inclined to give Tesla the benefit of the doubt, there’s little, if anything, in Musk’s recent behavior to justify this level of credulity. In recent months, Musk has repeatedly suffered the humiliation of seeing his lies and half-truths exposed. For example, the self-styled “visionary” claimed during the unveiling of the Model 3 Sedan that he would have 1,500 copies of the new model ready for customers by the end of the third quarter. Instead, the company managed a meager 260 models as factory-line workers at its Fremont, Calif. factory struggled to assemble the vehicles by hand as the Model 3 assembly line hadn’t been completed.

Increasingly agitated customers who placed deposits with Tesla back in March 2016 have begun asking for refunds, only to be chagrined by the company’s sluggish response. While nobody in the mainstream press has (somewhat bafflingly) made the connection, Tesla revealed earlier this month that it burned an unprecedented $1.4 billion of cash during the third quarter - or roughly $16 million per day - despite Elon Musk"s assurance that Tesla had its "all-time best quarter" for Model S and X deliveries.

And let’s not forget the fiasco surrounding Tesla’s autopilot software. Musk has repeatedly exaggerated its performance claims. And customers who paid more than $8,000 for a software upgrade more than a year ago have been repeatedly disappointed by delays and sub-par performance.

Musk’s exaggerations about the Tesla Roadster were particularly egregious.

Tesla claims that its new $200,000 Roadster is the quickest production car ever made, clocking zero to 60 in 1.9 seconds. Even crazier is the car’s unprecedented battery range: some 620 miles on a single charge. That"s a longer range than any battery-powered vehicle on the road—almost twice as long as Tesla"s class-leading Model S and Model X.

 

To achieve such power and range, Musk said the tiny Roadster will need to pack a massive 200-kilowatt-hour battery. That’s twice the size of any battery Tesla currently has on the road. Musk has previously said he won"t be making the packs bigger on the Model S and Model X because of space constraints. So how can he double the pack size in the smaller Roadster?

 

BNEF’s Morsy has a twofold answer. First, he expects Tesla will probably double-stack battery packs, one on top of the other, beneath the Roadster"s floor. That creates some engineering problems for the battery-management system, but those should not be insurmountable. Still, Morsy said, the batteries required would be too large to fit in such a small frame.

 

“I really don’t think the car you saw last week had the full 200 kilowatt hours in it,” Morsy said. “I don’t think it’s physically possible to do that right now."

Is it possible that, thanks to incremental improvements in battery density and cost, Musk somehow manages to hit these lofty targets? Perhaps, though, as Bloomberg points out, the fact that Musk is basing these claims on a set of projections that haven’t yet been realized is hardly confidence inspiring.

To be sure, there’s an important caveat to Musk’s claims. While they may be staggeringly exaggerated, there’s still the possibility that incremental improvements in battery technology will make these targets more feasible by the time the models hit the market.

Again, Musk may be banking on the future. While Tesla began taking deposits on the Roadster immediately—$50,000 for the base model—the first vehicles won"t be delivered until 2020. Meanwhile, battery density has been improving at a rate of 7.5 percent a year, meaning that by the time production starts, packs will be smaller and more powerful, even without a major breakthrough in battery chemistry.

 

“The trend in battery density is, I think, central to any claim Tesla made about both the Roadster and the Semi,” Morsy said. “That’s totally fair. The assumptions on a pack in 2020 shouldn’t be the same ones you use today."

However, in its analysis of the feasibility of Musk’s claims, Bloomberg overlooked one crucial detail: Back in August, the company"s veteran director of battery technology, Kurt Kelty, unexpectedly resigned to "explore new opportunities," abruptly ending a tenure with the company that stretched for more than a decade, and comes at a critical time for Elon Musk.

Kelty’s resignation – part of an exodus of high-level executives that is alarming in and of itself - hardly inspires confidence in Tesla’s ability to innovate. We’ve noticed a trend with Tesla: The more the company underdelivers, the more Musk overpromises.

In our opinion, this is not a sustainable business strategy.  
 

Elon Musk Pulls An ICO

By Chris at www.CapitalistExploits.at

First up, this beauty received by one of the crew here at HMS Capitalist Exploits:

Marketing an ICO...

Killer!

The Tesla ICO

Speaking of ICOs, last week something amazing, breathtaking, and revolutionary happened. We had another ICO... the very first of its kind.

An Initial Car Offering.

Pundits said it was an unveiling of the Tesla semi truck, but we now all know it was actually a thinly veiled capital raise.

Like many good things in life, this also began with foreplay.

Customers and shareholders are like women ovens - they need to be warmed up first.

So a few weeks before launching the ICO, the oven was dialled up:

Amazingly, I woke up this morning and, though having watched the unveiling, I looked around me and couldn"t notice anything different (though my dog had this strange look in his eyes).

My mind was surprisingly still in my skull and had not been sent into an alternate dimension, which was disappointing as I was quite excited by the prospects of that.

Anyway, so once the engine was warmed, we were treated to the de-robing of this.

I thought at first I"d missed it. Then I watched it again. And no, I hadn"t.

There was zero explanation of how Tesla would get all the dough to build this creature, where it would build it, and how (given the competition all have existing production plants, positive cashflows, dough in their treasuries, and access to credit markets) Tesla miraculously thinks that by the time it gets there it will have all of these things as well as the technology (that does not yet exist) to pull it off.

But then my nerves were calmed when they offered a warranty on the product. Wait, what? A warranty BEFORE they have a product? Killer!

I guess there"s a first time for everything.

But that wasn"t to be all.

No, then came the real showstopper as Elon went a step further in prostituting promoting Tesla. The fastest sports car in the world. And it may even just fly.

The kid in me did backflips. I sooo want a car that flies. Don"t you?

But then I remembered that there was a time when I really wanted the Easter bunny to be real, too.

Now, being older and wiser, I realise that rabbits screw up your lawn and chocolates make you fat, and I want nothing to do with either of them.

What I would like to know is how they found the time to muck around developing both a sports car and a giant truck when they can"t get a little Model 3 out?

Maybe that"s just me being a grouch. Heck, what do I know about cars? Mine"s 5 years old and smells of kids sweaty football socks which are buried in the back there somewhere.

Thankfully, I didn"t have to wait too long to figure out how they intend to fund some of this:

Now, when I saw this I"ll admit to having made the sort of noise a cat would make if fed through a mangle.

I realised then that Tesla was trying to pull off an ICO.

You see, the thing with 99% of ICOs is they"re kinda like the deals on Kickstarter, which means that you don"t actually get anything. It"s more like a donation... or part of a rewards points system. You know, like your air points where you get to trade them for a flight to Greece for a dirty weekend away or to upgrade your flight to first class so you can sit next to all the folks who eat lobsters in their bathrobes.

This works spectacularly well for anyone uneducated in investment markets. And that, my friends, is perfect for Tesla. Because you know what?

That"s about 90% of the population.

For the other 10%, here are some things to consider.

I"ll gladly admit to not really knowing a lot about cars. I like them very much as long as they take me where I want to go and do all the cool things that modern cars do.

But try explain to me about all the ins and outs of the bits inside and my brain does that man thing - it stops working and starts thinking about sex.

But what I do know a thing or two about is numbers and markets. And frankly, when Musk starts talking about these things he may as well be speaking Nepalese and explaining how to cook a yak stew because it"s all complete gibberish.

Tesla by the Colours

Last week when we were staring at Margot Robbie (don"t tell me you didn"t stare), and we said:

It was overconfidence that led the pointy-shoed suits on Wall Street to package subprime mortgages up, believing that a pile of isht when added to other piles of isht through the magic of diversification turns isht into non isht.

Like Margot explained in the Big Short (and bear with me as I"m extrapolating here): If we use Wall Street logic, you take the colour red and add it to more red... much more... you can get green.

So let"s run through Tesla by the colours, and then after that we"ll run through it by the numbers. Sounds fair?

• SolarCity: Red


• Gigafactory: Red


• Model 3: What Model 3?


• Model 3 in full production: Red


• Tax credits: Green... ah isht... no, make it red

Excellent!

So red + red + red + red + red = Green.

Tesla by the Numbers

Let"s take Q3 cashflow and toss in interest charges for 2017 (which is only fair — after all, someone has to pay them).

With that we realise that Tesla burned through about US$1.7bn or about US$500m a month.

Now, let"s be super conservative and say capital expenditures remain at 2017 levels, which is absurd and impossible given the new initial car offering and that semi truck, too (it"ll be far higher).

Anyway, let"s give it to them.

Well, let"s say they can find 1,000 fools buyers to drop a quarter million bucks on a pre-order for a car that they hope to receive some years in the future. Let"s say they can do that.

That"ll put US$250m into Tesla"s treasury, which will buy them less than 3 weeks. Killer!

I"m going to go out on a limb here and say that in the first quarter of 2018 Tesla"s going to lose US$1bn. Crazy, I know. How long for? It"ll go on until it doesn"t.

And here"s something to think about...

Here"s Venezuela"s 5-year sovereign CDS spread:

You may ask, why Chris are you posting this in an article about Tesla?

Well, Venezuela — like Tesla — made promises it couldn"t keep.

What I"d really like to know from you today is this:

Cast your vote here and also see what others think will happen

- Chris

“If you wouldn’t be short a multi-billion-dollar loss-making enterprise in a cyclical business, with a leveraged balance sheet, questionable accounting, every executive leaving, run by a CEO with a questionable relationship with the truth, what would you be short? It sort of ticks all the boxes.” — Jim Chanos

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Liked this article? Then you"ll probably like my other missives on

this topic as well. Go here to access them (free, of course).

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Morgan Stanley: Tesla Will Surge To $400 Before Crashing To $200

When it comes to Wall Street cheerleaders, Tesla has few closer friends than Morgan Stanley"s Adam Jonas (current price target of $379). To be sure, the relationship cuts both ways, with Jonas relentless enthusiasm "for the EV maker granting Morgan Stanley a reserved spot for any future debt, convert and equity underwriting, as well as associated IB fees.  Yet, following the recent volatility in Tesla"s business model, in which the "production hell" that is Model 3 has been quietly relegated to the latest and greatest hype involving the company"s truck (funded in turn by deposits for the new Tesla $250,000 flying roadster) as well as stock price, not even Jonas can pretend that it"s smooth sailing ahead.

And so, in his latest forecast released overnight which has the same interval of confidence as a bitcoin price prediction, Jonas previews the stock performance of Tesla over the coming year, writing that he expects "Tesla shares to be extremely volatile in 2018, divided into two stages: (1) The alleviation of production bottlenecks with strong cash inflow, and (2) mounting concerns over the sustainability of the competitive moat."

His enthusiasm is even more constrained in his thesis:

Our Equal-weight rating on Tesla expresses our view that any number of positive and negative forces influencing the stock are more or less in equilibrium. While our $379 price target offers 20% upside from current levels, we believe such upside is less interesting on a risk-adjusted basis. From a shorter-term trading perspective, we anticipate Tesla’s stock price may  reach highs in the range of $400 or more over the next few months before facing some more serious headwinds later in the year that could take the stock significantly below current levels.

While the upside forecast is hardly new for Jonas, the downside is certainly a headscratcher for the TSLA faithful, because if Musk is suddenly left without his biggest Wall Street fan, who else is left to drum up interest in a business model that would send PT Barnum in an orgasm of shivering delight.

And just in case there is some doubt about Jonas" sincerity, he provides the following five bullets to justify why even he has gotten cold feet:

1. It is our working assumption that Tesla’s battery module production bottlenecks may be resolved in weeks. It is not possible to prove precisely when problems with zone 2 will be overcome, if they ever are at all. There is only evidence that Tesla is throwing its human and financial capital at the problem. Elon Musk stated that it is better to be late and get it right than to be early and get it wrong. We agree. Tesla is trying to make battery packs with extremely high levels of volume and unprecedented automation with bespoke high-speed robotics. In high-volume battery manufacturing, robotics is a core competency and a competitive advantage.


2. We believe that Tesla baked in flexibility to allow for a highly unpredictable production ramp. Tesla’s Model launch timeline was always seen as extremely aggressive. When the July 2017 launch date was originally communicated to the market, we had seen it as a stretch goal and a form of supply chain management to increase the probability of a successful volume ramp in 2018. Given Tesla’s experience with the Model S and X launches and the unprecedented level of vertical integration and automation of the battery assembly, we believe Tesla had negotiated unusual levels of flexibility with its supply base compared to its prior launches and the industry standard.


3. The motivation of the Tier 1 and Tier 2 supplier base to be involved with the Model 3 project is a relevant factor in de-risking the ramp. It is our understanding that the Model 3 has been seen as a ‘trophy contract’ for the supply base. For any Tier 1 supplier wanting to be associated with the cutting edge of automotive technology (electric, autonomous) the Model 3 was a ‘must win.’ Tesla’s early success with Model S had a profound impact on its image in the supplier community. Where suppliers previously viewed Tesla with high degrees of  skepticism/trepidation, many of the same suppliers were willing to prioritize supply of key systems and even to colocate key production facilities near Tesla’s factory. We believe flexibility on working capital during the sensitive early ramp phase could have reasonably been a part of the negotiation process.


4. The Model 3 working capital arrangement may be highly favorable to Tesla, at least in the short term, during the inflection of the ramp… substantially alleviating concerns over near term liquidity. Like many auto OEMs, Tesla pays its suppliers over many weeks (as long as 60 to 90 days depending on the supplier) while it collects from its customers far faster, particularly given Tesla’s ownership of its distribution channel. Tesla’s own financials bear this out as it collects on its receivables 10 to 20x faster than it pays its suppliers. During times of fast production growth (as we’d expect through 1Q/2Q18), this can pull forward significant amounts of cash which can serve to address much of the market’s concerns over near-term liquidity.


5. Following a hypothetical 1H18 pop in the share price, we could see scope for longer-term risks in the story to come to the fore. The key drivers of our downgrade last May are 2-fold: (1) our view that the global addressable market may not be as accessible as the market expects, and (2) increasing encroachment from consumer electrics and mega-tech firms who are planning comprehensive strategies focused on shared, electric and autonomous transport systems in direct competition with Tesla. We expect a steady and increasing amount of evidence to hit the market as 2018 develops that could stunt the enthusiasm of surmounting the Model 3 production hurdles. Admittedly, we cannot be precise with the timing of positive (1H) and negative (2H) catalysts that could move the stock significantly in the quarters ahead, leaving us EW on the stock.

As a result of the above, Jonas now assumes only 1,000 Model 3 deliveries in 4Q, down from 10,000 deliveries previously. That said, he leaves his 2018 forecast of 120,000 Model 3  deliveries unchanged, and some more details: 

We took 2018 GAAP operating profit from ($688) to ($1,001). Our 2018 GAAP EPS (ex stock comp) estimates went from ($3.66) to ($6.17) and our US GAAP EPS estimate went from ($6.58) to ($9.00). From 2018 through 2020, our average GAAP OP forecast moved from positive $280mm to negative $70mm. From 2021 through 2025, our average GAAP OP forecast moved from $4,491 to $4,242…. A 5% cut. The cuts are even smaller in the out-years. Our Tesla Mobility forecasts remain unchanged. We roll forward our DCF start date to December 1st, and our price target remains unchanged at $379

As of this moment, investors appear just as confused about Tesla"s future as its former biggest fanboy, located almost exactly halfway betwen the two stated extremes...

Cash-Hemorrhaging Uber Announces Plans To Drop $1 Billion On Driverless Volvos

Earlier this summer we noted Uber"s staggering 2Q cash burn of $600 million which equates to roughly $7 million in net cash outflows every single day.  The staggering, and consistently growing, cash burn figures resulted in several mutual funds announcing they would slash their valuations of the struggling rideshare company by up to 15%. 

Of course, if cash burn was a concern before for Uber investors before then they should probably take note of the company"s newly announced decision to drop roughly $1 billion on driverless Volvos.  According to Bloomberg, Uber has just penned a deal to pick up 24,000 brand new Volvo XC90"s in their push to flood the U.S. market with self-driving taxis.

Uber Technologies Inc. agreed to buy 24,000 sport utility vehicles from Sweden’s Volvo Cars to form a fleet of driverless autos, Bloomberg News reports.

 

The XC90s, priced from $46,900 at U.S. dealers, will be delivered between 2019 and 2021 in the first commercial purchase by a ride-hailing provider, Volvo said in a statement Monday. San Francisco-based Uber will add its own sensors and software to permit pilot-less driving.

 

“This new agreement puts us on a path toward mass-produced, self-driving vehicles at scale,” Jeff Miller, Uber’s head of auto alliances, told Bloomberg News. “The more people working on the problem, we’ll get there faster and with better, safer, more reliable systems.”

 

“The automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption,” Chief Executive Officer Hakan Samuelsson said. “It’s a new market that’s emerging and we’re the first to be delivering into that segment.”

Of course, as we"ve pointed out multiple times before, to the extent the technology works consistently, avoiding the nasty consequences of death and mayhem in the event of failure, autonomous vehicles are worth big money to Uber and consumers...though not so much for the automotive OEMs (see "Ford Announces Plans To Self-Destruct Starting In 2021").  As we"ve pointed out, the cost of paying drivers is a substantial portion of the roughly $1.00 per mile charge paid by Uber riders.  To the extent that cost can be removed from the equation then fares charged by companies like Uber will decline materially.

Unfortunately, for the auto OEMs the story is the exact opposite.  In theory, truly autonomous cars could result in substantial increases in passenger car utilization rates and, therefore, declines in annual car sales.  But apparently, Volvo CEO Hakan Samuelsson isn"t worried (yes, we can sense the pure optimism in the quote below):

“That could be seen as a threat,” says Volvo Cars CEO Hakan Samuelsson. “We see it as an opportunity.”

But still, even if the technology works, the question remains how quickly consumers will adopt it, if at all. Certainly there certainly has been no shortage of videos hitting Youtube lately of driverless cars plowing through red lights and getting into accidents...which seems less than ideal.

Half Naked Woman Who Stole Uber Driver"s Tips Complains Of Harassment After Video Goes Viral

Content originally published at iBankCoin.com

A half-naked woman whose theft of an Uber driver’s tips was caught on video is complaining of online harassment after footage of the brazen incident went viral.

Scantily clad 18 year old Gabrielle Canales – a horrible human being, was caught on surveillance video reaching into the Uber driver’s tip jar after she and two other passengers reached their destination in Brooklyn, New York.

After posting a now-deleted Instagram response in which Canales showed little remorse, the Crown Heights woman finally admitted she was “completely wrong” for stealing the money – $5.00 by her count – which she says she paid back.

“I understand I’m completely wrong and I’m not denying it,” Canales told BuzzFeed. “The lesson was learned that same day. That’s why the gentleman was paid back.”

Watch:

 

After the video went viral, Canales told Buzzfeed she’s been subject to harassment and mocking.

“I didn’t need this video to go viral to teach me a lesson. I learned the lesson that same day. Before the video went viral, the man was paid back,” Canales said. “I apologize on the matter once again.”

Canales then doubled down on her self-righteous half apology and played the woman card, saying “I’m wrong for taking $5, and according to the world, I need to die,” she said. “I understand I’m going to get hate from a lot of people and that’s something I accepted, but I don’t think it’s okay to disrespect me as female.”

Uber bans woman, ignores driver

Following the incident, Uber banned the woman from the platform, stating “What’s been shown has no place on our app and the rider’s access to the app has been removed.” The driver, meanwhile, told the Daily Mail that he was “too busy working to file a police report after the video was filmed.”

When he reached out to Uber, they sent him a canned response:

We understand your frustration with this experience. We’ve attempted to contact the rider by phone and email, but haven’t been able to resolve this issue. The rider responded to us and advised us that she didn’t steal your cash from the tip jar. If you believe the rider has your cash as captured from your dash cam and is refusing to return it, you may want to initiate a formal investigation via the police.

Uber drivers raping passengers, passengers robbing Uber drivers – some of whom were then shortchanged by the company … I bet the ridesharing behemoth can’t wait to replace those pesky human drivers with self-driving cars.

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Musk Fires Back: Blasts "Hotbed Of MISinformation" In Racial Discrimination Lawsuit

A couple of days ago we noted a lawsuit filed against Tesla in the Superior Court in Alameda County which, among other things, alleged that his Fremont manufacturing facility was a "hotbed for racist behavior" in which employees and supervisors "regularly use the "N word."" Bloomberg summarized the case as follows:

Tesla Inc.’s production floor is a "hotbed for racist behavior," more than 100 African-American employees claimed in a lawsuit in which they alleged black workers at the electric carmaker suffer severe and pervasive harassment.

 

The employees are seeking permission from a judge to sue as a group and are seeking unspecified general and punitive monetary damages as well as an order for Tesla to implement policies to prevent and correct harassment.

 

"Although Tesla stands out as a groundbreaking company at the forefront of the electric car revolution, its standard operating procedure at the Tesla factory is pre-Civil Rights era race discrimination," the employees said in the complaint, filed Monday in California’s Alameda County Superior Court.

 

The lawsuit was filed on behalf of Marcus Vaughn, who worked in the Fremont factory from April 23 to Oct. 31. Vaughn alleged that employees and supervisors regularly used the “N word” around him and other black colleagues. Vaughn said he complained in writing to human resources and Musk and was terminated in late October for "not having a positive attitude."

But, in an angry blog post published on Tesla"s website, the embattled electric car darling has fired back saying that media reports of a "hotbed of racist behavior" at Tesla are nothing more than a "hotbed of misinformation" spread by a trial lawyer who "has a long track record of extorting money for meritless claims and using the threat of media attacks and expensive trial costs to get companies to settle."

There are a number of other false statements in the class action lawsuit alleging a so-called “hotbed of discrimination”:

 

- There is only one actual plaintiff (Marcus Vaughn), not 100. The reference to 100 is a complete fabrication with no basis in fact at all.

 

- The plaintiff was employed by a temp agency, not by Tesla as claimed in the lawsuit.

 

- Marcus was not fired, he was on a six month temp contract that simply ended as contracted.

 

- His email to Elon was about his commute and Tesla’s shuttles, which was addressed as he requested. There was no mention of racial discrimination whatsoever.

 

- The trial lawyer who filed this lawsuit has a long track record of extorting money for meritless claims and using the threat of media attacks and expensive trial costs to get companies to settle. At Tesla, we would rather pay ten times the settlement demand in legal fees and fight to the ends of the Earth than give in to extortion and allow this abuse of the legal system.

Given those silly fiduciary duties he has as a Tesla board member, Elon may not want to openly flaunt his willingness to "pay ten times" more in legal fees just to settle a personal vendetta...just a thought.

Meanwhile, Elon also decided to address a portion of a firm-wide email published by Bloomberg suggesting the Tesla employee who felt discriminated against should have been more "thick-skinned" by publishing the entire email that, in fact, confims that Elon said the guy should be more "thick-skinned."

We would also like to clear up the description of Elon’s prior email to employees. It is dedicated to ensuring that Tesla employees always try to do the right thing, that being a jerk is not allowed, that everyone should be contributing to an atmosphere where people look forward to coming to work in the morning and that no one should feel excluded, uncomfortable, or unfairly treated. As one of many points in that email, Elon also explained that if someone makes an offensive or hurtful statement on a single occasion, but subsequently offers a sincere apology, then we believe that apology should be accepted. The counterpoint would be that a single careless comment should ruin a person’s life and career, even if they truly regret their action and do their best to make amends. That would be a cold world with no forgiveness and no heart.

Of course, somehow we suspect that Tesla shareholders would prefer that Elon focus on learning how to weld rather than spend his time publicly responding to what he clearly views to be a "frivolous" lawsuit.

Goldman: Automated Trucks To Cost 300k Jobs Per Year

Authored by Jon LeSage via OilPrice.com,

While Google’s Waymo company has taken center stage for bringing self-driving cars to roads, autonomous trucking may make it to the mainstream first. 

Silicon Valley startups, technologists, and venture capitalists see great potential in the technology - even more than most traditional trucking companies are supporting.

For months, Tesla CEO Elon Musk has put out teasers that the electric carmaker will soon reveal an electric semi-truck with autonomous capabilities. That announcement may take place this week, on November 16.

Embark, a Silicon Valley start-up, is scheduled to release details next week on its self-driving technology for trucking. The automated system has tested in partnership with truck-leasing company Ryder and Electrolux, an appliance manufacturer. Trial runs are exploring the potential of transporting trailers to Electrolux’s California warehouses with autonomous trucks.

CB Insight, which tracks venture capital, reports that companies will place about $1 billion in commercial truck autonomous systems this year, 10 times the level of spending three years ago.

The $700 billion trucking industry continues to be an integral part of the U.S. economy, and that of other economic giants and developing countries around the world. With more manufacturing happening overseas in places like China, trucking is part of making sure everything from automobiles to packaged food products make it to warehouses and end users on time.

Trucking companies and giants who invest heavily in logistics—like Amazon and Walmart—see great potential in cutting costs and speeding up delivery times. That will come via cutting labor costs when truck drivers no longer become necessary, and by extending the hours that commercial trucks can be kept in operation.

Companies also believe that traffic accidents will be reduced when autonomous vehicles become widely adopted for passenger and cargo transport.

Insurance premiums are expected to go down, along with collision repair costs. Autonomous driving is expected to be much safer than what’s delivered by human drivers.

Waymo and other tech companies and automakers currently testing out self-driving cars are preparing to play a part in developing cities around the world. Government officials, employers, and residents in these cities hope that self-driving cars will eventually reduce the number of cars on the streets and make them safer with less car crashes.

Self-driving cars face tougher challenges navigating through crowded, chaotic city streets—and face even tougher regulatory hurdles to cross. Cargo trucks spend most of their time traveling down broad, open highways with much less traffic.

There’s also the practicality of several trucks “platooning” together on highways that simplifying the equation over companies like Waymo dealing with crowded cities and higher risk for collisions.

Volvo Trucks sees great potential in utilizing platooning systems for cost savings and achieving more efficiency in freight hauling. One autonomous truck can lead a platoon with two or more trucks following close behind, taking advantage of the aerodynamic efficiency.

The company successfully demonstrated on-highway truck platooning in California during March 2017. An alliance was set up for the trial run with Partners for Advanced Transportation Technology (PATH) at the University of California, Berkeley, to test three Volvo VNL 670 model tractors hauling cargo containers at the Los Angeles Port complex and along Interstate 110.

Volvo sees opportunities in achieving fuel savings, improving highway safety, and increasing the capacity of transportation systems.

Daimler AG’s truck division is following a similar path, announcing in September that it will test platooning technology on U.S. roads. The German company’s U.S. division gained approval from Oregon’s transportation regulatory agency after completing a successful trial run in the state.

US Xpress, one of the largest trucking companies in the U.S., added autonomous braking and collision-avoidance systems to its 7,000-plus truck fleet. Next, the company will add automated lane steering for deployment within the next three years.

The 7,000-plus trucks owned by US Xpress, one of the nation’s largest trucking companies, were updated with autonomous braking and collision-avoidance systems. Max Fuller, the company’s co-founder and executive chairman, plans to upgrade them to have automated lane steering in three years.

“I’m putting building blocks into my trucks that each year gets us closer and closer,” said Max Fuller, the company’s co-founder and executive chairman.

Another Silicon Valley company, Peloton Technology, is developing a platooning system that will make it easier for trucks to travel within a platoon. That means they’ll save large volumes of gasoline and diesel typically consumed by work trucks.

Peloton’s system uses cameras, sensors, and networking equipment for trucks to communicate with each other. It can avoid disasters such as a second truck ramming into the first after a sudden stop.

Goldman Sachs economists predicted that trucking will shed about 300,000 jobs per year starting in about 25 years. That may begin sooner than anticipated if automated trucking clears government hurdles and technology innovations—and becomes widely adopted by trucking companies.