The Political Page, T+217 -- August 25, 2017

EVs: Rigzone contributor: greater EV adoption relies on some big "ifs."

Electric vehicles (EV) constitute a very small share of all cars on the road worldwide. According to the International Energy Agency (IEA), the total number of EVs hit 2 million in 2016. Compare that to the nearly 1.3 billion figure of all vehicles worldwide, according to 2015 figures from the International Association of Motor Vehicle Manufacturers, and it's clear that EVs do not currently represent a personal transport juggernaut.

EV penetration in the global vehicle fleet could be considerably greater less than 20 years from now, however. A recent study by Wood Mackenzie and GTM Research predicts that more than one in five vehicles worldwide – or more than 350 million units – could be powered by electricity rather than the internal combustion engine. The study's authors foresee such a sharp EV growth trajectory under what they call a "carbon-constrained scenario."

These are the "big ifs":

Achieving a point where EVs make up more than 20 percent of the world's vehicle fleet would represent a significant milestone, but McConnell cautions that EV uptake faces some formidable obstacles. When asked what the biggest "ifs" are for EVs to become more widely accepted, he ticked off the following list:

• battery prices will need to fall fast enough so that sticker prices reach parity with internal combustion engine-powered vehicles
• charging infrastructure will need to be rolled out so that drivers can charge their EVs when and where they want
• the battery supply chain must "ramp up enormously," and it needs to incorporate battery recycling 

The top-3 list did not include "better batteries" -- longer life, longer range. Not much progress has been made in either area. In fact, the biggest names in the business (Sony, Toyota, Apple, GM) have been working on the "battery problem" for the past twenty years (or longer) and any number of small start-ups in the past ten years have failed or gone bankrupt trying to solve the "battery problem."

This tells me that it is unlikely there will be some major battery breakthrough in my investing lifetime. In fact, hydrogen and fuel cell technology may be the big surprise.

Debt limit: from a CNBC talking head this morning -- the likelihood of a government shut down over "the wall" and raising the debt limit and forcing a government shutdown:

• Trump does not care about the "GOP brand, and will play to his base (35% of the US population)
• the DEMS will play to their base -- they won't fund the wall
• the mainstream congressional GOP -- which the talking head called the "third party" -- will be "left in the lurch" or holding the short straw

All politics is local. A government shut-down is almost assured. The vitriol between T and M almost guarantees it. R seems the most "diplomatic" or should we say, the "most adult" among the three.

• T: Trump
• M: Ms Chao's husband
• R: Ryan

Trump rally continues. Dow 30 up over 100 points in early trading. Trump has been tweeting "like mad" this morning, threatens shutdown of the government, and the market rises 100 + points.

Inflation? What inflation? Central bankers have been trying for decades to "awaken long-dormant inflation" without success.

Anemic inflation has become a bugaboo for global central banks .... it's been a speed bump in the US Fed's path toward normalizing interest rates ...

... maybe central bankers need to encourage the Venezuelan model. LOL. Where's Paul Krugman when you need him?

Lost Decade: on CNBC, while discussing the Fed (Yellen vs Cohn), Rick Santelli called the last ten years, "the lost decade." I've had that "tag" for years.

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Amazon-Whole Foods

I assume almost everyone uses "loyalty cards' when shopping: 5% back on credit card purchases; significant discounts in grocery stores; discounts at gas stations; etc. Hold that thought.

[Last night I stopped at the grocery story for two items: cashier rang up $1.74. When I entered my "loyalty card number," the price came down to $0.99 -- a 43% savings. Don't tell me that Amazon doesn't have a lot of wiggle room on pricing.]

Amazon has said it will cut prices for products at Whole Foods. Talking heads argue that grocery prices really can't be cut that much without losing money.

For Amazon, Whole Foods was about two things (and it's not about groceries):

• the Amazon Prime credit card (see loyalty card above); and, 
• distribution centers and logistics behind these stores

Again, repeating, this is all about the credit card. The first is a no-brainer: Amazon has a lot of "wiggle" room on Whole Food prices when one looks at Amazon-Whole Foods-Prime credit card as a complete package. The Amazon Prime credit card costs $99 right now (more than what Costco charges).

It's all about the credit card, but then it dawned on me. I have never missed/lost an Amazon package. But there are occasions when the delivery is compromised/challenged because it is after-hours (or on Sundays when FedEx / UPS cannot get into our gated complex). In some urban areas, I am also aware that porch-theft, especially during the holidays, is a significant problem.

So think about this: I order something from Amazon; have it delivered to my local Whole Foods -- which, by the way is just down the street from where I live -- and then when I get a reminder from Amazon that my purchase has arrived, why wouldn't I combine a grocery shopping trip when picking up my purchase. I'm combing two trips into one; and the round trip is less than 10 miles, which would be perfect for an EV if I had one.

This Amazon - Whole Foods thing is becoming clearer and clearer:

• Amazon has a lot more wiggle room on grocery pricing than analysts are suggesting
• Whole Foods combines the best of the "Costco-Club" model
• Whole Foods Club members are already in place: anyone who has a Prime Credit card becomes a Whole Food Club member
• Whole Foods will be open to all (unlike Costco) and many non-Prime Credit card shoppers at Whole Foods will get a Prime credit card (it's also possible Amazon-Whole foods will offer a loyalty card to those who do not want to spend $99 for a credit card)
• we all knew that Whole Foods would become mini-distribution centers, but no one really articulated how they saw that working; now we know (see above)

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I Can See Clearly Now, Johnn Nash