EV Truck Excitement Is Off The Chart -- All Roads Lead To Amazon -- July 11, 2020

Updates

December 12, 2022: Rivian steps back from partnership with Mercedes-Benz.

August 11, 2022: Rivian reports today after market. 

August 11, 2022: Rivian: a "zombie" company. Link here. Trading at $38; a year ago: $172.

May 9, 2022: Rivian doesn't need cash. It's still tanking -- Barron's.

May 8, 2022: Rivian crashed and burn, taking Amazon with it. How bad was it? Delivers 1,015 vehicles in 2021. Market cap $25 billion after huge plunge in share value.

December 31, 2021: earnings.

September 15, 2021: Amazon-backed Rivian announces first EV pick-up truck rolls off the assembly line. Rivian says they were the first.

July 24, 2020: Nikola pilot plant to speed electric truck production.

Original Post

This graphic fascinates me:

Note: Toyota Motors is not shown in the graphic above. Market value of TM is $175 billion, about 70% that of Tesla. The graph above says as much about the "craziness" of Tesla valuation as the sad state of affairs for the legacy automobile industry. Did GM not see this coming? Did Mercedes not see this coming?

It appears that major specialty truck manufacturers were looking at electric drivetrains as early as 2018, if not before, with commercial production anticipated for 2021 or shortly thereafter. It appears that, based on headlines, we may be reaching a tipping point. This is simply fascinating.
What's in a name? Coincidence? Serendipity? The Transformers: The Last Knight movie, featuring a Western Star truck was released in 2017 just about the time we saw the transformation to EVs taking place.

One thing led to another. Random data points regarding EV.

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Which Led Me To This

Nikola (NKLA);

• market cap: $20 billion
• Nikola shares are up more than 60% since it went public last month (June, 2020)

Rivian: from the drive --

Rivian doesn't exactly live on hype as many electric vehicle manufacturers do. It can afford not to, because it seems like every other month the company—which has yet to release its first trucks, the R1T pickup and R1S SUV—gets another huge cash infusion from excited believers. Today, Rivian announced it's closed its biggest investment round yet, raising a further $2.5 billion with a B in support of its vision for the electrified future.

It's notable that this round wasn't driven by companies like Ford or Amazon that have already signed production deals with Rivian and have a concrete interest in getting its factories up and running.

This time, funding was led by financial firms like T. Row Price Associates (also a previous investor), Soros Fund Management, Fidelity Management and Research Company, Coatue, and Baron Capital Group. Amazon also pitched in a little more money, following its September 2019 order for 100,000 electric delivery vans.

The $2.5 billion investment is the first cash influx Rivian has received in 2020. In 2019, the electric truck brand received four separate investments that totaled $2.85 billion. In addition to the Amazon van deal, it was originally reported that Ford's involvement meant Lincoln would be teaming up with Rivian for the luxury brand's first electric SUV, however those specific plans fell through in April due to the ongoing pandemic and resulting economic downturn.

But Ford still plans to use the Rivian "skateboard" EV chassis as a base for future vehicles.

Scaringe has also indicated that he has no plans to take Rivian public anytime soon, so this likely won't be the last big funding round for the company as investors eying Tesla's soaring stock price scramble to get in on the ground floor of any serious EV play.

We just hope some of that cash goes towards developing more excellent paint colors like that yellow number up top.

Spartan Energy Acquisition: in talks to buy EV company, Fisker Inc. Spartan shares soared more than 38% on the news.  "Stock in electrical-vehicle makers are on fire. Special purpose acquisition companies, or SPACs, are doing even better." -- Barron's, July 9, 2020. Reuters link here.

Electric vehicle maker Fisker Inc is in talks to go public through a sale to a so-called blank-check acquisition company, modeled after a successful deal earlier this year by peer Nikola Corp NKLA.O, people familiar with the matter said on Thursday. The deal is estimated to be in the range of $2 billion.

Velodyne Lidar: an autonomous vehicle technology company agrees to be bought by blank-check company Graf Industrial for $1.6 billion.

Tortoise Acquisition: another example of a "blank-check" company. Link here.

Tortoise is a special purpose acquisition company (SPAC), meaning a company that has no business plans of its own but that seeks to acquire other businesses. (Put another way, it's a shell company, which explains its cheeky name and ticker symbol.)

Last month, Tortoise announced plans to merge with Hyliion, a maker of hybrid and electric drivetrains for heavy trucks, in a deal similar to the one that took rival electric-truck start-up Nikola public in early June. In a nutshell, Tortoise and Hyliion will merge, some outside investors will add additional funds, the merged company will be named Hyliion, and Tortoise's former shares will continue to trade under the new ticker HYLN.

Western Star.

Daimler unveils electric Freightliner Cascadia. June 6, 2018.

Daimler Trucks will launch a full line of electric trucks and buses starting with small scale pilot programs later this year and ramping up to full-scale production by 2021.

The company unveiled a nearly silent, electric version of its flagship Freightliner Cascadia heavy-duty truck at the Portland International Raceway during a meeting with Wall Street analysts and investors in Portland, Oregon, Tuesday (2018).

Meanwhile, GM, March 4, 2020:

Ford, April 28, 2020:

A joint project between Rivian and Ford to build a Lincoln-branded electric vehicle has been canceled as the auto industry struggles to navigate the coronavirus pandemic.

While there were never specific details about the product, where it would be built or timing for its launch, the automakers planned to build the new vehicle using startup electric truck manufacturer Rivian’s platform.

“Given the current environment, Lincoln and Rivian have decided not to pursue the development of a fully electric vehicle based on Rivian’s skateboard platform,” Lincoln said in a statement Tuesday. “Ford Motor Company’s strategic commitment to Lincoln, Rivian and electrification remains unchanged and Lincoln’s future plans will include an all-electric vehicle.”

Ford, which last year invested $500 million in Rivian, said Tuesday the partnership “remains strong,” and the companies continue to work together on an alternative vehicle based on Rivian’s platform.

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SPICKS AND SPACS

Spicks and Specks, The Bee Gees
And, of course that led me to Lana Del Rey, Radiohead, and The Hollies but that will be a story for another day. Or not.

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TCM

Two Peters Sellers movies in one night followed by a classic film noir movie. What could be finer? Film noir, The Bodyguard, 1948. A Pontiac station wagon and a Ford Woody Estate Wagon.

Factoid: Station Wagons originated from the age of train travel where they assisted in carriage. They were known as hacks, short for hackney carriage which was an old name for taxis. They also came to be known as "Carryalls" and "Suburbans."

Updating Some CLR Wells -- July 11, 2020

CLR's Rath Federal, Brangus, Maryland, and Nashville pads have been updated.

This CLR Radermecher well will go over 500K bbls crude oil cumulative when it comes back online:

• 28998, 1,880, CLR, Radermecher 4-22H2, Camel Butte, 8 days to drill, Three Forks 2nd bench, 39 stages; 10.9 million lbs; this is becoming so routine for CLR, the entire geologist's summary was less than a page, and did not include drilling to vertical depth; lateral drilling synopsis in one short paragraph; t2/17; cum 496K 4/20; off line 5/20;

The CLR Radermacher wells are tracked here. Data has been updated.

The CLR Norfolk wells have been updated.

The CLR Palmer and Palmer Federal wells have been updated. These wells are all SI/A; they all had two months or so of production, and were all taken off line 5/20;

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Buffett And The Airline Stock He Sold

Back on March 23, 2020, a senior analyst for some firm said that Warren Buffett panicked when he sold his airlines. That analyst did not know a basic rule of investing. LOL.

So, where does Berkshire Hathaway stand today if Warren Buffett re-invested all proceeds from the four airlines he sold, back into AAPL:
 

	Airline	Shr Price: 3/31/2020	Dollars: 3/31/2020	Shares	Shr Price: July 10, 2020	Total: July 10, 2020
	DAL	28.53	675,000,000	23,659,306	27.09	640,930,599
	UAL	31.55	675,000,000	21,394,612	32.67	698,961,965
	AAL	12.19	675,000,000	55,373,257	11.94	661,156,686
	SWA (LUV)	35.61	675,000,000	18,955,350	33.22	629,696,714
			2,700,000,000			2,630,745,965
	AAPL	254.29	2,700,000,000	10,617,799	383.68	4,073,836,958
						1,443,090,993
						2,630,745,965
						54.85%
March 24, 2020		224		10,617,799		2,378,386,881
July 10, 2020		383.68		10,617,799		4,073,836,958
						1,695,450,077

Hypothetical numbers:

• on/about March 31, 2020, proceeds from sale of the four airlines: $2.7 billion
• July 11, 2020, those four holdings would be worth: $2.63 billion
• had Buffett taken that $2.7 billion and purchased $2.7 billion of AAPL shares back in March, they would be worth $4.074 billion, a 51% increase in value vs a further loss in the value of those airline stocks.

Maybe This Is Why TSLA Surged This Week; Last State In The Continental US To Get Tesla Superchargers -- July 11, 2020

From the Bismarck Tribune.

Good news for at least one tethered vehicle:

North Dakota is the last state in the continental United States to get a Supercharger, which will work only with Teslas. Owners of other electric vehicles still don’t have a speedy option for charging in the state.

The new Superchargers span the Interstate 94 corridor in Dickinson, Bismarck, Jamestown and Fargo. Others went in recently along the interstate in neighboring Montana and Minnesota. In Bismarck, the eight chargers are located in the Pinehurst Square shopping center parking lot near T.J. Maxx.

How tethered are these vehicles? Listen to Jason Mosser:

In early June, the Mandan resident decided to test out one of the first chargers to become operational in Fargo.

“I drove highway speed no problem, got there, charged up, and 30 to 40 minutes later I picked up supper and came home,” he said.

More than a month ago, such a trip would not have been possible. He would have had to stay in Fargo and charge up his Tesla overnight by using an adapter at a slower electric vehicle charging station, making his way back to Mandan the next morning.

Tesla’s decision to install Superchargers in North Dakota “is massively transformational” for travel, he said.

Staying overnight in Fargo just to re-fuel his vehicle. LOL. That was before the Superchargers were installed.

Now, he only has to wait upwards of 40 minutes to re-fuel his Tesla. He certainly has more patience than I do. Whatever.

Prior to this there was one Tesla Destination Charger in North Dakota: Cannon Ball, north entrance to Standing Rock Reservation.

The closest Supercharger in Montana to Williston: Billings, MT.

The closest Supercharger to Fargo, ND, in Minnesota: Alexandria, MN.

There are at least six Supercharger stations along I-90 in South Dakota. 

It should be noted that it appears impossible to drive across the state on US Highway 2, Williston to Grand Forks, in a Tesla.

More On The Berkshire Hathaway -- Dominion Deal -- July 11, 2002

From CNN, and other sources, more on the Berkshire Hathaway / Dominion natural gas deal.

Some data points (numbers may be rounded)

• BRK, market cap: $445 billion
• most recent price BRK-B share price: $180
• 52-week high: $230 (market cap at this share price: $565 billion)
• BRK: down 20% "this year"; 
• S&P this year: down just 2%
• 1Q20: cash -- $137 billion
• Dominion natural gas purchase: $4 billion in cash; $6 billion in debt
• BRK's last major deal, 2015: Precision Castparts for $37 billion
• Dominion deal simply fills out a glaring gap in Berkshire's energy portflio
• compare that $10 billion for Dominion with $10 billion for share of OXY late last year
• Buffett: turns 90 years old next month, August, 2020
• likely successors, one or the other or both:
• Greg Abel: runs Berkshire's non-insurance business
• an energy industry veteran
• probably behind both the Dominion and the OXY deal
• Ajit Jain: vice-chairman who runs the insurance operations
• buyer of AMZN for Warren Buffett, either one of the following, either may be next chief investment officer:
• Todd Combs, GEICO/CEO, member of the board, JPM, or
• Ted Weschler
• Big gap: the name of the vice-chairman, if there is anyone, who runs the "high-tech investments" for the company, maybe Weschler

More on Berkshire Hathaway and Dominion:

• Berkshire buys Dominion's natural gas assets; and, here;
• Buffett fleeced Dominon -- Jim Collins, Real Money. This is such a huge story I've archived it; the article is likely to disappear being a paywall
• Buffett's Berkshire Hathaway reduces share count, suggesting possible buybacks -- Reuters via Yahoo!Finance. 
  

BRK portfolio at this link. This link does not include those companies that BRK owns outright.

Vertical Wells -- July 11, 2020

A reader writes, wondering if five weeks is long enough to establish a trend:

With low prices for oil & natural gas, it appears there has been an ongoing shift from expensive horizontal drilling to the less sophisticated conventional vertical drilling.

Recall that in the Dallas Fed energy survey of a couple months ago, of the 157 oil executives responding, none could profitably drill a new well in any US shale basin at an oil price below $30 a barrel, but at least one company thought they could profit with oil at $15 a barrel by drilling a vertical well.

On June 5th, there were 253 horizontal rigs, 24 directional rigs, and 7 vertical rigs deployed; but as we have just reported, by July 10th horizontal rigs had fallen by 33 to 220 rigs, directional rigs had fallen by 5 to 19 rigs, but vertical rig activity had increased by 12 rigs to 19 vertical rigs.

My sense is that some of this is taking place in the Permian basin, as horizontal rigs are being shut down in Permian Delaware, while vertical rigs are starting up in the Permian Midland, but to establish that, one would have to locate the individual well records on the North America Rotary Rig Count Pivot Table, and I don't have the patience for that tedious endeavor.

Nor do I.

From Xinhuanet:

The number of active drilling rigs in the United States decreased by 5 to 258 this week, down by 700 year on year, according to .... Baker Hughes.

These active drilling rigs included 181 oil rigs operating in the U.S. oil fields, down by four from the previous week; 75 gas drilling rigs, down by one from the previous week, and two miscellaneous rigs, unchanged from last week.

The 258 rigs included 246 land drilling rigs, down by five from the previous week, and 12 offshore drilling rigs, unchanged from the previous week. There was no inland waters drilling rig this week, same as last week.

Of the 258 land rigs, 19 were directional drilling rigs, 220 were horizontal drilling rigs and 19 were vertical drilling rigs.

I have not seen any new vertical well activity in the Bakken, so I tend to agree that it's most likely in the Permian where there might be new vertical drilling.

Business Stories Of Interest -- Nothing About The Bakken -- July 11, 2020

These stories caught my eye overnight. I wish I had more energy, time, interest, financial incentive to write more about them but at the moment I do not.

I will simply post them and come back to them later if the spirit moves me.

Wow, which version to post? Decisions, decisions, decisions.

But first:

The Original Stroll, Channel 5, Des Moines, IA
The stories:

• Billionaire Musk's net worth zooms past Warren Buffett's -- Bloomberg. Reuters via Yahoo!Finance.
• Buffett's Berkshire Hathaway reduces share count, suggesting possible buybacks -- Reuters via Yahoo!Finance.  
• Rivian raise $25 billion as it pushes to bring its electric RT1 pickpu, R1S SUV to market -- TechCrunch via Yahoo!Finance. 
• American credit card debt plunges during coronavirus pandemic -- Fox Business via Yahoo!Finance.
• Amazon begins rolling out bigger UPS and FedEx-style delivery trucks -- Reuters via Yahoo!Finance.  
• Buffett fleeced Dominon -- Jim Collins, Real Money. This is such a huge story I've archived it; the article is likely to disappear being a paywall. 
• How badly is Berkshire's portfolio doing right now? Really, really, really badly. Worried? Nope? -- CNN. 

It appears I may have to go back to subscribing to Forbes.The only business news I'm reading is Bloomberg, Reuters, and Yahoo!Finance.

Idle Rambling: Top Stories This Past Week -- July 11, 2020

Note: This is being posted though it is not ready for prime time. It has not been proofread. It is likely that it will be updated. We'll see. 

The most boring thing I do every Saturday is post the top stories for the week. I anticipated that today's exercise was going to be more boring than ever. I couldn't think of any news that was all that exciting. And then I started going through the posts for the past week. Wow, this was a huge week.

How could that be? That going into the exercise I thought I would have trouble finding any stories to make the "top story" list and then was overwhelmed by the number of huge stories that were reported last week.

My hunch is that Covid-19 is simply drowning out everything else. I don't watch the news and yet it seems Covid-19 permeates everything around me.

For example, I had completely forgotten that the numbers for non-manufacturing ISM absolutely crushed the forecast. Absolutely amazing. And that trucking volume soared the week before July 4th: up 45% year-over-year. Amazing.

I had completely forgotten about the federal judge's order to close the DAPL. [Obviously I didn't literally "forget" but it was no longer on my radar scope. Too much other stuff happening.]

I didn't even list the surge in corona cases as a top story this past week. Apparently folks don't understand the nature of epidemics and herd immunity. I do not care about the number of cases. The press seems to care. The politicians seem to care. Except for mandating masks, it doesn't seem the rest of America -- okay, that little microcosm of America I see -- really cares. The alternative: shut down America again. I don't think anyone really wants to do that, but there are warning signs and warnings. Apple re-closed a lot of their stores. I think another draconian lock down would be the death knell for mom-and-pop restaurants, and shopping malls, if the first lock down didn't already do it. We're going to see a lot more stories of cities in huge financial trouble. I wonder if San Bernardino, or whatever city it was in California, is still sending out $500-checks to randomly chosen families?

Going through the top stories this week, and stepping back to try to see the bigger picture, the Tesla surge in share price seems to me to be a bigger story about the legacy auto manufacturing than about Tesla. I've said from the beginning that Tesla is not about cars; it's about batteries. Tesla is a battery company, disguised as an automobile company. It turns out it is also a very, very high-tech company and I think folks are starting to understand that. That startling graphic of Tesla's market cap greater than eight leading automobile companies combined (not including Toyota, by the way) was a bit of fakery. Tesla needs to be compared with Apple, Microsft, and Amazon. The latter three ,with a combined market cap of $5 trillion, dwarfs Tesla's $250 billion.

Internationally, because of Covid, I think, and maybe for a few other reasons, what would normally be the biggest international story is hardly being reported, except on obscure internet sites. The most important international story: Israel starting to take out Iran's nuclear capabilities. The fact that it is occurring (and not being reported) is amazing, but what impresses me most is the timing. Israel realizes it has a small window of opportunity. Israel understands that sanctions on Iran go away if Biden is elected president. The world is distracted by Covid right now. Iran's closest ally, China, has its hands full. Russia, amazingly, is very, very quiet.

Back to the Bakken. I was blown away last week, Monday, when I saw twenty-some permits renewed. I thought it was a one-off. Then Tuesday, twenty-some more. And it continued each day last week. For five consecutive days, more than twenty permits renewed each day, resulting in 118 permits being renewed for the week. The usual number of permits were canceled, about ten if I recall correctly. I really wasn't paying attention to canceled permits. With regard to the renewed permits, Lynn Helms made, perhaps, the dumbest comment about permits. It was so incredibly stupid I did not post it and won't post it now. I did link the Williston Herald story where the comment was reported. When it comes to the ND Bakken he's the most knowledgeable man in the room, so I am clearly missing something.

Much bigger than the DAPL story, by the way, as far as I was concerned, was the announcement that Dominion and Duke were bailing on the $8-billion Atlantic Coast natural gas pipeline AND that Dominion was giving away its natural gas assets to Warren Buffett. More on that in a post that will appear later today. It's quite a story.

The PGA seems to be back on course and NASCAR seem to be back on track -- wow, what great puns. LOL. I wasn't even going to note professional sports but how could one pass up those puns? LOL. I said I wasn't going to watch either NASCAR or PAGA because of all the virtue signaling. I lied. Just like the other eighteen million white, heterosexual, MAGA-males who have said the same thing. But they, like me, will all watch professional sports. Last night, NASCAR XFINITY Kentucky race: Austin Cindric, 21 years old, tied a Richard Petty record set back in 1971. And in the post-race interview, nothing was said about nooses or kneeling. Social distancing did not preclude some great bumping on the race track and there just enough spectacular crashes to make it all worthwhile. By the way, that record may be tied, but it will never be broken. 

And finally, the US is either headed into an economic depression like we've never seen before, or Americans are going to thread this needle so perfectly, the recovery will be written about for decades.

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My Favorite

Week 28: July 5, 2020 -- July 11, 2020

Top story of the week:

• DAPL shutdown order;
• One hundred eighteen permits renewed in the ND Bakken;  
• TSLA;
• Israeli target practice; and, here;
• Berkshire buys Dominion's natural gas assets; and, here;

The week's best graphic:

• June, 2020, dashboards; 
• Bleak;

Most under-reported story:

• Gold tops $1,800; hits highest level since 2011; 
• US ISM non-manufacturing number crushes forecast;

Smallest story with the biggest headline:

• US Supreme Court rules on Trump's tax filings; and, here;

Biggest non-surprise:

• US withdraws from WHO;

Top international non-energy story:

• Israeli target practice;
• TSLA; and, here;

Top international energy story:

• Saudi and Kuwait re-open huge, shared field despite glut

Top national non-energy story:

• US trucking volume soars 45% yoy ahead of July 4 holiday;
• NYC rental market; 
• mortgage rates at all-time low;

Top national energy story:

• Atlantic Coast natural gas pipeline canceled by Dominion and Duke Energy

Top ND non-energy story:

Top ND energy story:

• One hundred eighteen permits renewed in the ND Bakken;

Geoff Simon's top ND stories:

• DAPL
• ND won't mandate cut in production 
• CBR may be the only option for Bakken crude
• Legacy Fund getting more attention
• Tesla superchargers now operating along I-94: Dickinson, Bismarck, Jamestown Fargo
• US Supreme Court deals big blow to Keystone oil pipeline
• Activists applaud "huge victory" that halts pipeline killing thousands of jobs

Operators:

• Hess announces another 18-well super-pad;

Operations:

• The Lassey wells, nice wells outside Tier 1 Bakken;

500K wells:

• Zavanna Gust in Williams County;

Natural gas:

• Update on the Bill Sanderson gas plant west of Williston;

Commentary:

• The Covid economy;
• NYC rental market;
• Impact of DAPL closure;
• Buc-ee's: the next big thing;
• How corona virus changes America;