Looking Backwards …
LB #1
Today we begin with a fun story written by Andrew English who is very much English and writes for the Telegraph. He got to drive the new Ford Mach-E mustang during a busy travel week in the UK. “Perhaps autumn half-term week was not the best time for driving long distances in an EV on largely unplanned routes, but then family life is like that, full of the unexpected, joyful and sometimes sad.
The first thing I learnt during 11,000 miles in the Mach-E was that it isn’t a “proper” Mustang. Secondly, if you regularly cover high mileage in an EV, you need to travel when everyone else isn’t to avoid queuing at chargers…. Unfortunately, no amount of planning could avoid bank-holiday travel and the armada of electric vehicles needing to charge.
It looked as though Gridserve hadn’t done much planning, either. Of its 24 high-current chargers at Exeter services, eight were out of service. It was chaos.
“I’m glad my boss will be doing this next week so he can see what it’s like,” said Gridserve’s Matt Sidwell, who was doing sterling work trying to instil order to the rambunctious queuing system. With no space to stack cars, no signposting and people constantly trying to push in, he was fighting a losing battle.
“The thing that drives me crazy is the people who stay on the charger to get a 100 per cent charge,” he said. “It’s virtually impossible to achieve and takes so long because the charger is only trickling current in at that point.”
I looked enviously at the rows of Tesla-only chargers, most of them unoccupied.
It took 45 minutes for a charger to become vacant… There was a sharp tap at the window. “The chargers are rated at 175kWh,” said an elderly motorist who’d emerged from a Nissan Leaf and was peering at the charger display. “You’re only getting 80.”
I didn’t tell him I’ve rarely seen more than 80 and even then not for long, although the Ford’s DC fast charging is rated at 150kWh… With the Mustang averaging 2.8 miles per kWh on motorways, it has an effective range of 250 to 270 miles (from the 91kWh lithium-ion battery) against a claim of 372 miles (although, to be fair, Ford advertises the Mach-E with a “motorway range” of 306 miles).
To eke out the range I travel everywhere with the heater off, which currently demands a substantial coat, hat and gloves. I’m writing to Santa for thick socks this Christmas… My poorly mother proved to be in rather better health than the UK charging system on that day. She was interested in the Ford parked outside.
“So, how much does it cost to run?” she asked, ever the mathematician. I grabbed some paper.
While I once had to pay a whopping £1.12 per kWh at a Shell Recharge station, in general fast charging averages at between 85 and 90p per kWh. On a long motorway journey, the Ford averages between 2.6 and 2.8 miles per kWh, which is by no means unexceptional in large battery SUVs I’ve tested. Using the more generous figures in both cases, the Ford is costing at least 30p per mile for the electricity alone.
“And what about your Honda?” she continued. My scrap of paper was getting crowded, but at similar speeds my Civic Type R will return about 34 miles per gallon, which means that the fuel cost per mile is about 16p. She gave me a hard stare.
“Is it worth it?”
The cost is in the eye of the beholder Andrew. If you want to wait 45 minutes to get on a charger, sit and wait while it is charging for who knows how long, wear a coat, hat and gloves while driving, and then pay twice as much. I welcome you to today’s must have. The electric vehicle…
LB #2
Just as the EV math may not seem what it appears, neither is modern day warfare. This from Ivana Kottasova from CNN World, “Investigators are trying to crack the mystery of how two undersea internet cables in the Baltic Sea were cut within hours of each other, with European officials saying they believe the disruption was an act of sabotage and US officials suggesting it was likely an accident.
The two cables – the BCS East-West connecting Lithuanian and Sweden and the C-Lion1 linking Finland with Germany – were suddenly disrupted on Sunday and Monday.
European leaders were quick to voice their suspicions. Germany’s Defense Minister Boris Pistorius said that “nobody believes that these cables were accidentally severed.”
At first, Russia was the culprit, just like the Nord Stream pipeline, but now the light seems to be shining on a Chinese Vessel, “One vessel in particular has sparked the interest of authorities and online sleuths.
Vessel tracking data from Kpler shows the Chinese-flagged ship Yi Peng 3 crossed both cables at around the time each was cut. The BCS EastWest was cut around 10 a.m. local time on Sunday, according to the Lithuanian Armed Forces, and the C-Lion 1 was cut around 4 a.m. local time on Monday, per Finnish telecom provider Cinia.
The bulk carrier was sailing from a Russian port, where it docked for several days.”
Well, isn’t that interesting. It is hard to access your Bitcoin without the internet and it seems the internet isn’t as reliable as you think. Of course, if you lose internet cable connectivity you can always use Starlink, which is owned by Elon Musk, who as we know and will see is far from compromised. Make no mistake, there will be a reckoning.
LB #3
Speaking of underwater and reckonings, this from ZeroHedge, “The delayed day of reckoning has arrived for millions of Americans who purchased vehicles during the pandemic auto boom. Many are now finding themselves trapped in a shitstorm of negative equity and burdened by costly monthly payments, all while low- and mid-tier consumers face mounting financial strain amid elevated inflation and high interest rates. Bloomberg Intelligence’s Joel Levington published a new report Monday, citing new data from CarEdge that showed a staggering 39% of vehicles financed since 2022 carry negative equity, including 46% of EVs … 39% of automobiles financed since 2022 have negative equity, including 46% of electric vehicles in the hole in 2024, according to a recent study by CarEdge. The affordability struggle is real, with 60% of loans and 34% of leases over the benchmark levels that consumers seek, based on data from Edmunds and CarEdge. Financially stretched buyers may further weigh on captive finance units and auto asset-backed indexes. The equity cushion at Tesla is notably troubling, while Toyota, GM, Ford and VW have ample flexibility.” Notably troubling is a wonderful way to describe Tesla. There is a chart in the article that we will put up on our website cthomasprinter.com showing Tesla being the only brand to have negative median equity cushion on their loan book. Toyota has the most equity cushion per loan and over $8,000. Please remember that Tesla’s stock price and market cap are larger than the next 16 auto companies combined.
Looking Forwards…
LF#1
Meanwhile there appears to be no limiter on the American consumer’s thirst for debt. This from the New York Fed and their Survey of Consumer Expectations credit access survey, “The average rejection rate for auto loans increased by 0.4 percentage point to 11.4 percent in 2024, the measure’s highest rate since the start of our series in 2013.
The average rejection rate for mortgage refinance applications increased to a new series high of 25.6 percent in 2024 from 15.5 percent in 2023. Voluntary account closures for any type of credit decreased to 13.9 percent in 2024 from 15.8 percent in 2023, marking a new series low. The proportion of respondents experiencing lender-initiated account closures for any type of credit increased to a series high 7.4 percent in 2024 from 7.2 percent in 2023.” My favorite stat is the average rejection rate for credit card applications has now broken 20 % at 20.2%. The credit in cars, houses, and credit cards is starting to dry up.
LF#2
That isn’t the only credit that is drying up. This from ZeroHedge regarding Wednesday’s treasury auction, “If anyone was hoping that today’s 20Y auction would be even remotely successful, they can not put those to bed: the just concluded sale of $16BN in 20Y paper was a disaster.
Pricing at a high yield of 4.680%, the auction tailed the When Issued 4.650% by 3.0bps. Not only was this the third tail in a row, it was the 2nd biggest tail on record. The internals were perhaps the only silver lining to the auction: indirects took down 69.5%, up from 67.9%, below the six auction average of 71.6%. But while Indirect demand was ok, the Direct award plunged to just 7.9% from 17.6%, the lowest on record. This mean that Dealers had to step in big time and so they did, taking down 22.6%, up from 14.5% and the highest since May 2021. Commenting on the auction, UBS said that it looks like the prior well-demanded 10y and 30y auctions were just fast money profit-taking on shorts, and that “real money hasn’t started to buy bonds.” Well, the real money better step in soon or it will get ugly fast.”
The word on the street is that the dealers are quickly getting very clogged balance sheets and if they can’t step in like they did during this auction and buy almost a quarter of the auction, then we have real problems. The new treasury secretary has gone on record that he doesn’t approve of Janet Yellen moving so much debt to the short end of the Treasury curve. Well if he tries to sell too much at the long end of the curve he might end up owning that problem. Is that his goal? Is the Soros agent going to do exactly that? We have been talking about who is going to buy the bonds and at what price? Like the soldiers of Santa Ana, the auctions just keep coming in waves and they get bigger and bigger…This won’t stop…
LF#3
We continue to see the sobering results of bad investments, this from Sam Meredith “The chief executive of Northvolt stepped down on Friday, shortly after the Swedish battery maker filed for Chapter 11 bankruptcy protection in the U.S.
Peter Carlsson, who co-founded Northvolt and led the firm since its inception in 2016, will step aside to take on a role as senior advisor, the company said. He remains a member of Northvolt’s board.
On Thursday, the company sought bankruptcy protection in the U.S. to allow it to restructure its debt, scale back its business and secure a sustainable foundation for its continued operation.
The move represented a major setback to Europe’s electrification ambitions.
Once one of Europe’s most valuable privately held tech firms, Northvolt said it would continue functioning as normal during the restructuring process, which is expected to finalize in the first quarter of next year… Northvolt said Thursday that the reorganization of the company would help it access approximately $245 million in new financing, totaling around $145 million in cash and $100 million debtor-in-possession financing — a type of loan that is provided to companies in financial distress.”
I know these are just words to most people, debtor in possession financing, restructuring, etc. You see debtor in possession financing allows a company a lifeline but it puts the DIP equity claims to be first in line for any payments should the company fail. The theory is that DIP financing might allow for all creditors to be paid back assuming the company becomes successful. It would appear that the original creditors just got wiped out and any equity left of the silly shit known as EV batteries will go to these new lenders who just jumped the line. Big business isn’t for the honorable.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 44,296.
The 10-year Treasury bond is at …at 4.41%
The price of Brent Crude is … at $75.17 per barrel.
The price of gold is … at $2,712/oz.
The price of silver is … at $31.33/oz.
I leave you with this from the information superhighway, what do you call a woman who sets fire to all her bills? Bernadette. That should be Trump’s name.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.