EV little thing is gonna be alright

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Hi there!

It’s been quite the week since we last popped up in your inbox. Let’s review the highlights, er, lowlights, shall we?

First, there’s the stock market, which apparently got the message that it’s the season to fall. The Dow slipped into a bear market on Monday, meaning it’s down 20% from its most recent high. Wednesday brought some bounce back from the lows, but as of Tuesday evening, the Dow had reached its lowest level since November 2020, with the S&P hitting the same milestone.

The Fed’s decision to raise interest rates (again) last week is one driving force behind stocks’ plunge, but rate hikes are having an opposite impact on the value of the US dollar, which keeps rising. That’s good for Americans traveling abroad or buying imported wine, but the rising dollar is fueling inflation elsewhere, ratcheting up the risk of a global recession, and could weaken the earnings of companies with significant international operations.

And the British pound dropped like the mercury in the northern US as investors reacted to two big pieces of news: the government’s plan to slash taxes and the Bank of England’s interest rate jump. On Monday, the pound briefly touched its lowest-ever level against the US dollar. If you’re curious what the ballooning dollar means for your finances, you can find some answers here.

And there is a hurricane blasting the State of Florida — thinking of all our FWIW Florida friends right now! In a speech Tuesday about the importance of a clean energy future, Treasury Secretary Janet Yellen reminded us there’s been a five-fold increase in the annual number of billion-dollar disasters over the past five years compared to the 1980s, even after adjusting for inflation.

Amid the financial tumult, the best thing to do is keep calm, stay invested and focus on your long-term goals. Remember: the stock market is not the only measure of the economy. One bit of positive news is that the labor market remains strong (especially for manufacturing jobs). Let’s hope October brings more treats than tricks for investors. If nothing else, at least we can enjoy Fat Bear Week while waiting for this bear market to pass.

News you can use

• Could Green Steel be the sequel to Zoolander’s Blue Steel? Six big banks have agreed to measure and report emissions resulting from their $23 billion in loans to the steel industry. Citi, Crédit Agricole CIB, ING, Societe Generale, Standard Chartered, and UniCredit have signed the Sustainable STEEL Principles (SSP). Because of the reliance on coal power, steel-making is the world’s largest source of industrial CO2 emissions. Decarbonizing efforts include using green hydrogen, carbon capture and other technologies.
  
• More than two-thirds of “expert/advanced” investors believe sustainability is key to driving long-term returns. This is compared to 52% of “intermediate” investors and 43% of those who believe they have “beginner/rudimentary” investment knowledge, according to a new survey of more than 23,000 investors around the world.
  
• Yet another study revealed that investors benefit when companies do things like pay employees a living wage and combat climate change. JUST Capital found that companies at the top of its America’s Most JUST Companies list outperformed their “less just” peers, achieving returns of 51.26% between January 2018 and June 2022 compared to returns of 19.02% for companies at bottom of the ranking.

The Other EVs: Moving Beyond the Car

You can’t talk about sustainability and technology these days without mentioning the electric car revolution, and there’s no wonder why. More electric cars were sold in a single week in 2021 than all of 2012, and the majority of cars sold in the US by 2030 will be EVs. But what about the other modes of transport?

The transport sector is the biggest contributor of greenhouse gas emissions in the US, and less than 60% of this is attributed to light-duty vehicles (cars, SUVs, small pickups). The rest is from medium and heavy-duty trucks (26%), aircrafts (8%), ships and boats (2%), rail (2%) and buses, motorcycles, pipelines etc. These segments will need their own energy storage technology and charging infrastructure, and as adoption grows, investors can look to the firms innovating and providing these solutions.

Today we’re looking at the latest developments in the global push to decarbonize mobility beyond cars.

Trucking along? Not so fast.

Trucks and other heavy-duty vehicles are essential to any economy, but their transition to clean technology has lagged. While nearly 10% of all cars sold worldwide last year were electric, it was just 0.3% for truck sales. Climate experts say this figure has to reach 25% by 2030 for us to reach net zero emissions by 2050.

But there is reason for investors to pay attention as multiple zero-emission options could hit the road soon as engineers are very excited by the battery capacity of these long-bed vehicles. Tesla’s much-delayed Semi truck will start shipping later this year. And a number of other trucking companies (think Volvo and Freightliner) are rolling out all-electric 18-wheelers. Progress is also being made on the fleets of small and medium trucks that are key to package delivery. For example, Amazon is rolling out the first of what will be 100,000 electric delivery vehicles from Rivian. Walmart, FedEx, and UPS are also electrifying their fleets by striking deals with Canoo, General Motors (BrightDrop), and Arrival, respectively. The bus sector is also alive with new options as Arrival and Proterra have sold buses and battery technology to other companies, airports, schools, and local transportation authorities. How cool would it be to have an electric bus pull up for your daily commute!

Micromobility

Love them or hate them, there’s no ignoring them zipping past. Bicycles, scooters and other lightweight vehicles with electric motors are seemingly everywhere now, transporting millennials, delivery drivers, mountain bikers, even the cops. They aren’t exactly new. The first US patent for an ebike was granted in 1895, but more than 1 million are expected to be sold in the U.S. in 2022.

This micromobility trend is booming partly due to sharing systems. The Department of Transportation, which maintains an interactive map, says there’s now 300 e-scooter sharing systems in 158 US cities.

Besides offering convenience, cost savings, and some fresh air, these vehicles can significantly cut a person’s carbon footprint if they replace a car. While the reports of exploding batteries are daunting, we love having that battery power when we see a big hill up-ahead when we are biking home from the store.

If you’re looking to be an eco-conscious investor as well as commuter, there are zillions of companies producing ebikes, etc. to consider. From a public company perspective, look for names like Vista Outdoor, Niu Technologies, Lyft, Bird, and Harley Davidson. Yes, the iconic HOG lifestyle now includes bicycles, including one for tots that should come with a cuteness warning.

Sky’s the limit

Emerging sustainable aviation fuels like hydrogen are touted as the solution for the airline industry (in particular due to how much batteries add to the weight of a plane), but there are startups making electric regional and cargo planes a reality. This week saw Alice, the world’s first all-electric passenger plane, take to the skies.

Another fast-growing area is “flying taxis” or eVTOLs (electric vertical takeoff and landing vehicles). Morgan Stanley expects the market for the drone-like vehicles to hit $1 trillion by 2040 and we’ve seen some very exciting options being tested. Think of air taxis, short flights, organ donor transportation and air deliveries to the parking lot of your local Target. But before you imagine an imminent Jetsons-like future, the analysts warn the industry must climb a “regulatory Mount Everest” and the chief of Boeing’s Wisk Aero is predicting that the number of projects will shrink. While a number of these eVTOL companies have gone public, it is still very early days and investors may find greater confidence by investing in the companies that are investing in all-electric planes and eVTOLs when they align with their businesses, like UPS, Amazon, United, and Air Canada.

Do your research

Keep in mind many EV companies have been plagued by delays and don’t have a proven product yet. As you think about these, your research can both influence your investing and purchasing strategies (ok, maybe more likely that you would buy an e-bike or scooter than an eVTOL). And in both cases, this may be an area you watch, learn about and see who succeeds as the markets mature before jumping in.

Before you go -

It’s puffling season in Iceland, where locals say throwing baby puffins off cliffs is about as normal as recycling cans.

** FWIW team members own shares of Amazon, Citi, ING, Rivian, UPS, and Walmart. We’ve also seen a BETA eVTOL fly overhead and it was really cool (and very quiet).

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