2024 market predictions

[theanimal]

@slevin, these kinds of comments about Tesla remind me of 2007 when the iPhone was released, and people complained about the buggy OS, expensive price, and insisted that a touchscreen would never replace the physical buttons of their BlackBerry, etc.

True. I see the difference in that Tesla has been selling cars for what, a little over 15 years? Just like the iPhone.

Maybe I’m wrong, and this post ages badly, but in my opinion, Tesla is heading to have a monopoly in charging EVs, software that is ahead of other manufacturers, and a rate of iteration far superior than traditional brands (e.g. materials that are improving as they go; the Model 3 in 2024 is not the same as the first one launched more than 5 years ago). I would treat it more like a tech company than a normal EV manufacturer.

Tesla is not even close to the best software. That would be Mercedes-Benz, which is the first company to have Level 3 self driving capability. Tesla remains at Level 2 (with everyone else).

Chargers are now open to all vehicles like @slevin mentioned.

Their current advantage is in perceived status of driving one and the popular perception that they are the best. We'll see if that lasts.

[giskard]

True. I see the difference in that Tesla has been selling cars for what, a little over 15 years? Just like the iPhone.

Cars? Selling cars? We're selling humanoid robots that fold shirts now.

Also waiting for the gangsta rap videos w/ bullet proof cybertrucks & they start selling them to police departments in an ever evolving arms race.

[okumurahata]

@theanimal Don’t compare the update frequency of a phone, approximately every 2 years, with the update frequency of a car, around every 10 years. Tesla has been selling consumer cars for a relatively short time, and the Model Y and Model 3 haven’t been on the market for long. In electrified countries like Norway, Tesla’s market share is now 20%.

While a Mercedes might be better, many people can’t afford it. The thing is that you can’t get a decent EV from Daimler or another German brand for ~40k.

[Slevin]

While I’m very happy to continue the sacred internet tradition of arguing past each other, it is clear we disagree and won’t change opinions with more words. Nbd, that’s what the market is for and I’m definitely not gonna be shorting TSLA, I just think the cars are a bad purchase decision (which I also say as an early reservation holder for the cybertruck).

Let’s make like Tesla’s glorious leader, Elon Musk, and ignore Tesla completely unless we get another 30 billion dollars in shares.

[thedollar]

They have the world's most popular car in most western markets. 'Nough said. They don't need too many more of such "home runs" in the future before they become wildly succesful. At some point it won't make sense not considering a Tesla, it already doesn't because you get so much compared to other brands and the price is lower.

The software is pretty good but I still prefer Apple Carplay or the l ikes.

[zbigi]

They have the world's most popular car in most western markets.

Which markets? Most popular car in US is Toyota RAV4, in Germany it's VW Golf, in France it's Peugeot 208, in UK it's Ford Puma, in Canada it's Ford F-series, in Italy it's Fiat Panda, in Netherlands it's Kia Picanto, in Japan (assuming it's a "western market") it's Toyota Yaris.

[rube]

Which markets?

Those of electric vehicles

[Henry]

My understanding is that Tesla is working off of Wright's law so the analog is the Model T. It's not the best that wins. It's the most that wins.

[okumurahata]

@slevin, I agree with you—put your money where your mouth is; don’t argue on the internet. I also need to clarify that I remain neutral, with neither a short nor long position in the company. I’m just speaking as an observer, a non-car enthusiast, who recently tried it and was genuinely surprised by the driving experience. It felt like a mix between being in a video game and a rollercoaster. Tesla Superchargers were the only ones that didn’t suck; the reliability of chargers from other manufacturers was more than questionable. 2035 is not so far away, and in the EU, all cars sold must be zero emissions. Every car Tesla sells is akin to signing a 10-year contract. Similarly, every non-Tesla car sold has the potential to be charged using Tesla’s infrastructure, essentially forming another kind of 10-year contract.

[blink2ce]

My predictions for 2024:
- The Federal Reserve cuts the fed funds rate, as projected.
- Congress uses the low interest rates as an opportunity to borrow a huge amount of money. ($1T+)
- Congress borrows so much money that it causes a significant amount of inflation, which conflicts with the Federal Reserve's goals.
- As a result of the ensuing inflation, the 10 year treasury rate, mortgage rates, and car loan interest rates all rise from current levels. Lenders need a positive real return to make lending a worthwhile activity. The sharp rise in interest rates takes the mainstream economics community by surprise.
- Since now real money conditions have gotten tighter in spite of the Federal Reserve's interest rate cuts, more layoffs ensue.
- Another major conflict breaks out, but this time in East Asia. The federal government can't keep up with all of its theaters of war and ends up dropping its support of Ukraine in favor of the new war that broke out in Asia.
- Continuing conflict across the world gunks up supply chains. "Onshoring" and "nearshoring" continue to become hot topics in the business community.
- The FTC wins a massive antitrust case against a Fortune 100 company.

[zbigi]

2035 is not so far away, and in the EU, all cars sold must be zero emissions.

Chances that the ban on selling ICE cars will actually hold are not great. It's only 2024 and the biggest party in European Parliament is already calling for abolishing this law:
https://www.politico.eu/article/europea ... -security/

[ducknald_don]

Yes, VW seems to be struggling with the transition. If it hasn't happened naturally by then, then the deadline will be extended.

The only fly in the ointment for European manufacturers is what the Chinese are allowed to do. They seem much more committed and if companies like VW aren't careful then they are going to be eaten alive.

[okumurahata]

I hope they ban it. I never understood the 2035 decision to stop selling combustion cars, considering petrol engines are one of the key industries in Europe. Politicians are shooting themselves in the foot; Europe will suffer the most economically from that decision. The most prudent and clever thing would be to let the market choose. Of course, I say this as a forum PhD Bar Economist.

[ducknald_don]

The obvious reason they want to ban them is to lower carbon emissions to deal with climate change.

[loutfard]

I never understood the 2035 decision to stop selling combustion cars [...] The most prudent and clever thing would be to let the market choose.

It is one way of dimishing fossil resource consumption in an extremely energy hungry sector. The market is not exactly good at pricing in negative externalities like pollution, resource exhaustion and climate change.

[Seppia]

a 7000 pound EV-monstrosity is much worse for the environment than a 3 cylinder ICE Panda or a 4 cylinder corolla.
Also to consider:
- how many metals/rare earth/stuff do we need to mine to move 100% of the cars from ICE to EV? What is the environmental impact of mining so much more? who (which country) is mining the overwhelming majority of these elements today? Is it good to be dependent on said country (hint: its key guy looks like Winnie the Pooh), or do we risk another Russia/Germany/Natural gas disaster?
- would the grid be able to sustain charging all the cars at the same time? what kind of investments would we need to make to fit it?
- what is the energy source behind the well charger?

[okumurahata]

@ducknald_don @loutfard

Waiter, okomurahata gets the next round. Tap water for everyone, though, I need to save money. I understand the intent to reduce emissions, but I think the point is not how many things should be banned to protect the planet and our species. The point is if governments should be allowed to ban products that have been in the market for a century. It’s a somewhat populist opinion, but should governments ban tobacco and alcohol to protect healthcare? In a free economy, I expect no bans, economic incentives at most if you will.

It’s easy to ban things when you wear a suit and move papers around. It won’t be so easy if family members of the rulers worked at VW and were 50-something years old. If for every point reduction in GDP, salary went down 10k to each of them to compensate, I guarantee you that bans would never happen.

[loutfard]

a 7000 pound EV-monstrosity is much worse for the environment than a 3 cylinder ICE Panda or a 4 cylinder corolla.

Very much so indeed. As I understood things, renewably sourced fuels would still be allowed and encouraged. So a 0.9l CNG Panda would very much be an option.

- how many metals/rare earth/stuff do we need to mine to move 100% of the cars from ICE to EV? What is the environmental impact of mining so much more? who (which country) is mining the overwhelming majority of these elements today? Is it good to be dependent on said country (hint: its key guy looks like Winnie the Pooh), or do we risk another Russia/Germany/Natural gas disaster?

The lithium bit is largely covered. The rare earth stuff is trickier. The good news is almost all of this can be mined from waste much more efficiently than from traditional mine deposits. Plenty of lithium recyclng capacity is coming up. Not enough movement on the rare earth metals yet, but it's not at a complete standstill either. See https://www.reuters.com/business/energy ... 021-10-08/ , https://www.reeproduce.eu and https://www.isi.fraunhofer.de/en/blog/t ... alyse.html for example.

The dependency on non-EU despots like Vladimir Putin and Mohammed Bin Salman is there already. The worst a switch to electric cars will do to strategic outside supplies is significantly reduce dependencies in some areas while increasing them in others.

- would the grid be able to sustain charging all the cars at the same time? what kind of investments would we need to make to fit it?

Grid and production capacity are less of a problem than once feared. Factors like falling battery storage pricing, increased production of renewable electricity and tighter EU level grid integration (HVDC interconnects!) help a lot.

- what is the energy source behind the well charger?

The energy production behind the charger is going renewable at breakneck speed. Low cost and high reliability are the main drivers. Look, trust me. I should know. I hardly ever drive, but I'm a specialist on cars just like a catholic priest is a specialist on marriage!

Turning back to 2024 market predictions, US political instability seriously impacting financial markets from late 2024/early 2025 would not surprise me.

[rube]

The point is if governments should be allowed to ban products that have been in the market for a century.

These products (cars) won't be banned? They just change requirements to cars from time to time. Similar to when seatbelts became a requirement and when asbestos was no longer allowed in breaking pads.

In any case, I think we already reached the momentum of EV's such that it is unstoppable. My prediction for 2024 is that global sales of EV's will grow exponentially further by 40% yoy and will be above 16%, Europe will be above 22% just behind China. USA is lagging with just above 10%.

[Slevin]

These products (cars) won't be banned? They just change requirements to cars from time to time. Similar to when seatbelts became a requirement and when asbestos was no longer allowed in breaking pads.

In any case, I think we already reached the momentum of EV's such that it is unstoppable. My prediction for 2024 is that global sales of EV's will grow exponentially further by 40% yoy and will be above 16%, Europe will be above 22% just behind China. USA is lagging with just above 10%.

USA also has the highest miles traveled per year, so it will have a higher proportional impact (on both emissions and power grids, etc) than the EU switch. This is also why the US is lagging behind in adoption, EV needs for adoption are higher due to longer commutes + slower charging times without building charging infra (thanks 120v AC standards).

I agree with the above about solar as well. Solar is now the cheapest and simplest energy source to deploy. These days you can essentially just buy power microgrids with batteries that can run all the lights / electronics from the average house for less than a thousand dollars (not appliances obvs), with basically zero technical know-how (with technical know how, it’s much cheaper). And you can just deploy them anywhere that gets sunlight. Think of how absolutely insane that is for any developing country or rural homestead.