What If…

Elon Musk is working hard to make people believe the future for transport lies with electricity.  He is producing a second model of his Tesla and other automobile manufacturers are announcing their entrants into the EV (electric vehicle) race – along with whispers of competition from non-traditional competitors like Apple and Google.

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The above would certainly represent a “sea change” in how the world’s population would travel.  Politicians in France, Great Britain and California are pushing their constituents away from gasoline and diesel-powered vehicles.  The curbing of pollution benefits seems obvious.  But is it feasible?  Do we have the technology today or will we have it in the near future to meet the goals?


The above chart suggests that the world will be in short supply of lithium – a key component of the lithium ion battery, the selected power source for electric vehicles.  No doubt market forces will come into play, driving up the price of lithium as shortages present themselves.  Higher pricing will spark more exploration and new reserves could be uncovered.  Or if no new lithium deposits are discovered, perhaps a new technology will displace the lithium ion technology.  Several oil company chiefs are today sounding as though “peak oil” demand will be here in a couple of decades and for that they are planning.  But despite their planning, the transition from the internal combustion engine to an electric motor will not be easy, cheap or convenient.  Our world has the internal combustion engine “embedded” into almost every facet of our lives.  Change will not be as swift as some pundits predict nor as simple as they would like.

Shifting gears, following are four charts we thought interesting.  For some time many economists have worried aloud that the US economy was not achieving “escape velocity”. They found fault with a “slow and steady as you go” mode of expansion.  However,we find that “plodding pays off”.

 

 

The opinions expressed in this Commentary are those of Baldwin Investment Management, LLC.  These views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.