Luckbox Spring 2024

the control freak's guide to life, money & probability

“The last six months of last year ... will rapidly sort out winners and losers in our industry.”

—FORD

LESS THAN ELECTRIFYING

Range worries and sticker shock are slowing the growth of EV sales.

EV ANXIETIES

An automotive journalist addresses the electric-vehicle market.

FAST-CHARGING TOYOTA

The Japanese auto giant plans to jumpstart battery technology.

FORD VS. GENERAL MOTORS

Two venerable automakers face political and economic hassles.

THE TWELVE HOTTEST NEW CARS OF 2024

60% of Luckbox readers are not confident the U.S. will build the necessary EV infrastructure.

LUCKBOX

From the practical to the aspirational, these autos made our shortlist.

TESLA’S WORST NIGHTMARE

It’s a Chinese EV maker called “Build Your Dream.”

ADOPTION ISSUES

Auto industry experts assess EV appeal, environmental impact, jobs and prices.

IT’S NOT EASY BEING GREEN

Regulatory capture impedes America’s transition to electric vehicles.

RETRO COOL

An upstart EV sports a Bond-like style and a voice-activated cockpit.

THE AUTO TRADER ISSUE

11

Book Value THE

These four books captured our attention this issue.

12

Diversions WILL EVS KILL THE RADIO STAR?

Some automakers want to banish AM radio.

17

18

20

Rockhound WHERE’S FRIKO BEEN?

The Chicago indie rock band releases its debut album.

Diversions A CAR-WORLD DIVIDE Enthusiasts love combustion, but EVs attract a new crowd.

Diversions

22

Fettle & Fitness HIGH-OCTANE BODY FUEL

Your body deserves a fill-up with premium.

The Ford F-Series pickup family was America’s bestselling vehicle for the 42nd year in a row.

“Nobody’s going to intercept our code. We put it on AM radio.”

55 Breakout TESLA LOSING CHARGE?

The EV-maker’s shareholders are experiencing price range anxiety.

56 Technician FROM MUSK TO DAWN

An early experience with Elon and the many phases of Tesla.

59 Trader MEET W. JOHN SABIN

He started learning how to trade at the age of 11.

60 Macro CRUDE OIL AND A REVOLUTION IN RETREAT

How to pick a winner among GM, Ford, Toyota and Tesla.

62 Macro CHALLENGES MOUNT FOR AUTOMAKERS

Rising delinquencies and China’s supply are squeezing margins.

63 Watchlist A LITHIUM TRADE

Heavy expectations for the world’s lightest metal.

“It runs on fossil fuel.”

06

“We are fighting back to get every piece of the [Lithium] supply chain back in the United States or with our allies.”

—ENERGY SECRETARY JENNIFER GRANHOLM

From the Editors

Who’s gonna hold you down when you shake?

Who’s gonna come around when you break?

You can’t go on, thinking nothing’s wrong, but now Who’s gonna drive you home tonight? DRIVE

Ed McKinley EDITOR IN CHIEF

Jeff Joseph EDITORIAL DIRECTOR

IN EV ITABLE EVOLUTION

THE ELECTRIC VEHICLE debate teeters between praise for groundbreaking innovation and wariness about perceived impracticality.

But Elon Musk’s audacious claim that the second-generation Tesla Roadster will streak from zero to 60 in less than a second shows the EV industry continues to push the boundaries of what’s technologically possible.

And if that’s not enough, Musk also promises a range of more than 620 miles on a single charge for the forthcoming Roadster. That would negate the “range anxiety” complaint— the most-frequent consumer objection to buying an EV.

Meanwhile, everyone from legacy carmakers like Ford to upstarts like Olympian are sharpening their strategies amid shifting consumer sentiment and volatile market dynamics.

Yet beneath the surface of all this drama,

attitudes toward EVs are undergoing a nuanced metamorphosis. For many, it no longer seems certain that battery-powered vehicles will someday dominate the world’s streets and roads. Confidence is wavering.

It didn’t help when the consulting company J.D. Power found 21% of public chargers are malfunctioning. Hearing that, you could almost feel the gap widen between EVs and

Two ways to send comments, criticism and suggestions to Luckbox.

Email: feedback@luckboxmagazine.com

Visit: luckboxmagazine.com/survey A new survey every issue

mainstream acceptance.

Plus, Consumer Reports found repair problems occur more often with EVs than with hybrids or internal-combustion cars. That didn’t do much to spur confidence in the electric transformation.

Now we find Hertz is rethinking its commitment to an all-EV fleet of rental cars. States already grappling with fiscal deficits are having second thoughts about subsidizing EV purchases.

Ford is throttling back on EV investment in favor of hybrids, reflecting the realization that hybrids are gaining traction over pure EVs. The public apparently values practicality over innovation for innovation’s sake.

So, it seems EV euphoria is subsiding.

But despite the challenges, companies like BYD are cranking out multitudes of EVs. The China-based manufacturer even outsold Tesla to become the world’s biggest maker of EVs for the first time ever in the fourth quarter of last year. We have to mention, however, that Tesla still led for the year after falling behind in the final quarter.

So, it’s complicated. The industry’s false starts and stutters are well-documented in this issue of Luckbox, but so are the advances, particularly in battery technology. Toyota, for example, says it’s developing a battery that charges quickly and has unheard of range.

The competitive push—both from established automotive players and new entrants— ensures a vibrant marketplace, teeming with options for consumers. Competition will inevitably drive down costs, bringing EVs within the grasp of a broader audience.

Plus, the environmental imperatives driving the shift toward cleaner transportation will continue to bolster governmental and consumer support for electric vehicles.

Despite the challenges shadowing the electric vehicle market, the technology will not only improve but also become more affordable. It will help shape a sustainable new automotive landscape.

As traders, investors and financial market forecasters, our experiences remind us that the convergence of innovation, government subsidies, lower costs and consumer satisfaction invariably creates an unstoppable force and a predictable outcome.

Luckbox expects the march toward wider EV adoption—albeit peppered with lessons from its formative years, as well as future missteps—will continue nearly unabated, eventually transforming our very notion of mobility and rewarding savvy investors.

Threats Aside, AI Will Be

Health. I learned how AI is already helping the University of Oxford and other institutions predict cardiac episodes. I am excited to see what the future holds for humanity having AI in our corner— or should I say coronary?

Imagine we live in a world where all vehicles are electric. Then along comes a new invention: the internal combustion engine. With this new technology we can build vehicles at half the weight and half the price. They can be refueled in one-tenth the time and have up to four times the range of electric vehicles in all weather conditions. They perform well in sub-zero temperatures, where battery-powered vehicles struggle. They don’t rely on destructive mining of rare earth elements for power, instead using fuel more easily and cleanly obtained by drilling. They would help reduce home energy costs by greatly decreasing the loads on our electrical grid. Do you suppose car buyers would be interested?

Mike T. | Winston Salem, North Carolina

I have a Tesla and love it. Living in Oklahoma I have no issues with charging. I am sure moving forward this will get even better. I will never go back to an internal combustion engine.

Tony Provenzano | Edmond, Oklahoma

I absolutely love my Tesla Y. It has tons of room, drives like a dream and the dog mode is brilliant. The only con, which will be eliminated over time, is the lack of superchargers. My biggest issue is having to listen to the media slam Tesla repeatedly and the amount of fake news swirling around this company! They keep talking about recalls over and over again, leading most people to believe Tesla owners are in the dealership all the time. Any recall usually involves an over-air software update performed in my driveway. We get updates and improvements ALL the time. It is like I get a new car every month or so.

K. Rouse | Ontario

I wouldn’t buy a pure EV. I’ve owned a hybrid Honda Civic since 2007. It’s been a great car, and I never worried about running out of battery power. I saved $2,000 in gas in the first six years. Then, I had to spend $2,500 to get new batteries.

Alex Lussos | Atlanta

Pros of EV ownership are you save on fuel and help the environment. If you plug it in when you get home, it’s always full in the morning. Before leaving, you can warm or cool the car while it’s in the garage. They have awesome acceleration, and there’s no more standing outside a gas station in the cold, rain or heat. Say goodbye to oil, transmission fluid, coolant, differential fluid, and belts and hoses. Get ready for peace and quiet while driving. My next car will definitely be electric.

Brad Beilfuss | Dyer, Indiana

TRUTH TK

Much of what you believe is wrong.

Now that we have your attention, we’ll walk that back a bit—but not completely. All of us carry around plenty of misconceptions.

Most of our errors, illusions and flawed perceptions result from outdated “facts.” We harbor beliefs that have been disproved decades ago. Truth evolves.

With that in mind, Luckbox is setting out to dispel myths, present new data and combat disinformation.

“TK” is journalism lingo for “to come.” The answers to the questions posed here are found in the stories that follow.

1. An electric vehicle typically uses 30 kilowatt-hours of electricity to travel 100 miles. That’s about the same as the average home uses in ...

One hour

One week

One day

One month

2. In the fourth quarter of 2023, Sirius XM Radio had nearly 34 million subscribers. How many Americans listen specifically to AM radio each month?

42.3 million

62.3 million

82.3 million

102.3 million

3. The Biden Administration appears likely to reconsider Environment Protection Agency electric vehicle mandates for new light-duty vehicle sales by 2032, according to The New York Times. What was the EPA’s original target for EV sales for 2032?

Reader Survey

Do you support phasing out the production of gasoline cars and trucks by 2025?

See answers on pp. 26, 15 and 45.

Luckbox Magazine is a product and service offered by tastylive, Inc. (“tastylive”). Luckbox Magazine content is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involves risk and may result in a loss greater than the original amount invested. The information provided in Luckbox Magazine may not be appropriate for all individuals, and is provided without respect to any individual’s financial sophistication, financial situation, investing time horizon or risk tolerance. Transaction costs (commissions and other fees) are important factors and should be considered when evaluating any securities, futures, or digital asset transaction or trade. For simplicity, the examples and illustrations in these articles may not include transaction costs. Nothing contained in this magazine constitutes a solicitation, recommendation, endorsement, promotion or offer by Luckbox Magazine or tastylive, Inc., or any of its subsidiaries, affiliates or assigns. While Luckbox Magazine and tastylive believe that the information contained in Luckbox Magazine is reliable and make efforts to assure its accuracy, the publisher disclaims responsibility for opinions and representation of facts contained therein. Active investing is not easy, so be careful!

INSPIRED

FEW HAS THE SPICE . HAND-MADE IN SMALL BATCHES, USING A MASH-BILL

INSPIRED BY WHISKEY’S PRE-PROHIBITION GOLDEN ERA. FEW COMBINES

YEAST TO MAKE A UNIQUELY

By Vonetta Logan

Fake Financial News

Off the Road Again

Illustration by Tyson Cole

A look at the auto show’s newest adventure vehicles

WHEN I WAS a kid, my dad and I would make the pilgrimage from our small town in Indiana to the big city of Chicago every February to visit the country’s largest auto show.

My dad is such a Car Guy™ that after I was born, he rigged a precarious baby seat in the trunk of a Datsun 240Z for my ride home from the hospital. Pretty good parenting!

I grew up loving cars, so it was quite a treat to cover the 2024 Chicago Auto Show for Luckbox. What I wasn’t expecting was the fake trees, ersatz boulders and artfully applied mud on a multitude of conveyances marketed as “adventure vehi-

cles.” What’s with all this nature cosplay? I thought we were at the show for the cars, trucks, vans and SUVs themselves.

Ready for adventure?

Tim Huber defined the “adventure” category of motoring in an article for HiConsumption, a digital lifestyle magazine for men. “‘Adventure vehicle’ is a big term to be throwing around, and we’re sure a lot of different definitions fit,” Huber

wrote. “For us, however, it’s a fairly specific genre of vehicle, boasting equal parts versatility, durability, dependability and go-anywhere capability.”

Whether you want to conquer rugged terrain or just need something to take you to an off-the-grid location, adventure vehicles are the Swiss Army knives of the auto world. And more automakers are focusing on off-road or adventure-type cars. “Auto manufacturers are

The Hummer EV Omega packs a staggering 11,500 pound-feet of torque.

simply selling the image of the millennial lifestyle,” Huber wrote.

But there’s more to it, as Humphrey Bwayo maintained in Autoevolution: “People don’t buy vehicles for who they are, but rather, who they want to be. Millennials are shaping the current consumer markets because they’re adventure-seekers, spontaneous, curious about the unknown and highly emphasize being unique.”

Even though the most harrowing trip many of these vehicles will face is the drive-thru at ChickFil-A, consumers want the potential to escape the 9-5 grind and live out their lives in a National Forest. Or maybe I’m just reading from my diary.

Subaru: an outdoor OG

Japanese automakers definitely understand the assignment when it comes to marketing cars for adventure. In a rugged display at the auto show, Subaru (FUJHY) simulated several woodland scenarios for their vehicles

to subjugate. Coniferous trees (hey, look at me using ninth-grade science class) dotted the booth, and the bland carpet of Chicago’s McCormick Place was replaced with a mockup of the dewy moss and pine needle floor of a forest in the Pacific Northwest.

Subaru’s latest lineup was not showroom pristine. Instead, the vehicles on display were covered in mud and grime and looked frozen in time as they climbed a steep incline. The display included a treehouse, log benches, a tent pitched on the ground and a tent mounted on a roof rack. The company even had puppies you could adopt.

Of all the Subaru display vehicles, I enjoyed the new 2024 Ascent the most. The eight-passenger SUV had a functional yet appealing interior layout with a huge touchscreen display. It comes with symmetrical all-wheel drive and 8.7 inches of ground clearance. Subaru describes its 75.6 cubic feet of cargo space as class-leading.

The Base Ascent starts at $34,395 but goes up to $48,695 for the seven-passenger Touring model. I give it three and a half Patagonia vests out of five. It’s definitely one of the more affordable models I saw.

Ride a Bronco

If Subaru was trying to set a scene and engage your mind, Ford (F) was trying to jack up your adrenaline and elevate your heart rate with its “Bronco Experience.” That’s what they called the massive indoor test track and a revolving coterie of the latest Bronco models, each performing off-camber maneuvers. It demonstrated Bronco’s class-leading electronic-locking front and rear axles and had a 40° hill climb with a squeal-inducing rapid descent.

The auto-show setting for the Broncos drew inspiration from rugged terrain ranging from the desert outside Moab, Utah, to the White Mountains of New Hampshire. There wasn’t

just a “Sasquatch Crossing” sign. There was a Sasquatch posing for selfies with attendees.

The Raptor iteration of the Bronco was my favorite with its glossy green exterior and menacing 37-inch tires. It’s a dead sexy car from the outside, but reading that sticker price is another way to elevate your heart rate.

Coming in at a starting price of $90,035, I was shocked that the interior had bungee nets instead of side door compartments. Some parts of the interior just felt cheap. But there are tons of off-road modes, and you can even remove the doors and roof. Look, for $90K imma need it to come with someone to remove the roof for me.

It does have G.O.A.T mode, though, which is just a *chef’s kiss* by the Ford marketing team. It stands for Goes Over Any Terrain. I was impressed with the camera systems in the Broncos to help drivers navigate off-road obstacles using wheel view and a cool drone mode, but 90K is a bonkers price. Four Patagonia vests out of five.

If money is no object …

GM (GM) showcased its lineup of electric Hummers (that sounds kinkier than it is), but the true main attraction was the integrated EarthCruiser. The base model, two-motor Hummer EV 2 has an astounding 570 horsepower and 7,400 pound-feet of torque with

a reported 300-mile range. The price starts at $96,550.

The top-tier Hummer EV Omega has 830 horsepower. (Where are you going? The moon?) It’s rated at a staggering 11,500 pound-feet of torque. (Nope, not overcom -

Hummer EV 2 with an integrated EarthCruiser.

Ford Bronco

pensating for anything at all). The Omega trim starts at $138K.

In a partnership with EarthCruiser, GM showcased a GMC Hummer EV with an integrated carbon-fiber overlanding module. Think of it as REI meets Jiffy Pop. It’s a zero-emission pop-up compartment where you can live, sleep and work as you and your billionaire friends wait for them to rebuild that Titanic submarine thingy.

There’s a full-size RV bed, full solar power and a 12-gallon capacity water tank. The tri-layered pop-up roof is insulated, and there’s enough juice to power a fridge/freezer combo for almost a full week.

GM Hummers are actual production vehicles, but the EarthCruiser is a concept and a representative told me they were at the show to gauge consumer interest. I was super interested. A zero-emission overlanding beast? Yes, please.

However, cost is definitely an issue. See above for the base costs across the Hummer line. Now, I’m told the EarthCruiser module will debut with a retail price of around $90,000 to $100,000. So, $100-$138K for the Hummer and then another $90K for the module. That’s a legit, nice-ass three-bedroom house in Kansas somewhere. Five Patagonia vests out of five.

Roads? Who needs ’em?

The pandemic focused us on exploring the outdoors and getting away from urban areas. Just try getting a camping reservation. Manufacturers are leaning into the moment, and this year’s auto show and its displays prove the adventure segment isn’t just growing. It’s here to stay.

“What this market has brought to us is new manufacturers and better-quality products,” said Andrew Funk, president of Cap-it International in an interview for the Specialty Equipment Market Association (SEMA).

“There are new ‘glamping’ and creature comforts that are nice while you’re out in the bush off-roading, but it’s becoming so mainstream now that your average consumer is seriously looking into it as an option.”

So, wherever you’re headed, perhaps an “adventure vehicle” is in your future. I’m of the mindset that any vehicle can be an adventure vehicle if you try hard enough.

Vonetta Logan, a writer and comedian, appears daily on the tastylive network. @vonettalogan

The Luckbox Bookshelf The books that captured our attention this issue

The Electric Vehicle Revolution: The Past, Present, and Future of EVs (2023)

By Kevin A. Wilson

The Future of Automotive Retail (2022)

By Steve Greenfield

Automotive journalist Kevin Wilson offers a thorough evaluation of the state of electric-vehicle technology, explains how it got there and predicts where it’s going. His timeline includes early attempts at modern EVs, like GM’s wonky EV1, and the first Tesla, a tiny roadster targeting an even tinier segment of the motoring public. From post-WW II experiments to today’s rush to electrify, here’s your guide to the EV revolution.

Automotive retailing is changing with lightning speed, and author Steve Greenfield explains how the transformation is reshaping the century-old industry. It’s an account of how technology is altering vehicle production, redefining the ownership experience and altering consumer expectations. His book helps readers understand advances in power sources, connectivity and vehicle servicing. Best of all, he shares his thoughts on how to navigate a future that’s already here.

The Cloud Revolution: How the Convergence of New Technologies Will Unleash the Next Economic Boom and A Roaring 2020s (2021)

By Mark P. Mills

Carmageddon: How Cars Make Life Worse and What to Do About It (2023)

Daniel Knowles

Conventional wisdom is simply wrong about how technology can change the future, according to author Mark Mills. Instead of succumbing to the usual dread, he’s developed a stunningly optimistic vision of what he says lies ahead. He expects a convergence of new microprocessors, materials and machines to drive an economic boom in the “Roaring 2020s.” Read more about his thoughts in an interview on p. 44.

Hot take: Cars are ruining the world and making us unhappy and unhealthy.

Journalist Daniel Knowles acknowledges the automobile as one of the greatest inventions of the 20th century but reminds us that relying on them has fueled climate change. Weaving together history and economics, he outlines the rise of the automobile and documents the costs we all bear as a result.

Far too often, book reviews drive readers away. They’re written from the viewpoint of just one stranger and taking them to heart leaves great books undiscovered. That’s why Book Value offers profiles instead of reviews. Don’t look to this page for opinions. Think of it as a place to find writing that educates, entertains and challenges entrenched beliefs

by Kendall Polidori

Will EVs Kill the Radio Star? Some automakers want to banish AM

TRENDS

UUPON READING HIS own premature obituary, Mark Twain supposedly observed that “reports of my death are greatly exaggerated.” The same goes for AM radio.

Some 82 million Americans listen to AM radio monthly, according to Nielsen Audio Today 2023. It reaches 91% of all Americans 18 years or older monthly—more than TV, PCs, tablets, smartphones or TV-connected devices, the report says.

Interest in radio parallels the resurgence of vinyl records, notes Robert Quicke, author of Finding Your Voice in Radio, Audio and Podcast Production and founder of College Radio Day. They’re old media, but old is good, he says.

“In general, people have taken radio for granted,” Quicke says, adding that they’re missing out on a great medium. “Radio is still this vital, brilliant thing that when it’s at its best, it’s creating compelling content.”

Radio reaches 87% of Americans ages 1834, a Nielsen study reported last year. Spotify lands at 41%, Pandora at 21%, Apple Music at 18%, Amazon Music at 14% and satellite radio at 7%, the data measurement firm says.

Yet despite what some view as the glories and mass appeal of radio, skeptics abound.

In the form we recognize today, AM radio began in 1906. From Bryant Rock, Massachusetts, Canadian radio pioneer Reginald A. Fessenden transmitted the first broadcast containing speech and music.

Who’s listening?

Critics accuse commercial radio of irrelevance for younger generations.

Most if not all of instructor Tom Moran’s students in his Columbia College Chicago course on writing for radio and broadcasting don’t listen to the radio.

“The fact is that younger people are not listening,” Moran says. “The main issue is that there is just too much media out there. I don’t know how any [medium] is supposed to be profitable—there’s too much competition.”

Measuring the audience can get complicated, too, notes Paul McLane, editor-in-chief of the trade journal Radio World. Some analysts combine radio and streaming when collecting data. People are counted as radio consumers if they listen to a radio station on a streaming app, he says.

It’s part of the uncertainty clouding our understanding of the present and future of radio.

“A lot of younger people still use radio as part of their lifestyle,” McLane says. “But that said, there’s no question that it’s probably a more challenging area for the business, and the long-term stability of our business is to make sure those listeners are locked in [and] to figure out more about how they’re listening. I think it’s an open question.”

cial radio could have the upper hand—it’s an accessible medium that does the work for you. But it’s all about having compelling content.

The most important trend over the past 10 to 15 years, McLane says, is that audio remains important in the lives of consumers. Radio execs have had to figure out how to adjust their businesses and use their presence in cars to maximum advantage.

“There are a lot of exciting things going on,” Quicke says, “and we’re putting a lot of exciting things into our vehicles. But let’s not forget that with a radio, this could be a potentially lifesaving tool when all else fails. We’re so connected to the cloud, there needs to be a device that isn’t.”

Threats to AM radio

In April 2023, Ford Motor Co. (F) announced plans to stop putting AM radio in new gas-powered and electric vehicles beginning in 2024.

About the same time, the National Association of Broadcasters (NAB) launched a “Depend on AM Radio Campaign” in response to some automakers stripping AM radio from certain vehicles. The campaign is meant to share the “dire implications of this decision and will amplify the voices of the more than 82 million Americans that AM reaches each month.”

A month after its announcement, Ford backpedaled and said it would keep AM radio in its cars. Ford CEO Jim Farley made this statement on LinkedIn:

Radio Waves

Can radio still kickstart a musician’s career? In today’s recording industry, songs first have to get past the new gatekeepers— Tik Tok and streaming. Then radio can help build the critical mass needed for a true hit.

That’s the view of Sean Ross, writer and editor for the Ross on Radio website and vice president of music and programming at Edison Research.

“Only songs that have Tik Tok, then enough streams, then a label commitment to radio, then perform well in radio research—have a chance,” Ross says. “Meanwhile, there are far fewer consensus hits than ever, and some artists can have a No. 1 record but never get promoted on radio again.”

But even in radio’s diminished state, it can do a lot for the career of a mainstream artist who wants to make mass-appeal music, Ross says. Most musicians aren’t interested in doing what radio has asked for in previous years—releasing clean versions and playing radio station concerts, he notes.

“I think labels and artists would be smart to fill the void by making radio records if their counterparts don’t want to,” Ross says.

Radio reaches more Americans than TV, PCs, tablets, smartphones or TV-connected devices.

Quicke, the radio book author, says the radio industry has had to adapt quickly and use different channels. Shock Jock Howard Stern, he notes, was a pioneer because he brought video cameras into the radio studio.

“Radio is becoming an increasingly visual medium,” Quicke says. “Radio has to be clever to compete ... utilizing everything, all the different social media channels and outlets.”

That muddles the overcrowded field, leaving the public with the task of deciding what to watch or listen to. This is where commer-

“After speaking with policy leaders about the importance of AM broadcast radio as a part of the emergency alert system, we’ve decided to include it on all 2024 Ford and Lincoln vehicles. For any owners of Ford EVs without AM broadcast capability, we’ll offer a software update. Customers can currently listen to AM radio content in a variety of ways in our vehicles—including via streaming—and we will continue to innovate to deliver even better in-vehicle entertainment and emergency notification options in the future.”

But Ford isn’t the only company that’s threatened AM radio. In December 2022, Sen. Ed Markey (D-Mass.) sent a letter to automakers urging them to maintain free broadcast radio in EVs. He asked the manufacturers to answer questions about their plans to discontinue free access to AM/FM radio. Of 20 companies, eight—Ford, BMW, Mazda, Polestar, Rivian, Tesla, Volkswagen and Volvo—had removed AM radio from some vehicles, primarily EVs.

In May 2023, Markey introduced the AM for Every Vehicle Act with the support of Sens. Ted Cruz (R-Tex.), Tammy Baldwin (D-Wis.), Deb Fischer (R-Neb.), Ben Ray Luján (D-N.M.) and J.D. Vance (R-Ohio) and Reps. Josh Gottheimer (D-N.J.), Tom Kean Jr. (R-N.J.), Rob Menendez (D-N.J.), Bruce Westerman (R-Ark.) and Marie Gluesenkamp Perez (D-Wash.). The proposed legislation

More Americans listen to the radio than use Facebook each week.

was endorsed by Jessica Rosenworcel, chair of the Federal Communications Commission (FCC).

If passed into law, the bill would require the Department of Transportation (DOT) to issue a rule requiring all new motor vehicles to have devices that can access AM broadcast stations as standard equipment. The bill applies to vehicles manufactured in the U.S., imported to the U.S. or shipped in interstate commerce.

So, why are some automakers not including AM radio in EV models?

The electric motors can interfere with AM reception in cars, says David Layer, vice president of advanced engineering for the National Association of Broadcasters (NAB).

AM and FM frequencies are on very different parts of the RF spectrum, Layer notes. The AM frequency band is from 550 kilohertz to 1,750 kilohertz and is known as the medium wave band of RF frequencies. FM is in the VHF band, from 88 megahertz to 108 megahertz. The reception characteristics and propagation characteristics of signals in those two bands differ significantly.

AM is at a much lower frequency, and it happens that interference generated by the electric motors is stronger at the lower frequencies, plus the nature of AM is more susceptible to that interference, Layer notes.

“These are not insurmountable problems, though, because a lot of EVs have AM radio in them,” he says. “It’s doable. It’s just a matter of priorities.”

EVs aside, McLane says the broadcasting industry has invested time and resources addressing this question: “How can we keep stations at the forefront of the car dashboard?”

“We don’t know where it’s going,” he says, “but the fact that broadcast interests have seen it necessary to push for legislation is an indication that it’s very important.”

Despite the worries, Moran, the college instructor, doesn’t think electric vehicles are sounding the death knell for commercial AM radio. About 2 million EVs are registered in the U.S. as of November 2023, according to

Serious Radio

If you’ve been listening to Sirius XM (SIRI), you’re not alone. The largest audio entertainment company in North America had a reported 34 million paid subscribers by July 2022.

But the numbers fluctuate. It lost 225,000 subscribers in the fourth quarter of 2023, even though sales were booming for cars—the place where listeners most often hear Sirius XM. Still, the company had picked up 2,000 in the quarter before that.

The service isn’t cheap but offers a vast assortment of audio. Its car + app platinum plan costs $23.99 per month and provides more than 425 channels of ad-free music, news, talk, comedy, podcasts and sports.

Sirius XM reported Q4 2023 revenue of $2.29 billion on Feb. 1, 2024, and announced it earned 9 cents per share. The company expects full-year revenue to clock in around $8.75 billion, compared to $8.95 billion in 2023.

Night Radio

The Federal Communications Commission (FCC) requires some AM stations to reduce their power at night or even stop operating until daylight to avoid interference with other AM stations. This is a consequence of the laws of psychics.

Because of the way the relatively long wavelengths of AM radio signals interact with the ionized layers of the ionosphere miles above the earth’s surface, the propagation of AM radio waves greatly changes from day to night, the FCC says.

The change in AM radio propagation occurs at sunset because of “radical shifts in the ionospheric layers, which persist throughout the night. During daytime hours, when ionospheric reflection does not occur to any great degree, AM signals travel principally by conduction over the surface of the earth,” according to the FCC.

Daytime AM is typically limited to a radius of 100 miles or less, while at night, AM signals can travel over hundreds of miles by reflection from the ionosphere, which is called skywave propagation.

The motors in EVs can interfere with the reception of emergency alerts on AM radio.

the Exploding Topics website, meaning the market isn’t necessarily booming. Moran says it will take a long time to see a major change in AM radio—that is, if the AM for Every Vehicle Act doesn’t succeed.

Sean Ross, writer and editor for Ross on Radio, says the biggest issue with deleting AM is that it’s a likely stalking horse of the future of FM, as well.

“I’m surprised the broadcasters who are

Radio holds the highest share of collective trust across all advertising channels.

lobbying for this to be addressed through legislation aren’t pushing for a guaranteed place for AM and FM, particularly given the number of news and talk outlets now found on FM,” Ross says.

For Quicke, the AM in EVs controversy brings to mind the recent Netflix movie Leave The World Behind, where two families fight for survival during a blackout that precedes a war. News of the conflict was scarce when the electrical grid went down.

“Having an AM radio is a tested method of communicating information out over long distances for large populations,” Quicke says. “I know very few people who get up and listen to AM radio, but as a potentially lifesaving device, it has value.”

Primary Entry Point (PEP) stations provide the public with information and alerts during emergencies. The stations are privately owned commercial and non-commercial radio broadcast stations that participate with the Federal Emergency Management Agency (FEMA).

Moran notes that AM radio also provides Americans with unbiased and direct news. As opposed to selecting content that caters directly to your personal views, Moran says you can turn on an AM radio station for objective newscasts.

But will keeping radio in cars matter if no one’s listening?

Rethinking audio

Stations should zero in on compelling content to gain and retain listeners, Quicke suggests. Commercial radio could do that by taking a page from the college radio book, he says.

“There is this perception that college radio is not professional—that it’s poorly produced, that it’s scruffy. I would say, ‘Yeah, that’s probably true,’” he says. “But college radio has an authenticity...rather than being this highly polished, technical product. That kind of roughness gives it value.”

Listeners are seeking local connections, and the human contact radio can deliver, Quicke

says. “Radio is the most intimate form of communication. I really believe that radio is still that companion in the darkness.”

“McLane cites other factors. “In their public presentation of the benefits of broadcasting, they will always talk about the importance of being local,” he says. “You can question how sincere some of them are. But at the end of the day, it’s true—these are local signals.”

How do radio fans listen to their favorite stations? More than half of consumption is on AM/FM radios.

19%

82.3

— Nielsen Report TRUTH

He notes the issue of geotargeting, a form of advertising that uses location data to reach customers. The Federal Communications Commission is considering authorization of geotargeted content via FM boosters. It’s not currently allowed, but McLane says the FCC may change the rule this year.

Meanwhile, trends in the industry include increasing content related to gambling because rules governing sports wagering have changed. People on the radio used to avoid even mentioning the word “gambling,” and now it’s becoming an accepted format, McLane says.

As for what to look for in the industry this year, Layer says hybrid radio will level the playing field for AM. He expects more automakers to announce its use in the coming years. It essentially combines information from the internet with information that arrives over the air.

“Now with these hybrid radio systems, AM stations can look just as good as any other station,” Layer says.

Ross says the radio’s strength is in the easeof-use AM/FM. If broadcasters are sincere about the public safety value of radio, there’s no reason not to have a hybrid approach, and they need to be more competitive in streaming, he says.

The goal, he says, is to bring more people to broadcast commercial radio, which includes more robust offerings on AM.

“Every time a major talk radio station moves to FM, it’s one less reason to go to AM,” Ross says.

18%

58%

38%

39%

— Percentage of time spent with their P1 station via each platform in a typical week

THE ROCKHOUND

Where’s Friko Been?

Chicago rock band releases debut album

C

CHICAGO INDIE BAND Friko’s debut album, Where We’ve Been, Where We Go From Here, opens with a song (Where We’ve Been) so strong it sounds like a record closer.

“When we play shows, [Where We’ve Been] is always one of the last ones,” says guitarist and

vocalist Niko Kapetan. “Moving it to the front has a lot to do with it being our debut record. For me, that song is like everything encapsulated in one song. If people are going to hear us for the first time and turn on this record, they’re going to get everything at first.”

That’s because the song relates the band’s four-year history and embodies the friendship among its members, Kapetan says.

It has a strong and steady buildup to an arc that opens the floodgates for booming guitar rhythms, improvised collective harmonies and the rapping of drumheads—all to end abruptly, isolating Kapetan’s vocals and guitar once again.

Friko didn’t just write and record their debut album. Instead, they found themselves as a band, decided how they wanted to record and discovered what music they wanted to write.

The band debuted the album March 1 with a headline set at Metro, one of Chicago’s larger independent venues.

The sold-out show featured a Chicago-centric lineup with Neptune’s Core, a female rock group, and Smut, a punk alternative band. I felt part of the older crowd at the all-ages show because many in the audience were in their teens. It was refreshing to see the next generation of Chicago music come out and support the young bands. The joy and community on stage was infectious.

When we chatted with Friko, it was still

by Kendall Polidori

more than three weeks before the release of Where We’ve Been, Where We Go From Here. It’s been a long wait for a piece of work that fills the band members with pride.

Many of the songs on the release stem from demos written in 2021, a time when Kapetan says he was in a much darker place. “I just didn’t know what I was doing, which a lot of people don’t in their 20s.

“By the time we finished it, for me it felt like I reached the top of some mountain,” he says. “Not the final point I want to get to, but recognizing we made a whole thing that represents our friendship. It’s something we’re really proud of, which I have not had my whole life.”

Where We’ve Been, Where We Go From Here is triumphantly hopeful, with an overarching theme of wanting to be better for oneself and the people around you—but the world presents challenges along the way.

Many of the album tracks started as live tapes—there are still plenty of overdubs—but the band wanted to spotlight the energy of live performances. You can hear the passion in Kapetan’s voice as it shakes and quivers, conveying real-time emotion and heart.

The band also made space for improvisation, sitting down at pianos and just seeing what came out—or having everyone sing on the recording for more body in the melodies.

“It felt good, and I honestly think we could try more of it going forward,” drummer Bailey Minzenberger says. “It can be easy to get caught inside of structure.”

The album maintains a versatile dynamic with energetic guitar anthems like Where We’ve Been and Chemical. But there are also some soft emotional ballads like For Ella and Until I’m With You Again. It’s a one-stop shop, catering to whatever mood listeners might crave. A post-punk romanticism melds with their love of classical music and art-rock.

Read The Rockhound’s full review at luckboxmagazine.com.

Kendall Polidori is The Rockhound, Luckbox’s resident rock critic. Follow her reviews on IG and X @rockhoundlb, TikTok @rockhoundkp

More Friko

Concert review on TikTok

PHOTOGRAPH: POONEH GHANA

by Ed McKinley

A Car-World Divide Enthusiasts love combustion, but EVs attract a new crowd

IIN 1963 , legendary stock car builders Holman & Moody proudly painted “410 HP” on the hood of the fearsome Ford Galaxy they campaigned on the NASCAR circuit. It took a folk hero like Glenn “Fireball” Roberts to drive it.

But these days, any reasonably well-off suburban family can wrangle a 1,020-horsepower electric Tesla Model S Plaid through stop-andgo traffic on the way to their kid’s soccer game.

It’s a vehicular revolution that’s pulling the car culture in two directions.

On the one hand, old-school enthusiasts and collectors vow they’ll never forsake their beloved gasoline-powered cars. They’ll cling

to big-block Detroit iron, seductive European exotics, precision-engineered Asian tuners or historic century-old Brass Era relics.

Meanwhile, a new breed of electric car aficionados seems to be emerging. They’re not defecting from the ranks of traditional gear heads. Most were never really enamored of internal combustion engines, but they’re bewitched by EVs’ style, quiet, smoothness, handling and mind-blowingly instantaneous acceleration.

Let’s start with what attracts enthusiasts to internal combustion engines, which car watchers now call ICE for short.

Smelly, roaring beasts

Automotive journalists who spoke with Luckbox waxed poetic over the rustic charm of ICE vehicles.

“Firing to life when you turn the key or push the start button, the rumble of an idle, the smell of octane, putting that manual shifter into gear, opening up the hood and sensing the mechanical workings—a lot of that stirs the soul of the driving enthusiast,” said Matt Avery a writer and video producer for Mecum Auctions, a company known for selling collector cars.

Automotive writer and broadcaster John McElroy couldn’t agree more. “People love that rumble and jumble of a V8 engine,” he noted. “They relish that visceral noise, vibration, harshness. It’s hard to beat the roar of an engine going to full throttle.”

Car enthusiasts become obsessed with the feedback they get from internal combustion cars, according to Daniel Pund, editor-in-chief of Road & Track magazine. He explained how serious drivers relate to what the car’s telling them.

“What has a better exhaust sound and a bet-

ter intake sound?” Pund said of the qualities enthusiasts seek. “Whose transmission shifts quicker or more firmly or is slow to react—all those things that went into building their hierarchy of performance cars.”

Enthusiasts love the controlled chaos of explosions driving pistons, and it just isn’t there with electric motors. But that’s not the only thing old-school enthusiasts find lacking in today’s electric vehicles.

A certain sameness

“What you find is the Mercedes, BMW, Porsche and Audi EVs drive more alike than their gasoline counterparts did,” Pund said. “They sound almost the same, the power delivery is almost the same and the center of gravity is almost the same because they all put batteries in the floor between the wheels.”

EVs can be so quiet you don’t even know the car’s turned on, Avery noted, comparing the driving experience to operating a kitchen appliance. “A microwave will do an admirable job,” he said, “but it’s certainly not the same experience as cooking over an open fire.”

Still, the peace, comfort, smoothness and strong acceleration that comes with an EV captures that feeling of luxury that companies like Mercedes, Rolls Royce and Bentley have sought for years to create with ICE vehicles, Pund maintained.

“Tesla has created Tesla enthusiasts,” he said, noting the company’s first CEO, Martin Eberhard, might deserve some of the credit.

But the trend doesn’t end there. “Certain very good EVs, such as Porsche Taycan or the Hyundai-Kia stuff that’s coming out now, have a way of converting people,” Pund maintained.

The visceral thrills of the Ford-powered Shelby Cobra can stir the soul. Of the 998 made between 1961 and 1968, 890 have survived, and they sell for an average of more than $2 million at auction. Fiberglas-bodied replicas abound.

Besides, EVs can perform admirably on the track, a trait McElroy can attest to from personal experience. He races in autocross, an event where cars are timed as they individually run a gauntlet of curves.

“Fastest cars out on the track??’ he asks rhetorically. “Tesla Model 3 dual motors with competition tires. You can’t beat them. I mean, man, are they quick.”

In autocross, you can’t beat a Tesla Model 3 with dual motors and competition tires.

He scoffs at skeptics who assume a Tesla can’t be competent in the curves because it’s a true heavyweight at more than two tons. “Let me tell you, these cars handle like they’re on rails because all that weight is very low and brings the center of gravity down,” he insists.

Acceleration? “I’ve done both Tesla’s Plaid

43 million Collector cars in the United States

16% The

$1

mode and Ludicrous mode,” McElroy said. “It’s the fastest I have ever accelerated in my life, and I’ve been in dragsters. So, there are a lot of electric enthusiasts because the power response is absolutely unmatched by an internal combustion car. The ranks of EV performance enthusiasts will grow.”

Off the track, commuters are taking to the comfort of EVs—including drivers who consider themselves ICE weekend warriors, Pund said.

“A lot of people are saying, ‘I have a Porsche Taycan EV or Mustang Mach E for my daily driver and then for my weekend car I’ll have an old, smelly, noisy, traditional enthusiast car,’” he said. “Increasingly, that’s what we’re going to see because commuting in an EV just makes a world of sense.”

So, EVs are filling niches, but does that mean they’ll become collectable?

EVs as future classics

Age isn’t the only variable in the collector car world. Rarity also factors into the equation, according to Avery, who’s seen the newest, most desirable but still difficult-to-obtain EVs sell for more than their sticker price at Mecum auctions.

But age also counts among collectors— many chase the machines they coveted but couldn’t afford when they were young. It’s an opportunity to rewrite their personal histories, Pund said.

“It has everything to do with that vehicle being tied to whatever stage of life they were in—when they first saw there was a beautiful woman in it, or the cool guy on the street had it,” he maintained. “I don’t see any reason that wouldn’t be the case with EVs.”

These two hypercars combine internal combustion and electricity to reach speeds well over 200 mph. A Porsche 918 Spyder Weissach (top) sold for $1.6 million a few years ago at a Mecum auction, and a Ferrari S90 Stradale (bottom) earned a high bid of $800,000.

PHOTOGRAPHS: MECUM AUCTIONS

by James Melton

Iron Man Has a Steel Fetish Robert Downey Jr.’s eco-modified dream cars

TRENDS H

HOW DO YOU MAKE a dream car?

When Chris Mazzilli and his team of experts took on the challenge of transforming six vintage classics for movie star Robert Downey Jr., restoration wasn’t enough.

Mazzilli, founder of Dream Car Restorations/CMC Motors, worked with his team to make each vehicle—which included a 1969 Mercedes Benz once owned by Downey’s mother—into a cleaner-greener version of itself. The project was the basis for Downey’s Max TV series Downey’s Dream Cars.

The Downey cars are similar to projects the shop has taken on for other clients, Mazzilli said.

“We’ve done similar things—not so much for celebrities—but a lot of people these days want what they call ‘restomods.’ They have modern engines in them that run a lot more efficiently,” he noted.

But Downey took things a step farther, Mazzilli told Luckbox

“He wanted to modify not just the motors, but other things in the cars,” he said. “One of the cars has a vegan mushroom leather interior that has carpets made from recycled plastic bottles.”

Now, Downey is giving the cars away in a

Top: 1965 Chevrolet Corvette convertible, Bottom: 1985 Chevrolet El Camino.

One of Downey’s cars has a vegan mushroom leather interior and carpets made from recycled plastic bottles.

sweepstakes to raise money for the FootPrint Coalition, a nonprofit organization he and his partners launched to focus on adoption of clean technologies.

DOWNEY’S

DREAM CARS

• 1969 MERCEDES BENZ 280 SE: Modifications included installing a new diesel engine, converting the fuel system to biodiesel and replacing the interior’s suede with recycled plastics.

• 1972 VW BUS: This classic became an EV. The team replaced the 1100cc aircooled engine with an EV West electric motor conversion and custom battery rack. They also added a solar-powered electric barbecue that slides out of the back of the bus.

• 1966 BUICK RIVIERA: Changes included replacing the stock 425-cubic-inch V8 engine with a modern hybrid engine and adding an air-quality sensor.

• 1972 K-10 PICKUP: Now an EV, this pickup has a custom electric motor and battery pack.

• 1965 CHEVROLET CORVETTE

CONVERTIBLE: The team replaced its 327 small-block engine with a modern electric motor and installed a mushroom-leather interior.

• 1985 CHEVROLET EL CAMINO: A new four-cylinder Chevy turbo truck engine replaced the stock engine. A solar-powered bike rack was also added.

I still love these cars. I feel like they represent something uniquely beautiful about the past. So I want to bring them into the present. Maybe even the future.

—ROBERT DOWNEY JR.

Robert Downey Jr. loves his cars. For the movie Iron Man 3, Acura built a special NSX concept car. Marvel let Downey keep the $9 million supercar.

Clockwise: 1972 VW bus, 1972 K-10 pickup, 1966 Buick Riviera and 1969 Mercedes Benz 280 SE.

More Downey

Dream Car Sweepstakes

PHOTOGRAPHS: RDJ DREAM CARS AND SHUTTERSTOCK

High-Octane Body Fuel Power up on lean meat, apples, broccoli, sweet potatoes & brown rice

A CORVETTE NEEDS premium fuel and so does your body.

Sure, you can keep yourself running for a while on Pop-Tarts, Hot Pockets and Jelly Belly treats, but you’re going to feel like garbage. You’re trading the short-term sugar rush of Skittles for the long-term consequences of lethargy and sluggishness.

Your personal engines—like muscles, joints, heart, brain and lungs—will wear out more

by Jim Schultz

quickly from low-quality fuel choices. Garbage in—garbage out.

But if you fuel up with lean meats, apples, broccoli, sweet potatoes and brown rice, your body will efficiently transform those inputs into usable outputs. You’ll be healthier, perform better and just feel lighter.

It’s all in the math

A mathematical equation largely determines how much body fat you carry and how much you weigh. Many of us do everything we can to avoid this truth. But calories in and calories out governs the way your love handles spill over your jeans or how many notches you have to uncinch your belt. If you’re in a caloric surplus, you gain weight. If you’re in a caloric deficit, you lose weight. When you’re at your maintenance calories, your weight stays the same.

In theory, you could lose weight eating just Ho Hos, Cookie Crisp and Twinkies. But no one over the age of 10 thinks that’s a recipe for health, longevity and sustainability. And if

Today’s sugar rush causes tomorrow’s sluggishness

Total eclipse of the Sun

A total solar eclipse will cross North America on April 8, passing over Mexico, the United States and Canada. The phenomenon occurs when the Moon passes between the Sun and Earth, blocking the Sun’s face.

Astronomers predict half a billion people will witness the “Great North American Eclipse.” They’ll also feel the temperature dive about 10 degrees Fahrenheit, depending upon humidity and cloud cover.

Major U.S. cities with the best view along the path of the eclipse include Dallas; Little Rock, Arkansas; Indianapolis; Cleveland; Buffalo, New York; and Burlington, Vermont.

you have any athletic aspirations whatsoever, consistently cleaner choices of fuel will boost your performance in the gym, on the track or at the pool.

Like a Mustang Mach-E

While the barriers to entry for owning an electric vehicle might seem too high because of the price or range, everybody can make better nutritional choices. The short-term sugar-high payoff from a Payday bar may seem attractive, but the long-term effect is to move you farther from your fitness goals.

Make the cleaner choice. Your future self will thank you.

Jim Schultz, Ph.D., a derivatives trader, fitness expert, owner of livefcubed.com and the daily host of From Theory to Practice on the tastylive network, was named North American Natural Bodybuilding Federation’s 2017 Novice Bodybuilding Champion. @jschultzf3

STAYING HEALTHY

• 85% Of your calories should come from nutrient-dense foods

• Below 2,300 Your daily intake of sodium in milligrams

SOURCE: U.S. Department of Health and Human Services at dietaryguidelines.gov.

Eat This, Not That

Stick to high-quality foods in appropriately sized portions and pay attention to the carbohydrates you consume. That’s the advice of nutritionists at the Harvard School of Public Health.

AVOID

2024 tastytour

The tastylive crew plans to visit cities across the U.S. and make one stop in London on the latest tastytour. Highlights will include tastylive shows like Where’s Bat? and eight free shows co-sponsored with Cboe/CME Group and scheduled to feature traders Tom Sosnoff, Pete Mulmat, Jermal Chandler, Nick Battista, Mike Butler and Katie McGarrigle. See tastylive.com/events for information.

Vehicular autonomy

Since 2017, Americans have been celebrating self-driving cars and aircraft on National Autonomous Vehicle Day. Aficionados praise the sector’s advanced engineering and welcome its business opportunities. Although the technology isn’t 100% foolproof, it continues to improve rapidly. Just think of the Waymo driverless cars used as taxis in San Francisco.

5.1

44

ILLUSTRATION

THE AUTO TRADE

BY ED MCKINLEY

RANGE WORRIES AND STICKER SHOCK ARE SLOWING THE GROWTH OF EV SALES

Filled with optimism, American and European automakers were plunging headlong into electric vehicle production just a year ago. So, why are they pulling back?

“There was one component missing in the forecasts of the EV transition and that was demand,” said Steve LeVine, an automotive journalist at The Information, a digital news outlet.

Shoppers “very likely” to consider buying an EV fell to 25.6% in January, a percentage point lower than in December, according to J.D. Power, a firm known for car reliability ratings.

EV sales in North America are expected to grow this year by 25% to 30%, but that’s down from 46% last year, multiple sources agreed. It’s a big enough slowdown to pit Tesla (TSLA) against General Motors (GM) in a price war and force Ford (F) to cut back production of its F-150 Lightning EV.

Meanwhile, reports from the front lines of auto retailing shed light on why growth has slowed.

EVs GATHERING DUST

“As people come into the store to look to buy transportation, they are identifying the EVs as more expensive and less useful,” said Mickey Anderson, CEO of Baxter Auto Group, an Omaha, Nebraska-based network of 21 dealerships selling nine car brands in four states. “Far more often than not, they’re not the right choice for customers today.”

Many of his potential buyers drive long distances across the Great Plains and in the Midwest, making them skeptical of owning a vehicle that might travel only 150 miles on a charge. What’s more, the region’s bitterly cold winters challenge the capacity of car batteries.

Motorists often fear they’ll find themselves far from a charger when they need to power up. Some also object to waiting 20 minutes or so for a car to charge on a public device at the end of a dark and lonely Walmart parking lot.

Then there’s price. The average EV sticker price of $60,000 is about $10,000 more than the typical car with an internal combustion engine, or ICE, according to automotive writer and broadcaster John McElroy.

Price wasn’t a big enough factor to discourage the tech fans and status seekers who

100 MILES ONE DAY

became the early adopters of EVs, but it compels average consumers to stick with less-expensive ICE vehicles.

These days, however, the price differential is continuing to narrow and may disappear in two to three years, LeVine said. That’s when the true demand for electric vehicles will come into focus.

“If they still aren’t buying EVs, that means there’s something wrong,” he said of the near future when EVs and ICE vehicles reach price parity.

But whether they like EVs or not, consumers should choose their means of locomotion for themselves without the federal government deciding for them, Anderson maintained. In his view, free markets should prevail, not policy makers.

FREEDOM TO CHOOSE

“If carbon were cancer, we would never dream to let the federal government mandate one therapy to fight it,” he said. “This is the one drug, and 75% of that drug is made by the Chinese.”

Without intervention, the public would choose a mix of vehicles powered by a wide range of sources, including batteries, gasoline, diesel, hydrogen and biofuels, Anderson said.

Instead, the Environmental Protection Agency is easing but not abandoning emissions standards and mileage requirements that would push automakers to phase out ICE vehicles.

To comply with the regulations, manufacturers would need to ensure that by 2032 about two-thirds of the cars they produce are electric, said Nick Nigro, founder of Atlas Public Policy, a company that helps businesses and state and federal agencies track issues.

The declining cost of building EVs could

COMPETITORS.

encourage car makers to exceed the EPA standards because it would be in the best interest of their businesses, Nigro suggested.

But those standards still amount to a de facto EV mandate, and that prompted Anderson to become part of an informal alliance representing 4,000 dealerships. The ad hoc group has dispatched two letters to the Biden administration asking it to “tap the brakes” on promoting EVs.

UNREALISTIC EV GOALS?

Growing EVs’ market share from 7.6% in 2023 to 67% in nine years simply won’t work, the dealers maintained in the letters. Reaching the government’s goal of having 2.8 million public chargers by 2032, up from 170,000 today, would require building 800 every single day and in their opinion strains the imagination.

Besides, EV production can be anything but green, Anderson noted. “I’m a car dealer in Omaha, Nebraska, and even I’m aware of what’s going on in the strip mining of Malaysian rainforests to get nickel and the really irresponsible way that they’re chasing down rare earth minerals in the Congo,” he said.

Lately, attention has focused on the slow rollout of a federally funded network of EV chargers 50 miles apart along the nation’s major highways. The Bipartisan Infrastructure Law that President Biden signed in 2021 provides $7.5 billion to subsidize placing 500,000 of the chargers by 2030.

When LeVine began tracking research on EV batteries in 2010, researchers “cherished” grants in the hundreds of thousands of dollars. “If you were a researcher or a company and got a three-year grant for $2 million or $3 million, you’d take your wife out to dinner— that was an incredible amount of money,” he said of conditions 14 years ago. “And now they routinely give $100 million to one company to do something.”

The Obama administration committed $2.4 billion to building the EV battery supply

1.2 MILLION

THE NUMBER OF NEW EV s SOLD OR LEASED IN 2023

7.6% EVs’ U.S. MARKETSHARE IN 2023

— STATISTA

chain, he noted, and the government loaned Tesla $465 million to fund development of the Model S.

But green or not, EVs have been receiving government largesse for years in the form of loans, tax credits, research grants and funding for charging stations. Some might conclude it’s already too late to stand aside and allow the markets to reign.

EV buyers can qualify for a tax credit of up to $7,500 on new or used EVs, depending upon the purchaser’s income, the price of the vehicle, and where the car, battery, minerals, and other components were sourced or manufactured.

No one knows how much cash the government may eventually spend promoting EVs because it depends upon how much the public avails itself of the incentives and how businesses react to charger subsidies, LeVine said. But some observers expect a $500 billion price tag, and others warn it could easily reach $1 trillion, he notes.

Still, some consider it money well-spent.

SEIZING THE EV FUTURE

“The U.S. has to try to win the future here,” said Nigro. “We’re playing catch up, unfortunately, because we were asleep at the wheel for about four years, between 2016 and 2021. And in that time period, Europe and China passed us in terms of leadership on this issue.”

But the future need not resemble the past. The ingenuity that put America on wheels could keep it on wheels in a new era of electrification.

THE AUTO TRADE

BY ED MCKINLEY

AN AUTOMOTIVE JOURNALIST ADDRESSES THE ELECTRIC-VEHICLE MARKET

JOHN MCELROY,

a print, radio, television and online journalist, serves as president of Blue Sky Productions, producer of the Autoline Daily webcast.

McElroy is a former editor at Road & Track magazine, writes monthly for Ward’s Auto World and has contributed the annual automotive entry for the Encyclopedia Britannica Yearbook.

He was gracious enough to sit down with Luckbox for a wide-ranging Q&A about the state of the electric vehicle industry and automotive world in general.

LUCKBOX: WHY DO EVs COST SO MUCH?

—

JOHN MCELROY: The price of EVs is too high but so far that’s been a deliberate strategy by the automakers. Batteries are still very expensive, and the market for EVs is somewhat limited. They can’t make money on EVs, but they lose a whole lot less on their expensive ones.

Besides, it’s wealthier people who have the disposable income to add an EV to their two-car or three-car garage and keep a couple of ICE (internal combustion engine) vehicles handy for when they want to travel long distances.

But in China, which is a much more mature EV market, it’s quite a different situation. In fact, just last week I drove the BYD Seagull electric car that sells for $11,000 in China. It doesn’t meet U.S. crash standards, and it has limited range. But it’s a very nice car, and it’s very comfortable. It doesn’t feel cheap. There are other Chinese electric cars under $30,000 that are also very nice. So, it can be done.

WHEN WILL WE SEE MORE MODESTLY PRICED EVs IN THE U.S.?

—

We’re not going to see inexpensive electric cars in the U.S. without any government subsidies anytime soon, and by that, I mean $25,000 or less. That’s still at least three years away in the U.S. market. And as automakers start to come out with EVs that are more reasonably priced for the mass market, you’ll see far more adoption.

In the U.S., the average EV sells for something like $60,000. The average ICE vehicle sells for about $50,000. So EVs are, rule of thumb, about 10 grand more expensive. That limits who can afford to buy them. Until we see mid-priced or lower-priced EVs, the market cannot be a whole lot bigger than it is.

MORE

CARBON IS RELEASED INTO THE ATMOSPHERE IN MAKING EVs THAN IN MAKING ICE VEHICLES. PLUS, A LOT OF THE ELECTRICITY POWERING EVs IS GENERATED BY BURNING COAL, OIL OR NATURAL GAS. ARE EVs ACTUALLY GREENER?

—

The reality is EVs are far cleaner, but they don’t come off the assembly line that way. EVs start with a much bigger carbon footprint than ICE vehicles do because the battery is very energy-intensive to manufacture.

But for every gallon of gasoline you burn, you release 19 pounds of greenhouse gases. Once an EV travels 20,000 miles, it matches the carbon footprint of an ICE vehicle to that point. After that, the EV is cleaner, and since

most cars are scrapped with 200,000 miles on them, EVs come out much, much cleaner than any ICE vehicle.

Last year, the U.S. generated more electricity with renewables than it did with coal. Coal is down to like 20% of all electric generation in the United States. But EVs are so efficient that even if you run them on electricity generated fully by coal, they’re about the same or slightly cleaner than ICE vehicles.

SO, EVs ARE GREEN. BUT ARE THERE OTHER REASONS TO BUY THEM?

—

Look, EVs offer a better driving experience for a regular everyday driver. Smoother, quieter, faster. What’s not to like about that? Acceleration? Look where you want to go, bang you’re there. It just responds so much better. There’s so little vibration compared to an ICE car.

If you drive for less than 200 miles a day,

the hassle of taking a lot longer to charge on their trip than it takes to fill up a gas tank. So, yeah, you bet range anxiety is still an issue.

LET’S SHIFT GEARS EVEN THOUGH MOST EVs HAVE SINGLE-SPEED TRANSMISSIONS. WHAT EFFECT ARE FEDERAL INCENTIVES, GRANTS, REGULATIONS AND MANDATES HAVING ON EVs?

There’s no EV mandate per se in the United States. There are emission and fuel economy standards that get to be pretty tough for an automaker to meet unless they’ve got EVs in their fleet. So, it’s sort of a de facto EV mandate.

Incentives play a big role in getting people to buy EVs, but they’re not the only determining factor. The first go-around of EV incentives capped an automaker at 200,000 unit sales. As soon as they hit that number, the $7,500 tax credit individual car buyers could claim on their taxes started to phase out. It

“[ELECTRIC VEHICLES] ARE THE KIND OF THING THAT EVENTUALLY MORE AND MORE PEOPLE WILL ADOPT, AND IT DOESN’T NEED TO BE FORCED ON PEOPLE. THE GRID’S NOT READY YET. THE GOALS THAT BIDEN HAS SET ARE UNREALISTIC.”

—REP. THOMAS MASSIE (R-KY.), WHO OWNS A TESLA

you can plug in at home and you’re going to love it. You’ll never go back. Every morning when you leave your garage, you’re leaving with a full tank. And gasoline is far more expensive than electricity, so the average person would save about $1,000 a year running on electricity instead of running on gasoline.

IS RANGE ANXIETY STILL A PROBLEM?

—

The average American drives under 40 miles a day. So, just about any electric car would easily serve their needs. But people don’t look at it that way. They dream of going over the river and through the woods to grandmother’s house on Thanksgiving, and she might live a state or two over. Here in Michigan, people talk about going up north and trailering their snowmobiles or their WaveRunners.

Americans buy cars with a dream. And it’s not just driving back and forth to work. It involves cross-country trips and vacations. They recognize an EV will not fulfill those needs, or they’re going to have to put up with

dropped to half in six months, and then in another six months it was gone altogether.

That didn’t seem to affect Tesla sales very much. Even though the incentives went away, people kept on buying them. I don’t think that was going to be the case with other manufacturers. If you yank the subsidies on GM and Ford and any of the other legacy car makers, you’d see a big hit on sales.

But look at Porsche with the Taycan. The buyers certainly don’t qualify for the $7,500 tax rebate. Still, they went out and bought those things. They bought more of them than they bought 911s [iconic Porsche sportscars]. It shows if you have the right product, you don’t need incentives.

HOW HAS THE INFLATION REDUCTION ACT AFFECTED EVs?

—

There’s a lot of talk about EVs increasing our dependence on China because China controls the supply chain for this. But because of all the money going into the U.S. EV industry, be-

cause of the Inflation Reduction Act [IRA], spectacular progress is being made in sourcing the raw materials right here in the United States or among our allies.

VEHICLE EFFICIENCY (DISTANCE COVERED FOR THE AMOUNT OF ENERGY CONSUMED)

30% : GAS-POWERED CARS

40% : HYBRIDS

50% : FORMULA 1 CARS

government’s trying to shove them down their throat. So, there’s quite a bit of opposition to EVs.

In fact, we just reported day before yesterday that the biggest rare earth mineral found in the world was in Nevada. Same with lithium. Now that there’s demand, they’re starting to find this stuff all over the place. While we will not be China-free by the end of the decade, we are going to be very early in the 2030s.

88% : ELECTRIC VEHICLES

—JOURNALIST JOHN

MCELROY

—

The IRA kicked off an investment frenzy that I call the California Gold Rush or the Oklahoma Land Rush—pick your choice. For every dollar the federal government is investing, three dollars is coming in from private investors. So, there’s a real multiplier effect. Europe is deeply worried because so much is happening here. We’re seeing progress coming far faster than most people are aware of.

THE FEDERAL GOVERNMENT IS SPENDING BILLIONS TO SUBSIDIZE

500,000 PUBLICLY AVAILABLE CHARGERS BY 2030. BUT ONLY THREE WERE OPERATING BY THE BEGINNING OF THIS YEAR. THOUGHTS?

—

It doesn’t surprise me at all that it’s going to take a long time. You’ve got to get permits. Depending on where you put these stations, you might have to do environmental impact statements. There are going to be public reviews if you go down that route.

You might need electrical substations nearby. You’ve got to find companies willing to do all this. The first fed-

THE AVERAGE MOTORIST WOULD SAVE ABOUT $1,000 A YEAR DRIVING A VEHICLE POWERED BY ELECTRICITY INSTEAD OF GASOLINE.

erally funded charging station just went in place a few months ago, and quite a few charging companies are putting in public chargers, too.

WOULD A SECOND TRUMP ADMINISTRATION BE A SETBACK FOR EVs?

—

Sure. Trump and many republicans have made an anti-EV stand. It’s one of their talking points. They think the

LET’S SHIFT GEARS AGAIN. SOLID STATE BATTERIES WOULD CHARGE QUICKLY, LAST LONGER AND PROVIDE GREATER RANGE. WHAT’S THE LIKELIHOOD OF HAVING THEM IN CARS IN THE NEXT FIVE YEARS?

Slim to none in five years in any kind of volume. Look, here’s the issue: Lithium batteries are not only good, they keep getting better all the time and the cost keeps coming down while the volume keeps going up. They keep making refinements to these batteries to make them better.

And a solid state’s not even here yet—at least not in cars. It’s going to take them a long time to ramp up. Meanwhile, they’re chasing a moving target because the lithium-ion battery just keeps getting better and better all the time. There’s going to be a place for solid state but not in this decade.

WHY AREN’T CARS WITH HYDROGEN FUEL CELLS TAKING OFF? —

Where are you going to get your hydrogen? Look at the problems we’re having right now with public EV charging. There’s electricity everywhere you go, and there are still all these complaints. There aren’t enough chargers. They’re not reliable enough. Now go start building a hydrogen infrastructure. Lots of luck.

EMISSION AND FUEL ECONOMY STANDARDS CAN BE TOUGH FOR AUTOMAKERS TO MEET UNLESS THEY HAVE EVs IN THEIR FLEET. IT’S A DE FACTO EV MANDATE.

Hydrogen fuel cell vehicles are not going to be in passenger cars or light trucks—maybe long-haul semis. Toyota does a booming business with hydrogen fuel-cell forklifts, and they might make sense for trains as well.

There’s one potential technology that could be a game changer. Most hydrogen is made from water using electrolysis to split it into hydrogen and oxygen. Well, any building that you drive past has got water and electricity running into it. What if you could make hydrogen right on site? You could dramatically slash the cost, but nobody’s done that yet.

WHAT ELSE IS GOING ON IN THE AUTO INDUSTRY?

We’re in peak auto right now. The industry sold 17 million new vehicles in 2019, and we’ll never go above that number again by any significant amount. We’ve plateaued here and in Europe and Japan. The only growth left is in emerging markets—South America, Africa, Asia.

THE AUTO TRADE

In the world of electric vehicle power, experts often refer to solid-state batteries as a technical holy grail of the EV battery industry.

In a statement last June, Toyota (TM) made the bold claim that the new battery technology would “change the future of cars.”

By October 2023, the automaker announced an agreement with Japanese oil company Idemitsu Kosan to develop and make the solid-state batteries. They’ll have to work out issues, such as developing mass-production technology, improving productivity and establishing a supply chain.

A BIG DEAL

Such batteries could, in theory, eliminate the most anxiety-producing aspects of EV ownership by speeding up charging times to mere minutes and significantly improving range.

Toyota’s technology promises to fast-forward to a place where all-electric vehicles charge in 10 minutes and then go 750 miles— and eventually 930-plus miles—before needing to be plugged in again.

Toyota says it plans to launch battery vehicles using the new fast-charging, solid-state

batteries by 2027 or 2028. Toyota will use solid-state batteries in hybrids even sooner, Gill Pratt, Toyota’s chief scientist told Autoline, an online news source, in January.

MAJOR EV PLANS

Critics have accused Toyota of being too slow to embrace battery electric (BEV), because it has instead embraced hybrids (like its venerable Prius line) and plug-in hybrids. But the automaker says that’s about to change.

By 2025, Toyota says it plans to have an “electrified option”—BEV, hybrid or plug-in hybrid— available for every Toyota and Lexus model globally. Toyota hopes to sell 3.5 million BEVs annually by 2030. Of those 1.7 million will employ its new solid-state technology, according to company statements. That would account for about one in every three vehicles sold.

By 2035, Toyota plans to convert its Lexus luxury-car division into an all-electric brand. In October, Lexus unveiled an all-electric concept car called the LF-ZC.

Toyota announced in February that it plans a $1.3 billion investment at its Kentucky factory to make future electric vehicles, including assembly of an all-new three-row battery electric SUV for the U.S. market.

Toyota’s solid-state battery prototype

THE AUTO TRADE

TWO VENERABLE AUTOMAKERS FACE POLITICAL AND ECONOMIC HASSLES. ARE THEY GOOD INVESTMENTS?

BY GARRETT BALDWIN

Interest rates remain stubbornly higher for longer, credit card debt has ballooned to an all-time record and housing prices have grown downright prohibitive.

But one sector really needs attention—automakers.

The auto industry has benefitted from a decade of quantitative easing and fairly recent low-interest car loans. Yet share prices for Ford (F) and General Motors (GM), the two largest auto manufacturers based in the United States, have slid back to where they started in 2013.

These stocks look cheap. But de facto electric vehicle mandates and surging consumer debt weigh on their valuations. Is there an opportunity to profit from these equities, or have America’s top auto nameplates become value traps?

EV CHALLENGES

Recent earnings reports signal demand for electric vehicles continues to weaken.

Stock prices for startups Rivian Automotive (RIVN) and Lucid Group (LCID) fell when the companies reported

earnings in February. Rivian declined 25% and Lucid 17%. Both said they expected to produce the same number of vehicles in 2024 as last year.

Meanwhile, Volvo (VLVLY) announced plans to reduce its stake in EV maker Polestar (PSNYW), and Mercedes Benz (MBGYY) scrapped its 2030 EV targets, citing high costs and weak demand. In late February, Apple announced it is abandoning its Project Titan EV initiative.

It seems the EV sector isn’t exhibiting the strong demand nearly everyone expected. The federal government may be eager to save the planet from climate change, but The New York Times reported in February that the Biden ad-

casted rate cuts have fallen from six to four.

The Fed has forecasted just two.

Meanwhile, consumer credit is hitting a wall. Defaults and repossessions are rising. Americans got stimulus checks in 2020 and 2021 that fueled demand for cars in a tight market. Now, higher prices and higher interest rates are leading to a deteriorating market outlook.

Then there are the consumers themselves. Fifty-seven percent of Americans say they’re unlikely to choose an EV for their next car, according to Ipsos, a multinational market research and consulting firm.

Its survey also showed motorists are not only rejecting EVs but also electric hybrids. But the federal government and states are still moving

ministration is considering delaying emissions standards that would amount to EV mandates.

ELECTRIFICATION DELAYED

In April, the Environmental Protection Agency proposed regulations that would lead companies to make approximately 67% of their cars electric by 2032. That’s later than the original target of 2030, but it still calls for a significant increase from the 7% of sales achieved in 2023. It would also require big targets for buses, garbage trucks, and both short- and long-haul freight tractors.

So, why the delay?

Feel free to place most of the blame on macroeconomic conditions and higher interest rates. But remember that the economy is doing fine, according to Paul Krugman, a Nobel Prize winner in economics and an oped columnist for the aforementioned Times Markets largely ignored the Federal Reserve’s warnings of tighter policy in 2024 but got hammered by inflation and shifting rate cut expectations for this year. CME Group’s fore-

increase from the previous year. The Mustang Mach-E sold 40,771 units, up 3% from 2022. The F-150 Lightning, Ford’s electric pickup, sold 24,165 units, a 55% jump from 2022. The E-Transit, the company’s electric van, sold 7,672 units, up by 18%

Ford sold 26,000 EVs in Q4 2023, a 24% increase over the previous quarter. The Lightning was America’s top-selling electric truck in 2023.

Those successes made Ford America’s second-biggest EV brand behind No. 1 Tesla (TSLA). Elon Musk pointed out in 2021 that among thousands of EV manufacturers only Tesla and Ford have never declared bankruptcy.

DE FACTO EV MANDATES AND SURGING CONSUMER DEBT WEIGH ON FORD AND GM VALUATIONS.

full-speed ahead with EVs and charging stations.

So, the question becomes whether American auto producers can capture market share in this new era of electric cars and trucks.

FORD: 2023 REVISITED

In 2023, Ford saw significant growth in its EV sales. The company sold 72,608 EVs, an 18%

Yet despite the wins, Ford faces challenges, prompting it to change its EV strategies. The automaker has slashed planned investment in future EV battery plants and reduced its 2024 Ford F-150 Lightning production estimates.

GM: 2023 REVISITED

Despite challenges, including a United Auto Workers strike and production issues, General Motors posted strong sales last year.

It sold 75,883 EVs in 2023, a 93% jump from 2022. Sales rallied thanks to increasing demand for the Chevrolet Bolt and Bolt EUV.

The company also reported higher demand for its new Cadillac Lyriq. The luxury EV sold 9,154 units for the year, an increase from 122 in 2022. The company also plans to expand production.

It will add more electric cars to its lineup, including a Chevrolet Silverado EV pickup, GMC Hummer EV and Chevrolet Blazer EVs.

That said, GM’s financial performance isn’t

Based on seven best-performing Wall Street analysts offering 12-month price targets for Ford in the last three months, according to Tipranks. The average price target is $15.50 with a high forecast of $21 and a low forecast of $12. The average price target represents a 25.3% change from the last price of $12.37.

Based on 10 best-performing Wall Street analysts offering 12-month price targets for General Motors in the last three months, according to Tipranks. The average price target is $52.40 with a high forecast of $88 and a low forecast of $40. The average price target represents a 27.9% change from the last price of $40.97.

FORD GENERAL MOTORS

TICKER: F  (NYSE)

CEO: James Farley

EMPLOYEES: 183,000

HEADQUARTERS: Dearborn, MI

TOTAL VEHICLES SOLD IN 2023: 2 million

2023 REVENUE: $176 billion

2023 NET INCOME: $4.3 billion

MARKET CAPITALIZATION: $48 billion

promising. Last October, the company withdrew its 2023 forecast, citing concern about the UAW strike and EV sales. Barron’s magazine noted in February that the company wiped out its stock losses linked to the strike in September and October.

But this analysis ignores the broader market sell-off. Global liquidity problems and a sharp rise in the 10-year U.S. Treasury bond fueled it. These events happened at the same time. General Motors— like most of the S&P 500 stock—rebounded into the end of the year. Shares have moved higher as part of a broader market run with record levels of global money and AI fever as the fuel.

So, GM’s not out of the woods, and its valuation challenge explains why.

TICKER: GM (NYSE)

CEO: Mary Barra

EMPLOYEES: 157,000

HEADQUARTERS: Detroit

TOTAL VEHICLES SOLD IN 2023: 2.6 million

2023 REVENUE: $171.8 billion

2023 NET INCOME: $12.4 billion

MARKET CAPITALIZATION: $46 billion

VALUATION EXPEDITION

On valuation, Ford and General Motors are both attractive value stocks.

Looking under the hood, we see General Motors has been flat over the last five years. It trades for close to $40. This price has haunted the company for roughly a decade. Its yield is 1.2%, and its margins are as sticky. It has a net margin of 5.9%, but its free cash flow margin is -2.1%. On top of that, its return on invested capital is 4.23%.

General Motors looks like a Ben Graham dream value stock. It trades for 73% of book value and 0.8% of tangible book value, while it has a price-to-Graham figure of 0.42%.

Danny DeVito’s character in the film Other People’s Money would like this type of stock. “Larry the Liquidator” would

—ALL DATA ABOVE COURTESY OF TIPRANKS.COM AS OF 3/10

FORD WOULD NEED TO GAIN MOMENTUM AND BECOME MORE PROFITABLE TO WARRANT BUYING ITS STOCK.

GM SUFFERS FROM TIGHT MARGINS AND HIGH COSTS.

break the company into many little pieces for profit. The problem, though, is that GM has too much at stake and remains too close to Washington on EV policy.

Meanwhile, Ford trades at 1.13x book value and 11.2 times earnings. Its price-to-Graham number, which serves as a percentage of a fundamental valuation, is 0.55.

But looks can be deceiving. Ford has been operating with razor-thin net margins of 2.5% and has a return on invested capital of 2.75%. Its free cash flow margin is 3.8%.

Tack on an enterprise value to earnings before interest and tax (EV-EBIT) of 15.7x.

Ford traded in late February at $12.15 per share. This reflected a stock that has yoyoed with interest rates and the economy over the last five years. It also failed to deliver better returns. Even income investors can do better. They can find a 4.95% dividend on companies outside the sector. These companies have better signs of capital efficiency and free cash flow.

Neither GM nor Ford has a gross profit margin of over 20%.

This figure suggests neither has a safe economic moat in the medium to long term. Also, these margins indicate challenges lie ahead in a competitive industry.

TOMORROW’S OPPORTUNITIES

Deciding between the two auto companies for a stock portfolio feels like picking one of the last two players in a sandlot baseball game. But there’s no need to resort to “eenymeeny-miny-moe” because Ford is the clear choice.

Ford’s competitive advantage isn’t in EVs. It’s in its effort to boost customer loyalty. “Ford Pro,” the company’s dedicated commercial vehicle and services division, is designed to help small businesses that might need a single van or large companies managing vast fleets.

The Ford Pro division covers vehicles with conventional internal combustion engines and electric vehicles. It offers customized help with meeting sustainability goals and operational needs. Ford says the division can improve uptime, productivity and efficiency through aids like telematics and data for fleet optimization. It will tackle everything from company running costs, to vehicle utilization and driver safety.

Last year, Ford Pro had more than 500,000 subscribers at a gross margin over 50%. CEO Jim Farley suggests the division parallels what Deere & Co. (DE) began doing seven years ago. Since then, shares in

Deere have increased by more than 220%. In February, Ford announced it expects its Pro unit’s pretax earnings to reach $8 billion to $9 billion in 2024.

Like Ford, General Motors must also address the “elephants in the room.” These take the form of pension reform and the unions. Labor focuses on hourly pay, but better stock incentives for employees could free the com-

67% 7%

pany from those twin albatrosses. Instead of competing at the negotiating table, both companies should find ways to collaborate with workers.

Future contracts should address wage increases, job security and benefits. They have to deal with those issues in an industry where shifting to EV production is raising concern about job displacement. Making EVs requires less labor than producing traditional cars, and the situation is also complicated by the globalization of labor and competition from U.S. plants that aren’t unionized.

Meanwhile, the federal government’s push for EVs could boost either Ford or General Motors. Automation will likely cut labor costs during this transition, but the industry faces higher costs for metals and other materials.

Ford would need to gain more momentum and become more profitable to warrant buying its stock. Also, General Motors’ cash flow struggles could hurt the company if the economy weakens in 2025 or 2026 as global liquidity tops out.

Ford is a speculative play. While GM’s challenges from recent contract negotiations are over, tight margins and high costs still present problems.

Garrett Baldwin, a commodity and trade economist, serves as Luckbox editor-at-large. He is the author of Postcards from the Florida Republic on Substack, which focuses on insider buying and momentum trading.

The

EV

THE AUTO TRADE

FROM THE PRACTICAL TO THE ASPIRATIONAL, THESE NEW GAS, HYBRID AND ELECTRIC VEHICLES SCORCHED THEIR WAY TO OUR SHORTLIST

BY JAMES MELTON

Tesla fans have already waited a long time for the second-generation Roadster, and they will wait some more—until at least some point in 2025. Tesla CEO Elon Musk took to his X social media site on Feb. 27 to announce the roadster will go from zero to 60 mph in less than a second. And, in classic Musk fashion, he posted: “There will never be another car like this—if you could even call it a car.”

TESLA ROADSTER (SECOND GENERATION)

LAMBORGHINI REVUELTO

The Revuelto is Lamborghini’s first highperformance electrified vehicle (HPEV) hybrid. This supercar combines a 12-cylinder internal combustion engine with three electric motors to produce a maximum of more than 1,000

horsepower and a top speed of about 217 miles per hour. It features carbon-fiber monocoque construction and a pilot-like cockpit.

“The Revuelto is equal parts past, present and future Lamborghini, and the combination is undeniably intoxicating,” said a review in

Car and Driver magazine.

The manufacturer calls the Revuelto “the most customizable Lamborghini ever,” with numerous options available via the Lamborghini Ad Personam customization program. The price starts at $604,000.

CADILLAC CT5 V-SERIES

Cadillac’s luxury sport sedans get a refreshed look for the 2025 model year. Unveiled in January, the 2025 Cadillac CT5-V and the higher-end CT5-V Blackwing are expected to be in showrooms this summer. New features will include 33-inch-diagonal LED color touchscreen displays. The 2025 CT5 price will reportedly start at over $45,000.

DELOREAN ALPHA5

The electric Delorean Alpha5 is the first product from DeLorean Motors Reimagined, a reborn Texas-based incarnation of the 1980s Delorean brand. True to its heritage, the Alpha5 is a gull-winged sports car. The manufacturer’s website says delivery will begin no earlier than late 2024. Media reports say the price will be $150,000-plus.

TESLA CYBERTRUCK

After several delays, Tesla is finally delivering one of the most anticipated (and polarizing) EVs ever introduced. The stainless-steel-clad Cybertruck displayed at the recent Chicago Auto Show got plenty of attention. Price starts at $57,390 for the RWD version due out next year. The AWD version (which Tesla produces now) starts at $76,000.

GENESIS GV70

Car and Driver magazine named both the gasoline and electric versions of GV70, from Hyundai’s Genesis brand to its 2024 Editors’ Choice ranking. The magazine says “this compact SUV does luxury better than the Audi Q5 and BMW X3 and also delivers well-balanced road manners—with a smoother ride than the Mercedes-Benz GLC-class and the Volvo XC60.” Price starts at $45,000 for the dinosaur-juice version and $66,450 for the EV.

MASERATI GRANCABRIO

Introduced on Leap Day, the updated GranCabrio—a convertible version of Maserati’s venerable GranTurismo—could be the perfect springtime gift to yourself.

At launch, the GranCabrio is available in the

carmaker’s high-performance Trofeo trim, featuring a 3.0-liter twin-turbo six-cylinder engine cranking out 542 horsepower. This spyder streaks from zero to 62 mph in 3.6 seconds and has a top speed of 196 miles per hour, Maserati says.

APTERA

Technically, it’s not a car. It’s classified as an enclosed “autocycle” and subject to motorcycle regulations. Aptera says it gets 250 to 1,000 miles on a charge, depending on the battery buyers choose. And the Aptera can get enough continuous charging from the sun to more than replenish the power used during daily driving. Due out in late 2024, the 400-mile Launch Edition starts at $33,200.

An all-electric version is in the works for the convertible, while the GranTurismo already has one called the GranTurismo Folgore. Maserati had not released the price before press time, but it will reportedly start at more than $200,000.

FORD MUSTANG

Ford rolled out an all-new, seventh-generation Ford Mustang for the 2024 model year. Prices start at $30,920 but can top $62,000 for higher-end versions. The least-expensive iteration features a turbocharged 2.3L EcoBoost engine delivering 315 horsepower. Coming for 2025 and pictured here is a $300,000 (starting price) edition called the Mustang GTD, a street-legal performance version designed in parallel with Mustang GT3 race car.

CHEVROLET CORVETTE E-RAY

When Chevrolet announced its Corvette E-Ray, the word “hybrid” was nowhere to be found.

This is an “electrified” Vette with allwheel-drive capability provided by an electric propulsion system added to a smallblock, 495-horsepower V-8. The electric motor and gasoline engine create a combined 655 horsepower. The electric assist also features a “stealth mode,” that enables drivers to operate on quiet electric power for three or four miles at up to 45 mph.

The E-Ray’s zero-to-60 time is 2.5 seconds, making it the quickest Corvette ever, Chevy says.

The price starts at $106,000 for the coupe and $113,000 for the convertible.

BMW I4

Will automakers build EVs enthusiasts will love? BMW is one of the mainstream manufacturers giving it a try. Car and Driver magazine tested the xDrive40 version of the all-electric BMW i4 and called it “a sprightly performer at the test track, with a 60-mph time of 4.4 seconds and a quarter-mile zip of 12.9 seconds at 109 mph” and “a finely honed driver’s car.” The BMW i4 line starts at $53,000, and the xDrive40 iteration starts at $62,000.

LUCID AIR PURE

Lucid is obsessed with efficiency, including the way it distributes space. The Lucid Air Pure—the “affordable” version of Lucid’s Air models—has a surprisingly roomy cabin and 32.1-cubic-feet of cargo space when you combine its trunk and the “frunk” located in the front of the car. Car and Driver magazine named the Lucid Air Pure to its 10 Best List for 2024. Price starts at $70,000.

Twelve years ago, elon musk scoffed at Chinese EV manufacturers. Asked about China’s BYD (BYDDY), Musk chuckled and responded, “Have you seen their car?”

Musk isn’t laughing anymore. In fact, he recently sounded the alarm on the growing influence of Chinese EV makers, saying, “If there are not trade barriers established, they will pretty much demolish most other companies in the world.”

Walking through downtown Shenzhen, China—a modern city of more than 15 million located just inland from Hong Kong— provides a look at what may lie ahead. Most foreign visitors would be surprised by the sound of silence. And it’s not a lack of traffic. Shenzhen has heaps of that. Instead, it’s because of the diminishing presence of internal combustion engines on the city’s streets.

Instead, Shenzhen—often referred to as China’s “Silicon Valley”—is filled with EVs. And to most foreign visitors, especially those from outside Asia, the brands are mostly unfamiliar. In that regard, taking a stroll through China’s largest cities can feel a bit like walking on a different planet, as opposed to just another Earthly city.

UNFAMILIAR CAR BRANDS

After decades of prosperity, roads in China have long been filled with high-end cars. It’s been common to see BMWs, Bentleys, Lamborghinis and McLarens in Hong Kong, Guangzhou, Shanghai and Shenzhen. Recently, cars from Tesla (TSLA) joined that list.

But now cars bear the names of manufacturers that include Geely (GELYF), Nio (NIO), Xpeng (XPEV) and, of course, “Build Your Dream”—better known as sim-

ply “BYD.” Plus, there are many more. Wired magazine reported in October that at least 300 companies make EVs in China.

But when was the last time you saw those names emblazoned on the bodies of cars traversing America’s highways? Probably never, and there’s a good reason for that.

In 2018, then-President Donald Trump slapped a 25% tariff on Chinese vehicles, which was on top of the existing 2.5% duty on all automobile imports. That made Chinese EVs 27.5% more expensive here than their original sticker price. The European Union levies a more modest 10% tariff on imported Chinese EVs, and as a result sales of Chinese EVs have been rising in Europe.

In fact, Chinese EVs have gained such popularity in Europe that the EU is considering raising the tariff to help protect European automobile manufacturers from Chinese competition. That’s why the United States erected the trade barrier. The threat is real. Last year, China became the world’s largest vehicle exporter, surpassing Japan. And new-energy vehicles accounted for a lot of that growth.

BYD IN TESLA’S REARVIEW MIRROR

Politicians in the West have long argued that Chinese EVs enjoy an unfair advantage because they’re subsidized by the Chinese government. At least, that’s how they rationalize

the tariffs. Regardless, Chinese manufacturers may soon develop a workaround. BYD, for one, recently announced plans to build an EV factory in Hungary to avoid the high U.S. tariff on cars made in China.

That said, it will cost more for BYD to build EVs in the EU than in China. And it’s likely BYD will be forced to raise its prices in the European market. Right now, the average retail cost of an EV in China is around $33,000, while in the EU it’s closer to $70,000.

When BYD starts manufacturing in the EU, it will undoubtedly raise prices, but it will

WITHOUT TRADE BARRIERS, BYD WILL DEMOLISH MOST OF THE WORLD’S CAR COMPANIES.

—ELON

MUSK

Soaring Chinese NEV exports

In the first seven months of 2023, China more than doubled the number of electric and hybrid vehicles it exported when compared to the same period in 2022.

TESLA BYD COMPANY

TICKER: TSLA  (NASD)

CEO: Elon Musk

EMPLOYEES: 127k

HEADQUARTERS: United States

VEHICLES DELIVERED IN 2023: 1.8 million

TOTAL EVS DELIVERED IN 2023: 1.8 million

UNIQUE MODELS OFFERED: 6

2023 REVENUE: $97 billion

2023 NET INCOME: $15 billion

MARKET CAPITALIZATION: $510 billion

TICKER: BYDDY (OTC, ADR)

CEO: Wang Chuanfu

EMPLOYEES: 570k

HEADQUARTERS: China

VEHICLES DELIVERED IN 2023: 3.0 million

TOTAL EVS DELIVERED IN 2023: 1.6 million

UNIQUE MODELS OFFERED: 26

2023 REVENUE: $80 billion

2023 NET INCOME: $4 billion

MARKET CAPITALIZATION: $78 billion

still be able to undercut most of the competition. And that cost advantage is what’s been keeping auto executives like Tesla CEO Elon Musk awake at night.

EV COMPETITION HEATS UP

Even without Chinese EVs saturating the market, the sector has become increasingly competitive, as evidenced by Tesla’s recent Q4 2023 earnings report.

During its most recent earnings call, the company lowered sales expectations for 2024, while also revealing that the company’s margins continue to shrink. Those headwinds have affected Tesla shares, which, at press time, are down more than approximately 35% year-to-date in 2024, and 60% lower than its peak in November 2021.

Yet Tesla’s current struggles aren’t linked to slumping global demand for electric vehicles. Last year, worldwide EV sales notched a fresh all-time high at just over 14 million units. And the United States is one of the world’s fastest-growing markets. However, stiffening competition has

forced many EV manufacturers to lower prices. In 2023, Tesla’s price cuts came to a total average discount of about 25%.

One can only imagine how much deeper those discounts might go if hordes of Chinese EVs invade North America. Chinese manufacturers obviously benefit from lower labor costs, but they also enjoy an advantage because most EV batteries are produced in their home market. In 2022, China manufactured nearly 80% of the world’s lithium-ion batteries. And in some cases, Chinese EV companies make those batteries in-house. For example, BYD, the world’s second-largest producer of EVs, is also the world’s largest supplier of rechargeable batteries.

BYD manufactures battery-electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). In 2023, it made 3 million vehicles, of which 1.6 million were BEVs. In comparison, Tesla manufactured 1.8 million BEVs in 2023, barely edging out BYD on a full-year basis. However, in Q4 of 2023, BYD finally surpassed Tesla in terms of total deliveries in a single quarter.

AN EV RECKONING IN EUROPE

The statistics show why Musk is getting nervous. The Tesla CEO leaned heavily on federal tax credits to build his EV empire, and new reports suggest that Tesla and other American car manufacturers are now pushing for an outright ban on Chinese-made vehicle imports into the U.S. market.

Musk proclaims himself a staunch supporter of capitalism and free markets, but when it comes to maintaining Tesla’s market share, he displays pronounced protectionist tendencies. And while BYD won’t challenge Tesla anytime soon in North America, there may be an EV reckoning on the horizon in Europe if the EU maintains only a modest duty on imported Chinese EVs.

If Tesla loses significant market share in Europe to companies like BYD, Tesla’s stock could come under further pressure in the coming months. In one scenario, BYD shares could also be re-rated with a higher valuation relative to Tesla. At present, BYD’s market capitalization is a fraction of Tesla’s—$78

billion vs. $510 billion—despite the Chinese company selling many more vehicles annually when EVs and hybrids are combined.

BYD’s hybrid line could also contribute to the company’s competitive advantage. In the United States, hybrids have been selling more quickly than EVs of late. American car dealers reported in January that unsold new EVs were sitting on the lot an average of 114 days, compared to 37 for new hybrids.

Addressing that trend, Akio Toyoda, chairman of Toyota (TM), recently predicted the auto industry of the near future will offer a variety of choices, including hybrids, EVs and hydrogen-powered vehicles. EVs will account for only about 30% of new vehicle sales “at maximum”—far short of the lofty expectations of many in the EV industry.

Because BYD offers both hybrids and BEVs, it may hold a strategic advantage over Tesla. And BYD doesn’t confine itself to passenger vehicles. It also makes electric buses, taxis and vans. BYD also announced recently that

short-term, but what if BYD decides to build a factory in the United States or Mexico?

What’s more, Americans bought only 1.2 million of the 14 million EVs sold worldwide in 2023. That suggests BYD can challenge Tesla in other parts of the world, even if the U.S. remains off limits. It helps explain why BYD has been aggressively expanding its operations in Malaysia and the Philippines.

A few years ago, nearly everybody expected Tesla to remain a big winner in the EV revolution, but not many predicted BYD would be ascendant. Warren Buffett, one investor who sensed BYD’s potential early, steered Berkshire Hathaway (BRK.B) into BYD stock. In 2008, Berkshire Hathaway invested about $230 million to buy 225 million shares of BYD—about $1 per share. Today, those same Hong Kong-listed shares of BYD trade for about $25.

BYD’s success serves as a reminder of one of the market’s longest-running axioms— never bet against Buffett or his longtime, recently deceased business partner, Charlie

BYD beats Tesla in electric-car sales

China’s top brand becomes the new global No. 1 in EVs.

it plans to enter the luxury market, starting with an upscale SUV and a high-performance supercar. The new luxury lineup is expected to be marketed under the new “Yangwang” brand.

BYD’S ATTRACTIVE SHARES

Taken together, these developments help illustrate why Musk is preparing to deploy the full court press in Washington to ensure existing tariffs on Chinese EVs remain in place or move even higher. That may work in the

Munger. Last year, Berkshire sold some of its position in BYD (at a huge profit) but still owns roughly 6% of the company. Berkshire’s continuing position suggests there’s still plenty of upside to be had in BYD—especially when one considers the large discrepancy between the current valuations of BYD and Tesla.

Andrew

THE AUTO TRADE

BY JAMES MELTON

TWO EXPERTS ASSESS EV APPEAL, ENVIRONMENTAL IMPACT, JOBS, AND PRICES.

WILL ELECTRIC CARS

help save the planet? To explore that issue, we posed the same questions to two electric car fans. One is a scion of a prominent political family, veteran in the clean-technology industry and activist committed to the creation of a zero-emission future. The other is a physicist, columnist, author, entrepreneur and selfdescribed technology pundit who thinks the climatesaving potential of vehicle electrification is misguided and, at best, wishful thinking.

LUCKBOX: ARE ELECTRIC VEHICLES CLEANER THAN INTERNAL COMBUSTION VEHICLES?

ALBERT GORE: They are. In fact, it’s really not even close considering all the upstream emissions in the manufacturing process, including mining of critical minerals. If you’re doing a full lifecycle analysis, it’s two to three times less carbon-intensive to own an electric vehicle than an internal combustion engine vehicle because you need to consider all the emissions associated with oil and gas production.

Something like 80% of the emissions associated with a gas vehicle are during the use phase because of the combustion of fossil fuels and all the related emissions in producing, transporting and distributing the fossil fuels and fossil fuel infrastructure. The major benefit of electricity as a transportation fuel is that it will get significantly cleaner over time.

MARK MILLS: The short answer is no. But that of course depends on what you mean by clean. There are air pollutants in urban areas from vehicles. Because EVs have no tailpipes, they, by definition, have no pollutants in the urban zones. And if you want to make a dense urban core cleaner from the viewpoint of photochemical smog, an EV is a good thing.

But look at the materials. Eighty-five percent of the weight of a conventional vehicle is iron and steel. Iron is a common element, easy to make and has very, very low environmental impact by metal standards. But 85% of an EV is a soup

of other metals, like aluminum, copper, nickel and manganese. These are extremely challenging metals to produce. EVs are just differently dirty than conventional vehicles.

OTHER THAN ENVIRONMENTAL IMPACT, WHY WOULD SOMEONE BUY AN ELECTRIC VEHICLE?

GORE: The No. 1 reason is it’s a great product. EVs have a lot of advantages, compared to the cars that we’ve all grown up with. They’re fun to drive. They are more convenient for people who have access to charging where they park, whether it’s at home or where they work. Of course, that isn’t universally available. But people with access to charging at one of those two places don’t think about refueling very often.

MILLS: Electric motors have what engineers call infinite torque at zero load. That means coming off the line. Everybody who has driven a golf cart knows you get a bounce back. And, of course, Teslas have the “insane” acceleration mode. So that’s a lot of fun. The EV drivetrain also offers fun stuff, like you can drive each wheel independently, make the vehicle crab walk, rotate on its center axis—all kinds of cool stuff.

ARE EVs SIMPLY TOO EXPENSIVE FOR MOST PEOPLE?

GORE: The average transaction price of a new vehicle in the United States is a little over $48,000. And the average transaction price of an electric vehicle is a little over $50,000. Each is very expensive. I think the cost curve for electric vehicles is very highly correlated to the volumes in which they and their major components are produced, including batteries.

The cost of electric vehicles is coming down significantly and very quickly. We are on the cusp of price parity with internal combustion. Several models out now cost below the average. Some of the top-selling models are in the $40,000 range, before factoring in the $7,500 credit.

MILLS: Right now, with the glut on showroom floors, lots of automakers are losing a lot of money. The glut will result in lower consumer prices temporarily, but that’s not because they’re cheaper cars.

The significant difference is the “fuel tank,” and the battery is where all the price difference comes from. It roughly comes in at $10,000 to $15,000 on average per car. Most everything is about the future price of the battery. All this hand waving about batteries getting cheaper is infantile and naive. It’s a half-ton electrochemical machine for which between 50% and 80% of its cost is tied up in its bill of materials.

WHY HAVE ELECTRIC POWERTRAINS BECOME THE GO-TO CHOICE FOR MAKING VEHICLES CLEANER?

GORE: Physics is the primary culprit. Gasoline engines are up against the limit of how much more efficient they can get. Hybrid technology can offer a lot in terms of emissions reductions, but it’s not close to what full electric operation of the vehicle offers. I think hydrogen holds a lot of promise for a lot of applications, including potentially for some heavier classes of vehicles, and marine and aviation applications. But distributing hydrogen, which is a very volatile fuel source, is very difficult compared to distributing electricity.

48% OF U.S. CAR BUYERS SAID THEY INTENDED TO PURCHASE A FULLY ELECTRIC, PLUG-IN HYBRID OR HYBRID VEHICLE WITHIN 24 MONTHS. THAT INCLUDES 22% WHO PLANNED TO BUY A FULLY ELECTRIC VEHICLE.

MILLS: Even though I was trained as a physicist, I’m like everybody else and love to engage in forensics of human psychology. I think the short answer is because Elon Musk was successful. He built a really, really cool EV and people like him. And there’s a big market of people who like EVs, and for very good reasons. They’re great cars, a lot of fun. So that got everybody all excited about them, especially automakers who were looking at the stock valuation of Tesla vs. their own stock valuations.

EVs ARE LESS MECHANICALLY COMPLEX THAN TRADITIONAL CARS AND THEORETICALLY REQUIRE LESS LABOR FOR ASSEMBLY. WOULD WIDESPREAD ADOPTION OF EVs REDUCE THE NUMBER OF JOBS IN THE AUTO INDUSTRY?

GORE: I think we can already see evidence that it’s quite the opposite. EVs and related industries are driving a lot of job growth in the

ALBERT GORE III , executive director of the Zero Emission Transportation Association, spent seven years at Tesla, most recently as the lead for public policy and business development for the Eastern and Midwestern United States. Before its acquisition by Tesla, he was deputy director of policy and electricity markets at SolarCity. Gore also served as vice president of business development at Strategic Capital Partners, a commercial real estate investment and development firm.

MARK P. MILLS , a distinguished senior fellow at the Texas Public Policy Foundation, is a contributing editor to the Manhattan Institute’s City Journal , faculty fellow at Northwestern University’s McCormick School of Engineering and co-founding partner in Montrose Lane, an energy fund. He formerly was a senior fellow at the Manhattan Institute. Mills is author of The Cloud Revolution: How the Convergence of New Technologies Will Unleash the Next Economic Boom and a Roaring 2020s and host of the podcast The Last Optimist .

—ERNST & YOUNG

“THE COST OF ELECTRIC VEHICLES IS COMING DOWN VERY QUICKLY. WE ARE ON THE CUSP OF PRICE PARITY WITH INTERNAL COMBUSTION.”

—ALBERT GORE, A GREEN ASSOCIATION EXECUTIVE

United States. And there are very compelling reasons for localizing supply chains for batteries and minerals as well, which I think overlap with a lot of the policy goals of organizations. So, purely in terms of job growth, this is in many ways driving a manufacturing renaissance.

MILLS: They get cheaper because they’re simpler. That’s the trope. This is an easy one to debunk with a conceptual point and simple data that people can find using the magic Doctor Google machine. The only difference between an EV and a regular car is that we’ve swapped complexities. We have a complex physical engine that uses combustion chemistry for propulsion. Now we also have a simple propulsion system with one looping part, the electric motor, but a “fuel tank” that has thousands of parts.

HOW LIKELY ARE YOU TO CONSIDER AN EV THE NEXT TIME YOU BUY A VEHICLE?

61% : NOT LIKELY OR NOT AT ALL

28% : VERY LIKELY OR SOMEWHAT LIKELY

11% : NO PLANS TO PURCHASE ANOTHER VEHICLE

—SOURCE: LUCKBOX READER SURVEY

WHAT ARE THE MOST PROMISING BATTERY TECHNOLOGIES ON THE HORIZON?

GORE: Solid state, in theory, holds a lot of promise. And I think it really depends on commercial viability. Toyota (TM) has been a leader in the hybrid vehicle space and seemingly abandoned the battery EV space for the short term. I am very hopeful that [Toyota’s plans for a solid-state battery] pan out and it puts out a commercially viable solid-state battery within a few years.

I think lithium iron phosphate has been an ascendant of battery technology. It’s a better chemistry for higher-volume, lower-cost vehicles and holds a lot of promise in that regard. And NMC [nickel manganese cobalt] has been a reliable technology.

“ALL THIS HAND WAVING ABOUT BATTERIES GETTING CHEAPER IS INFANTILE AND NAIVE. IT’S A HALF-TON ELECTROCHEMICAL MACHINE FOR WHICH BETWEEN 50% AND 80% OF ITS COST IS TIED UP IN ITS BILL OF MATERIALS.”

— TECHNOLOGY PUNDIT MARK MILLS

EV TIRE POLLUTION

MILLS: At the Illinois Institute of Technology, a professor found a way to manufacture nanoparticles that function like microscopic batteries in a liquid. When they’re exhausted, they can be just drained out of the tank and a new tank of liquid nanoparticles poured in. I’m simplifying. But that’s a big deal. This gets you to recharge rates like gasoline, and energy densities that aren’t like gasoline—but that’s OK. Lots of new chemistry is possible.

If you really cared about cutting oil use, and therefore CO2 emissions, we would have agnostic subsidies and give people $1,000 for whatever they did to reduce oil consumption—ride a bicycle, buy a hyper-efficient hybrid or buy an EV.

Greenhouse gas emissions from tailpipes aren’t the only major source of pollution from passenger vehicles. Particulate matter is another and, in that case, the main culprits are tires and brakes, which spew microscopic particles as they wear.

Loaded down with heavy batteries, EVs wear down tires and brakes much faster than internal combustion engine (ICE) vehicles. That’s why battery electric vehicles (BEVs)—can generate significantly more particulates from those components.

In fact, tires release 1,850 times more particulate matter than modern tailpipes in normal driving, according to a 2022 report from the U.K.-based research firm Emissions Analytics. Much depends on the driving style of a car’s operator, but the extra weight of BEVs is a factor as well. The company cites reports saying tire emissions from battery EVs can be 10% to 25% higher than for ICE vehicles.

The report also offers a glimmer of hope, advising that “a gentle BEV driver, with the benefit of regenerative braking, can more than cancel out the tire wear emissions from the additional weight of their vehicle, to achieve lower tire wear than an internal combustion engine vehicle driven badly.”

THE AUTO TRADE

LAWYERS, LOBBYISTS, LEGISLATORS AND LIZARDS IMPEDE AMERICA’S TRANSITION TO ELECTRIC VEHICLES

Environmentalists are seeking to curb carbon emissions, Congress issues tax credits to encourage Americans to buy electric cars, and regulators have nixed natural gas leases and banned drilling for oil on public lands.

It’s all in pursuit of a green utopia where everything is electrified and 15-minute cities are free of downtown pollution.

But this all-encompassing transition isn’t going to happen in the expected time frame. In fact, we might never achieve it.

Gas-guzzling conveyances aren’t the only reason. Yes, a sizable chunk of the citizenry is choosing internal-combustion over battery-powered transportation. But federal regulation, global supply chain issues and questionable American lawsuits are combining to render the green revolution impossible.

It’s been two years since Congress passed the huge Inflation Reduction Act, but it’s hard to tell where money is going and who’s getting it—except for one big winner. Lawyers. But we’ll come back to them.

RUSSIA AND CHINA AND CONGO … OH MY

Let’s look at the big picture. The green transition needs an incredible quantity of minerals—at least three times the amount of copper produced annually, for example. These numbers come from geopolitical strategist Peter Zeihan.

On a global scale, producing nations have never doubled their output of any metal in a decade. The 3X figure for copper is the lowest of the production requirements listed on the table accompanying this article. It applies to at least 14 metals needed for the green transition in different sectors of the alternative-energy world.

The switch to green living requires at least four times the chromium, 10 times the lithium, 10 times the nickel, 10 times the cobalt and 18 times the graphite now produced, Zeihan said in a 2023 presentation.

It turns out Russia is a top producer of these commodities, and it’s difficult to ramp up production in a war zone.

China, a top supplier of global rare earth materials, has taken over the supply

BY GARRETT BALDWIN

chain for solar panels and other major goods.

At the same time, China has benefited from America’s Inflation Reduction Act. Before the act, the U.S. imported about $2 billion in Chinese lithium-ion batteries in 2020, according to U.S. Census data. By 2023, that figure exploded to $13 billion.

LAWYERS AND LIZARDS

Critical mineral needs for clean energy technologies

The Bipartisan Infrastructure Law and the Inflation Reduction Act showed the need to make critical EV materials in the U.S. That includes domestic refining, processing and manufacturing. But last year, the biggest challenges in mineral extraction became even more difficult.

Still, a lack of materials isn’t holding back America’s mineral and energy production. Instead, it’s mired in regulation and legal problems.

First, participants spent too much time waiting for guidance from regulators. Business leaders understandably wanted to know about qualification criteria and tax credits before committing themselves to action.

Second, we saw the rise of “sue and settle.” Ballotpedia says the phrase “describes cases in which a federal agency is sued by an inter-

GET READY: MORE RARE EARTH

The recent discovery of what may be the largest deposit of rare earth minerals on the planet could help the United States pass China as the world’s largest producer of those essential resources.

The find is in Halleck Creek, Wyoming, and contains a whopping 2.34 billion tons of rare earth oxides, Donald Swartz, CEO of American Rare Earths (ARNNF), said in February.

“This exceeded our wildest dreams, and we only drilled on about 25% of the property,” Swartz told Cowboy State Daily , a digital news outlet.

China currently produces 90% of the rare earth minerals used globally.

ested party, declines to defend itself in court and negotiates a settlement with the plaintiff in a non-adversarial process.”

It’s keeping lawyers wealthy while putting America’s energy security on the sideline, some observers say. Some even contend “sue and settle” provides a backdoor method for advocacy groups and federal agencies to shape policies outside of traditional lawmaking.

In recent years, “sue and settle” tactics have targeted key parts of the energy transition. Some cases have led to policy shifts, and others have delayed production. But no matter what, taxpayers shoulder the cost of defending the government in these cases.

Cases that slowed EV-related production include one against lithium mining that threatened a rare flower species in Thacker Pass, Nevada. In another, the Center for Biological Diversity (CBD) sued to halt oil and gas production because of an endangered lizard species native to the Permian Basin in West Texas and southeastern New Mexico.

The CBD has tried to stop Navy and Air Force training and sued over the construction and expansion of military bases, according to Common Sense America (CSA), a right-leaning nonprofit promoting government policy. CBD also sued the U.S. space program, taking the Federal Aviation Administration to court over SpaceX, according to a CSA press release.

Critics note about 30% of the CBD’s 170 employees are lawyers.

“Sue and settle” cases declined drastically between 2016 and 2020 but came roaring back in 2021.

But the Sierra Club argues the cases labeled “sue and settle” serve constructive purposes like compelling the EPA and other federal

agencies to take timely action on regulations. The suits have been unjustly maligned, according to the club’s website.

Either way, some promising news is emerging.

HOPE IN WYOMING?

A measure of optimism emerged for America in recent weeks with the discovery of a large cache of the rare earth metals in Wyoming. (See sidebar, lower left.) This find could eventually rescue the nation from dependence on China for EV batteries.

The path to extracting minerals is rife with challenges. Environmental regulation, community concerns and indigenous rights come into play. Moreover, the specter of “sue and settle” looms large.

The discovery in Wyoming could become the latest target for legal action. How will America’s rare earth mining and electric vehicle production ever get off the ground if we can’t even get under it?

“SUE AND SETTLE” TACTICS HAVE TARGETED KEY PARTS OF THE GREEN ENERGY TRANSITION.

Higher, faster, further. Why not more beautiful?

Patria

Modest gold watches made with superior manufacturing skill, have a centuries-old tradition in Germany. After Glashutte‘s new rise, the watchmakers and their fine watches were able to attain a world-renowned reputation once again. With the Patria, we keep Glashutte’s deep-rooted horological tradition alive: the watch must be noble, beautiful, and precise.

Patria · manufacture caliber · 6600-01

MADE FOR THOSE WHO DO.

BY JAMES MELTON

THE AUTO TRADE

HOPEFUL OLYMPIANS

Olympian has received funding from venture capitalists Y-Combinator, Collaborative Fund, Climate Capital, Soma Ventures, Reunited Ventures and Mobility Vision.

Now, it’s raising $12 million via an early-series A investment round that had attracted more than 2,170 investors as of February.

It’s also running an oversubscribed but still-open campaign on Wefunder that had raised more than $3.7 million as of early March.

MORE ON YOUTUBE

AN UPSTART EV RECALLS A JAMES BOND-LIKE DESIGN EQUIPPED WITH A VOICEACTIVATED COCKPIT

Arecent walk around the Chicago Auto Show made one thing clear: A lot of new vehicles look awkwardly similar to those in their competitors’ showrooms. And many are aesthetically uninspired.

Olympian Motors sees that as an opportunity. Their retro-themed driving machines—the upcoming Model 84 and the sleek Model O1 (on this page and the cover)—look like nothing else on the road.

The cars are also built differently. Each uses a modular design built atop the same electric drivetrain. The drivetrain “hosts” four core hardware and two software modules.

But the differences don’t end there. The startup embraces a design philosophy of simplicity and sustainable materials, like wood and steel as opposed to plastic. Eren Canarslan, CEO and chief architect at Olympian, compares assembling the company’s vehicles to putting together a Lego set.

“That’s easy to assemble, easy to manufacture, contains fewer parts, fewer components, and less-complicated electronics architecture,” he told Luckbox. “That means it can be assembled by a team of four assembly employees.”

Olympian wanted to avoid the distractions that fill many of today’s vehicles, Canarslan says. The joy of simply driving can get lost amid iPad-like touch screens and lots of other controls, he says, his company puts the driving experience first and keeps the technology in the background.

The upcoming Olympian Model O1—due out in late 2024—eliminates 80% of the buttons and switches in a typical auto cockpit. Instead, it will use a “voice first” control system, a headsup display and a minimalist analog dashboard. The same philosophy applies to the Model 84.

The Model O1 starts at $80,000.

MORE CANARSLAN

The Olympian CEO

OLYMPIAN’S EREN CANARSLAN SAT DOWN IN FEBRUARY FOR AN INTERVIEW WITH JACKLYN DALLAS, HOST OF THE NOTHINGBUTTECH YOUTUBE CHANNEL. TO WATCH THE VIDEO, SCAN THE QR CODE.

PHOTOGRAPHS: OLYMPIAN MOTORS

Jack of all t r ades.

MATHBOX

Here’s a hint:

Having trouble? Step away and come back with a new perspective.

16 06

68

88

A Lot to Think About

What’s the number of the parking place with the question mark?

The image above went viral on social media last year because so many people couldn’t figure it out. But the riddle is straightforward: What’s the number of the parking space?

That may sound simple, but the question stumped almost everyone who’s considered it, including some of us at Luckbox.

The riddle was posted in September 2023 on X, formerly Twitter, and attracted more than 10 million views and 20,000 replies.

98

The 18.6 million parking spots in Los Angeles County cover 200 square miles.

— betterinstitutions.com

ANSWER: See p.

Is Tesla Losing its Charge?

THE MARKET VALUE OF TESLA (TSLA) has plummeted by an astonishing $280 billion this year, but it was still worth approximately $510 billion at press time, comparable to the combined worth of industry giants McDonald’s (MCD), Disney (DIS) and Nike (NKE).

Shares in Tesla had cratered in March on expectations of disappointing first-quarter deliveries projections, vehicle price cuts, analyst downgrades and pessimism around the market for the EV giant’s long awaited next-generation offering.

Meanwhile, competition is fierce from China, the world’s largest EV market. Investors’ sentiment for the stock is likely to remain subdued until early April when the company reports its first-quarter delivery numbers.

From here, bulls should be looking to push the price up to the two-week moving average (MA) of $190, where a continuation of buying activity could lead to a rally toward the 100-day MA of $216.

However, if the breach of the $160 support level is sustained, the price could fall to $152, where a further selling could send the stock lower into unchartered territory.

In light of the price breakdown at press time, the best advice is to fear the falling knife—step aside.

Jermal Chandler, is host of Engineering the Trade, a show that helps tastylive traders get a sense of the way the market is moving from an analytical point of view.

Tesla (TSLA)

Industry: Automotive

Market Cap: $510 billionn

Employees: 140,000+ (2024)

Beta vs. SPX: 2.41

One-year return: 2.10%

Analysts’ target (Avg.): $190.50 (As of March 14, 2024)

by Tim Knight The Technician

From Musk to Dawn My early experience with Elon and the many phases of Tesla

IIT WAS BACK IN 1999 that I met Elon Musk. In those days, hardly anyone knew who he was, but he had already built a company called Zip2 in Palo Alto, California. During the startup he consumed a sandwich every night from a Jack in the Box restaurant on El Camino Real.

Musk had made $22 million from that company, so I was excited to shake his hand and try to convince him his new online bank, X.com, should use the charts provided by my tiny company, Prophet Financial Systems. He decided he didn’t need them and that was that. X.com didn’t exactly succeed, but Musk still found a way to make it pay off handsomely. He merged it with Paypal (PYPL) and got even richer when the resulting company went public. He had joined the fabled “Paypal Mafia” that also included business icons Peter Thiel, Reid Hoffman, Chad Hurley and Max Levchin. I had only that one handshake with Musk, but my relationship with his companies was far from over. In 2008, the CEO of the firm that had acquired Prophet decided it would be fun for us to visit the world’s only Tesla dealership, which was just a mile from our office. At the time, Tesla had one product, the Road-

ster, which was essentially an electrified Lotus Elise two-seat sports car. The company sold only 147 of them in the first year.

Still, visiting the pristine dealership was remarkable. Even the repair shop in back was free of the usual automotive grease and grime—you could pretty much eat off the floor, and it made a lasting impression.

In fact, it was one of the reasons I chose a Tesla four years later when I decided to take the plunge and buy my first electric car. With tax, it came to about $100,000, but it was so gorgeous and exciting that I thought the company could charge three times that much and still sell them.

The car pictured (left) was waiting for me when I toured the Tesla factory. Musk had bought the place for a pittance when General Motors went bankrupt during the financial crisis. Tesla was using about 10% of the building’s space when I visited in 2012 but would soon grow into the facility.

Tesla’s cars were virtually unknown when I bought mine, and it attracted a lot of attention when I drove it. Hardly anyone had ever seen one before, and they seemed exotic.

But that’s certainly changed. Tesla products have become a common sight, and the name has become synonymous with luxury electric cars.

My personal experiences with Musk and his products aside, let’s review the dozen years Tesla (TSLA) has been a public entity. I perceive seven discrete phases of its lifespan as a tradeable security.

1 The quiet dawn

From June 2010 to March 2013, Tesla’s stock increased in value from about $2.00 to $2.50. (These prices are adjusted for stock splits; The first one, a 5-for-1 on Aug. 31, 2020, and the second, a 3-for-1, on Aug. 25, 2022).

While a 25% increase in price is welcomed, it isn’t exactly a noteworthy performance over the course of three years for a speculative new company with disruptive technology. The stock meandered during that time but didn’t attract much attention because there was nothing extraordinary about its price performance.

2 The first rally

Tesla’s stock eventually exited the doldrums. In less than a year—from March 2013

The author’s first Tesla Model S in 2012.

through February 2014—it climbed from $2.50 to nearly $20, an increase of about 700%. The world fixed its gaze on the company and its CEO and has yet to divert its eyes.

3 The malaise

The company’s fantastic gains quickly stalled. After the astonishing lift the stock had in less than 12 months, it entered an era of dullness lasting from February 2014 through October 2019, a span of nearly five years. Its price remained essentially unchanged for half a decade.

In other words, you could have bought Tesla in February 2014 for $17 and five years later would have seen 0% profit, even after enduring some pretty nasty dips along the way. The buzz around Tesla’s stock had faded, and it ground along trying to form a base.

The company suffered from bad press and was plagued with production problems. It famously stumbled along in what came to be known as “production hell” for the Model 3, which Musk has described as perhaps the worst time in his life.

4 The second rally

The Phase 4 boom blasted off from Phase 3. After years of going nowhere, Tesla soared from $17 to $412, a move of about 2,300%, from October 2019 through November 2021, a period of merely two years.

Those absolutely eye-popping returns made Musk famous as by far the richest man in the world. Tesla became the absolute darling of

By 2028, Tesla could be the most valuable company on the planet.

Wall Street and a member of the elite “Trillion Dollar Club” of companies with 13-figure market capitalization. It seemed Musk and Tesla could do no wrong.

He became so cocky about the stock’s performance that he issued Tesla-branded red satin shorts to chastise any of the bears who had “shorted” the stock on its amazing ascent and turned into fiscal hamburger in the

The Seven Phases of Tesla

process. The satin shorts quickly sold out, as did any of the other Tesla swag, and 20,000 infamous flamethrowers from The Boring Co., another of Musk’s ventures.

5 The wipeout

Although Tesla had plenty of ups and downs during its first decade as a public company, it had never experienced a bear market until late 2021. After the stock peaked at $414.50 on Nov. 4, 2021, it commenced a brutal slog of “lower highs and lower lows” which is the classic characteristic of a long-term downtrend.

Grinding away for thirteen months, the stock finally bottomed on Jan. 6, 2023, at a price of $101.81, a loss of 75%. Those who prided themselves on having “diamond hands” found their portfolios laid to waste because the stock had been thrown back to its level of July 2020.

6 The recovery

After bottoming in January 2023, Tesla mounted a hearty but uneven recovery. It bounced sharply for just one month, eased back for a couple of months while it gave up

some of those gains and then blasted higher through July, adding almost 200% to its price. Although it was still 25% beneath its lifetime peak, the rebound helped restore confidence in the company, its products and its leader.

7 The new slog

That recovery lasted half a year, and Tesla subsequently started burning up its gains again, slipping from almost $300 in July 2023 down to $180 in January 2024. In other words, most of the gains of Phase 6 were gone in the six months that followed, although the stock was still appreciably higher than its January 2023 nadir.

Concerns began mounting that Tesla’s large increase in sales and profits were quickly weakening and that its new generation of cars was a couple of years away from making any meaningful difference in revenue. Thus, even though its revenue and profit were vastly higher than three years earlier, the stock price was, in fact, the same as it was three years before.

The full picture

The chart of Tesla’s history shows all seven of its phases and indicates it has been an uneven

ride. Investors who bought shares in 2020 and hung on into 2024 may well have been left with a meager profit or, just as likely, a loss.

Those lackluster results have convinced some observers Tesla may no longer deserve membership in the “Magnificent Seven,” a group of companies with high-performing tech stocks that also includes Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT) and Nvidia (NVDA).

No one knows Tesla’s future. But based on its lengthy history, the company may have

2,300%

Tesla’s stock gain as it soared to $412 per share in November 2021 from $17 in October 2019.

entered a new Phase 8 that will come to resemble Phase 3. It’s probably going to spend a while—years, probably—grinding away in a rather large range and buffeted this way and that by overall market direction. Its fate will also hinge on its own product successes and failures and, perhaps most importantly, the adoption of its self-driving technology.

Full Self Driving (or FSD) has become a running joke with Tesla naysayers because Musk has been pledging for many years that the technology would soon be perfected. Despite tremendous progress at the company, doubters seem to outnumber or at least outshout the true believers.

By 2028, Tesla could be far and away the most valuable company on the planet. Bigger than Microsoft. Bigger than Apple. Bigger than Aramco. That may sound like utter lunacy because Tesla has been the only “dog” in the Magnificent Seven and Musk has become the object of incredible public animosity.

But if you asked 100 people to name the CEOs of the Magnificent Seven, most couldn’t come up with anyone but Musk. Not many

Musk will be remembered as a greater visionary than the late Steve Jobs.

would remember the names of Sundar Pichai or Satya Nadella.

Musk is a visionary whose influence will ultimately be greater than that of Apple’s late Steve Jobs. Tesla may be in the doghouse right now, but Phase 9 could bring a new dawn of unimaginable success and prosperity.

Tim Knight has used technical analysis to trade the equity and options markets for decades. He founded Prophet Financial Systems and created the website slopcharts.com, which offers free access to his charting platform. @slopeofhope

Many

5. iPhone for SMS price and trade alerts

6. Camera and mic to provide options trading

Meet the Trader

W. JOHN SABIN

TRADES & TACTICS

How did you start trading?

My grandfather was an options trader. He taught me about saving, trading stocks and stock options starting when I was 11. At that time, it was mostly writing covered calls. I became a Series 7 broker at 18 years old and have traded almost every day since then. It’s the best gig ever.

Favorite trading strategy?

I don’t really have a favorite trading strategy. I let IVR and the Greeks direct my approach for each trade for the most probabilistic outcome. Approximately 70% of my trades are strangles/ratios. The rest are iron condors, vertical spreads, calendars and butterflies. An occasional jade lizard will sneak in as well.

Average number of trades per day?

About 30 to 50-plus trades per day, depending on whether we are in earnings season, at 21 days to expiration or if positions are needing attention. I always seem to be looking for more trades to put on.

What percentage of your outcomes do you attribute to luck?

Luck? Zero percent. Sixty-eight percent is pure normal distribution. Mean reversion and skill fill out the next two standard deviations.

Favorite trading moment?

Every day when the markets give two-sided action. The best was probably riding Tesla (TSLA) up and up—second only to exiting most positions before March 2020.

Favorite trading moment?

Those days when the market acts like it’s on a lunch break. One time, I was being long Tesla on its way down. I have learned to trade “sure things” a lot smaller. I have a love-hate relationship with Tesla.

Location:

The Villages, Florida

Age: 54

Years Trading: 43

1. tastytrade beret

2. tastylive on screen

3. Trading platform options flow effect on free float

4.

charts with various exponential moving averages, Davos boxes, Bollinger Bands

training

Crude Oil and a Revolution in Retreat Plus, how to pick a winner among GM, Ford, Toyota and Tesla

output continues to build seems somewhat counter-intuitive. One might have expected that growing production would pressure WTI lower. The lingering presence of a speculative geopolitical risk premium embedded in prices might explain the disconnect.

The war in Ukraine continues, and a new front has opened in the Middle East after Hamas attacked Israel on Oct. 7, 2023. The war that followed has brought violent clashes along key shipping routes as Yemen’s Houthi rebels sympathetic to the Hamas cause attacked commercial vessels in the Red Sea. The risk that major Persian Gulf producers could get pulled into the fray is ever-present.

In fact, supply risks seem minimal. Daily U.S. crude oil consumption averages about 20 mbd, leaving a bit of room for imported supplies. From here, making the jump to full self-sufficiency hardly seems challenging.

CCRUDE OIL PRICES have been drifting sideways since October 2022.

The benchmark West Texas Intermediate (WTI) contract briefly spiked to $115 per barrel (bbl) in March 2022 as Russia stoked supply disruption fears with its invasion of Ukraine. Concerns cooled by June, with prices easing back to settle in a choppy range between $68/ bbl and $91/bbl. They have remained locked in it since.

U.S. CRUDE OIL PRODUCTION VS. PRICES

Meanwhile, the United States is awash in crude supply. Data from the Energy Information Administration (EIA) shows production bottomed out in March 2021, having plunged amid COVID-19 lockdowns, then started to rapidly rebuild. By December 2023, the U.S. was producing 13.3 million barrels per day (mbd), the most on record.

Crude oil prices are stuck

That prices are broadly pinned in place while

Crude-oil supply risk?

Imports have flatlined at an average of 6 million to 7 million barrels per week since mid-2021. Over the same period, exports have more than doubled from 2.4 million to nearly 5 million barrels per week. That leaves an average gap of just 2 million barrels per week, the lowest in at least three decades.

At the same time, production efficiency seems to have improved by leaps and bounds. The number of operational oil rigs in the

TOP 3 U.S. CARMAKERS VS. TESLA

Ratios comparing the share price of the top three automakers—Ford (F), Toyota (TM) and General Motors (GM)—to that of EV vanguard Tesla (TSLA) plunged from double digits to within $1 in a mere decade, from 2011 to 2021. If oil prices recede toward the long-term floor near $30/bbl, this trend may turn in the opposite direction.

Pair trades establishing bullish exposure to TM—the stock price outperformer among the traditional automakers—alongside an equivalent bearish bet on Tesla might appeal to traders looking to capture this reversal. Doing so via long-dated options might be more capital efficient as well as more attractive from a risk management perspective than outright long and short stock positions.

The United States is awash in crude oil ... from here, the jump to full self-sufficiency hardly seems challenging.

United States has trended steadily lower since peaking just shy of 1,600 in September 2015, energy company Baker Hughes reports. The tally fell to a pandemic low of 183 in August 2020, then rebuilt to settle at about 550 in 2023.

Meanwhile, the number of crews actively engaged in hydraulic fracturing of shale oil deposits, or fracking, has nearly halved from about 500 in mid-2018 to about 260 in the past two years. The extraction method is at the heart of surging U.S. output over the

past decade.

Finally, EIA estimates domestic storage capacity utilization rates are hovering at 50% to 60%.

In all, there appears to be ample room to ramp up output and store it, such that the meager shortfall between domestic and imported supply is briskly closed. Absent a relatively short transition period, this likely insulates the U.S. from global supply disruptions. That means prices might fall once scary headlines spooking speculators begin to abate.

EV revolution in retreat

In turn, declining oil prices might put the brakes on a key forcing function driving the transition to electric vehicles from conventional options using internal combustion engines.

Ilya Spivak heads tastylive global macro and hosts the network’s Macro Money show. @ilyaspivak

by Christopher Vecchio

Challenges Mount for Automakers Rising delinquencies and China’s supply are squeezing margins

T

THE POST-PANDEMIC YEARS have proved challenging for global automobile manufacturers, especially companies making electric vehicles. Look no further than their share prices for proof.

While both the S&P 500 and Nasdaq 100 have traded to fresh all-time highs, the Global X Autonomous & Electric Vehicles ETF (DRIV) is down more than 25%, and the iShares Self-Driving EV and Tech ETF (IDRV) is down nearly 46% from the November 2021 highs.

A significant precipitating factor for weakness in auto manufacturers’ stock in recent years has been the undoing of pandemic-era supply chain pressures. That process has increased availability of new cars.

Meanwhile, rising interest rates have started to push up auto loan delinquency rates, with 2.66% of auto loans now in “serious delinquency” as of Q4 ’23, up from 2.22% in Q4 ’22, according to the New York Federal Reserve’s latest quarterly report on household debt and credit.

Spreading to used cars

The effects of rising delinquencies and an ample supply of new cars have spilled over into the used car market. Prices there have been receding rapidly, down 13.4% across all models over the past year, according to the Cox Automotive Manheim Index.

Absent a new supply chain crisis, the nearterm trend points to a continued increase in relative supply in the global automobile market, keeping downside pressure on vehicle

5.26 million

Cars exported by China in 2023

63.7%

The increase from 2022

prices—both new and used—in 2024.

Then there’s China and its burgeoning car industry.

The Chinese threat

The oversupply problems seem particularly damaging for U.S.- and European-based companies. The biggest change to the global auto manufacturing industry may not be the undoing of pandemic era supply chain issues, but instead the surge in Chinese automobile (especially EV) production and exports in recent years.

Chinese carmakers produced 30.16 million vehicles in 2023, with 5.26 million units shipped aboard for a staggering 63.7% rise in exports over the previous year. By comparison, the U.S. shipped 1.8 million units abroad

The automakers’ challenges have spilled over into the used-car market.

in 2023. China has quickly surpassed the U.S., and now is on pace to topple Japan, as the world’s largest exporter of automobiles in the span of a few short years.

So, what kind of vehicles will the Chinese auto industry export for the remainder of 2024 and beyond? Around 50% of them are expected to be EVs, a share likely to increase in the future. Prices of electric vehicles are coming down, which is good for consumers but also means margins on these vehicle sales are in a stable downtrend.

Struggles with their share prices, just like those in Tesla, should not be dismissed lightly. After all, if stocks like Ford (F), General Motors (GM) and Tesla (TSLA), or ETFs like DRIV and IDRV, can’t rally to all-time highs during one of the best bull markets in U.S. equity market history, who’s to say that the future holds more promise given the difficult landscape for global automakers in 2024 and beyond?

Christopher Vecchio, CFA, head of futures and forex at tastylive, forecasts economic trends in a number of countries. @cvecchiofx

by Garrett Baldwin

A Lithium Trade Heavy expectations for the world’s lightest metal

FFOR A COMMODITY once celebrated as “the new oil,” lithium has fallen hard—its stock price plunging 80% from the December 2022 all-time high. Blame the soft metal’s soft prices on the slowdown in demand for electric vehicles.

But is it a case of peak pessimism? The EV market’s decline has slowed. Despite a 26% monthly drop in January, global sales grew by 69% from the previous year, according to the EV analytical firm Rho Motion.

“The European market grew by 29% yearover-year, the U.S. and Canada by 41%, and in China sales almost doubled,” Rho Motion reported.

And in February, the investment bankers at Goldman Sachs forecasted EVs would account for half of global new car sales by 2035.

TRADES & TACTICS

As long as motorists buy EVs in sufficient numbers and no new battery technology supplants lithium, companies that deal with the metal should be on your watch list.

One such company, Arcadium Lithium (ALTM), produces lithium-related chemicals crucial for portable electronics, electric vehicles and stationary storage facilities. It also performs hard-rock mining, conventional pond-based brine extraction and direct lithium brine extraction.

About 1% of global lithium comes from the U.S. That’s a shame because lithium batteries were developed here, and we gave up the business to China. We went where they were cheapest.

Arcadium has a global presence with operations in Argentina and Australia and downstream conversion assets in China, Japan, the United States and the United Kingdom. It’s based in Ireland and was formed by the merger of Allkem and Livent.

The company had an initial public offering on Dec. 22, 2023, in an attempt to break into the global lithium market. It’s well-positioned as governments continue to mandate a shift away from gas-powered vehicles and offer subsidies and incentives for EVs.

In addition, Arcadium seeks to become a player in renewable energy storage systems,

which are declining in price mainly because of China’s success in the sector. But those prices should increase late this year as the world approaches a lithium deficit in 2025.

It’s all about demand and mandates. Globally, projects requiring lithium will increase by 1,235% over the next 15 years, Statista projects. That would mean rising from 310 metric tons in 2020 to more than 3.8 million by 2035.

If you’re looking for an economic moat here, pay close attention to Arcadium’s Argentina lithium production, which is high in quality and low in impurities, the Morningstar financial services firm suggests.

As for the stock, we see a fair value of $7.35. There’s virtually no debt, and the return on invested capital is 19.5%. Its adjusted F score is 7.5, with a price-to-Graham at 0.6. These are all very positive figures.

ALTM’S IPO stock went public at $6.00 on Jan. 4, popped above $7.00 and retreated quickly to $4.15 in early February. It is currently trading at approximately 1.2x book value. But it’s running with net margins above 40%, shows better profitability than sector rivals and could quickly become a momentum stock if inflows continue.

Buy Arcadium with an 18-24-month target, but expect some volatility over time because of overheated U.S. markets.

The ultimate price target is about $10.

Portions of this article appeared in “The March Wave Model Portfolio Pick” in the author’s Republic Risk Letter on Substack.

The average Arcadium Lithium price target is $7.56, with a high forecast of $12.00 and a low forecast of $5.00, based upon the nine best-performing Wall Street analysts offering 12-month price targets for the stock in the last three months.

TIPRANKS

Buy ALTM: below $5.25 Target: $10.00

LASTPICTURE

From Diapers to Depends

Active traders and investors search for short-term opportunity and strive to maintain an agnostic view of the stocks they pick. But in the longer-term, wisdom resides in looking beyond the immediate.

Warren Buffet, the storied oracle of Omaha, has long championed the merits of investing in companies with product portfolios so comprehensive they cater to their customers from the cradle to the grave.

This strategy hinges on two metrics—customer lifetime value (CLV) and customer acquisition cost (CAC). CLV measures the amount a company expects to make from a single customer over the length of the relationship, while CAC measures how much a company spends to win a customer’s loyalty.

The next issue of Luckbox will delve into those metrics and exam-

ine the product portfolios of cradle-to-grave companies with high CLV. They’re the businesses that have mastered the art of evolving alongside their customers, offering products that mark every significant life event.

Enduring relationships not only cement brand loyalty but also transform customers into brand advocates. They help ensure a steady stream of revenue that’s nearly immune to the whims of market volatility and the grind of economic cycles.

Take, for instance, companies like Kimberly Clark. With diverse product lines targeting consumers from infancy to retirement, the consumer goods company epitomizes the “cradle to grave” business model. Investing in such companies is a solid bet on their nearly inescapable presence in consumers’ lives.