Getting closer

I am sitting at my computer on May 14 wondering if my T Bills will be worth anything two weeks from now. I must tell you, on a financial front, we are in deep Dudu if we default on our debts. WHAT A MESS.

And if I get bored, I run to YouTube to see what I can find out about where the EV (Electric Vehicle) vs ICE (Internal Combustible Engine) debate stands. Came across one program that was pretty good where they compared EV total cost against an ICE total cost over 125,000 miles.

As it turns out the EV purchase cost is well in excess of a similar ICE model, but not as much if you take into account the $7,500 credit available on new EV’s. But let’s remember you must be able to “pay” for the EV and will not get the benefit of the if you don’t have at least $7,500 tax to pay. And it is probably safe to say that you need at least a $100,000 annual income to wind up with that type of tax.

The bottom line is that the total cost (cost to purchase plus operating costs) over $125,000 was about the same at $65,000. The higher purchase price of the EV plus fueling was the same as the lower-priced ICE unit with the cost of gasoline and repairs. Thinking further ahead you would expect the EV cost to decrease as demand climbs, which could reduce total cost to the point where EV wins the cost game (if the demand for electricity does not get so high that cost increases get to the point where we once again wind up with a tie). Could happen.

For me, I am thinking there are other alternatives that could provide similar climate benefits for less cost. Hydrogen in some form is that option. During my visit to ProMat I had a chance to spend some time with Plug Power while they were showing off how one of their units could be used with lift trucks. Less operating hassle compared to both acid and lithium batteries but similar overall run times per charge. And having H20 as the exhaust is not bad either. Toyota has developed an engine that operates along this line and concludes that EV is not necessary if buyers use the Toyota as an alternative to EV. Dealers, as far as lift trucks go, this is an option you have to keep in mind because customers are going to ask about it.

As far as our financial picture is concerned, I believe it will be tougher than expected, mainly because of the banking crunch taking place. With BK’s increasing banks take steps to review their outstanding loan portfolio to see if they have any substantial risk to consider. Being in this frame of mind banks are cutting back on new financing requests or asking for tighter coverage on existing bank loans. We discussed this topic and reaction before, and I really cannot blame the banks if they decide they must cover their butts to stay solvent. But let’s not forget that these issues also concern your customers, especially those who constantly pay late or have known cash flow problems. In the end, the banking situation will slow the economy down to where we can prepare for a hard landing.

To assist with your planning for any type of downfall that may appear, last month we went through a Balance Sheet (BS) exercise where I suggested you investigate cleaning up the BS with a goal to convert as many assets as possible into CASH because you are going to need it. The alternative is a balance sheet with assets decreasing in value once the recession goes into full swing, which, of course, are part of your bank collateral which the bank will be reviewing on an annual basis.

Now, let’s discuss the Income Statement (IS) which, of course, represents how we did profitwise over a segment of time.

You all have an idea of how the IS works and understand that it is entirely possible, with all the changes taking place in BUSINESS these days, that Income Statement results could put a strain on the BS, your cash position, and the overall value of the company. Consequently, knowing what is likely around the bend I do not believe you can sit back and say there are no changes required in your business. You can, of course, come to that conclusion, but please do so after you have examined all your risk factors and find nothing out of order. And heck, I haven’t even mentioned AI yet!