Justin’s note: The electric vehicle (EV) revolution is underway.
EVs aren’t like traditional vehicles. They run on electricity instead of gasoline or diesel.
Not long ago, just a few hundred of these vehicles existed. Now, there are nearly 1.5 million EVs on the roads… and that number grows by the day.
In short, EVs are the future. Even Doug Casey thinks so. And when Doug gets excited about something, I get him on the phone to find out why.
Read on to see what Doug has to say about this megatrend…
Justin: Doug, the last time we spoke, you mentioned how electric vehicles [EVs] will become a huge deal. What made you say that?
Doug: There’s no doubt that electric vehicles are going to put an end to the internal combustion engine [ICE]. I want to not only explain why – but some related changes that are much bigger, that almost nobody has thought about.
There’s a famous picture that was taken of 5th Avenue in 1901. The whole street is chockablock with horses and buggies. There’s one motorcar in front of a building amongst the mass of horse-drawn vehicles. In 1913 another picture was taken of the exact same place. There’s only one horse and buggy on a street bumper-to-bumper with motor vehicles. Things changed radically in just more than a decade.
That’s about to happen again. From a purely technical point of view, EVs are now vastly superior to ICEs. And I speak as a lifelong car guy. I’ve owned high-performance cars, and played with them my whole life – including racing sports cars, stock cars on ovals, and quarter-mile drag racing. EVs are far superior to ICE vehicles. They’ve got every possible advantage. They handle better because of a much lower center of gravity. They’re more economical. They’re much faster. Much more quiet. And they’re more reliable because they have vastly fewer moving parts.
Every major car company in the world is going electric, as we speak. Mercedes, BMW, Porsche, and even General Motors and Ford – who tend to lag behind on everything – are all going to EVs. This is really something. It’s a megatrend. But the average guy is completely unaware of it, because there are as yet very few on the street. Mainly Teslas. Which probably won’t make it as a company. Not because of its cars, but because of its finances. Pioneers are the ones who get the arrows in their backs…
Justin: What are the biggest investment implications of this? Is it the battery metals or something else that nobody’s talking about yet?
Doug: As you know, there’s been a lot of emphasis on the metals necessary for batteries. That’s because the success of EVs relies on the quality of their batteries more than any other factor.
Electric vehicles were around a hundred years ago. If you read Uncle Scrooge comic books you might recall that Grandma Duck drove an electric vehicle – basically a primitive golf cart. In those days the only kind of economically and technologically viable battery was lead-acid, which is what you still find under the hood of ICE vehicles, to start the engine.
Lead-acid is cheap, but it’s very heavy and doesn’t hold a charge very long under use. We now have compact lithium batteries that are relatively lightweight and highly efficient, like the battery in your computer. But they’re expensive. In the near future thousands more tons of lithium will be needed. As well as gigantic amounts of nickel, cobalt, and vanadium for various applications. So far, people have been emphasizing metals as the way to play the inevitable triumph of electric vehicles. And that makes sense.
Justin: Yeah, there’s no doubt that demand for the battery metals will explode in the coming years. But what are some second-order effects of EVs?
Doug: The second – and third order – effects are going to be vastly more significant. They’ll change much of the landscape, and the very way people live. Electric vehicles will eliminate the need for 90% of gas stations. And repair shops. Just as ICEs largely eliminated stables, farriers, and buggy whip factories.
But EVs are just part of the story. Most of them will also be self-driving. There are already tens of thousands of self-driving trucks and cars on the road. They’re already safer than driven vehicles, but since the technology is improving at the rate of Moore’s Law they’re getting better every day. Further, when most cars are both battery-powered and self-driving, they’ll be safer and faster yet, because they’ll be able to identify each other.
The trend towards these cars is reinforced by the fact people today are much less interested in recreational driving. And for good reason. The roads in the United States – everywhere in the world, really – are way too crowded to enjoy in most places. And they’re full of police anxious to give you tickets. It’s not like it was in the ’50s, ’60s, or ’70s when you could drive fast just for the pleasure of it.
Cars are increasingly just for transportation. Evidence is that a lot of millennials don’t even bother getting driver’s licenses. And if they do, they avoid buying a car. It used to be that kids couldn’t wait until they were 16 to get a driver’s license. No more.
Self-driving vehicles will compound the changes due to electric vehicles.
Justin: What are the biggest implications of self-driving cars?
Doug: One big change with self-driving vehicles is that you’re not going to need many parking lots. Most cars will be driverless Ubers. A self-driving car will pick people up and drop them off wherever and whenever they want. At least in metropolitan areas, which is where more and more of the population is concentrating. Taxi, limo, and truck drivers will cease to exist within a decade. As will Uber and Lyft drivers.
It’s not just because of technology, it’s economics. The typical car today only spends between two and ten percent of its life on the road, driving. The rest of the time it’s parked on a street, or in a driveway or parking lot. Storing unused cars is a major expense. Commercial lots charge $10 an hour in many places. And over 10% of the square footage of urban buildings is used for parking cars. Plus all the parking spaces on streets, and giant parking lots out in the suburbs.
I suspect most self-driving EVs – at least in cities – will be used like taxis, or rented by the hour. They’ll be used 24-7, however, so you’ll need only a fraction of the cars we now have. Self-driving EVs will be much more efficient, and much, much cheaper than the cars we use now.
Because there will be fewer vehicles, and they won’t be sitting in parking lots all the time, there’s going to be a glut of real estate hitting the market. Not sometime in the indefinite future – over the next decade. That goes for a lot of real estate now used for roads as well.
If a Martian were to land on Earth today, he’d think that the major lifeform on this planet is vehicles. But that will change as vehicles are used more efficiently. A lot of suburban families have two or three cars. Over the next decade, if they own any at all, it will be just one, mostly for long trips.
Justin: It’s interesting that you mention that. I just sold my car to my parents, and I did this for a few reasons.
Number one, I travel so much, and I obviously can’t bring my car with me. There’s no sense in paying insurance on a vehicle that’s collecting dust most of the time. Plus, you don’t need a car in most U.S. cities, not with Uber, Lyft, and these new scooter sharing companies.
So I don’t see myself buying another car anytime soon. I may actually never own another car, as strange as that might sound.
But I’m clearly not alone. People across the country are opting to share vehicles rather than own them outright.
Doug: It’s unlikely that I’ll get another Porsche or Ferrari. Cars like that are increasingly pointless with roads being what they are today. Combine that with the effects of the Greater Depression, and in a decade you’ll find exotic cars sitting in barns with flat tires and birds roosting under the hood – which was the case with Duesenbergs and Cords in the ’40s and ’50s. The current boom in exotic cars selling for $100,000 to $1,000,000 is another bubble about to burst.
Anyway, if I want to go somewhere today, quite frankly I’d rather have some remote vehicle pick me up and drop me off. So I can read a book while I’m in transit.
This change is happening right before our eyes. And it’s going to play out quickly, taking millions of people completely by surprise.
Justin: Thanks for speaking with me today, Doug.
Doug: You’re welcome.
Justin’s note: Tomorrow, Doug and I will finish this important discussion. We’ll look at what will happen to oil as EVs and self-driving cars go mainstream… what other commodities stand to gain or lose the most from this megatrend… and much more.
In the meantime, I urge you to check out this video presentation from our commodities expert Dave Forest. In it, Dave uncovers a story from the EV revolution that you haven’t been hearing about from the mainstream media.
In short, a radical new technology is about to take down the world leader of electric vehicles. Elon Musk’s worst nightmare is coming true… And one tiny company may be responsible. Go here to learn more.
Please let us know what you thought of today’s Conversations With Casey right here: at [email protected].
Did you know that the U.S. is in 55th place when it comes to this essential infrastructure?
That’s right. America has fallen behind countries like Finland and Romania. And our good friend Jeff Brown, Bonner & Partners’ tech expert, believes this could be one of the little-known motivations for Trump’s trade war. Full story here.