Porsche’s Electrifying New ‘Mission’

Major automakers are discovering the benefits of electric cars. And it is a really big deal.

This week, Porsche announced that its “Mission E” electric concept led to a corporate epiphany. The German maker of luxurious, fast cars is now committing to electrify 50% of its production by 2023. Given that its 2016 output was 230,000 units, this would be no small feat.

This also accelerates two important trends: the longer-term decline of fossil fuel prices … and the rise of digitization.

Let me explain.

Energy prices are not governed so much by overall demand, as they are by margin. Worldwide demand for oil is about 85 million barrels per day. Supply is roughly equivalent. When there is imbalance, even a relatively minor one, prices fluctuate wildly.

Porsche has big plans for its Mission E model, including a base plate that you can drive over to automatically charge the underbody battery. Image credit: Porsche.com

From June 2014 through March 2015, worldwide oil markets were roiled by chronic overproduction. A 2 million barrel-per-day (bpd) glut developed. West Texas Intermediate crude oil prices plummeted from $107.65 to $42.11.

Last year, Michael Liebreich and Angus McCrone, writing for Bloomberg New Energy Finance, predicted electric vehicles (EVs) will reach price parity with internal combustion vehicles by 2022. They concluded this could create a 2 million bpd glut as early as 2023.

The math is easy. The implication, for energy investors, is daunting. Even minor EV adoption will create a systemic imbalance in worldwide energy markets.

You can blame the Tesla Model S. The refined electric sedan was the first environmentally friendly vehicle without compromises. It was greener than a Prius and faster than a Lamborghini.

The engineering would not have been possible 20 years ago. The Model S is the product of the exponential progression of information technology. It pushes data analytics, artificial intelligence, the Internet of Things and robotics to their current limits.

A Tesla can be summoned from sleep in the garage with just a few taps on the smartphone application. Over-the-air software updates remotely fix problems that require recalls for other manufacturers.

In the largely analog world of cars, a Tesla is a fully digital, consumer electronic device. And its peers have taken note.

Reduced maintenance costs, better safety and reliability, and platform superiority for autonomy and shared mobility cannot be ignored. Even in a world where fossil fuel prices are likely to remain low, it’s difficult to justify longer-term investment in internal combustion.

That’s why Porsche is making the jump. It’s why Volkswagen has committed to electrify as many as 2.5 million vehicles by 2025. It’s also why Ford (F) committed $4.5 billion to electric cars. It even changed the location of its Focus plant from Mexico to China to get closer to EV components. And I could go down the list of traditional car companies clamoring to get aboard the EV bandwagon.

The change is happening. And it is likely to be swift.

Liebreich, given his roots in Fluid Dynamics, likens the process to material science. He reasons that change for complex systems tends not to be linear. It’s more like “flipping from one state to another,” he wrote in 2015.

Most analysts assumed smartphones would lead to incremental societal changes. What transpired was tectonic. Media, information, commerce and even small stuff like maps all became digital. They were transformed into bits of code for use on smartphones.

EVs will do the same for infrastructure. Power grids, roads, buildings and shopping malls will all mutate to accommodate the migration to electrification. In the process, the entire physical world will become networked. It will routinely undergo data analytics and software updates. It will become digitized.

It’s a big change. Tectonic, really.

It’s the kind of thing few pundits talk about. They think it’s too far off in the future. Something you don’t have to worry about, let alone plan for.

And mark my words, they will not take advantage. They’re the same people who railed against Amazon (AMZN) when it was reinventing enterprise IT infrastructure with the public cloud. Now they are missing the most important change in our lifetime. The digitization of the physical world.

Finding investment opportunities in this mega-trend is a commitment I have made to my members.

I believe this era, what I call the New Gilded Age, is a once-in-a-lifetime opportunity. New inventions and business models are being developed right now that will shape our age. Astute investors will earn terrific fortunes.

Don’t let anyone tell you it’s too far away. These things happen quickly. The time to invest is now.

Best wishes,

Jon Markman


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Comments 13

  1. polywan July 3, 2017

    if you talk about future of people, you must think about cheap tech of price to invest

    Reply

  2. Darren July 3, 2017

    The day you can charge your cell phone in under 5 min and have it last 3 days is when electric cars might have their day. Oil will stay low as USA pumps and funds social programs much like Sweden does . Of course many would like higher costs and a war would be just when they want .
    So far Tesla S is fashion if the 1% . Resale on electrics a steep down slope.
    An anti diesel agenda is now the fashion pushed in EU. I wonder why the attention on cars but none look at the chimneys that have zero abatement and bun wood, coal, low grade oil. These are the machines that cause brown smoke in cities you see on tv.
    The rest is an anti auto agenda

    Reply

  3. John July 3, 2017

    Thanks for the update. I think Blackberry will surprise in the EV growth.

    Reply

  4. Allen July 3, 2017

    Jon, It seems that in talking about the decrease in carbon fuels brought on by “electric” vehicles the claims don’t take into account the fuel requirements of the power plants. Nor do they take into account the carbon used to produce the batteries, nor the cost of replacing the batteries. I’ve read that a “green” car is responsible for the use of MUCH more carbon fuels than gas/diesel engine vehicles when all is taken into account. What say you?

    Reply

    • jrj90620 July 3, 2017

      Seeing a lot of solar panels on roofs,here in So California.Read that in Hawaii,there is a waiting list to get roof panels.Add in the large companies adding solar on their roofs and big wind power generation,now going offshore,you can see that clean energy production is growing and getting cheaper to produce.

      Reply

    • Jim July 3, 2017

      Good points, curious to see the responses.

      Reply

  5. H. Horace Newberry July 3, 2017

    Watch out… EMP will get you.

    Reply

  6. CoffeeHousePhilosopher July 3, 2017

    When it comes to Power Plants and their Carbon Footprint compared to automobiles, there is one very simple concept but hardly ever talked about: Centralized Generation of Pollution. There are now more than 1 billion cars and trucks on this planet. Each of them were fitted with anti pollution devices such as catalytic converters (Platinum-expensive), Oxygen sensors in exhaust pipes (also Platinum) and computerization (expensive at least in the beginning) with many more sensors. All of these items are prone to failure without warning. Poverty prevents many regular working people to continue driving with the “check engine light” on because they simply can not afford the repairs. Now consider that each of these cars are moving objects.
    Not so with Power Plants. And they have full time maintenance crews to keep up on these same types of anti pollution systems. I can only guess at the number of Power Plants on this planet 1- 200,000 (?) but you don’t have to chase them around to do the repairs compared to 1 billion automobiles.
    And further, all of these computerized advancements have NOT increased fuel mileage by very much. A model T got 45 miles per gallon! A 1966 chevy 283 could get 25 mpg in a pickup truck. The manufacturers have increased their fleet fuel numbers more through smaller autos, less moving weight.
    I believe China made a big mistake by following US down the Internal Combustion Engine path. Electric motors are inherently almost 4 times (3.8) more efficient (<90% vs 25% for ICE).
    The battery technology is improving. Standard Lead Acid batteries as found in typical autos are 1 of the top 5 most recycled items. Therefore the system is in place to recycle Lithium or most any new chemistry batteries.
    Seriously: Centralized Generation of Pollution.

    Reply

  7. Andrew July 3, 2017

    Australian lithium mine galaxy resources (GXY) is trading very cheap at the moment as a company called Blackrock is holding the price down and accumulating share hard out. (Do your own research) I believe this company is a very good investment and have put my money into it.

    Reply

  8. Jim July 3, 2017

    Fantastic article Jon.

    Reply

  9. FRANK GALLER July 5, 2017

    IT WILL SOON BECOME APPARENT THAT THERE IS NO IMPROVEMENT IN ENERGY COSTS FOR
    A COUNTRY AS A WHOLE WHENUSING ELECTRIC VEHICLES. THAT WILL CASUE THE MOVEMENT TO HALT LIKE THE SOLAR MOVEMENT EXCEPT FOR ISOLATED AREAS AND UNIWQUE SITUATIONS.
    SO YES, THERE WILL BE A GRADUAL GROWTH OVER THE LONG TERM WITH SHORT TERM BUBBLES
    AND DECLINES. BUT NO REVOLUTION WILL OCCUR. THE NUMBERS DO NOT SUPPORT IT.

    Reply

  10. Will July 8, 2017

    Present progress still is needed to improve the batteries used in electric cars, and different manufacturers do not apply the same battery technology. Presently the highest density (providing longer run time) is obtained when using Cobalt as all or part of the cathode. Almost all cobalt is derived as a byproduct from the mining of base metals, with the bulk of Cobalt supply now coming from the Congo. The future of this source is presently liable to strain from within the country. Bringing new Mines into production will take years.

    The clean air considerations of electrical vehicles do not relate to the vehicle itself, they are clean running; but the applied cleanliness that will be realized relates to the generation of the electricity needed to charge the batteries. And, the utility of the vehicles that can be realized relates to the run time and the distance traveled between charges, as well as the time required to recharge; not to mention the cost and development time needed to build a network of recharge infrastructure, particularly in the Western US States.

    Many articles have been written about the electrical vehicles themselves, including this one; but what is needed is a deep look into the aspects of what I have touched on above.

    Reply

  11. Reynald Callahan July 9, 2017

    Dear Mark,

    Range limitation of electric battery cars is a major problem, particularly in cold climates like Canada. Setting up a major refuelling system for electric cars is also a major hurdle. Electric cars are no cleaner than the electric power plants that feed the recharging grid. Also nobody states what the electric refuelling costs per mile driven is or will be!
    How much brain washing are we going to be submitted! It is just like the belief that income tax hurts the wealthy and corporations! We the middle class and the poor pay for all those income taxes in the goods and services we buy and need. Income taxes of all the people and corporations in the food industry are reflected in the prices we pay! The proof is the rich keep getting richer and big corporations the same!! The same goes for energy! Food and energy are necessary for human life and should not be taxed directly or indirectly!
    These statements are heresy and I do not believe we have free speech in any country, so please do not get me in trouble.

    Reply