Tesla dragged into EU battle with China over electric vehicles
Tesla dragged into EU battle with China over electric vehicles
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The growing battle between the European Union and China over taxes on imports of Chinese electric vehicles snagged Tesla TSLA 0.00%↑ this week after Brussels said the U.S. EV giant’s vehicles made in China — about half of Tesla’s fleet — will be subject to additional tariffs as well.
The EU said Teslas made in China would face tariffs of 19%, well above the normal taxes on auto imports of 10% but significantly below the 47% proposed for Chinese-owned vehicle companies such as the popular BYD. The EU said that Tesla was being charged extra because its Chinese operations enjoyed lucrative tax breaks, subsidies and other financial support from Beijing.
For Tesla, whose shares are down about 11% year-to-date amid price wars at home and manufacturing headaches abroad — as well as the Elon Musk factor — the proposal is another headache, and one that to us seems a bit arbitrary.
The bureaucrats in Brussels, in a hail of regulatory red tape, announced a slew of tax rates against vehicles made in China by international automakers, including higher ones for those with Chinese joint ventures. Tesla’s rate, although higher than normal, was even seen by some, including China, as a break for the original mass EV maker, though Tesla would no doubt disagree.
The result is that all sides are unhappy. The issue will almost certainly be taken up by the World Trade Organization. In the meantime, there is concern that auto dealers will stockpile Chinese cars — including Teslas — ahead of the rulings, according to the Financial Times.
Most unhappy, of course, will be those European consumers who are looking for more choices in their electric vehicles and will face a more expensive route to both Teslas and Chinese vehicles such as BYDs, which continue to generate as many good reviews as they do international trade controversy.
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Hulbert: A surprising new role in your portfolio for green securities
. . . . Most investors think of green investments, particularly stocks, as having great potential to generate innovative tech profits while at the same time helping fight climate change, writes Mark Hulbert. But a new study has found a surprising new benefit — that of portfolio diversifier. Because of the overweighting of reliance on government policy, such as tax subsidies, on many clean energy companies, this new research shows that these stocks are not as directly impacted by traditional market influencers such as rates and earnings. A controversial finding to be sure, but Hulbert puts it in context. . . .
Thursday’s subscriber insights
U.S. about face on global plastics deal signals progress toward UN treaty
. . . . A U.S. shift in policy this week that throws its support toward an international effort to cut production of plastic signals that a UN treaty to be discussed later this year finally has a chance of making it over the top. The U.S., one of the world’s largest plastic makers, had previously aligned itself with countries such as China and Saudi Arabia, which argued that more innovation in recycling and packaging were the answer, not production cuts. Now it is in direct opposition to them, despite calls from plastic makers such as Exxon Mobil XOM 0.00%↑ to vote against the treaty.
Plastics talks have long been bogged down by the debate over production cuts vs. recycling and packing efforts, known as the circular economy. The answer is that both are necessary. But as science increasingly shows the presence of microplastics in everything from our food and water to our bloodstreams, it’s become increasingly unpopular to not support production cuts at some level.
For beleaguered plastics negotiators, the shift in U.S. policy is a green light that could finally signal the makings of a deal when they meet in South Korea later this year. But like with the Paris Accords of 2015, that agreement will only be the beginning of the real work. . . .
Rio Tinto lithium plant protests stall European transition
. . . . Another example of renewable energy goals blocked by grassroots turmoil is manifesting itself in Serbia, where plans for Rio Tinto RIO 0.00%↑ to build a $2.5 billion lithium extraction plant for electric vehicle batteries have been blocked by massive protests by residents who fear the environmental consequences. Lithium mines, like all mines, have massive pollutive capabilities, so it makes sense that those in the vicinity would be nervous. Unlike, for example, the protestors on Cape Cod who don’t want the Vineyard Wind offshore turbines because they are an eyesore.
But until some innovation comes about to make mining for valuable lithium worthwhile, these types of production plants will run into constant local interference. In Serbia’s case, that has resulted in nationwide protests in the streets to block the mine, according to a NYT story this week. Climate advocates are saying that while Europe has plenty of lithium mines — some 20 — in development, this one in Serbia is the key to generating the quality of lithium needed for the EV revolution. One expert told The Times there could be “no green transition” in Europe without it.
From the Amazon Basin in Brazil to the east and west coasts of the U.S. to central Europe, the irony of environmental protests against renewable energy products designed to mitigate the environmental disasters of global warming is an issue that only further tech innovation can solve. In these lithium mining cases, it might be down to the very oil and gas miners themselves to help the market solve this problem, once they can be persuaded there is enough money in it. . . .
Thames Water troubles start to pile up losses for investors
. . . . The UK Labour Party, still enjoying a summer honeymoon after sweeping to power for the first time in 14 years in early July, is facing its first potential crisis later this year as troubled Thames Water is running out of options to solve its massive debt problems and investor losses are starting to pile up.
The water company servicing greater London’s water and sewage needs and which is struggling under £15 billion ($19.6 billion) in debt, last week lost a bid to raise water rates to help fill a growing pension gap. This week, one of its main investors began to sell off troubled loans after lending Thames what the Financial Times called hundreds of millions of pounds.
As predictions mount that the company faces more trouble after shareholders balked at adding more funds this past spring, worries are mounting that the new government may need to launch some sort of bailout. That would blow a hole in its finance plans, including an expensive strategy to set up a Great British renewable energy company.
Energy infrastructure, and particularly electric grids and water supply lines, are increasingly becoming the front lines of the battle against global warming as demand soars against finite supply. While London would likely be insulated from any water shortages if Labour renationalized Thames Water, the crisis will be a clear resources challenge for a new government. File under one to watch closely. . . .
Editor’s picks: Jane Goodall says there’s still time; plus, hail on Earth
Watch the video: British primatologist and conservationist Jane Goodall believes that there is still a window of opportunity to halt climate change, and is traveling the globe with a message of hope, urging commitment through actions such as reducing unsustainable lifestyles. “I’m so well aware of these problems and always trying to think of ways in which we can somehow live in a more sustainable way,” the 90-year-old scientist told Reuters and local media in an interview at the British embassy in Argentina where she was visiting as part of a Latin American tour. “We can start thinking about what we need, not only what we want.”
Forget golf ball-sized hail. How about grapefruit?
If you’ve ever worried about golf ball-sized hail, brace yourself. How about hail the size of a grapefruit? More powerful hailstorms and bigger hail are a possible consequence of continued rising global temperatures, according to new research spotlighted by a report from USA Today. The study, recently published in the journal npj Climate and Atmospheric Science, used two scenarios for possible greenhouse gas emissions to estimate the change in size for future hail. According to the report, Victor Gensini, an associate professor and meteorologist at Northern Illinois University, and a co-author, said, “Hailstones larger than two inches get larger.” The higher the emissions, he said, the greater the size of the hailstones, with the hail largest and most frequent in the worst-case scenario.
Latest findings: New research, studies and projects
Companies’ resilience and adaptability
This NBER Working Paper, titled Firm Adaptation to Climate Change, surveys the microeconomics literature that studies how firms in the developing world are adapting to extreme weather, local pollution, and natural disasters. From the abstract: Climate change increases the uncertainty that every firm must address as it decides where and how to produce and who to trade with. The authors study how expectations, market structure and firm heterogeneity determine investment in self-protection. A firm’s resilience also depends on government policies, market insurance access and infrastructure investments. “We explore the strategic interactions between firms and governments that together determine firm risk exposure. We discuss benchmarks for measuring adaptation progress at the firm, industry and macroeconomic level.” Authors: Arti Grover, World Bank; and Matthew E. Kahn, University of Southern California, National Bureau of Economic Research.
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Words to live by . . . .
“As the climate crisis gets worse, extreme weather will pose a rapidly growing danger to a rapidly growing number of communities. So, to protect the people of our nation, let us understand that we can match that desire with action and that we must act now.” — Vice President Kamala Harris, speaking on climate resilience at Florida International University.