Tesla's deliveries spark relief rally, test endurance of EV slump
Tesla's deliveries spark relief rally, test endurance of EV slump
Plus, rates can't fall fast enough for climate entrepreneurs, Labour's climate pledge, and our big July 4 summer sale
Ahead of Independence Day, today’s edition of Callaway Climate Insights is free. But wait, there’s more! We depend on your support to bring you the latest and best investing insights from the world of climate finance. So, we’re kicking off the month with a July 4th Summer Sale. New subscribers can get 40% of the price of an annual subscription for orders placed by the end of the July.
In today’s edition:
— Tesla’s sales spark short-term rally; send clues to length of EV slump
— Two big climate tech projects went bust this week as funding drought extends
— Labour Party’s Ed Miliband delivers climate-first pledge ahead of UK election
— Storing solar energy in old California oil wells? It’s a thing
— The only six countries where carbon prices are high enough to meet Paris emission goals
— These national parks are best for your dog days of summer
Beleaguered Tesla TSLA 0.00%↑ surprised its loyal investors Tuesday with second-quarter delivery figures that beat expectations, sending shares up as much as 10% in a much-needed relief rally after six months of declines. The question now is whether we’ve seen the bottom, and a look at recent trends suggest the endurance of the year-long, industry-wide sales slump in electric vehicles may be fading.
Tesla deliveries actually fell for a second quarter, but they fell less than expected, which is what sparked the rally. Deliveries of 443,956 Teslas was about 5% lower than the same quarter last year, but up almost 15% on the preceding quarter.
Tesla sales in China, its second biggest market, held steady in June at about 71,000, but both May and June were up about 16% from April. China’s largest EV maker, BYD, sold 426,000 total EVs in its second quarter, which was below Tesla but up 21% from a year ago as it continues to close the gap.
Also, on Tuesday, General Motors GM 0.00%↑ reported that second-quarter EV sales rose 40% to a record 22,000, even as overall sales were flat.
Of course, price cuts drove a lot of these sales, and will continue to do so. But as we (finally) approach a change in the rate cycle, where financing deals will become popular again, the relative strength in these numbers show that the prolonged slump in EV sales may be coming to an end. It’s a slump that has claimed several startups, including Fisker, but other EV makers, including Rivian RIVN 0.00%↑ , are hanging in there, announcing new financing deals.
Tesla shareholders celebrated Tuesday, but the shares are still down some 10% for the year. It’s not the product, it’s the price. Like with many other industries, a period of falling interest rates for EV makers in the second half of the year is well overdue.
Enjoy the holiday. We’ll be back with more climate finance insights on Monday.
Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.
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Tuesday’s subscriber insights
Funding limitations sinking costly new climate tech
. . . . High interest rates aren’t just holding back the EV industry, they’ve led to a serious crunch in financing for climate tech entrepreneurs in the last year, particularly ones already far along in their plans who now can’t get new funding to continue.
Just this week, it was reported that a major Los Angeles-based hydrogen fuel company, Universal Hydrogen, has shut down after burning through $100 million trying to fly passenger jets on hydrogen fuel cells. Among the investors, according to Canary Media and the Seattle Times, were American Airlines, GE Aviation, and the venture arms of other airline companies eager to be involved.
Also, carbon removal startup Running Tide, which sought to store carbon in the seas by using algae, ran out of money, according to Bloomberg Green.
High borrowing rates are just one factor, but a major one, in a new business’s ability to generate enough interest in its products before the money runs out. As financial markets await a move to lower interest rates by the Federal Reserve, these types of examples will continue popping up.
But VC investors and strategic investors, despite pulling back, are in for the long game. No sooner did we read about Universal Hydrogen than a friend sent along a story about another hydrogen jet fuel company, ZeroAvia, which announced that it had secured a conditional promise from American Airlines to purchase up to 100 hydrogen-fuel cell engines in the future.
Labour’s Miliband delivers climate pledge ahead of election Thursday
. . . . The UK Labour Party’s shadow energy secretary, Ed Miliband, who by all expectations will be in government after Thursday’s general election, made the boldest climate promise yet in the five-week election campaign this week.
Miliband told The Guardian that Labour won’t just govern with climate as a priority, including immediately restarting the UK’s onshore wind industry, but that it will seek to take a leadership position in Europe after right-wing forces won elections in Brussels last month with pledges to dial back climate progress.
Europe is sorely lacking in climate leadership since EU Climate Commissioner Frans Timmermans resigned two years ago to run for high office in the Netherlands. Miliband, a seasoned Labour politician who led the party in opposition from 2010 to 2015, will be the most senior member of Keir Starmer’s cabinet if Starmer becomes Prime Minister on Thursday after the election.
His brother, David Miliband, is head of the International Rescue Committee in New York, which helps coordinate humanitarian relief in some 40 countries and is closely tied to the climate crisis story.
Labour has been hamstrung during the campaign by promises not to raise taxes or increase costs of energy, and that will continue after the election. But there are other ways to influence and lead climate progress. As Europe shifts right, the UK may finally reassert a leadership role just when it’s needed most.
Editor’s picks: From oil to solar; plus, the dog days of summer vacations
Old oil wells and new solar energy
Can a California oilfield be retrofitted to store solar energy? The transition to renewables requires batteries that can store energy for long periods of time. To meet that demand, engineers in California’s Kern County are hoping to use old oil wells to hold concentrated solar energy in superheated water underground, according to a report from Yale Environment 360. A new wave of early technology is rising to develop energy storage alternatives. The GeoTES project, run by the National Renewable Energy Laboratory (NREL) and a private investment group, is a geological thermal energy storage project that focuses on systems capable of retaining power for 10 or more hours. Guangdong Zhu, the senior researcher overseeing the long-duration energy storage program at the NREL, says the project is believed to be the world’s first attempt to store solar energy in a natural geologic reservoir, and it aims to store that energy for more than 1,000 hours. “We are looking to find the battery, not build it,” he said. According to the Yale report, parabolic mirrors gather solar energy above ground and that heats silicon oil which in turn heats groundwater kept in retrofitted reservoirs in the old oil wells.
The most dog-friendly national parks
Some national parks in the U.S. welcome dogs with open, er… paws. At others, canine visitors are restricted or not allowed. But there are six parks considered a great fit for Fido. Emily Pennington writes in 6 supremely dog-friendly national parks for Tripadvisor that she’s an “insufferable dog mom” who’s been to all 63 of the major national parks in the U.S. Her best barks parks are: Acadia National Park, Maine; New River Gorge National Park, W. Va.; Grand Canyon National Park, Ariz.; North Cascades National Park, Wash.; Cuyahoga Valley National Park in Ohio; and Shenandoah National Park. Check out her tips for trekking with your dog and how to plan a great vacation with your best friend and family year-round.
Data driven: The price we pay
. . . . Only 1% of global emissions are priced high enough to meet the Paris Agreement’s temperature target in 2024, Selin Oğuz writes in a visualization report for Visual Capitalist titled Visualized: The Price of Carbon Around the World in 2024. This chart, created in partnership with the National Public Utilities Council, shows carbon prices around the world using data from the World Bank. In 2017, the Carbon Pricing Leadership Coalition suggested that carbon prices should range from $50–100 per ton of CO₂ by 2030 to meet the Paris Climate Agreement’s temperature goal. This year, the global average carbon price is $32/tCO₂ — $18 below the minimum needed in six years. In the U.S., California’s cap-and-trade program comes in at $39/tCO₂. The Regional Greenhouse Gas Initiative, a joint effort by 11 eastern states that cut power plant emissions by 50% since 2005, has a carbon price of $18/tCO₂. According to the report, carbon pricing varies significantly across different regions. Europe and Central Asia have the highest number of pricing initiatives out of any other world region, with an average price of $50/tCO₂. The highest carbon tax in the world is in Uruguay, at $167/tCO₂. According to the World Bank, Uruguay’s GDP per capita is $20,795, lower than other countries with Paris Agreement-aligned carbon pricing. Read more and see the full graphic at Visual Capitalist.