Tesla’s Side Gig Is Going To Make More Money

Tesla is technically a car company. But looking at it strictly as an industrial concern could never account for its stock market valuation, nor would it give you a sense of its emissions credit business. All that and more in The Morning Shift for January 27, 2021.

1st Gear: Tesla’s Emissions Credit Business Is Looking Strong

Tesla sells EVs, sure, but Tesla also sells EVs against an industry that is almost entirely driven by gas-burning vehicles. It’s not what Tesla does on its own. It’s the contrast that makes Tesla what it is.

Nowhere is that more clear in Tesla’s emissions credit side gig. Basically, Tesla can sell its environmental responsibility to other carmakers that have been profiting off of ecological disaster. Say, you’re a car company that puts a Hellcat engine into a pickup truck and makes a boatload of cash from it. You can use that cash to pay Tesla for emissions credits to offset the environmental repercussions of sticking a Hellcat engine into a pickup truck. What a brilliant system!

As it stands, emissions standards are getting stricter and fines are getting harsher, so things are looking good for Tesla, as Bloomberg reports:

Tesla Inc.’s business selling regulatory credits to automakers that need help complying with emissions rules will keep on booming this year, according to Credit Suisse.

Regulatory credit revenue probably will rise to $2 billion from about $1.4 billion in 2020, analyst Dan Levy predicted in a note previewing Tesla’s quarterly earnings Wednesday. He wrote that his estimate for 2021 is higher than consensus of $1.3 billion.

A surge in regulatory-credit revenue had been a major factor in Tesla’s streak of quarterly profits that’s sent shares soaring and made the stock eligible for the S&P 500. Levy suggested in his note that Europe’s stricter limits on automotive carbon-dioxide emissions will present an opportunity for the company this year.

Someday I hope that Tesla improves its efficiency to some kind of ultimate point. It could sell one extremely environmentally-friendly vehicle, so clean that it could use it to offset the emissions of all other carmakers.

2nd Gear: Nissan Going All-Electric Sometime Before The Heat Death Of The Universe

The Nissan Leaf went on sale in 2010, and sometime after its 20th anniversary, Nissan expects its whole lineup will be electric! In some markets! This is an amazing turn for a company that will be sure to save the planet, as Reuters reports:

Nissan said Wednesday all its “new vehicle offerings” in key markets would be electrified by the early 2030s, as part of the automaker’s efforts to achieve carbon neutrality by 2050.

The company, which plans to cover markets in Japan, China, the U.S. and Europe, said it will pursue battery innovations, including solid-state batteries, for electric vehicles and further develop its e-POWER hybrid technology to achieve greater energy efficiency.

“We’re determined to help create a carbon-neutral society and accelerate the global effort against climate change,” said Nissan CEO Makoto Uchida.

I can’t wait for the world to be saved starting 10-15 years from now!

3rd Gear: Jennifer Granholm Next Up For Confirmation Hearings

Granholm is nominated to lead the Department of Energy; you might remember her as the former governor of Michigan. Granholm continues President Joe Biden’s trend of naming fairly boring, competent people to his cabinet.

From Reuters:

While governor of auto-manufacturing Michigan from 2003-11, Granholm led a charge to secure $1.35 billion in federal funding for companies to produce electric vehicles and batteries in the state.

Granholm, 61, who is expected to be confirmed by the Senate in days after the hearing, wants to steer the department to help the United States compete with China on EVs and green technologies like advanced batteries and solar and wind power.

“We need to be the leader, rather than passive bystanders, or otherwise we’re going to allow other countries like China and others we’re fighting to be able to corner this market,” Granholm told ABC News last month.

She would be the second female U.S. energy secretary after Hazel O’Leary served in the 1990s. Granholm has done few media appearances since being nominated by Biden, but said on Twitter this month she was doing a “deep dive” into the department and was awed by the work of its lab scientists.

4th Gear: Jaguar Is “Redefining” Its Strategy Again, Apparently

Jaguar, a carriage company for the British royal family, is confused about where it fits in now, in the 21st Century. It looks like it’s shuffling some people around to help figure itself out, as Reuters reports:

Jaguar Land Rover appointed its creative boss to the board of management Wednesday to help redefine the Jaguar brand as Britain’s biggest carmaker reviews its strategy under new CEO Thierry Bollore.

[…]

Bollore said Chief Creative Officer Gerry McGovern would be “developing the character, distinction and personality of each” brand and the role includes leading the design function at the marques.“Jaguar Land Rover continues to transform its business at pace and redefine its strategic direction,” the Tata Motors-owned company said in a statement.

I don’t know what exactly Jaguar can even do to redefine any strategic direction. Maybe it will pivot to trying to make bad cars and accidentally making good ones, as opposed to trying to make good cars and instead making cars nobody wants to buy.

5th Gear: People Are Still Shook About Chip Shortage

I sort of thought this story would quickly fade away, but the Financial Times reports that the auto industry is still facing shortages for semiconductor chips:

Fiat Chrysler was one of more than a dozen carmakers forced to wind down plants this year as contract chipmakers in Taiwan and China were caught off guard by the multipronged surge in orders.

With workers furloughed, car executives are seeking government help in a bid to see if the supply of chips — that control everything from power steering to anti-lock brakes — can be accelerated.

“I am here to protect the fact that my company is treated fairly,” Carlos Tavares, chief executive of Stellantis, the newly merged Fiat Chrysler and PSA, told the Financial Times. “I will look for all possible solutions. If I need to I will fight back [to ensure its chip contracts are met],” he added. 

The FT points out that it’s not just the tech sector that’s keeping chips out of Western car companies’ hands, it’s also a surge in Chinese auto production, too.

Reverse: The Good Mustang

Neutral: What Will Be The First Company To Pull A Tesla And Go All-Electric?

There are all-electric sub brands from major manufacturers, but nobody has yet made the full commitment. I’m thinking Jaguar Land Rover is going to do it. I can’t explain why, I just feel it in my bones.

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