As Elon Musk backs fossil fuels, one strategist sends warning over EV sales

The uptake of electrical autos has elevated lately, as nations all over the world try to cut back the environmental results of transportation.

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Recent feedback from Elon Musk in regards to the want for extra oil and fuel mirror a broader concern that the uptake of electrical autos will probably be hampered by rising electrical energy costs, in response to the top of fairness technique at Saxo Bank.

Speaking to CNBC’s “Street Signs Europe” on Tuesday morning, Peter Garnry stated automobile producers would face headwinds going ahead.

“We see that in the 12 month trailing auto sales figures coming out of the U.S. and Europe — they’re coming down and they’re coming down pretty hard in Europe.”

On the electrical car entrance, Garnry famous that whereas the section was “still expanding, expanding rapidly” there have been additionally areas of potential concern.

“I don’t think it was a coincidence that you had Elon Musk in Stavanger, in Norway, talking about ‘please don’t decommission any more nuclear power plants’, you know … ‘we need oil and gas to do the clean transition, we need that bridge.'”

“And I think he’s very well aware that you cannot sell a lot of electrical vehicles with electricity prices going through the roof right now.”

“I mean, the cost advantage for electric vehicles versus a gasoline car is fast diminishing here in Europe, and I’m really wondering to what degree that will begin to impact sales for EVs.”

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Garnry’s remarks consult with a current interview Musk gave on the ONS 2022 Conference in Norway, by which he provided up his opinion on fossil fuels and the broader vitality transition.

“I, actually, am not someone who would tend to, sort of, demonize oil and gas, to be clear,” Musk stated. “This is necessary right now, or civilization could not function.”

“And … at this time, I think we actually need more oil and gas, not less, but simultaneously moving as fast as we can to a sustainable energy economy,” the Tesla chief went on to state.

Musk, who additionally pressured the significance of renewables similar to hydro, photo voltaic, geothermal and wind, later described himself as “pro nuclear” and stated “we should really keep going with the nuclear plants.”

With European economies going through an vitality disaster and hovering costs over the approaching months, there have been issues in some quarters that the growing price of charging an EV will disincentivize uptake amongst shoppers.

In the U.Okay., a minimum of, many discussions about the price of charging an electrical car have taken place in current weeks, particularly after regulator Ofgem hiked the vitality worth cap.

The U.Okay.’s new Prime Minister, Liz Truss, is ready to announce a assist bundle to handle the cost-of-living disaster imminently, that means that the general impact of Ofgem’s resolution continues to be unsure.

In the times following the announcement of the brand new worth cap, a spokesperson for motoring group the RAC sketched out the present state of play.

“Despite recent falls in the price of petrol [gasoline] and diesel, the cost of charging at home is still good value compared to paying for either fuel, but again underlines just how the rising cost of electricity is affecting so many areas of people’s lives,” Rod Dennis stated.

“We’re also aware that public chargepoint operators are having no choice but to increase their prices to reflect the rising wholesale costs they’re faced with, which will heavily impact drivers who have no choice other than to charge up away from home,” Dennis added.

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In the U.Okay., the present state of play on the subject of EVs makes for fascinating studying.

On Monday, the Society of Motor Manufacturers and Traders stated new registrations for battery electrical autos within the U.Okay. hit 10,006 in August 2022, a year-on-year leap of 35.4%.

The SMMT nonetheless famous that “growth in this segment is slowing, with a year-to-date increase of 48.8%.” Comparatively, it stated that “at the end of Q1, BEV registrations had been up by 101.9%.”

When it got here to a long run outlook, Saxo Bank’s Garnry cautioned there could be bumps within the street.

“If you look from mid-2008 to late 2020, that was a 12 year long bull market for intangible driven industries — so software, health care, media and entertainment, etcetera.”

“Since the vaccines were announced in November 2020, we have seen the tangible world come back,” Garnry stated. This included automobile producers and commodity firms.  

“They sit in the physical world … and we think the next eight years will … mean a lot of positive tailwind[s] for these tangible companies,” he added.

Medium to long run, this may be a optimistic for carmakers, “but there will be a pretty, pretty nasty adjustment period going ahead for this industry, unfortunately,” he added.


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