My investing muse - how Climate Change & OPEC+ are pushing for Tesla (20Oct2021)

The world is facing an energy crisis. With energy prices soaring, it leaves all fearful of the coming winter as heating is needful in the households. With OPEC+ not increasing their supply, this has led to oil prices hitting recent highs. Russia has yet to increase their gas supply to Europe as Europe's utility bills continue to climb. In fact, some countries turned to coal (a more affordable) energy source.

In the US, gas prices have increased 42% from September 2020 to September 2021. CPI has hit a high of 5.4% on top of other notable increases in prices (from Sep 2020 to Sep 2021). This includes car rentals up 42.9%, steak up 22%, Lodging up 19.8%, bacon up 19.3% and more. Though there was some retracement of commodity prices from a recent all-time high, the pinch is felt throughout the economy. This has left many to wonder how long will inflation remain transitory. In fact, several have started to call for the Fed to address the problem of inflation - to start the tapering and even to consider raising the interest rates before inflation goes out of control.

$Tesla Motors(TSLA)$ has claimed her place on the world stage as the leading manufacturer of EVs. However, it is inappropriate to consider Tesla as another automotive maker. Tesla is a sustainable energy company with Electrical Vehicle (EV) as one of their products. They have products in energy generation (solar panel), energy storage (power wall & power grid) and sustainable energy vehicle (EV). This in fact completes the loop from (solar) energy generation to energy storage and sustainable energy application with their EV. Tesla has also produced industrial battery storage used by power grids in California, Hawaii, Australia and the United Kingdom. The energy that was generated from solar (homes) would be stored in the home batteries (Powerwall). This will allow Tesla solar & powerwall owners to charge their Tesla vehicles. More than this, they will be able to power their own homes at night from solar energy captured in the day. Virtual power plant (VPP) setup will also allow Tesla energy owners to sell some of the energy back to the local power grid, thus, reducing the utility expenses of the household.

Climate Change has imposed itself with severe fire, flooding, hurricanes, drought, hail and more. Thus, more homeowners have started exploring (independent) energy solutions at home. Should the power lines be affected by any harsh weather, they would be able to be “self-sufficient” with a solar and energy storage system (like Tesla’s). So long your solar energy and battery systems are intact, you would be able to power up your own place as you wait for the authorities to fix up the power lines. In lieu of the increasing weather extremities, more households are looking for backup sustainable energy sources - a need that Tesla is well poised to meet.

On the other hand, OPEC+ is driving up the fuel price by controlling the supply of fossil fuel. While this can generate “more” profits for the fossil fuel companies, this is also pushing up costs. This is not limited to the record pump prices, but it is also increasing the supply chain costs. This forces car owners to consider EV to replace the traditional Internal Combustion Engine (ICE) vehicles. With EV cheaper in maintenance, eligible for rebates, reducing the carbon footprint, these will push the demand towards EV. The Biden administration has initiated the push for the adoption of 50% EV in the US by 2030. With the improvement of range, features (autonomous driving) and reduction of costs, the growth of EV will accelerate with time.

We are aware that Tesla is involved in a lawsuit involving Solar City (solar energy unit) and there were damaging reports about the lack of customer service for solar city customers. Together with the high “costs” of the installation, Tesla is not having an easy time. It is said that Tesla’s energy business can be bigger than the EV business. Given the success of the Tesla EV, let us remain hopeful as Tesla irons out the various issues. With such a backdrop, Tesla is poised for expansion from their new gigafactories (Texas and Berlin), FSD, Tesla Bot, Tesla cyber truck, Tesla semi, Tesla insurance and more. Let us continue to monitor this closely as we repair our earth with sustainable solutions.

(Please do your own due diligence before you invest. This should not be considered financial advice.)