- The electric vehicle boom is unstoppable
- Robots won’t destroy our jobs… but they will change them
- The only stocks I recommend are the ones I’d want to invest in myself
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology. Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
But before we get to our questions, a quick update…
This was certainly a week full of interesting developments in the pursuit of a vaccine for COVID-19. We’re going to finish up the week with one final bit of news on the same topic.
Pharmaceutical giant AstraZeneca has been collaborating with a team at Oxford University to develop a candidate vaccine.
And the U.S. government just committed $1.2 billion to the company. The goal is to obtain 300 million doses of a vaccine by this October.
AstraZeneca has already organized enough production capacity to deliver 400 million doses by this fall. But here’s the thing…
The current candidate vaccine just started its Phase 1 clinical trials last month. The trials are with 1,100 volunteers in England. And we have no idea if it works…
Early testing of the vaccine on monkeys only indicated that the vaccine provided partial protection. Hopefully, we’ll have some data from the trials by the end of this month to review.
The remarkable thing is how far government bodies and the biotechnology industry have been willing to work in advance of Food and Drug Administration (FDA) approval for a vaccine or therapy. They are producing hundreds of millions of doses of a vaccine prior to completing and analyzing Phase 3 clinical trial results. That’s very unusual.
One positive is that the world will have a wide range of vaccines and therapies available under emergency use authorization in the fall. I predict that’s when the second, smaller wave of COVID-19 will return.
And I hope that once COVID-19 passes, governments and the biopharma industry can refocus their collective energy and resources on curing far more deadly diseases that have plagued civilization far longer than this airborne virus.
Now let’s turn to our questions…
Nothing can stop the EV market…
Just wanted to let you know I really enjoy reading your articles. Always such a fresh perspective on things.
I had a question regarding electric vehicles because I am thinking of buying one and also from an investment standpoint… With everything we are experiencing with governments shutting down so many things, could they shut down electric cars or any other vehicles?
– Dale D.
Hi, Dale. Thanks for writing in.
As for your question, I would be shocked if the government moved to shut down the electric vehicle industry because of COVID-19. There’s simply no reason to do that. Right now, many states are moving to reopen their economies, not shutting them down further.
The one exception to this might be Tesla and its ongoing fight with the state of California. Tesla was forced to shut down production of its EVs out of its Fremont, CA, factory amid the pandemic lockdown, and it has been fighting to reopen production.
A few weeks ago, California Governor Gavin Newsom informed Tesla that its factory in Fremont, CA, had to remain in lockdown.
In response, Elon Musk tweeted, “Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately.”
I got a chuckle out of that. It seems like Musk is ready to get back to work. I don’t blame him. Musk’s analysis of COVID-19 has been similar to mine. He believes strongly that it is time to get back to work.
This lockdown however is just a small blip in the EV industries’ advancements. Every day, we’re getting more data that make it more difficult for those trying to prolong the lockdown.
EV production and the automotive industry are going to come back stronger than ever. Why? Many people are not going to want to travel by bus, train, or subway for a while. Who wants to sit in a crowded small space with a bunch of strangers over the next few years? The fear of COVID-19 will still linger.
Governments around the world have put in place incentives over the years to motivate consumers to purchase electric vehicles. These policies were designed to speed up adoption, not shut it down.
In the United States, for instance, consumers can receive a tax credit for up to $7,500 if they purchase an electric vehicle that meets the policy guidelines. That can be a strong piece of motivation.
The caveat is that these tax incentives are phased out once an automaker sells more than 200,000 electric vehicles. So if you’re planning on buying a Tesla, the tax credit won’t apply. Unfortunately, the tax credit expired for the company at the end of 2019.
But even without tax credits, the EV market will see exponential growth over the next 10 years.
Currently in the U.S., only 1.8% of cars sold are EVs. And in 2018, the last full year we have stats for, only 2.1 million electric vehicles were sold globally.
But Credit Suisse predicts over half of all cars sold will have some type of electric power by 2030. That will translate to about 60 million EVs sold annually.
But I don’t believe it will take nearly that long to see the mass adoption of electric vehicles.
The shift toward electric vehicles is happening more quickly. The total cost of ownership is already lower than a comparable internal combustion engine (ICE) vehicle. And with battery costs continuing to drop and efficiency improving every year, we have already passed the inflection point. We’ll talk more about that on Tuesday.
Dale, best of luck with your car hunt. When you finally buy one, feel free to write in to tell me which model you went with.
My strong preference is for Tesla’s vehicles, as readers likely know. Tesla is on the verge of rolling out full autonomous services on its vehicles. And the Model 3 sells for as low as $35,690.
And as I have predicted in the past, once Tesla launches its self-driving autonomous taxi service, consumers who own or lease a Tesla can opt into the program.
Their cars can generate revenue for them when not in use. For this reason, we could consider leasing a Model 3 or Model X with the expectation that the car will soon earn money for us.
America’s manufacturing renaissance will be a boom for jobs…
Hi, Jeff, I look forward to your insights every day! I was fascinated by your article suggesting China’s manufacturing costs are on par with U.S. production costs and your projection that manufacturing will be returning to the U.S.
But could you please distinguish between manufacturing production and manufacturing employment? It’s my understanding that whereas U.S. production peaked in 2016–2018, manufacturing employment peaked around 1980, long before China opened up or NAFTA was developed. If automation will be running our factories, how can American workers prepare for the future?
– Stacey M.
Hi, Stacey. Glad to hear you’re enjoying The Bleeding Edge.
For readers who missed it, in last week’s mailbag, we talked about a looming “manufacturing renaissance” coming to America.
Despite what we may believe, the cost advantages of manufacturing in China are now less than 5% compared to the cost of manufacturing in the U.S. And that’s before we consider factors like supply chain risk, tariffs, intellectual property theft, quality problems, or logistics costs.
And if COVID-19 has taught us anything, it’s that an overseas, centralized manufacturing model is prone to supply chain disruptions by these “black swan” events.
Companies know this. And in the years ahead, they will move their manufacturing base back onshore. These new factories will be largely automated and utilize technology like advanced robotics, artificial intelligence, and 3D printing. In fact, there’s an exciting development in this trend that I’ll share on Tuesday.
Yes, automation will indeed change the nature of manufacturing work. I like to compare the coming shift to what we saw during the Industrial Revolution.
During the Industrial Revolution, steam power and mechanization automated many of our repetitive, physical tasks.
That led to a dramatic shift in the workplace. Machines took over many of the grueling jobs humans weren’t well-suited for.
But rather than the doom and gloom of mass unemployment that many expected, the opposite happened. There was an explosion of productivity and economic growth that ultimately created far more jobs and opportunities than were lost.
The key point that we should realize is that for 30 years, the Western world methodically moved much of its manufacturing to Asia… and more specifically, to mainland China.
Now these companies are moving much of their manufacturing back onshore. This will take the next 15 years to accomplish.
That means millions of jobs to construct and build these new bleeding-edge factories and also to integrate, implement, service, and maintain all of the automation and robotics systems that produce products. These massive investments will require every kind of skill level… from construction workers to PhDs in robotics.
As for your specific question, developing skills in commercial construction techniques as applied to factories will go a long way. Training and/or formal education in robotics, machine learning, computer vision, machine vision, computer science, mechanical engineering, and process automation will also be in very high demand.
We are in for an incredible decade of economic growth.
Why I save my best ideas for my readers…
If you can’t recommend what you already own and can’t front-run what you recommend, and you’re a biotech guru and angel investor, it seems like those of us who are paid subscribers to Early Stage Trader are getting second tranche info – i.e., companies that you’re not particularly interested in owning yourself or you would already have purchased shares. Please provide as detailed an explanation as possible to this apparent conflict of interest in your next mailbag
– Richard S.
Hey, Richard – thank you for writing in. This question comes up every once in a while, so I’m glad you asked it.
In my current capacity, I invest in very few publicly traded companies. The reason is simple. Any stock that I would want to own is in my Near Future Report, Exponential Tech Investor, or Early Stage Trader portfolio. My best investment ideas go into these three investment research products. That is my commitment to my subscribers, and I take it very seriously.
I am, however, a very active investor. The majority of my investments are made in private companies that are not accessible to normal investors. That means that these companies are not ones that I could recommend in my investment research – they aren’t publicly traded, so it wouldn’t be possible to make a recommendation.
These are high-risk, highly illiquid investments that can take 8–10 years to return any capital, but the pay-off is astronomical on the early stage companies that make it.
For this reason, I rarely buy publicly traded stocks. I don’t need to.
In fact, I developed Early Stage Trader specifically because I wanted a way to deliver venture capital-like gains to investors who do not have access to the types of private deals that I invest in personally.
I think it’s almost criminal that retail investors are locked out of these types of deals. But that’s the way the Security Exchange Commission regulations work right now.
And I can tell you, the venture capital firms and private equity groups are more than happy to keep it this way. That bothers me to no end. And that’s why I work so hard to deliver what I believe to be the best tech investment research available to retail investors today. I am trying hard to level the playing field as best I can.
That’s all the time we have this week. If you have a question for me, be sure you submit it right here. I’ll do my best to get to it next week.
Have a good Memorial Day holiday.
Editor, The Bleeding Edge
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