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Want to fight climate change? Don’t invest in Tesla

Fri Aug 18, 2017 6:10 pm

Want to fight climate change? Don’t invest in Tesla
Aug 18, 2017
By Ryan Vlastelica
Building an electric car creates more CO2 than it saves, Morgan Stanley calculates

Climate change is almost unanimously considered one of the gravest threats facing humanity, with the worst-case scenarios representing massive environmental destruction. Investors hoping to combat it with their portfolio allocations can, but one famous environmentally focused company may actually be doing more harm than good.
Morgan Stanley identified 39 stocks that generate at least half their revenue “from the provision of solutions to climate change,” something it said was a central component of investing to make a difference, as opposed to just a making a buck.
“In our view, impact investing needs to begin with companies whose products and services have a notable positive environmental or social impact,” wrote Jessica Alsford, an equity strategist at the investment bank.
Not surprisingly, alternative-energy companies ranked the highest in terms of their positive impact, and the “top five climate-change impact stocks” were all manufacturers of solar and wind energy: Canadian Solar (CSIQ) China High Speed Transmission (HK:0658) GCL-Poly (HK:3800) Daqo New Energy (DQ) and Jinko Solar (JKS)
Not among the top companies? Electric-car makers, including Tesla Inc. (TSLA) Elon Musk’s company has been an investor favorite for years, even eclipsing Ford Motor Co. (F) and General Motors (GM) in market cap.
Tesla shares are up nearly 66% so far this year, but the good it may have been doing for portfolios may not translate to it doing good for the planet. Morgan Stanley said this was one of the “biggest surprises” of its study.
The bank grouped the “climate-change impact stocks” into four sector categories: utilities, renewable manufacturers, green infrastructure companies and transportation stocks. It then analyzed them on a number of metrics, including “the CO2 [carbon dioxide] savings achieved from the products and services sold by the companies,” as well as secondary and tertiary factors centered around the environmental impact of the making of these products.
This is where Tesla, along with China’s Guoxuan High-Tech (CN:002074) fall short.
“Whilst the electric vehicles and lithium batteries manufactured by these two companies do indeed help to reduce direct CO2 emissions from vehicles, electricity is needed to power them,” Morgan Stanley wrote. “And with their primary markets still largely weighted towards fossil-fuel power (72% in the U.S. and 75% in China) the CO2 emissions from this electricity generation are still material.”
In other words, “the carbon emissions generated by the electricity required for electric vehicles are greater than those saved by cutting out direct vehicle emissions.”
Morgan Stanley calculated that an investment of $1 million in Canadian Solar results in nearly 15,300 metric tons of carbon dioxide being saved every year. For Tesla, such an investment adds nearly one-third of a metric ton of CO2.
Morgan Stanley, which in February advocated for looking at gender diversity when analyzing companies, admitted that considering companies on a climate-change basis was not a perfect science.
“Very few if any stocks will have a 100% net positive impact,” read the report. “However, the extra layer of analysis on subsidiary effects must be a subjective judgement call, based on whether the additional impacts (of which there may be many) are sufficiently negative to offset the positive effect created by the core business.”
It added, “We even struggled to find total CO2 emissions data for most companies.”
Investing with an eye toward the environment is part of a growing trend of ESG investing, which stands for evaluating companies on environmental, social and governance grounds. Such investments favor companies that have strong environmental policies, or that treat their employees well, for example.
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There are even funds that focus specifically on climate-change issues, like the iShares MSCI ACWI Low Carbon Target ETF (CRBN) or the SPDR MSCI ACWI Low Carbon Target ETF (LOWC) . Both exchange-traded funds have outperformed the broader S&P 500 so far this year, whereas the largest ETF to track the energy sector (XLE)recently dropped into bear-market territory, defined as a 20% drop from a peak.
The low-carbon funds have seen increased usage over the past year, something analysts credit to the election of President Donald Trump, whose administration is seen as hostile to environmentally friendly policies.
Oh no, now we have a reputable source saying what we didn't want to hear :(

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Joined: Wed Feb 15, 2017 12:01 am

Re: Want to fight climate change? Don’t invest in Tesla

Wed Aug 30, 2017 8:03 pm

Tesla Cars Aren't As Carbon (And Taxpayer) Friendly As You Think
Zero Hedge
Tyler Durden · Aug 10, 2017
Authored by Duane Norman via Free Market Shooter,
Tesla proponents love to remind people how their vehicles are “carbon free” (in spite of Tesla CEO Elon Musk’s own carbon profligate lifestyle):
Fact: the Tesla Model S is an environmentally friendly, zero emissions electric vehicle that won’t pollute the air like gas-powered cars. Carbon emissions from a gas car’s tailpipe has a dangerous impact on global warming…. In addition, Tesla CEO Elon Musk explains that, “combustion cars emit toxic gases. According to an MIT study, there are 53,000 deaths per year in the U.S. alone from auto emissions.”
But in reminding people about how they don’t burn fossil fuels, they make sure to omit and/or obfuscate all the other emissions-laden factors that go into production of Tesla automobiles, including the oft-unspoken costs of the vehicles to the taxpayer and to other auto manufacturers.
Start with the power source for the Tesla; their electric power plant uses lithium-ion batteries to store the electricity required to run the car. And while a good amount of lithium is produced at salt lake brines that use chemical processes to extract the requisite lithium…

…a large (and growing) amount of lithium is sourced from hard-rock mining, which is also referred to as strip mining:

This type of mining involves not just all the carbon used to extract the lithium from mines, it “strips” the land of its forests, which is far more environmentally (and carbon) detrimental. And while it is likely impossible to know exactly where Tesla sources its materials from, a closer examination on Tesla’s impact on the mining industry should paint a crystal clear picture:
Should the concept capture the imagination of Americans who are increasingly conscious of reducing their carbon footprint demand for these crucial elements could skyrocket in addition to the already robust global demand for lithium, nickel and copper. Major mining companies are already “future proofing” their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry.
You can’t make this stuff up – Tesla and other renewable energy industries are going to save the world by mining its natural resources to excess, without regard for the environmental impact and carbon emissions generated in the process. You shouldn’t be surprised to seldom hear this mentioned by Elon Musk, or the liberal crowd that champions electric vehicles.
It’s hardly the only way Tesla’s manufacturing process is anything but emissions-free. Just take a look at their factory:

Even, of all places, muses at the irony of the Tesla plant:
The factory is in the middle of nowhere, really — 23 miles from the nearest city of any size, Reno, Nevada. If we assume that this is the average distance workers are commuting (and it is likely a lot farther), that the cars are powered by gasoline, and that they are average size, then according to the EPA they pump out about 411 grams of CO2 per mile or 18.9 kilograms per round trip. Multiply that by 3,000 and you have 57 tonnes of CO2 generated every day just by the the workers driving to the factory. The average car puts out 4.7 tonnes per year. So every day that the Gigafactory workers drive to work to make batteries for carbon-saving electric cars, they generate as much CO2 as 12 conventional cars do in a year.
And though no one should put it past Tesla to source power for its plant via a “renewable” source, would you really be surprised to find some fossil fuel powered machinery in the plant, given Musk’s own callous attitude towards carbon emissions when it comes to space launches and his own private flights?
None of this even mentions the tax incentives Tesla receives. Electric vehicles are subsidized by the federal government via a tax credit, which is no small chunk of change; $7,500, to be exact:
The federal incentive to purchase an electric vehicle comes in the form of a $7,500 tax credit. In order to qualify for this credit, one must have a tax burden of at least $7,500 and take ownership of a newly purchased electric car before the vehicle manufacturer reaches its 200,000th EV sold in the U.S.
Since Tesla has not sold 200,000 vehicles in the US, the tax credit is still alive and well. Which means that if you say the average sticker price of a Tesla is $100,000 (still high according to estimates), the federal government is subsidizing 7.5% of the purchase price.
And that is before you even count the “Zero-Emission Vehicle” (ZEV) credits that Tesla makes a mint on. Bloomberg explained exactly how important these are to Tesla:
I’m referring to zero-emission vehicle, or ZEV, credits. California and several other states require that a certain proportion of the vehicles sold by an automaker emit no greenhouse gases. These cars earn the automaker credits, and if they don’t have enough to meet their quota, they can buy extra ones from someone who does. As Tesla only makes vehicles that run on batteries and emit nothing, it usually has a surplus for sale.
The profit margin on these is very high, perhaps 95 percent. The implied $95 million of profit equates to about 58 cents a share. Tesla reported a loss of $1.33 per share this week — beating the consensus forecast by 55 cents.
So Tesla earns a subsidy not just from the American taxpayer, it earns a subsidy from all the auto companies that are forced to buy ZEV credits from Tesla in states (primarily California) that force ZEVs upon automakers. And somehow, Tesla still spends more money than it takes in.
That’s correct; in spite of the massive subsidies it receives to operate, Tesla is not even profit-neutral, and the cars are not carbon-neutral, despite what the proponents will have you believe. Of course, none of this even factors in the carbon impact of whatever electricity source Tesla owners charge their cars with, which is a topic you could write a whole ‘nother article on.
Tesla cars are subsidized using a business model that is anything but “dollar-neutral”, and they are built and operated using anything but a “carbon-neutral” process . Can you imagine what could happen if the subsidy “plug” was pulled?

Note: What would be a “solution” for the “climate change” crowd to push that would actually be honest? Look no further than the aforementioned to fill you in:
Nothing has changed, which is why this TreeHugger will continue being critical of any kind of car, and will continue to promote walkable cities, bicycles and public transport as the real solutions to the problem of decarbonizing our society.
“Decarbonizing” our society obviously isn’t something I believe in, so don’t expect me to join Lloyd Alter in his carbon-free city. However, I acknowledge that he’s at the very least participating in an intellectually honest discussion about CO2, and not grandstanding about how much he’s helping the environment by plopping himself behind the wheel of a Tesla.
I imagine so much of this is true in one way or another for other manufacturers - we just don't know it yet

Posts: 94
Joined: Thu Oct 27, 2016 12:02 am

Re: Want to fight climate change? Don’t invest in Tesla

Sat Sep 02, 2017 11:53 pm

If this is true it could prove to be very damming for Tesla and maybe other EV manufacturers . I really hope we can get some more input from forum members on this topic as it is a big one for many of us

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