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Tesla’s Stock Surge Bodes Well For EV Marketplace, And The Grid


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Tesla’s (TSLA) wild stock ride began Monday with a whopping 20% increase to $780 per share. That was followed by a 17% price spike Tuesday, sending prices near the $1000 dollar mark. Year-to-date that’s a 170% increase in Tesla’s share price, and a quadrupling since its low of $178 in June 2019.

The rally began after a positive fourth-quarter earnings report last week, revealing an above-expectations $105m profit. This was fueled by an accelerated roll-out of its new Model Y and positive news on the company’s battery manufacturing and patent front. Tesla’s first ever back-to-back profitable quarters drove the stock price up and continued higher still due to an historic ‘short squeeze’ (short sellers with positions against Tesla rushed to cover their positions – creating additional demand for shares).

Even after a 17% correction Wednesday the company is still up 71% on the year – sitting at $755 per share as of this writing. Tesla has now overtaken Volkswagen, General Motors, Daimler, and Ford, only trailing Toyota in total market capitalization.

As the leading name in electric vehicles (EV), Tesla’s ascendance is good news for the EV market, and for the electric grid.

EVs and the Grid

Electric vehicle adoption is growing in the United States – the world’s third largest EV market – with annual light-duty electric vehicle sales surpassing 2 million in 2018, an increase of approximately 70% from 2017. Growth of EVs in the long haul trucking sector hasn’t started yet, but plans are in the pipeline.

About half of the nation’s EVs are located in California, where a state mandate for zero emission vehicles is helping to drive demand. The ZEV program assigns each automaker “ZEV credits.” Automakers are required to maintain ZEV credits equal to a set percentage of non-electric sales. Each car sold earns a number of credits based on the type of ZEV and its battery range. California is joined by Connecticut, Maine, Rhode Island, Maryland, Massachusetts, New Jersey, New York, Vermont, Oregon, Washington and Colorado in this increasingly popular legislation.

So, with EV sales continuing to grow, there are important implications for the energy grid:

Electricity demand goes up: If high power demand states like Texas and California saw their Internal combustion vehicle fleets entirely replaced by EV’s, they would experience an estimated 30% and 50% increase in electricity consumption, respectively. Though this will likely happen gradually, it will necessitate massive infrastructure development in power generation and transmission, costing billions. America’s power generation sector is in desperate need of modernization, and electric vehicles could be the catalyst for a smarter, greener, more efficient electric grid.

Battery technology benefits: EV adoption is driving investment in battery technology, which leads to increased battery performance and reduced costs. Average market prices for battery packs have plunged from $1,100/kWh in 2010 to $156/kWh in 2019, an 87% fall in real terms according to Bloomberg. Energy storage tech can be scaled up from residential and auto use to play a utility-scale role in grid balancing. As batteries get cheaper and more reliable, so do electric grids.

A greener and more resilient grid: EVs can provide ancillary services like ‘peak shaving’ and ‘load shifting’ which reduces stress on the electric grid. When millions of EV owners plug their cars in, they become energy storage devices or virtual power plants, able to consume excess power (sometimes generated by renewables) or to discharge energy in case of capacity shortfalls. In effect they can help to smoothen constantly occurring grid disturbances. More flexible ‘smart’ grids are better prepared to take on the intermittency of renewable energy sources, which produce power when the sun is shining or the wind is blowing. Greener grids are better for the environment, and increasingly a better value for utilities and consumers.

Utilities Can make money:  For utilities, selling electricity has higher returns during off-peak hours, as they can rely on cost-effective base load power sources rather than expensive ‘peaker plants’ which must be ramped up and powered down quickly in times of high demand. Time of Use (TOU) plans like those rolled out by California’s PG&E and SCE charge consumers (like EV chargers) reduced prices for electricity in off-peak hours. This way consumers pay less, and utilities increase their revenue, which can then presumably be put towards critical infrastructure investment like smart grid technology and transmission line expansion.

Tesla’s meteoric rise coincides with a growing demand for EV’s in the United States and across the globe. There are many questions surrounding the widespread adoption of electric vehicles, but one thing is for certain: we are living through yet another tectonic shift of technology, which together with autonomous driving will redefine out transportation patterns. It will increase mobility, make our grids more resilient, and reduce dependence on the global oil market. Electric vehicles are ushering in a new age of productivity and US energy security.

 James Grant contributed to this piece

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Tesla’s (TSLA) wild stock ride began Monday with a whopping 20% increase to $780 per share. That was followed by a 17% price spike Tuesday, sending prices near the $1000 dollar mark. Year-to-date that’s a 170% increase in Tesla’s share price, and a quadrupling since its low of $178 in June 2019.

The rally began after a positive fourth-quarter earnings report last week, revealing an above-expectations $105m profit. This was fueled by an accelerated roll-out of its new Model Y and positive news on the company’s battery manufacturing and patent front. Tesla’s first ever back-to-back profitable quarters drove the stock price up and continued higher still due to an historic ‘short squeeze’ (short sellers with positions against Tesla rushed to cover their positions – creating additional demand for shares).

Even after a 17% correction Wednesday the company is still up 71% on the year – sitting at $755 per share as of this writing. Tesla has now overtaken Volkswagen, General Motors, Daimler, and Ford, only trailing Toyota in total market capitalization.

As the leading name in electric vehicles (EV), Tesla’s ascendance is good news for the EV market, and for the electric grid.

EVs and the Grid

Electric vehicle adoption is growing in the United States – the world’s third largest EV market – with annual light-duty electric vehicle sales surpassing 2 million in 2018, an increase of approximately 70% from 2017. Growth of EVs in the long haul trucking sector hasn’t started yet, but plans are in the pipeline.

About half of the nation’s EVs are located in California, where a state mandate for zero emission vehicles is helping to drive demand. The ZEV program assigns each automaker “ZEV credits.” Automakers are required to maintain ZEV credits equal to a set percentage of non-electric sales. Each car sold earns a number of credits based on the type of ZEV and its battery range. California is joined by Connecticut, Maine, Rhode Island, Maryland, Massachusetts, New Jersey, New York, Vermont, Oregon, Washington and Colorado in this increasingly popular legislation.

So, with EV sales continuing to grow, there are important implications for the energy grid:

Electricity demand goes up: If high power demand states like Texas and California saw their Internal combustion vehicle fleets entirely replaced by EV’s, they would experience an estimated 30% and 50% increase in electricity consumption, respectively. Though this will likely happen gradually, it will necessitate massive infrastructure development in power generation and transmission, costing billions. America’s power generation sector is in desperate need of modernization, and electric vehicles could be the catalyst for a smarter, greener, more efficient electric grid.

Battery technology benefits: EV adoption is driving investment in battery technology, which leads to increased battery performance and reduced costs. Average market prices for battery packs have plunged from $1,100/kWh in 2010 to $156/kWh in 2019, an 87% fall in real terms according to Bloomberg. Energy storage tech can be scaled up from residential and auto use to play a utility-scale role in grid balancing. As batteries get cheaper and more reliable, so do electric grids.

A greener and more resilient grid: EVs can provide ancillary services like ‘peak shaving’ and ‘load shifting’ which reduces stress on the electric grid. When millions of EV owners plug their cars in, they become energy storage devices or virtual power plants, able to consume excess power (sometimes generated by renewables) or to discharge energy in case of capacity shortfalls. In effect they can help to smoothen constantly occurring grid disturbances. More flexible ‘smart’ grids are better prepared to take on the intermittency of renewable energy sources, which produce power when the sun is shining or the wind is blowing. Greener grids are better for the environment, and increasingly a better value for utilities and consumers.

Utilities Can make money:  For utilities, selling electricity has higher returns during off-peak hours, as they can rely on cost-effective base load power sources rather than expensive ‘peaker plants’ which must be ramped up and powered down quickly in times of high demand. Time of Use (TOU) plans like those rolled out by California’s PG&E and SCE charge consumers (like EV chargers) reduced prices for electricity in off-peak hours. This way consumers pay less, and utilities increase their revenue, which can then presumably be put towards critical infrastructure investment like smart grid technology and transmission line expansion.

Tesla’s meteoric rise coincides with a growing demand for EV’s in the United States and across the globe. There are many questions surrounding the widespread adoption of electric vehicles, but one thing is for certain: we are living through yet another tectonic shift of technology, which together with autonomous driving will redefine out transportation patterns. It will increase mobility, make our grids more resilient, and reduce dependence on the global oil market. Electric vehicles are ushering in a new age of productivity and US energy security.

 James Grant contributed to this piece

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