IN THE swanky setting of an exclusive Tokyo restaurant, I savoured a few mouthfuls of burgundy before getting up to introduce a guest speaker to global investors. The gentleman was a retired German inorganic chemist who had spent his entire career working for the conglomerate BASF. For the next 45 minutes he explained why lithium-ion batteries for automobiles would lead to a dead end. I’ll spare you the dry detail but suffice to say that inorganic chemistry is a rigid area in which the laws of the universe dictate its limitations.
In short, it isn’t possible to build a battery which can compete with petrol-powered vehicles for longevity and economic efficiency.
After the dinner ended, I chatted to some of the biggest names in finance.
‘Very interesting, Ian,’ they said. ‘But the governments are throwing so much money and incentives at green initiatives that we have to play the game.’
All but two participants held a different opinion. These were our invited representatives from Toyota and Honda. Former Japanese engineers at their respective companies, they came up to meet our German chemist and agreed wholeheartedly with his presentation, exchanging their ‘meishi’ (business cards) and promising to engage in future dialogue.
This all took place a decade ago. By 2023 we found ourselves with EV sales shrinking, and inventories at dealers at astronomical levels so much so that fields are being rented to store the excess. You see, the depreciation of EVs is some five times higher than petrol vehicles owing to the inability to get battery costs much lower, as predicted by our German friend.
However, this is all just a backdrop to the real story. In the intervening decade Europe, including the UK, has squandered an average of some €764billion each year ‘to reduce GHG emissions’ versus a relatively paltry $280billion by the US and very little by the rest of the world.
These investments have not performed well in recent years. Look at Orsted, the Danish wind farm ‘pioneer’ which has fallen some 76 per cent since its peak in 2021. Or Albemarle group – a lithium producer – down over 80 per cent in the same time span. How about Hertz, which replaced its entire fleet with EVs and is now facing Chapter 11 bankruptcy? Down 90 per cent. I haven’t even bothered to add in the opportunity costs of the lobbies on Shell and BP to divest oil and gas assets. Shell was practically forced to sell now far more valuable proven finds in the Permian Basin to ConocoPhillips for a song just under three years ago.
All of this is YOUR money being channelled into dead-end investments and will certainly have an impact via lower pension payouts in years to come, creating future economic headwinds.
Yet our government and their attendant bodies – the Pension Regulator – are still urging our pension funds to throw good money after bad. Indeed, non-compliance with green policies will even result in significant penalties. As you know from my previous article, I’m studying for FCA exams and the whole course is littered with references to green investments. As far as I can see almost one in three jobs in finance these days is related to ESG.
Not only are we directly subsidising renewables and EVs, driving up transport and energy costs, but we are also losing our prosperity in terrible investments.
Going back to the start of this piece, the shrewd Japanese have barely thrown a Yen at developing EVs while the other global automakers are making layoffs and cutting investment amid languishing share prices and falling profits.
Yet again, the stupidity of our overlords is contributing hugely to our decline in national prosperity. I only hope that some light is seen before the next economic collapse is upon us.
