🔌 The EV outlook

Friday, June 3, 2022 by Robinhood Snacks |
If you build it, they will come (Bill Pugliano/Getty Images)

If you build it, they will come (Bill Pugliano/Getty Images)

If you build it, they will come (Bill Pugliano/Getty Images)

If you build it, they will come (Bill Pugliano/Getty Images)

Yesterday’s Market Moves
Dow Jones
33,248 (+1.33%)
S&P 500
4,177 (+1.84%)
Nasdaq
12,317 (+2.69%)
Bitcoin
$30,350 (+1.88%)

Hey Snackers,

The hottest trend in podcasting: white noise. Spotify podcasters are raking in as much as $18K/month with pods that consist of nothing but the soothing sounds of running vacuum cleaners and waterfalls.

Stocks rallied to break a two-day losing streak as investors set inflation and economic growth fears aside, putting all three major indexes on pace to close the week in the green. The Dow, S&P, and Nasdaq are now between 8% and 12% off their 52-week lows.

Plug

Sparks are (still) flying… Despite production delays, EV investment isn’t going anywhere. This week Ford doubled down on its electrification plans. Supply shortages (think: chips, lithium) have eaten into sales across the industry, but Ford has fared better than its rivals:

  • Lightning strikes again: Ford plans to invest $3.7B and add over 6K union jobs at three US plants to boost electric F-150 Lightning production. FYI: last week Ford delivered its first Lightning — to a buyer who reportedly got tired of waiting for his Tesla Cybertruck.
  • Savvy strategy: Industry-wide, car sales slipped 30% in May from last year. But Ford sales fell just 5% after it shifted resources to its F-Series and Mustang Mach-E (whose sales both jumped).

Your e-truck’s on back order… but you can still buy a charger. EV sales hit nearly 7M last year, tripling their market share from two years ago. Because automakers can’t crank out EVs fast enough, they’ve found other ways to invest in an electric future:

  • Big battery: This week Toyota debuted a home battery that can charge hybrids, EVs, and even houses — benefiting current Prius drivers and (the idea goes) future EV buyers.
  • Priming the plug: Earlier this year, Ford, BMW, VW, Daimler, and Hyundai pooled $800M to build 7K European charging stations.
THE TAKEAWAY

The electric revolution is underway… but the road ahead is long (and probably won’t have enough charging stations). Although demand for electric cars is growing faster than expected — $6 gas will do that — EV production could lag behind for years on prolonged chip and material shortages, plus slow infrastructure development (think: few chargers). Since automakers can’t manufacture EVs any faster, they’ve shifted their focus to manufacturing future EV customers, by creating convenient charging stations and battery options.

Storage

Looks like a mega-mall... actually Amazon’s biggest warehouse ever. The five-story, 4M-square-foot facility has been under construction in Southern California since last summer — eons ago in the world of ecommerce. The distribution center is about to come online at a time when Amazon finds itself with too much warehouse space.

  • Glut: After doubling its portfolio of warehouse space to 387M square feet since 2020, the Zon recently said it would sublease at least 10M square feet after posting its slowest growth in two decades.

(Ware)house hunters… At the height of the pandemic, retailers like Amazon, Costco, and Walmart snapped up record amounts of storage and fulfillment space to keep up with demand. Their belief was that Covid would accelerate the transition to ecommerce and they’d have the square footage to keep the boom going. But two years later, online shopping has cooled and consumer retail habits are roughly back to where they were pre-pandemic. That’s causing online-only retailers like Amazon to offload extra space to cut costs — and it’s leading to a real-estate ripple effect.

  • For retailers: The Zon shouldn’t have trouble finding tenants for its subleases, because many smaller competitors still don't have enough space to pick up inventory from container ports.
  • For industrial-property owners: The red-hot growth in the warehouse space could slow now that Amazon is dumping millions of square feet onto the market.
THE TAKEAWAY

Amazon bit off more than it could chew… and its decision to cut back on its industrial footprint could signal trouble for other ecommerce players who took on too much too soon — not to mention the warehouse industry that supports them. Commercial real-estate giant CBRE is expecting industrial leasing volume to fall 15% this year from 2021’s record highs.

What else we’re Snackin’

  • Pump: The oil cartel known as OPEC+ pledged to increase crude production by 650K barrels a day in July and August. That should help offset the loss of sanctioned Russian oil on the worldwide market.
  • Frenemies: Block (fka Square) is teaming up with Apple to integrate the iPhone’s “tap to pay” feature with Square’s tech. The partnership suggests Apple’s software could be a boon for Square, rather than its demise.
  • Stretch: Lululemon reported sales and profits above expectations and upped its yearly guidance. Unlike many stay-at-home stocks, Lulu's kept its momentum as athleisure proves to be a resilient fashion trend.
  • Floof: Chewy shares rocketed 24% after the pet retailer posted surprise profits and told shareholders demand is “resilient.” Even with the bump, the stock’s down 50% this year.
  • Blaze: A US gov’t supercomputer was named the world’s fastest, with the ability to make 2 quintillion calculations per second (1 quintillion = 1 million trillion). But there are rumors China’s got a faster machine.

Snack Fact of the Day

Reno, Nevada, is west of Los Angeles.

Friday

  • May jobs report.

Authors of this Snacks own: bitcoin and ethereum and shares of Amazon, Walmart, Block, Apple, Spotify, Tesla, and Ford.

ID: 2229365