Tesla sells 5K cars....in one quarter
 

Tesla Motors Stuns Wall Street ... Again - Businessweek

For some perspective, the last 993, another niche/boutique car, barely sold 2,600 cars in North America for the whole year -- during a booming U.S. Economy. At this pace globally Tesla will be matching total Porsche NA sales for as recently as 2009. And their SUV has yet to be launched. They have a dealer showroom right in the upscale mall near here on the second floor. That's a genius move right there...stores are closing so cheap retail space to park a showroom car without a pushy sales guy wanting you to go for a test drive. Simply stage 1 of peeking interest from a prospective buyer. brilliant.

Tesla stock has gone from $29 to $150 in the last year.


http://images.bwbx.io/cms/2013-08-07...-s-630x420.jpg

Update, 7 p.m.: Adds details from Tesla’s earnings conference call.

Anyone hoping to ratchet the Tesla Motors (TSLA) hype down a notch will want to ignore the company’s second-quarter results delivered on Wednesday afternoon. Tesla turned a profit, much to the surprise of Wall Street analysts, and said it shipped a record number of its Model S luxury sedans that have become all the rage with the wealthy, eco-conscious set. The results pushed Tesla shares further into the stratosphere and boosted its market cap beyond that of Suzuki Motor (7269:JP), Mitsubishi Motors (7211:JP) and Isuzu Motors (7202:JP).

Led by Chief Executive Officer Elon Musk, the 10-year-old automaker delivered 5,150 Model S sedans in the last quarter, beating a forecast of 4,500 vehicles. As first reported in our cover story last month, Tesla has ramped production at its Silicon Valley factory up to 500 vehicles a week. (You can see the factory in action here.) It’s also preparing to ship cars into Europe—Norway alone should account for 800 orders, the company said—and then Asia. Tesla’s revenue for the second quarter reached $405 million, up from $26.7 million in the same quarter last year (PDF). Excluding one-time items, Tesla posted an operating profit of 20¢ a share, which was a real shocker to the Wall Street analysts who expected a 20¢-per-share loss. Including all the special items, Tesla reported a net loss of $30.5 million, or a loss of 26¢ per share.

Investors in the after-hours markets drove Tesla shares up more than 12 percent to a 52-week high of $150.90. Tesla started the year trading at about $33 per share before a string of announcements generated interest in the stock and put the squeeze on short sellers who had bet the Model S would be a dud.

Tesla kept its sales forecast for the year steady at 21,000 vehicles but declared that it expects to ship 40,000 Model S units per year by late 2014.

Financial analysts joined Musk on a mid-afternoon conference call to discuss the results and did not seem bothered by their huge forecasting miss. One analyst asked Musk for his take on BMW’s (BMW:GR) electric i3. “I think there is room to improve on the i3, and I hope they do,” Musk said. At which point the analyst broke into a fit of giggles, only to be joined by Musk. This went on for some time.

Throughout the call, Musk insisted that Tesla has more supply problems than demand problems. The company continues to work out kinks in its factories, to get better deals from suppliers, and to try and improve gross margins by becoming more efficient overall. “It is not some story about how did we get super good,” he said. “It is how did we stop being so stupid.”

Close Tesla watchers will have paid special attention to what Musk said about the Model X, a SUV-minivan mashup based on much of the Model S technology. The car will arrive in late 2014 in limited numbers, then reach volume shipments in 2015, Musk said, which is probably a bit later than the optimists hoped.

Musk, also the CEO of SpaceX, flicked at the Hyperloop, as well. He’s been dropping hints about this mysterious invention for almost a year now; it’s said to be a new mode of superfast transportation. He will reveal a draft plan for the technology on Aug. 12 and open-source it, asking others to improve on the design. Musk does not plan to commercialize the technology unless it languishes for a few years without anyone else acting on it. “I have to focus on the SpaceX and Tesla,” he said. “That is more than enough.”
http://upload.wikimedia.org/wikipedi...Model_S_01.jpg

btw,
Porsche is on a streak of its own... plenty of nice cars coming into the used car market fellas.

http://press.porsche.com/news/pdf/2013/Porsche-Delivers-More-than-13700-Units-in-July.pdf

I'm very impressed with the Tesla cars and what they are doing. They are pissing off the Saudis though.

I put a ton of cash into TSLA early February. Hands down best investment I've ever made.

Lucky you. :)

I wouldn't mind an electric car for commuting at all, but until prices drop. :p

Tesla has certainly had a couple of very solid quarters, but the future is not entirely clear as:

1. They are facing problems with rulings in a couple of states (with others pending) that their direct to consumer sales breach state laws.

2. BMW is releasing its own electric vehicle, which will likely cut into their sales.

3. Other vehicles such as Porsche's new hybrid may also cut into sales of their upscale electric sedans.

Still, it is nice to see that with a combination of government assistance and good design they have managed to not only stay afloat, but to thrive to a relative degree.

Brad

Yea but who bought these cars? Celebrities buy them by the dozen like the Range Rover.

The Tesla is cool, but electric only vehicles are still only practical for short commutes. The range is only 200 miles at a constant Hwy. speed, spirited driving will kill the battery very quickly. Besides, they still consume fossil fuels, just via powerplants instead of directly. Powerplants have fewer environmental controls than autos, so I don't even buy the Eco-friendly angle.

The emission from a combustion vehicle as opposed to energy made in plants are completely different.
Unless you're using coal.

Yes, there are some differences, but also many similarities. (assuming non-Nuclear energy) Both rely on combustion of fossil fuels, and after Bush's de-regulation, plants can do a ton of environmental damage.

So true
 

Also the batteries used in electric vehicles are anything but eco-friendly. Marketing sells electric vehicles as green but it isn't true.

Electricity is not only 'green' if produced by nuclear plants, but also by wind turbines (popping up in huge numbers in various parts of the world), hydro (think of the Sir Adam Beck plant at Niagara Falls, but also various other smaller hydro-electric plants) and solar (which is becoming more and more prevalent). Furthermore, even when plants use oil to generate electricity, less polution will typically result at peak periods (aka rush-hour) as vehicles are using their stored electricity and recharging at night when there is typically less demand. Over time, as more and more electricity is converted to 'greeen' sources, the difference will become even greater.

At present there are many reasons to prefer gasoline or diesel engines, but contributing to the environment is not one of them.

Brad

There are at least 3 Model S Tesla's in my town (I've seen three different colors).

Just the other day, a guy in a Tesla pulled up to me and said "nice car" to which I replied "want to trade..."?

He said the car has been a rock solid daily driver for him.




/

Brad, I see you've drank the Coolaid. First, the US is unlikely to build any more nuke plants because of the minor inconvenience of the radioactive waste produced. Not very Green to just bury it in Salt mines. Hydro is also has a limited number of sources. Solar is a supplement at best, the power output is tiny compared to a traditional power plant. Ditto wind. I think you're being naïve to think "green" sources will ever produce the bulk of our energy. They are now switching to Nat. gas power because it's so cheap. Pollution is OK if it's produced at night instead of rush hour? Don't get me wrong, I think we should pursue all available energy sources, but other than Nuclear, they don't provide enough to meet demand.

Sorry for the thread derailment.... moving along......

I would sooner invite a daily kick to the groin than to even contemplate buying an experimental car from BMW. Ditto for Merc.

Which is precisely where the meat of the market is. Long range battery technology is an unecessarily expensive cost for the market that Tesla is apparently wiping the floor clean with. Elon Musk is a genius. I could care less about the 'green issue'. I'm more concerned with the 'greenback' issue. Consumers like the idea of paying $6 a gallon as much as they'd like to switch to energizer batteries for their rechargeable phones, tablets and laptops. A huge waste of money! And precisely what we do every time we fill up our tanks and make the oil lobby happy. These are billions, trillions of dollars that could be spent to come up with new ways of making electricity (ie Bloom). Dirty coal and insanely expensive nuclear plants can not continue to be the only way. It's economic Liliputianism. There is a fortune to be made in cars and new forms of energy production. We have to stop doing the same old same old even if it takes 40 years to flip the whole U.S. fleet.

Well yeah, the genius part was doing it on the taxpayer's Dollar ! (mostly) Large subsidies continue to make it viable. Granted, big oil receives huge subsidies, adding to an already very profitable business.

Neighbor went and bought a white model S. My main exigence for wanting an electric is not because it is "green", but filling up for less than 5 bucks. I don't think I ever drive more than 200 miles a day, even if I am running around in the DFW area. There are certainly good points in that these cars not green as the virgin forest, but I feel at least some electricity can be offset. There are times when I must commute, and times when I want to drive spirited. :)

There is no free lunch (or not for long).

The electric utilities can't wait for 30% of the public vehicle fleet to be electric - then they will jack the price of electricity (including at 2am) through the roof. You'll be paying e-equivalent of $7/gal.

You can be held hostage by the oil companies or the utility companies - but you're going to held hostage. :)

If you ever need to compete with China, then you're going to have to deal with concept of public funding to break new industrial ground that carry huge capital expenses and burn rates from hell. The new Asian economies have no issue with throwing trillions into new industries thereby articificially lowering prices that our private industries must compete with. Few investors are going to jump into that shark tank solo. So communist economies like China's stuff their pockets deep, employ tens of thousands, open up factory after factory and grow their economies with our missed oppourtunities because U.S. private equity only wants 'sure bet' investments that pay off in 12 to 18 months so that they can sell prospective investors on how good they are at beating the S&P. It's all short term while our competitors overseas focus on the big picture.
China has plans to FORCE hundreds of millions of their citizens to relocate from the countryside into their urban sectors just to fill up the assembly lines and to get at raw material.

Dismissing public funding could be understandable when the global economy consisted of only the U.S. This is a whole new game now.
Sovereign wealth funds and direct monetary injection by Asian central banks into their manufacturing sectors need to be factored in.

OK, let's see.....$60-100k...vs. $6/Gallon for gas, you're talking a pretty long payoff period for the short distance commuter. The people buying these can afford high gas prices! Let's face it, most will buy them for "green" bragging rights, just like celebrities do now with the Prius. I'll admit, it is nice to at least make an electric car that is fun, and doesn't look like a clown car.

Everything in techology is expensive at first. My first IBM laptop cost $4,000. That same computing capability can now be purchased at 1/10 the cost at Wal-Mart. Those $4,000 Windows computers paved the way for $500 iPads and iPhones in a span of less than 15 years.

Also, the price of finite forms of energy that are traded on the expectation of future demmand rather than current demmand being met or even exceeded, and then further speculated by institutional investors who have an interest in parking vast sums on long side only energy bets (which will bring you $6 gas sooner than many realize) will not deliver us falling prices like in the case of laptops. Quiet the opposite: the more China and the rest of the BRICS grow, the higher the oil specualtion will go. These players are all more than willing to bid well past the prices that strict supply and demmand would call for just to secure their share of oil and to price out the competing bidders. The average U.S. household can't survive in those pricey waters. Nat Gas>fuel cell>hybrid electric cars, seem like one of the few alternatives to spare them of the whims of rampant future oil speculation.

Who would ever buy overpriced phones and tablets from Apple when you can get cheaper ones that do more with Android!?!?!???

Bingo, exactly how I see it.

You guys are missing the point. Why spend your hard earned money on people who DO NOT LIKE US!!! Its cheaper to run electric now but even if it goes up, I like supporting Us instead of a suicide bomber. Our country need to be the first to invent a better battery tech. We can save so much alone just in the wars we fight for crude. Oops did I say that?

Besides have we forgotten the miles per gallon of the first cars? Got to start somewhere.

We had an electric car for a few years. It was more of a golf cart, but street legal (a Gem electric car, produced by Chrysler at the time) and it was problematic:

After about 4 years, the range on a charge became shorter and shorter. It went from the initially advertised 35 miles down to about 3 miles. Replacing the batteries with gel batteries did NOT help, the systems just degraded as it aged. Speed was also reduced, to the point where the car was almost unusable. I worry about the Tesla and it's systems long term. I don't think battery technology is where we need to be to make this a truly reliable, long-term, vehicle.

Also, I'm very suspicious of the company. After the New York Times reporter test drove one and found it wanting (http://www.nytimes.com/2013/02/10/automobiles/stalled-on-the-ev-highway.html?pagewanted=all&_r=0) he got severe blow back from the company. They implied that, essentially, he had "driven it wrong". Well, I'm sorry, but how many people are going to "drive it right"? I think Tesla "doth protest to much".

The dealership in the mall is a huge gimmick, plus it keeps you from test driving the car. Seriously? Why - oh, why - are people lining up to buy a car they haven't driven?

I agree, 100%.

The only truly green car is the Prius, because it harnesses Unused, FREE energy that is created by the car's inertia. It's genius engineering.

As a side note, I saw a report on an energy system that was embedded into road surfaces (it used flexing panels) to harness the energy of cars driving on the road. The flexing panels recharged batteries that were used to power buildings adjacent to the road. That is, again, harnessing energy that is free and wasted.

Simply plugging into a powerplant does not impress me.

The claims of the writer were put into question when the data didn't match his statements, in that he falsified "issues" (ex. never ran out of power when called for a flatbed). A group of Model S owners did the same route and had no issues, I believe, just to prove the point.

State laws, in many cases, forbid them from allowing test drives. Thank the NADA and dealership lobbies for this. So they, instead, showcase the cars but cannot discuss pricing either. Legal mess they're trying to fight.

I don't about your neck of the woods but over here they put the showroom in the NJ mall with perhaps the highest incomes in the state. I seriously doubt that there have been any visitors to that mall, who live in $1 million and above homes, who have not stopped into that showroom. Getting a person to go out of their way to otherwise visit a Tesla showroom is a whole bigger effort requiring advertising, direct marketing and manpower to execute. The funny thing is that I'm willing to bet they took the idea from the German luxury car dealers that came up with the idea to park new Porsches, Mercs and Range Rovers in the mall's corridors but didn't take the next logical steps of putting the cars in an actual store where they could sell to the customer properly and build a book of leads.
Its the Apple store equivalent of cars. Frankly I can't believe luxury car makers haven't followed Tesla's lead. You have wealthy shoppers walking inches past your product with tons of parking space to house test drive cars that can be valet'd over to the buyer in minutes.

And as far as buying the car without ever driving it, there must be many, many people who configured a Porsche online and pretty much had their mind 99% made up before the first model even came off the trailer. The showroom visit was more confirmation of the prior website experience. They only needed to confirm that trim looked as good in person as it did in all those high resolution pics. That the seat was as plush to their bascksides as they hoped. That exterior had the wow factor that they required. Most luxury buyers aren't really serious driving enthusiasts that demand some spirited driving experience during a test drive...nothing like when our big Porsche dealer here sent over two Caymans during an autocross just for us to beat on. A luxury car test drive is probably no different than a Honda test drive, drive down the street. Stop at a few lights. Maybe go crazy and go 5 miles over the sped limit. That's not really where the sale is made with a 'passive' type driver. It was back at the showroom when they imagined what their neighbor's face would look like when they pulled up in that new S class or 7 series. Tesla knock most of that right off the salesman's to do list right inside the mall.

How much will it cost to replace the batteries in a Tesla? And I'm sure there will be a disposal fee for the old batteries too.

They also had Top Gear faking a Tesla roadster break down to 'dramatize' the car running out of battery power. Tesla said there was no possible way the car could have run out of juice given the number of laps and speeds. Which later revealed that nearly all of Top Gear's tests are scripted just like a WWF wrestling match.

Have you looked at the number of products in the average household produced in a communist dictatorship where its completely legal to force a woman to have a late term abortion? Like physically taken to the abortion clinic and strapped down against her will? Seriously.
We are either sending our spending to kooks to the West or kooks to the East. And we're only going to be doing more and more of it.

Bingo! Here is some more insight into Li-ion battery recycling:

First, many e-cars use propylene glycol as a coolant for the battery pack. We all already know that this stuff isn't good for the environment and must be carefully recycled or it will contaminate the ground.

Second, the electronics components used to charge and monitor the status of the battery packs must be removed and disposed as e-waste. E-waste is also harmful to the environment.

Third, the batteries are mechanically shredded and then screened into three components: fluff, copper cobalt, and slurry.

The fluff consists of most of the physical parts of the battery (ground plastic, ground metal, and other materials). The battery and car companies say its mostly plastic and say that it is disposed in landfills. But they fail to mention that its been contaminated with a lot of different chemicals so it gets a quick wash (creating contaminated rinse water) and then goes into landfills where whatever chemicals are leftover leach into the soil.

The copper cobalt is sold for later processing to recover the metals such as cobalt, aluminum, nickel, and copper. This requires significantly more chemical processing using ammonia, hydrogen, and sulfuric acid in processes similar to smelting, which in turn, create additional toxic byproducts. Definitely not good for the environment.

The slurry is processed into cobalt filter cake. Soda ash is added and precipitates out as lithium carbonate. Lithium carbonate is well known for its affects on the central nervous system: lithium carbonate is used in the treatment for bipolar disorder and manic depressive illness. 300mg per day is the standard dosage and will significantly affect brain behavior. That is the good side; the bad side is that lithium carbonate toxicity can occur at levels only slightly higher than therapeutic levels (>500 mg per day). Remember 500mg is the amount in one Tylenol capsule - this is not massive dosing. Lithium carbonate has also been proven to be harmful to pregnant women and harm kidney function. There are no formal regulations for the handling, storage, or transportation of lithium carbonate.

Lastly, ask this: Is the battery recycling facility located in the US? Probably not (and in fact, Tesla's battery recycling facility is outside the US). Why? Because EPA regulations make battery recycling almost impossible to perform safely and without impacting the environment. Thus, almost all battery recycling facilities are located outside the US where environmental laws are weak and/or poorly enforced.

The battery recycling facilities that are located within the US are generally only Level 1 facilities where the batteries have the coolant and electronics removed and the batteries are shredded. Then the waste is sent outside the US for the remainder of the processing. This allows companies to "claim" that the batteries are recycled "locally" - true in some sense but ultimately misleading.

Green? You decide.

Nonsense. I have three friends who bought them and here in the Bay Area (where Tesla is located) they are a quite common sight, driven by normal folks

I agree that regenerative braking is the real "something for nothing" solution. Of course it still requires the batteries for energy storage.


Perfect, I agree, most people don't care much how a car drives. Even my wife, who does care, bought a A5 with what I consider a completely inadequate test drive "around the block".

Chris, "normal folks" with a large disposable income. No one I know can afford a car starting at $60k to "save" money on gas. People aren't buying them because they can't afford gas!

Mazda makes a car available in Australia that has regenerative braking but uses capacitors for storage rather than expensive batteries. The car is not a hybrid, just has regenerative braking, the best feature of hybrid cars IMHO.

Perfectlap

I don't know where to begin. This is a a topic best discussed over several hours and bottles of wine.

The performance of Tesla stock is, in my opinion, really just a price of oil story. At the moment, there are only 3 things in world markets that matter. The price of energy, US dollar interest rates and Chinese economic growth.

I will cop it for my opinion here, but I believe that this alternative energy "fad" is just that. The only reason alternatives make sense at the moment is that oil is trading above $100 a barrel. Add government subsidies, cheap raw materials out of China because the Chinese government is also subsidising industry very heavily and taxes on carbon emissions and we have the perfect environment for inefficient "green" technologies to flourish.

Since other posters are talking their book, I will say that I am short oil. I personally believe that the current price is not sustainable. It is inflated by speculators and also by insatiable Chinese demand that is used for less than economically efficient purposes. Chinese GDP growth based on government expenditure financing bridges to nowhere and the construction of ghost cities with the equivalent of muni debt is not real growth. People are not leaving the farms fast enough, a middle class is not emerging, many large businesses are not sustainable without government subsidies and wages are rising due to persistent inflation which is costing China some of it's competitiveness. The China story will not end well.

The one nation to back at the moment is the US (I am Australian btw) as I believe that once the oil price falls back to the $30 - $40 a barrel that it should be the US will be back to the economic powerhouse it was and this will be possible again due to cheap energy. Unfortunately this will mean the death of renewables again, until the next oil spike anyway.

The beautiful thing is that expensive oil is disruptive and encourages us to become creative and find better and more efficient ways of spending energy. Most of our ideas are simply useless when oil returns to a normal level and subsidies dry up. There will be some technologies however (regenerative braking perhaps) that will prove to be useful even with cheaper oil and will continue to save us money and help to reduce emissions for the benefit of the environment. We saw this in the automotive industry in Europe with the oil shock in the '70's when aluminium engine blocks and double overhead camshafts were created to make engines more efficient since fuel had become so expensive. These technologies may not have been developed until much later had it not been for temporarily expensive oil.

Heed the warning, if anyone wants to buy an electric car my advice is to also buy some long-dated and deep out-of-the-money put options on oil. A great hedge for the value of your car.

Now I'll keep some powder dry to defend the backlash...

Cant wait for my brothers Model S to arrive i october. He also bought a bunch of stocks before this summer, so thats nice. I have driven it twice now and the instant torque from standing still is something that cannot be explained in words. :eek:

I would agree that the eco and cost savings claims of hybrid and EV cars are inflated. But the benefits will improve over time. The thing is people want to disrupt the status quo. People who appreciate technology and engineering (often the the educated wealthy) think it ridiculous that we are still filling up cars with gasoline and diesel while so many other things in their daily lives can be plugged in. Obviously this creates more strain on our dilapidated power grid and has the potential to explode electrical costs but that too highlights the urgency to address infrastructure and to find new ways to produce electric power. In my book we should be importing engineers by the truckload every day to do nothing but developing ways to capitalize on natural gas to produce cheap electricity, nat gas is a commodity we have no short supply. T. Boone Pickens is going to have his work cut out for him in taking on the coal lobby and the Koch brothers who spend billions to keep it a coal or nuclear only choice.

As far as the price of oil, I would agree that these cyclical spikes force us to reconsider the way we produce and spend energy, but the harm far outweighs the benefits. Only a few see a net benefit from high oil prices while its effect on aggregate demand spill over to every single consumer in what became a consumer economy long ago. But at the same time I don't blame the professional traders, they go short like yourself just as often as they go long. The problem is with these outside investors that play the market in only one direction, up. Much like the minuscule number of retail investors who will ever short a stock, they provide the market with a never-ending supply of capital with each paycheck's 401K contribution. Blind money that pushes price action and volume higher. The market for oil seems to have gotten in their heads that even though this economy is consuming less oil than ever before, that other economies will deliver on the peak oil theory. And few are betting against the Chinas of the world. Even if China has their long over due hard landing, the long-term picture is obvious, they have become the world's factory -- that title is going to demand more of every type of commodity and technology. As long as that's the case speculation in oil and other industrial and agricultural commodities will continue to push prices higher. You would in essence have to prove absolutely that China, India, and the rest are all farce to convince speculators to trade these commodities with a mindset that there will always be enough for all. How do you prove an unknown, the future level of demand? impossible.

As far as the U.S. with regards to our current woes. These were decades in the making and long pre-date spikes in oil. The U.S. worker has become less vital to U.S. commerce. Back in the early 20th century Henry Ford doubled the average worker's pay and declared that he would share a mind-boggling dividend with these very workers. His competitors thought he lost his mind and declared that he would single-handedly ruin the economy. And today most CEO's would laugh at ever contemplating such ideas of "sharing the wealth". The important thing is that factory jobs is what allowed Henry Ford to double worker pay with a single phone call, those factory jobs have left our shores and have been replaced with low paying service jobs. Unless we can claw those back this decades in the making decline, first from automation and now from outsourcing, will only collide with higher and higher costs of living. We created a short term solution to falling wages and a drastic gap income inequality with a securitization bonanza of all forms of borrowing, but this alchemy met its predictable demise and we were back to square one of falling middle class wages. U.S. corporations and banks are not overly concerned with the gap in incomes and the weak domestic demand domestic it creates since these U.S. multi-nationals, as well as major banks have untapped foreign markets for their goods and project financing that now account for half of more of total revenues. Even during a protracted U.S. recession, they can have their best years ever. The one bright side is that we still have the most liquid and transparent financial markets, which will always be China's downfall, which means we have good odds at continuing to be the place to park money safely for global investors. No matter how bad things here may get, investors will see other markets as worse. Europe is trying to sustain an inherently flawed Euro that bars weak states from devaluing their currency to get back to even after austerity, Latin America will always be an unpredictable bubble to bust cycle pegged to Chinese demand, China will have have three sets of cooked books, and few other economies are large enough to handle what our financial institutions can easily accomodate. In essence we will become a giant Switzerland with over-priced healthcare, much lower quality of life and a huge military.

I agree with almost everything you have said. The educated wealthy leading the charge towards alternatives... absolutely. I have a number of friends who fit that bill, putting solar panels on their roofs and buying hybrids, they are often hippies at heart but with plenty of money.

While natural gas may be the answer in the near future, the infrastructure necessary to make this a reality doesn't quite exist yet. Pushing electric cars too prematurely might just be putting the cart before the horse. In the decade (or possibly longer) or so that this will take, more time can be spent on R&D improving battery and capacitor technology. I know that a university in my city is studying capacitors and apparently the latest research is in experimental capacitors with 200 times the capacitance of current, commercially available capacitors. This, along with all the other developments we can look forward to, will eventually make electric cars a viable alternative, even with oil back near its long-run average price.

Back to the oil price, I agree that spikes are bad for the economy. Volatility in energy markets is never a good thing, although it is a fact of life that we cannot do much about. Talking about AD you sound like a Keynesian, I am closer to the Austrian school myself. I agree that there is too much "dumb money" on the bid side in the oil market, along with the trading banks manipulating the market buying the physical and selling futures a few months out - banking the contango until delivering against the futures contract. Again, probably not the bankers fault, idiotic buying in the futures market allows such a disproportionately large contango to exist that can be arbitraged.

In terms of China however, they are plain wrong. China cannot continue on this trajectory, period. The interesting thing is that after this period of sustained expensive energy, all of the investments in alternatives that only made sense with $100 oil and government subsidies, will still be a part of the energy mix when oil falls. The capex is already spent and I would not thing running and maintenance costs of solar panels or wind farms are anything more than negligible. This all points to an exacerbated fall in oil prices once the world works out there is far too much productive output, or "stuff" in layman's terms, than the current "real" wealth of the world can afford. It will just culminate in a huge hangover from bringing forward productive capacity before it was needed, and we will just have to sit tight and wait until real demand can catch up.

In terms of the US economy, I agree that having a manufacturing base is critical to economic strength. My bet is that we are only seeing the beginning of these currency wars. The US was first to the punch and has been rewarded handsomely. Europe is handcuffed in this respect, as you mentioned, but it will not be long before every nation in the world is debasing to try and "stay ahead". Of course there can be no winner to this game, so the next move is to start "trade wars". Embargoes and tariffs will be rife, decades of work by the WTO will be undone, a breakdown of globalisation will ensue.

Just my 2c

P.S. Are you an economist, Perfectlap? I am a financial markets guy myself, but I consider armchair economics a hobby that goes well with friends and wine.