Battery technologies starting to disrupt the electricity and automobile industries may also emerge as a trillion-dollar threat to credit markets, according to Fitch Ratings.
A quarter of outstanding global corporate debt, or as much as $3.4 trillion, is linked to the utility- and auto-industry bonds that rely on fossil fuel activities, the ratings agency wrote in a report published Tuesday.
Batteries have the potential to “tip the oil market from growth to contraction earlier than anticipated,” according to Fitch. “The narrative of oil’s decline is well rehearsed — and if it starts to play out there is a risk that capital will act long before” and in the worst case result in an “investor death spiral.”
.. petroleum consumption will peak in 2030 and decline thereafter, the World Energy Council said in a report this month
The Tesla Model 3 Is Still a Rich Person’s Car
Meanwhile, many hundreds of thousands of vehicles is a lot to produce, even for a more established manufacturer than Tesla. The Toyota Camry was the most popular car in America last year, with 429,355 vehicles sold, followed by the Toyota Corolla at 363,332 and the Honda Accord with 355,557. For its part, Tesla delivered 25,202 Model S cars in the U.S. during that same period. To put that figure in context, it’s about the same number of Lexus GX460 full-size SUVs or Fiat 500 hatchbacks that were sold last year. All of which is to say: For the Model S to reach Camry or Accord-levels of popularity, Tesla would have to ramp up its production capacity quickly and substantially to start delivering by its late-2017, as the company has promised. In all likelihood, many Model 3 reservation customers will wait longer than two years for their vehicles.
.. These are not everymen and women; they are elites. Tesla is still the BMW of electric cars.
.. By contrast, the average new car buyer in 2015 put down only 10.4 percent cash, which means that the average down payment was $3,488.
It’s a Tesla
Christensen’s theory is based on examples drawn from buying decisions made by businesses, not consumers. The reason this matters is that the theory of low-end disruption presumes:
- Buyers are rational
- Every attribute that matters can be documented and measured
- Modular providers can become “good enough” on all the attributes that matter to the buyers
All three of the assumptions fail in the consumer market, and this, ultimately, is why Christensen’s theory fails as well…
.. The reality is the company’s significant research and development costs have been paid for by issuing stock and incurring debt, not the profits of high-end models.
.. Tesla is not disruptive. Rather, their error was a repeat of the mistake Christensen made with the iPhone; first, they don’t understand why people buy Teslas, and two, they assume that disruption is the only viable strategy to enter a new market.