Investment

Why Porsche is investing $100 million on eFuels to keep its cars on the road

Published

2 years ago

May 5, 2023

Porsche’s bestselling cars today are SUVs, a far cry from what the luxury brand built its reputation on — small, nimble and, above all, unique rear-engine sports cars like the 911.

Now the famous German automaker is faced with the challenge of how to maintain a connection to its illustrious heritage, and its distinct brand identity, in the EV era. The answer might be something called eFuel — or fuel made in a factory partly from carbon pulled from the atmosphere.

Porsche has invested more than $100 million in the development of eFuels. The company argues that fully converting its 1.4 billion-vehicle global fleet to electric vehicles will take too long to meet climate change mitigation goals, so it has decided to go this new route.

Panamera eFuels experience in Patagonia, Chile

Courtesy: Porsche

In late March, the European Commission, the executive body of the European Union, included an exception for eFuels in a proposed ban on internal combustion engines set to take effect in 2035.

“With this approach we have another lever, another opportunity to reduce the CO2 footprint for the combustion engine-driven cars,” said Karl Dums, senior manager of eFuels at Porsche. Before he joined the project, Dums was one of the engineers who worked on the Taycan, automaker’s first EV.

The Taycan, which was launched in 2019, has been a double-barreled success. It accounts for 11% of Porsche’s total sales and makes a profit, which is a rare feat for an electric vehicle.

Panamera eFuels experience in Patagonia, Chile

Courtesy: Porsche

“Electric cars are more expensive to produce, so they are margin dilutive,” said Daniel Schwarz, managing director at Stifel. “And Porsche managed to increase the share of electric cars and increase the profitability in parallel.”

Porsche plans to electrify 80% of its lineup, but some iconic models — especially the 911 — may never make the transition.

“It’s really brand defining and an iconic product,” Schwarz said of the 911. “And due to its architecture, the engine and most of the weight being on the rear axle, it’s not easy to electrify if you want to keep the driving characteristics unchanged.”

Porsche also believes a large share, roughly 70%, of all its vehicles ever made are still on the road. The brand also is a favorite among collectors. Industry analysts say its heritage, embodied in these older cars, is part of what gives Porsche its status and mystique, and, what’s more, helps to carry the brand’s reputation on to the next generation of car lovers.

But critics of Porsche’s $100 million push into eFuels argue the resultant fuel will be too expensive and inefficient to ever compete with electrification.

Panamera eFuels experience in Patagonia, Chile

Courtesy: Porsche

“I honestly don’t understand why some of these automakers are interested in eFuels, because it just doesn’t make sense from a cost perspective,” said Stephanie Searle, director for the fuels program and the U.S. region at the International Council on Clean Transportation. The group is a nonprofit that researches technologies used for carbon reduction.

The ICCT expects EV costs to continue to decline rapidly, and reach purchase cost parity with gasoline cars and SUVs somewhere between 2025 and 2030, depending on the vehicle.

“EFuels only make internal combustion engine vehicles more expensive,” Searle said. “We’re finding that if we produce them today, it would cost something like $10 a gallon at the pump for consumers.”

But Porsche says costs can be brought down to a level acceptable to at least that portion of customers who are willing to pay more money to keep classic vehicles and high-end sports cars on the road for years more to come.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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