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Electric Cars Projected to Make Waves Through Oil and Other Global Industries

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Electric Cars Projected to Make Waves Through Oil and Other Global Industries

For over a decade, the electric car has been heralded as the most world-changing and upcoming technology.

The demand for electric cars has been rising steadily every year, and Elon Musk’s Tesla, the most prominent electric car manufacturer, plans to sell 500,000 cars each year by 2018.

For context, this projected growth is even higher than the rise of the Model T in the early 1900’s.

 

Why Are People Demanding Electric Cars?

Electric cars’ energy efficiency, economic value, and potential to reduce some of the automobile industry’s most egregious environmental impacts are very strong selling points. These qualities have led the U.S. government to incentive consumers to purchase electric cars, promising a $7,500 tax refund to anyone who purchases the upcoming Model 3, Tesla’s first mass-produced car.

Many industries have jumped onto the surge in demand and interest, with Chevrolet coming out this year with its mass-produced electric vehicle. Governments in Europe, such as Germany, are also using tax incentives to encourage industry growth. Governments are also beginning to plan for the massive infrastructural changes which will need to occur, such as building charging stations and increased electric grid power.

 

Economic Impact of the Rise of Electric Cars

There are clearly many positive economic impacts of electric cars for consumers. Owners of hybrid vehicles will spend less money on gas, and owners of fully electric vehicles will spend nothing.

The clear economic benefit of the huge tax break means more money in consumers’ pockets, and thus more circulating in the economy. With driving made cheaper and easier, more people will travel, stimulating the tourism economy in many parts of the U.S.

Asian economies such as Korea, Japan, and China have also benefited through the creation of many jobs producing batteries for upcoming electric cars.
Importantly, the use of electric cars strongly decreases the amount of biomass being burned to fuel transportation. This decline in carbon dioxide emitted into the atmosphere would have not only human and environmental benefits but also economic benefits.

By halting some of the environmental damage we are doing now, we save millions of dollars down the road which would be spent on medical bills from pulmonary problems caused by smog and adapting and trying to clean up a heavily polluted atmosphere.

However, many have debated whether electric vehicles are actually as energy-conserving as they claim to be, as it takes a lot of energy to produce the batteries, and they are not suitable for cities experiencing energy shortages.

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Negative Impacts
Despite the promises the electric car industry holds for a cheaper and cleaner transportation future, there are also some major economic consequences for producers heavily invested in the traditional automobile industry.

The most obvious example is oil. With the demand for oil declining as people switch to electric cars, oil producers will suffer from overproduction crises, massive price decreases, and potential total market crash. Recently, however, as oil prices have declined, fewer people have been interested in electric vehicles as an alternative.

Many oil-producing countries such as Saudi Arabia have positive relationships with the United States only because of the oil trade and are very politically tense. A crash of the oil market would destabilize many Middle Eastern countries and lead to potential political conflict.

However, as more cars are on the road, the oil industry will have to find alternative energy pathways forward regardless of whether electric vehicles rise to prominence.

 

Some Industries Which May Be Impacted

  • Battery producers
  • Electricity companies and power plants
  • Utilities management companies
  • Construction Industry (for development of charging infrastructure)
  • Aluminum, Nickel, and Platinum

 

Impact on the Platinum Industry

Oil is not the only industry which will experience difficulties as electric cars gain popularity.

Another key player is the platinum industry.

The automobile industry makes up nearly half of the total market for platinum because platinum is an important element in purifying air emitted from the exhaust pipes of cars.

Electric cars require no platinum to manufacture, so platinum producers would lose half of their demand if everyone switched to electric. However, this is not necessarily inevitable.

Car producers are also looking into the creation of hydrogen-cell powered cars, including Toyota, which released a hydrogen-cell vehicle in 2015. These cars use hydrogen as their primary fuel source, and hydrogen cells are already proven to be effective through their use in space rockets. Hydrogen-powered cars use a large amount of platinum in production, so this could stimulate the platinum market.

 

Impact on Battery Producers

Many investors are predicting that as oil declines as the most globally important market, the battery manufacturing industry will rise to take its place. Battery manufacturers will also have to adapt and change significantly from their current production models.

Instead of chemistry at the battery cell level, they will have to begin focusing on how their batteries will work as an aggregate system in the vehicle. Producers will have to work more closely with manufacturers of other automobile parts than every before.

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Finance

Dow Jones Industrial Average Breaks 29,000 For The First Time in History

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Screenshot of Dow Jones Industrial chart taken January 15, 2020.
By ELAINE KURTENBACH, AP Business Writer

Slight gains send Dow Jones Industrial Average above 29,000!

The Dow Jones Industrial Average closed above 29,000 points for the first time and the S&P 500 index hit its second record high in three days Wednesday.

The milestones came on a day when the market traded in a narrow range as investors weighed the latest batch of corporate earnings reports and the widely anticipated signing of an initial trade deal between the U.S. and China.

President Donald Trump and China’s chief negotiator, Liu He, signed the “Phase 1″ deal before a group of corporate executives and reporters at the White House. The pact eases some sanctions on China. In return, Beijing has agreed to step up its purchases of U.S. farm products and other goods.

“This was telegraphed well enough that the market is kind of looking through it and toward the next phase and what that means,” said Keith Buchanan, portfolio manager at Globalt Investments.

Health care stocks accounted for much of the market’s gains. Utilities and makers of household goods also rose. Those gains outweighed losses in financial stocks, companies that rely on consumer spending and the energy sector.

The S&P 500 index rose 6.14 points, or 0.2%, to 3,289.29. The index also climbed to an all-time high on Monday.

The Dow gained 90.55 points, or 0.3%, to 29,030.22. The Nasdaq composite added 7.37 points, or 0.1%, to 9,258.70.

Smaller-company stocks fared better than the rest of the market. The Russell 2000 picked up 6.66 points, or 0-4%, to 1,682.40.

The benchmark S&P 500 index is on track for its second straight weekly gain.

Bond prices rose. The yield on the 10-year Treasury note fell to 1.78% from 1.81% late Tuesday.

While limited in its scope, investors have welcomed the U.S.-China deal in hopes that it will prevent further escalation in the 18-month long trade conflict that has slowed global growth, hurt American manufacturers and weighed on the Chinese economy. The world’s two largest economies will now have to deal with more contentious trade issues as they move ahead with negotiations. And punitive tariffs will remain on about $360 billion in Chinese goods as talks continue.

With the “Phase 1” agreement now a done deal, investors have more reason to focus on the rollout of corporate earnings reports over the next few weeks. Earnings have been flat to down for the last three quarters, and if the fourth quarter meets expectations, it should be around the same.

However, analysts are projecting 2020 corporate earnings growth to jump around 9.5%, which is why traders will be listening this earnings reporting season for any clues management teams give about their business prospects in coming months.

“We’re expecting a reacceleration in the back end of the year, so any (company) guidance that brings any type of skepticism to that could threaten the recent rally we’ve had and the gains that we’ve accrued in the past few months,” Buchanan said.

Health care stocks powered much of the market’s gains Wednesday. Several health insurers climbed as investors cheered a solid fourth-quarter earnings report from UnitedHealth Group.

The nation’s largest health insurer, which covers more than 49 million people, said its revenue rose 4% on a mix of insurance premiums and growth from urgent care and surgery centers. Its stock rose 2.8%. Other health insurers also moved higher. Anthem gained 1.6%, Cigna added 1.5% and Humana climbed 1.9%.

Technology companies also rose. The sector is reliant on China for sales and supply chains and benefits from better trade relations. Microsoft gained 0.7% and Advanced Micro Devices gained 0.8%.

Utilities and consumer staples sector stocks also notched gains. Edison International climbed 2.5% and PepsiCo rose 1.7%.

Financial stocks fell the most. Bank of America slid 1.8% after reporting weaker profits due to the rapid decline of interest rates in late 2019.

Energy stocks also fell along with the price of crude oil. Valero Energy dropped 3.3%.

Homebuilders marched broadly higher on news that U.S. home loan applications surged 30.2% last week from a week earlier. The pickup in mortgage applications reflects heightened demand for homes and suggests many buyers are eager to purchase a home now, rather than waiting for the traditional late-February start of the spring homebuying season. Hovnanian Enterprises jumped 6.4%.

Target slumped 6.6% after a disappointing holiday shopping season prompted the retailer to cut its forecast for a key sales measure in the fourth quarter. The company said weak sales of electronics, toys and home goods crimped sales growth to just 1.4% in November and December.

Benchmark crude oil fell 42 cents to settle at $57.81 a barrel. Brent crude oil, the international standard, dropped 49 cents to close at $64 a barrel.

Wholesale gasoline fell 1 cent to $1.64 per gallon. Heating oil declined 3 cents to $1.88 per gallon. Natural gas fell 7 cents to $2.12 per 1,000 cubic feet.

Gold rose $9.70 to $1,552.10 per ounce, silver rose 25 cents to $17.92 per ounce and copper fell 1 cent to $2.87 per pound.

The dollar fell to 109.91 Japanese yen from 110.00 yen on Tuesday. The euro strengthened to $1.1150 from $1.1128.

Markets in Europe closed mostly lower.

AP Business Writer Damian J. Troise contributed.

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Aircraft

Uber and Hyundai Are Planning to Offer Flying Taxi Rides by 2023

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Hyundai/Uber Flying Taxi Source: Hyundai
By Cat Ellis

At CES 2020, Uber and Hyundai showed off a full-size mock-up of a flying taxi that both companies hope will be ferrying you above congested city streets by 2023.

The electric plane, called Uberdai, will carry a pilot and three passengers up to 60 miles, at speeds of up to 180mph, slashing journey times and helping get cars off the road. Eventually the craft will be automated, but for now the two companies are focusing on manned craft.

The flying taxi market is starting to get pretty lively. Last year, Boeing began test flights to test the safety of Boeing. Next, an electric aircraft with passenger pods designed to travel up to 50 miles, and Bell Helicopter unveiled the Bell Nexus, which the company hopes will “redefine air travel”.

The difference with Hyundai’s plane is its partnership with Uber, which is a name synonymous with ride-sharing throughout much of the world, and already has the infrastructure in place to offer flights as an option alongside trips by car, bike, scooter, helicopter and even submarine.

Ready for lift-off?

Uber has been aiming for the skies for several years now, teaming up with various aerospace companies to build a fleet of mini aircraft. At the Uber Elevate Summit in June 2019, it revealed a concept created in collaboration with Jaunt Air Mobility – a business that’s aiming to create a fully autonomous aircraft by the end of 2029.

This design was a cross between a helicopter and a plane, with a rotor to get it off the ground, and wings for gliding once airborne to conserve power.

“It’s called the compound aircraft, and what it’s doing is really trying to get the best of both worlds of hover and high-speed efficient flight,” Uber’s head of engineering Mark Moore said at the event.

Uber intends to launch its first swarm of flying cars in the US and Australia in 2023, with schemes planned for Dallas, Las Vegas and Melbourne. We’ll keep you updated as we learn more over the coming months. 

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Business

Paypal Acquires Honey for $4 Billion

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Honey-Cofounders-Image-1
Left to right: Honey Co-Founders Ryan Hudson and George Ruan (Photo courtesy PR Newswire)

PayPal Holdings, Inc. announced that it has agreed to acquire Honey Science Corporation, a rapidly-growing technology platform for shopping and rewards, for approximately $4 billion. Honey, in combination with PayPal’s two-sided network, will transform the shopping experience for PayPal’s consumers while increasing sales and customer engagement for its merchants.

Founded in 2012, Honey is best known as a popular discovery tool that helps consumers find savings as they shop online. Honey has continued to grow and evolve, expanding its suite of products and services to include a mobile shopping assistant, offers and rewards program, and price-tracking tools and alerts. With approximately 17 million monthly active users, Honey has helped millions of people find more than $1 billion in savings in the past year. Honey currently works across approximately 30,000 online retailers ranging from fashion and technology, to travel and pizza delivery.

The acquisition supports PayPal and Honey’s shared mission to simplify and personalize shopping experiences for consumers while driving conversion and increasing consumer engagement and sales for merchants. The combination will help accelerate growth across both companies. Honey will accelerate its growth by driving adoption among PayPal and Venmo’s more than 275 million active consumer accounts and sourcing exclusive offers from PayPal’s extensive network of 24 million merchant accounts. Honey will enable PayPal to reach consumers at the beginning of their shopping journeys and will enhance PayPal’s ability to help merchants acquire and convert consumers by delivering offers that are personalized, timely, and optimized across channels.

“Honey is amongst the most transformative acquisitions in PayPal’s history. It provides a broad portfolio of services to simplify the consumer shopping experience, while at the same time making it more affordable and rewarding,” said Dan Schulman, president and CEO of PayPal. “The combination of Honey’s complementary consumer products with our platform will significantly enhance our ability to drive engagement and play a more meaningful role in the daily lives of our consumers. As a partner of choice for our merchants, this is another way that we can help them build and strengthen their customer relationships, provide personalized offers, and drive incremental sales. The combination of Honey and PayPal adds another significant and meaningful dimension to our two-sided platform.”

Following the acquisition, Honey will retain its headquarters and brand in Los Angeles, California. Honey co-founders George Ruan and Ryan Hudson will continue to lead the Honey team as part of PayPal’s global consumer product and technology organization, reporting to Senior Vice President John Kunze.

“Honey’s vision has always been to give consumers the tools they need to make the best decisions with their money,” said Ruan. “PayPal shares that vision and together we can build powerful commerce capabilities that create real value for both consumers and retailers around the world.”

“Combining PayPal’s assets and reach with our technology, we can build powerful new online shopping experiences for consumers and merchants,” said Hudson. “We’ll have the ability to help millions of retailers efficiently reach consumers with offers that deliver more and more value to Honey members.”

Honey was profitable on a net income basis in 2018. Subject to customary closing conditions, including the receipt of regulatory approvals, the transaction is expected to close in the first quarter of 2020. The acquisition is expected to be accretive to PayPal’s non-GAAP earnings per share in 2021.

Perella Weinberg Partners LP is acting as sole financial adviser to PayPal, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as its legal adviser with regard to the transaction. Qatalyst Partners is acting as sole financial adviser to Honey, while Latham & Watkins, LLP is acting as its legal adviser.

About PayPal

PayPal has remained at the forefront of the digital payment revolution for more than 20 years. By leveraging technology to make financial services and commerce more convenient, affordable, and secure, the PayPal platform is empowering 300 million consumers and merchants in more than 200 markets to join and thrive in the global economy. For more information, visit paypal.com.

About Honey

Honey Science Corporation is an L.A.-based tech company building tools to help people save time and money when shopping online. What started as a browser extension has grown into a suite of free tools that help everyone shop with confidence. From notifying you when a price drops, to showing you the lowest prices available, Honey provides you with the information that you need to make the best decisions with your money. With approximately 17 million monthly active users, Honey has helped millions of people find more than $1 billion in savings in the past year. Visit www.joinhoney.com to shop smarter.

Forward-Looking Statements

This announcement contains “forward-looking” statements within the meaning of applicable securities laws. Forward-looking statements and information relate to future events and future performance and reflect PayPal’s expectations regarding the impact of this transaction on PayPal’s and Honey’s financial and operating results and business, the operation and management of Honey after the acquisition, and the timing of the closing of the acquisition. Forward-looking statements may be identified by words such as “seek”, “believe”, “plan”, “estimate”, “anticipate”, expect”, “project, “forecast”, or “intend”, and statements that an event or result “may”, “will”, “should”, “could”, or “might” occur or be achieved and any other similar expressions.

Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially from the statements made, and, accordingly, readers should not place undue reliance on forward-looking statements and information. Factors that could cause or contribute to such differences include, but are not limited to, the timing and possible outcome of security holder and regulatory approvals in connection with the transaction, the possibility that the transaction may not close, the reaction to the transaction of Honey’s customers and business partners, the reaction of competitors to the transaction, the retention of Honey’s employees, PayPal’s plans for Honey, economic and political conditions in the global markets in which PayPal and Honey operate, the future growth of PayPal’s and Honey’s businesses and the possibility that integration following the transaction may be more difficult than expected.

More information about these and other factors that could adversely affect PayPal’s results of operations, financial condition and prospects or that could cause actual results to differ materially from those expressed or implied in forward-looking statements can be found in PayPal Holdings, Inc.’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (the “SEC”), and its future filings with the SEC.

The forward-looking statements contained in this announcement speak only as of the date hereof. PayPal expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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