In his Daily Market Notes report to investors, while commenting on the crypto wild west, Louis Navellier wrote:
Q2 2021 hedge fund letters, conferences and more
The Crypto Wild West
Some of the biggest news this week was that SEC Chairman Gary Gensler asked Congress to give his agency more authority to better police cryptocurrency trading, lending and platforms. Specifically, Chairman Gensler on Tuesday called cryptocurrencies the "Wild West" that is riddled with fraud and investor risk. Furthermore, Gensler added that some cryptocurrencies involve tokens (e.g., coins) that may be unregistered securities. Gensler concluded by saying “We need additional Congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks.” Well that settles that because Chairman Gensler sounds like General Custer looking for a fight! However, since Congress is going on a recess and 2022 is a midterm election year, it will be interesting if Congress actually finds the time to grant the SEC any authority to police the cryptocurrency market.
The Wall Street Journal on Thursday reported Biden Administration is preparing an executive order setting a voluntary target of 50% for electric vehicles (EVs) by 2030. In a joint statement, Ford, GM and Stellantis said that they plan to have electric, fuel cell and plug in hybrids comprise 40% to 50% of sales by 2030. What is holding the domestic auto industry back is an acute shortage of lithium batteries for EVs, as well as soaring prices for lithium, nickel and cobalt.
Cobalt Shortage
Cobalt now primarily comes for the Congo and is mined by child labor, many of whom die in cave ins. There is simply not enough cobalt to make these EV goals, so less efficient iron-phosphate batteries, like Tesla is using in China, may be an interim solution. Longer-term solid-state batteries are the ultimate solution, but they are expected to be very expensive when they are commercially available in 2025.
There are approximately 38 giga-factories planned around the world to meet the transition to EVs, but delays will likely be common, like Tesla has experienced with its new Berlin factory. Overall, I highly question if the Biden Administration can meet its 2030 EV goal, which will also dramatically increase the U.S. trade deficit, since most of the raw materials for batteries are processed in China.
