Dear Reader,
Gaining exposure to technology companies benefiting from the exponential growth in electric vehicles has been an important area of focus for me in the Near Future Report and Exponential Tech Investor.
We’ve even been able to “back into” related investments in my SPAC-focused investment research in Blank Check Speculator.
Naturally, my team and I have been researching this sector extensively for years. One of the key enablers of more widespread adoption of EVs over the last decade has been the consistent decline in the cost of manufacturing batteries for electric vehicles.
For the last decade, we’ve seen a consistent and dramatic decline in cost per kilowatt-hour, which has naturally led to less expensive electric vehicles. At least, that was true until this year:
This Monday, the International Energy Agency announced that it expects the cost of EV battery manufacturing will rise by about 15% this year due to the rapidly rising costs of lithium, cobalt, and nickel, which are all commonly used to produce EV batteries.
The price of an EV is tightly linked to the cost of the batteries… It’s the largest single cost of producing an EV.
Driving the cost of batteries down to $100 per kilowatt-hour has long been a goal in the industry. That’s the price point at which EVs are expected to be on par with a comparable internal combustion engine vehicle.
Back in 2010, the cost of batteries was around $1,191 per kilowatt-hour, and by last year that number had dropped to $137. Incredible progress was being made, and the industry was on track to hit just $92 per kilowatt-hour by 2024.
But this year has thrown a wrench into the industry’s targets. It is likely that the average cost per kilowatt-hour will be well above $150 this year. And these developments will likely push out that $100 target by years.
Needless to say, this is the wrong direction and will only increase the sticker price of EVs.
Tesla has an incredible advantage in this regard. It has been proactive and early in securing the raw materials needed for battery manufacturing, and its unique battery chemistry reduces some of the exposure to rising prices. The rest of the industry won’t fare so well in that regard.
The prevailing political narrative around EVs remains strong, however. And I expect that major governments around the world will offer more stimulus to the industry in the form of tax breaks on EV purchases, in an effort to increase the rate of adoption. Of course, the automotive industry will be spending millions lobbying for the same.
Interestingly, these rising costs for batteries mask an even larger challenge for the electric vehicle industry: It simply doesn’t have the ability to make enough batteries to meet the production targets for EVs for this decade.
Legacy automotive companies are guilty of making grand projections of how many millions of EVs they’ll produce a year without having secured the necessary metals required to produce the batteries. In other words, their supply chains are not only not secured, there is no way for them to meet their targets.
SpaceX has just raised an impressive $1.5 billion, rocketing the private company’s valuation to an incredible $125 billion.
We have been enjoying all the progress that SpaceX has been making in The Bleeding Edge over the last few years. This company just can’t stop winning.
As we discussed last month, SpaceX is gearing up for the first orbital launch of its Starship. That’s just weeks away.
SpaceX Starship
Source: SpaceX
For the sake of new readers, the Starship is the world’s first reusable all-purpose spacecraft. It’s made of stainless steel and shaped like a giant corn silo. And it is the craft that will power NASA’s manned mission to the Moon in 2024, and Mars after that.
SpaceX just completed several successful manned missions to the International Space Station (ISS). This included the first all-private mission to space.
Just as much progress has been made with Starlink, SpaceX’s satellite constellation. It has already put over 2,300 satellites into low-Earth orbit. That includes a new launch of 53 satellites last week.
The point is, SpaceX is executing flawlessly right now. That’s why the company can raise this kind of capital at that valuation. At $125 billion, that puts SpaceX on par with Lockheed Martin (LMT) as the second most valuable aerospace company in the world.
As for the top spot, that belongs to Raytheon (RTX). It trades at an enterprise value of about $166 billion. It won’t be long before SpaceX eclipses that level as well.
SpaceX will use this round of funding to continue building out the Starlink network. Musk’s goal is to get that business to a scale so that it’s ready to spin out with its own initial public offering (IPO). A successful IPO would raise even more capital for SpaceX’s ambitions.
Musk will also invest heavily in the Falcon Heavy rocket and the Starship in preparation for future missions to the Moon and Mars. It’s going to be incredibly exciting to see those visions become a reality in just the next few years.
Speaking of Lockheed Martin… In something of a surprise move, the aerospace incumbent is partnering with the Filecoin Foundation to host blockchain nodes… in space.
Filecoin is a blockchain project geared toward data storage. It’s built on technology with a great name called the Inter Planetary File System (IPFS). What a forward-thinking name.
The IPFS is a protocol that allows users to store data and share files. We can think of it as a cloud storage system, except there’s no third-party company involved. Users interact with the protocol, not a company.
So Lockheed and the Filecoin Foundation plan to launch satellites that will serve as relay nodes for the IPFS in space. These nodes would allow people on the ISS – or even on the Moon – to store and share data seamlessly and quickly. And they could speed up the transmission of data from space back to Earth as well.
Bigger picture, this is all about forming the foundation of a robust space economy.
Ultimately, there will be multiple space outposts with a manned presence. These outposts will need ways to communicate, collaborate, and share data.
There will also be “gas stations” in space. They will take the form of satellites that serve as fueling stations for other satellites. When one satellite runs low on fuel, it will signal this to the fueling network. Then the fueling satellite will perform its task completely autonomously.
This can only be possible with communication systems like Starlink, and data relays like what Lockheed Martin and the Filecoin Foundation are looking to do.
I know that this kind of application might feel a bit far out there, but what’s happening in the aerospace industry right now is incredible. The foundation to support a vibrant space-based economy is already being built. And it will need much of the same technologies that we use here on Earth.
Prominent film producer Francis Ford Coppola’s production company just launched a Web 3.0 funding platform called Decentralized Pictures. This is a blockchain-based platform that works just like a decentralized autonomous organization (DAO)… And it has the potential to completely reshape the film industry.
Up to this point, investing in movies and television shows has been reserved for the insiders. Namely, private equity firms and high-net-worth individuals.
These insiders decide what projects get funded. And then they share in the profits that the films generate.
Decentralized Pictures changes this dynamic. It allows anyone, including nonaccredited investors, to help fund films. Then the platform will share profits via its native token, FILMCredits.
What’s more, anyone contributing to the platform can review proposals and vote on which projects receive funding. This could help break Hollywood’s stranglehold on the industry.
To me, this is a great application of blockchain technology and a DAO-like platform. And the more it catches on, the more FILMCredits will appreciate in value. That’s the power of Web 3.0 economic incentives.
And I should point out, Decentralized Pictures is built on a version of the Tezos blockchain. We’ve talked before about the benefits of Tezos. It is the 37th largest cryptocurrency by market cap, and it is similar to Ethereum (ETH) in that the blockchain powers smart contracts… Yet it is also very fast and cheap to use.
And it looks like the team has some larger aspirations regarding studio production applications that can run on top of the blockchain.
So this is certainly a project to watch. I like this application of a decentralized autonomous organization. It is a good example of blockchain technology that can be used to crowdsource not only funding, but also engagement and contribution from those that have a personal interest in the mission of a particular DAO.
It can be difficult sometimes imagining how a DAO might work without any headquarters or management structure, which is why I like concrete examples like Decentralized Pictures.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
