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This is part 2 of the videopod series that dives into my January 1, 2023 post, Five Big Questions At The Start of 2023. I look to answer the question: What does Tesla’s valuation correction mean for EV growth projections?

* First, I take a look at bubble stock cycles and what has been the toggle from the bull phase of fundamental growth, free money, and climate ideology to the bear phase that has been hit by energy pragmatism, the end of free money, and growth deceleration.

* Next, I look at the underlying assumptions for “peak” oil demand, which rests on a combination of expected fuel economy improvements along with “hockey stick” EV growth forecasts.

* Most notably, there is zero evidence of a step change improvement in either fuel economy gains or, more broadly, global oil demand efficiency relative to GDP growth.

* On EVs, the very real and dramatic growth in Tesla sales over the past seven years has led to hockey stick EV adoption assumptions. While I expect EV sales to grow in the years and decades ahead, I believe the hockey stick assumptions will be revised sharply lower in coming years.

* As $TSLA’s outsize valuation premium versus legacy OEMs diminishes, the significant valuation envy, which has contributed to EV growth strategies at legacy auto makers, will similarly be scaled back, in my view.

* In the absence of a step change improvement in oil efficiency gains coupled with what I believe will be downside revisions to EV hockey stick growth forecasts, I would expect oil demand assumptions to be revised higher (relative to the “peak” demand expectations). I believe this will lead to traditional energy regaining “terminal value” credit as the date of its anticipated demise gets pushed to the right.

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⚖️Disclaimer

I certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.

📜 Credits

* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.

* This episode of Super-Spiked Videopods was created and lightly directed, edited, and produced by Super-Spiked Productions.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit arjunmurti.substack.com