This week the electric vehicle world is abuzz with the news of a new million-mile battery in the works, but another, much less flashy innovation announced this week could have even more sweeping implications for the EV sector. It may not make the sexiest headlines, but a new form of EV credit-trading being tested out in Beijing could revolutionize the way electric vehicle markets function.

“Tesla made about $354 million in Q1 2020 by selling regulatory credits,” Electrek reported this week. “Fiat Chrysler and General Motors, among others, buy billions of dollars in CO2 credits a year to avoid paying fines.” Despite the fact that the Trump administration is in the process of rescinding fuel economy rules that include greenhouse gas credits, Tesla has seen plenty of demand for their credits at the federal level. Even without these greenhouse gas credit sales, “Tesla has made over $2 billion from the sale of environmental credits over the years, but those have mostly consisted of ZEV credits from CARB states – mainly California,” Electrek reported in a  separate article last June.

According to Xinhua, he went on to say that “a driver can help cut carbon emissions by 1 tonne if he or she does not drive the car for about 200 days over a three-year period. The municipal authorities hope to bring 1 million car owners in the city to the one-tonne campaign with a target of reducing carbon emissions by 1 million tonnes within three years.”China has clearly been paying a lot of attention to what’s happening with high demand for environmental EV credits in Western markets, and this week the Beijing Environmental Exchange launched “a similar credit system to get individuals to drive an electric car, or avoid driving altogether.” As Electrek explains, “carbon emissions allowances are usually traded by companies. But the Beijing exchange’s mobile app allows individual car owners to create an account and accumulate credits.”

Xinhua Net, China’s state-run news source,  reported this week that this “new carbon-neutral solution provides a market-based incentive to encourage car owners to reduce their driving frequency and allows enterprises to buy emission quotas saved by car owners.” The article also referenced an interview with Wang Huijun, executive vice president of the exchange, who explained that “the average daily carbon dioxide emissions for an electric vehicle is 0.83 kg, while a fuel-powered vehicle with an engine of no more than 1.2 liters discharges 2.58 kg of carbon dioxide on average daily.” 

Essentially, the Chinese government will pay citizens to switch from traditional combustion engines to electric vehicles or not to drive at all. Beijing’s target to convert 1 million of the city’s car owners to participate in the 1 tonne campaign is a lofty goal, but represents fewer than a third of the city’s drivers, as “Beijing was among the 11 cities in China that had over 3 million cars on road by the end of 2019.”

“Using the Beijing Environmental Exchange’s ‘Green Traveler Platform,’ individual drivers would install a smart device to track a user’s emission-reduction behavior,” reports Electrek. “Emissions would be tallied in an account, building up credits. Then, other individuals or companies (including banks and insurance companies) would buy credits for cash.” Participants won’t see a huge influx of cash--in fact they’ll make less than a dollar per day on average. But over the course of the year, participants can make a few hundred dollars or more when these credits add up.

While Europe is often thought of as the EV headquarters of the world, and Tesla, the world’s most famous EV company, is located in the United States, China is taking over. Beijing has been on the cutting edge of the electric vehicles sector for a while now, and all but controls EV markets. Way back in 2018 Oilprice reported that “China Indirectly Controls EV Markets” because of its near-monopoly at various levels of the supply chain, most notably in the case of lithium ion batteries. It’s true that this program isn’t completely novel. As Electrek points out, “Metro Mile and other insurance providers in the US offer similar programs that use connected devices to monitor driving” and Beijing has already had parts of this system in place for a few years, like their auto insurance platform that is used to track driving behavior. But what Beijing launched this week is unique in that it  “not only reduces your insurance bill, it pays you not to drive at all or to get around in a zero-emissions vehicle.”

At that time Oilprice reported that “China produces about two thirds of the whole world’s supply of lithium ion batteries, the most common battery type used in electric vehicles. Furthermore, these highly valuable batteries make up a staggering 40 percent of the cars’ value. As it stands, Europe is far from being able to compete with China when it comes to the production of lithium ion batteries. In fact, currently the entire continent is estimated to hold just 1 percent of the market.” Because of this, EV companies around the world are moving their entire production to China. 

This credit trading market innovation is just another way that Beijing is securing its place at the forefront of the EV sector.

This article was originally published on Oilprice.com

A million-mile battery would be just one pillar of Elon Musk’s strategy to make Tesla an energy company, according to the sources.  

Last year, a team from the Dalhousie University in Halifax, Canada, who do research for Tesla, said in a paper that they had tested lithium-ion battery cell chemistry expected to be able to power electric vehicles (EVs) for more than 1 million miles and last at least two decades in grid energy storage. 

Jeff Dahn and his research team presented testing results of “excellent moderate-energy-density lithium-ion pouch cell chemistry” that should be able to power an electric vehicle for over 1.6 million kilometers (1 million miles) and last at least two decades in grid energy storage.

The researchers from Dalhousie University have an exclusive agreement with Tesla, and they reported that they had designed battery cells with higher energy density without using the solid-state electrolyte that many believe is a necessary condition for enhanced density.  

Earlier this year, Reuters reported that Tesla was in talks with China’s Contemporary Amperex Technology Co Ltd (CATL) to make batteries without using cobalt for its China-made vehicles. Cobalt, one of the most expensive metals for batteries, is a key reason why EVs are still more expensive than vehicles with internal combustion engines.  After an initial rollout in China for the Model 3, the million-mile battery will be further improved for cost, storage capacity, and energy density and will be used in other Tesla models in markets outside China, including North America, Reuters’ sources said, while Tesla declined to comment on the report.

This article was originally published on Oilprice.com

Tesla's newest rival is taking the stock market by storm

And their stock prices are surging—but for different reasons.

The day on which Tesla's shares hit an all-time high closing price of $949.92 on Monday on record-high China-made Model 3 sales, shares in competitor Nikola more than doubled since their Friday closing price, hitting $73.27 per share after soaring 104 percent on the third day of trading on the NASDAQ.

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Nikola – founded in 2015 and named after the same man that Tesla used for its name – made its debut on the stock market on June 4, after merging with special purpose vehicle company VectoIQ Acquisition Corp. Stephen Girsky, the current CEO of VectoIQ and former Vice Chairman of General Motors, joined Nikola's board of directors.

Nikola is not rivaling Tesla in the passenger car manufacturing business: it's aiming to build battery-electric and hydrogen-electric trucks and pickups. Its long game is in zero-emission heavy-duty transportation and related infrastructure such as hydrogen station networks.

But its new electric pickup truck, Badger, could become a competition of Tesla's Cybertruck. The Badger will have an estimated range of up to 600 miles, which is 100 miles more than the estimated maximum range of Tesla's Cybertruck.

Nikola Share Price Doubles Just Two Days After Market Debut   

On their third trading day since listing on the NASDAQ, shares in Nikola surged by 104 percent, after the company's founder and executive chairman Trevor Milton tweeted that Nikola would open up reservations for the Badger, "the most bad ass zero emission truck" on June 29. The projected retail price of the Badger will be between $60,000 and $90,000, depending on the configuration, according to the company.  

Nikola and its founder are betting big that policymakers will support zero-emission technology in road transportation and that investors will see the Environmental, Social, and Governance (ESG) credentials of the company.

"Nikola is thrilled to complete the Nasdaq listing and be part of the ESG investment world. This is a significant endorsement in fuel-cell and battery-electric technology," Milton said in a statement last week when the firm announced its listing.

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So far, so good—the stock market, retail investors, traders, and fans are lapping up Nikola's stock. The market capitalization of the company exceeded on Monday the market caps of two of Detroit's Big Three.

"I've wanted to say this my whole adult life; $NKLA is now worth more than Ford and FCA. Nipping on the heels of GM. It may go up or down and that's life but I'll do my part to be the most accessible and direct executive on Twitter," Milton tweeted after markets closed on Monday.

Surpassing the market capitalization of each of Ford and Fiat Chrysler Automobiles is not bad for a company that has yet to make any revenue.

Revenue Generation Expected Next Year 

Nikola expects to start generating revenue by 2021 with the rollout of its Nikola Tre Class 8 BEV, followed by the Nikola Two Class 8 FCEV coming in 2023.

According to founder Milton, the company will make five times the revenue per truck sold compared to other companies. This will be achieved by vertically integrating the supply chain, Milton told Yahoo Finance in an interview on the day of the stock debut last Thursday.

Jeffrey Ubben, chief executive at Nikola investor ValueAct, said earlier this year that Nikola could be the next $100-billion company.

Milton told Yahoo Finance last week that "How you get there is because we vertically integrated the entire supply chain. It's very similar to Amazon."

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Can Nikola Avoid Tesla's Growing Pains?

Regardless of the different business models, comparisons between the two companies named after Nikola Tesla may be inevitable, not only because they bear the name of the same inventor.  

Going forward, Nikola will have to start generating revenues, preferably sooner rather than later, in order to convince the still sizable camp of skeptics that zero-emission heavy-duty vehicles could give fossil fuel-powered vehicles a run for their money over the next decade.

Delivering on targets and smooth production ramp-up could also spare Nikola some of the growing pains that Tesla had two years ago.

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Just like Tesla, there is a lot of shorting on Nikola's stock. On Friday, Nikola's short interest was $40.51 million, with 1.20 million shares shorted, or 5.89 percent of its float, according to Ihor Dusaniwsky, managing director of financial analytics firm S3 Partners.

The trend in the stock price of Nikola – just three days into trading on the market – is impossible to predict, but so far, it shows the company may have already built a devoted group of followers and believers, just like Tesla has done.

(By Tsvetana Paraskova for Oilprice.com)