Tesla's New Supply Chain Woes

Current conditions: An “Arctic outbreak” will bring bitter cold to much of the U.S. this weekend • 109 weather stations in China have broken mid-January heat records • Nearly a quarter of humanity now lives in drought conditions.

THE TOP FIVE

1. Red Sea tensions hit Tesla Berlin factory

Tesla will suspend operations at its Berlin gigafactory for two weeks – from January 29 through February 11 – due to supply chain problems caused by the escalating tensions in the Red Sea, Reuters reported. Iranian-backed Houthi rebels who support Hamas in its conflict with Israel have been attacking vessels in the region, disrupting trade in one of the world’s busiest shipping routes. “Tesla is the first company to disclose a resulting interruption to output,” Reuters noted. Other companies, including Ikea and China’s Geely, have hinted at possible delivery delays. On Thursday a U.S.-led coalition launched strikes against the militants in Yemen. President Biden said he “will not hesitate to direct further measures to protect our people and the free flow of international commerce as necessary.”

2. Hertz suggests its EV rentals are in more accidents than gas guzzlers

Car-rental company Hertz is making a “dramatic about-face” on electric vehicles, reports Bloomberg Green. The firm will sell off 20,000 EVs – about a third of its EV fleet – and use the money to buy gas-powered cars. One analyst suggested the sell-off could boost Hertz’s cashflow by up to $300 million over the next year or so. The company has given several reasons for the move:

• Lack of demand from customers
• Unexpected loss in resale value due to Tesla’s steep price cuts (most of the vehicles in Hertz’s EV fleet are Teslas)
• Increased collisions and higher repair costs

Why more accidents? Perhaps customers who rent EVs don’t understand how the driving experience differs from that of a gasoline vehicle, posited Stephen Scherr, Hertz’s chief executive. EVs are much heavier, after all, and they accelerate more quickly. While some schools are starting to incorporate EVs into their driver’s ed courses, a small learning curve still exists for most Americans, and a road trip probably isn’t the best time to confront it.

Hertz says it isn’t abandoning EVs entirely, but wants to let the market develop. The upshot for anyone looking to buy a cheap EV is that “now would be a really good time to pop over to Hertz’s sales page and start browsing,” wrote Andrew J. Hawkins at The Verge. Tesla Model 3s are going for as little as $20,000.

3. California budget cuts hit state climate programs

State funding for California’s climate goals could be cut by 11% – down to $48.3 billion from $54 billion – in the year to come, the Los Angeles Times reported. “Climate crusader” Governor Gavin Newsom needs to close a $37.9-billion budget deficit and is eyeing climate programs. The initiatives on the chopping block include clean transportation, forest maintenance, watershed resilience, and coastal protection. The state’s Extreme Heat and Community Resilience Program would be trimmed by $40.1 million, and wildfire reduction programs could see $100.7 million in cuts. Environmentalists lamented the news; Newsom’s office insisted the state’s climate goals were still a priority, noting that more than $10 billion in funding from the Inflation Reduction Act will help soften the blow.

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4. Natural gas investments on the rise

Global investment in natural gas infrastructure is growing even as green energy pledges mount and renewable technologies gain momentum, reported Gavin Maguire at Reuters, citing data from Global Energy Monitor (GEM). Natural gas is a fossil fuel energy source, albeit one the International Energy Agency says emits less carbon than other sources. Many see it as a “bridge fuel” in the clean energy transition. More than $720 billion is slated to go toward building natural gas pipelines worldwide, and another $190 billion will fund import facilities, according to GEM. “Once completed, the pipelines and LNG import terminals will extend the use of natural gas for years to come, and guarantee that fossil fuels will retain a critical role in key power systems well beyond 2030,” Maguire said.

5. The case for naming heatwaves

A report from Australian nonprofit Renew suggests countries take a lesson from the Spanish city of Seville, which began naming heatwaves in 2022 to create a “heat culture” in which the public is more aware of and prepared for looming dangerous temperatures. “Naming heatwaves is about letting people know that this is a serious issue,” said Rob McLeod, a policy manager at Renew and author of the report. His recommendation is targeted mainly at Australia, but could be applied to many other regions where climate change is making extreme heatwaves more common.

THE KICKER

“Now that Stanley has helped show that relatively ecofriendly products can become wildly popular, the next milestone in nondisposable drinkware should be to prove that a mass consumer trend doesn’t inevitably lead to waste and excessive consumption.” –Elana Klein at Wired, The Big Problem With the Giant Stanley Cup

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