This blog could also be titled, “You Can Lead a Horse to Water But You Can’t Make Him Drink.”
Recently, the House voted to overturn, with some Democratic support, the EV mandate the Biden Administration let California impose on the rest of America. The California mandate is ludicrously impossible to meet. It requires 43% of an auto manufacturer’s California sales be zero-emission by 2027 and 68% by 2030.
Looking in a different direction, the Trump Administration wants LNG exports to be carried on US built ships, starting with 1 percent of shipments in 2029. This is going to be very hard to do. The US is woefully short of shipyards and costs are completely noncompetitive. While not a direct comparison, a container ship currently under construction at a Philadelphia shipyard is expected to cost $300 million. Shipowners say that a comparable ship would cost $55 million in China.
Investors should be extra cautious when mandates are a material part of the projected return.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
