Who Will Be King of the Road?

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To the Editor:

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Thank you for your first transportation roundtable (“The Future of Transportation,” Cover Story, May 6). As an engineer who does risk management in the industry, I know that it’s about more than cars. Transportation agencies are already using electric buses. Private cars and cargo vehicles use the same supply chain, and there are obvious weak points in the supply chain that can affect the success of businesses (and investment results). Safety issues aren’t going away, and the mining and refining of lithium, cobalt, nickel, and other materials have social and environmental impact. I am looking forward to future coverage.

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Paul Franklin

Kennesaw, Ga.

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To the Editor:

As an “old fossil,” fossil-fuels industry retiree, I have a few observations on your cover story: 1) Fossil fuels are inexpensive; solar and wind are expensive. 2) My memory of organic chemistry is fading, but I have difficulty understanding how to obtain petrochemicals, lubricants, greases, etc., from the alternatives now in vogue. 3)Currently, the US has a significant geopolitical advantage in that we obtain most of our energy from domestic sources, despite the antagonism and roadblocks from the federal government. Most of the components going into wind and solar equipment need to be sourced from abroad, often from unfriendly countries. In doing so, we will be trading a geopolitical advantage for a disadvantage. 4) The article “Toyota Is Trying to Catch Up in the Crowded EV Race. It May Be Too Late” (May 6) is negative on the company because it focuses on “particularly complicated hybrids” rather than 100% electric vehicles. As a past and current owner of Toyota hybrids, I can assure you that Toyota has mastered how to make those hybrids.

Charles Neubecker

Plano, Texas

To the Editor:

I found the cover story and outlook for various car manufacturers to be interesting. I may be a bit of a contrarian, but I believe that Toyota will be the better long-term investment than Tesla.

While it is hard to predict the future, if EVs end up accounting for 50% of all car sales by 2030, as stated in your article, it is a safe bet that they will do so by using solid-state batteries. These experimental batteries are different from today’s offerings—they have the potential to pack twice the amount of power into a battery weighing half the amount of today’s lithium batteries. The big question, of course, is when they will be commercially available. Estimates vary from 2025 onward.

Your profile of Toyota didn’t mention that it has spent a great deal of its research-and-development budget in this area for several years now and has stated that it will be offering solid-state batteries in vehicles by 2026. be a laggard today in pure EVs, that is unlikely to continue to be the case by 2030. Tesla, on the other hand, would seem to be one of the last bubble stocks still standing and is likely to fall by 50% at some point as the age of 100 price/earnings valuations disappears.

Brad Brooks

East Hampton, NY

To the Editor:

Your article “Buy GM Stock. It’s Time for the Auto Maker to Stomp on the E-celerator” (May 6) excludes how badly General Motors’ sales of internal combustion engine, or ICE, vehicles are doing. Plus, the slow rollout of EVs, and the associated need to add significantly to its debt levels, will be headwinds for GM over the coming years. Sales of ICE vehicles peaked in 2016 and have declined every year thereafter to a low in 2021, a 37% decline.

As noted in your article, GM will need to increase debt levels significantly to support four new battery plants and to build out its EV production. When you factor in its unfunded pension and healthcare obligations, as also noted, net cash (cash minus debt) is negative and on a path to worsen over the coming years. It’s noteworthy that Tesla’s net income exceeded that of both GM and Ford combined for the first quarter of 2022.

GM will have a difficult time making its expansion into EVs profitable, due to high input and manufacturing costs. Its stock looks more like a “value trap” than a good value investment.

Donald J Coleman

Charlottesville, Va.

Bonds and Gold

To the Editor:

In “Bonds Are Starting to Look Attractive. Investors Should Be Careful in Chasing Yield” (Income Investing, May 4), JP Morgan’s Robert Michele likes investment-grade corporate bonds and municipal debt. To this we can add FDIC-insured certificates of deposit, which not only offer a safe return, but also, historically, the interest rate of new CDs rise along with increasing federal-funds rates. So, buy a sequence of short-term CDs, or SDCDs—say two or three months—where the proceeds from the maturity of one STCD is invested in another STCD. Then, when the Federal Reserve stops raising interest rates, switch to long-term CDs with their higher rates. Fidelity’s CD New Issue Offerings is a good place to do this.

And regarding “Gold Rises as Investors Seeking an Inflation Haven Pour Into Gold ETFs” (Funds, May 6), it may also be wise not to buy gold until the Fed stops raising rates because higher rates usually increase the strength of a currency. This puts downward pressure on the price of precious metals like gold, just as a rising dollar has done for the past two months.

Ron Minarik

Mystic, Conn.

To the Editor:

I have been buying physical gold via one of the exchange-traded funds mentioned in Debbie Carlson’s article since November 2019. I have also been buying gold equity ETFs and gold-mining companies. I like the fact that the different asset classes sometimes behave contrarily to the market as well as toward each other. But if I had to pick just one strategy, it would be direct purchase of Agnico Eagle Mines, Barrick Gold, and Newmont. Why? No ETF expense fees and dividend yields approaching 3%, plus the potential for more impactful capital growth (than is available from a diversified ETF) as they buy out smaller miners or one another.

Mike Meehan

Bradenton, Fla.

Send letters to: [email protected] To be considered for publication, correspondence must bear the writer’s name, address, and phone number. Letters are subject to editing.

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