• The knock-on effects we’ll see with self-driving cars…
  • Diving into how “magment” charges EVs…
  • Why hydrogen cars aren’t beating Teslas…

Dear Reader,

Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology.

Today, I’ll do my best to answer them. If you have a question you’d like answered next week, be sure you submit it right here.

And before we look at today’s questions, I wanted to share a special update from Brownstone Research…

An Important Announcement

As many readers know, I’ve been passionate about blockchain technology and digital assets for years. I first invested in bitcoin in 2014 and recommended it in the summer of 2015 when it was trading at just $235.

For years, I’ve shared my insights on blockchain technology through my work in the capital with the Chamber of Digital Commerce and my own private investments into bleeding-edge startups in the space.

As a result, sometimes readers will ask me why I don’t make more blockchain recommendations in my research services. The answer is simple… Until recently, cryptocurrency and blockchain projects have been a little like the Wild West.

The risk had been high because the industry simply hadn’t developed enough for easy access. A simple, honest mistake could lose someone’s entire investment. And when a mistake was made, there was no recourse for investors. What was done was done.

I’ve been patiently waiting for the right time in the market… when the infrastructure and ease of use would be well established enough for my subscribers.

And I’m happy to announce that we’ve finally hit the tipping point. On August 25, I’ll unveil all the details about this development at my Click for Crypto event.

If any readers have wondered how to invest in the blockchain or cryptocurrency space… or have been looking for new, top-notch projects to follow… then I’d highly encourage you to attend this event. This has been years in the making, and I can’t wait to share all the details with my subscribers.

Simply go right here to put your name down to attend.

The real impact of autonomous cars…

Let’s begin with a question on the ramifications of self-driving cars:

Hi Jeff,

Joining as a Brownstone Unlimited member when you founded Brownstone Research was the best financial decision I made in my lifetime.

I have an odd question. With the adoption of self-driving cars, wouldn’t driver’s licenses become obsolete? And if so, what cultural ramifications would that have? Would there be any obvious investment opportunities for us that might arise from such a change? Lower auto insurance rates come to mind for one. Any thoughts?

 – Michael M.

Hi, Michael – thank you for your kind words and for being a lifetime subscriber. It’s great to have you as a member.

And you’ve asked a very astute question. Once we have cars that can drive themselves anywhere with no safety monitoring by passengers, we can expect several changes.

The first one is clear… If we don’t ever actually drive a car, there’s little need for us to carry a driver’s license. There would be no reason for it.

You are absolutely right, and I suspect that many will initially revert to state-issued ID cards. Eventually, we’ll get around to electronic ID cards that are stored on a blockchain.

And you’re also right that insurance rates are going to drop significantly. Sadly, driver error now causes around 94% of traffic accident deaths.

Self-driving cars will greatly reduce the number of accidents. And as the percentage of self-driving cars on the roads increases, the number of automotive accidents will continue to drop.

During the transition from “mostly autonomous” to “fully autonomous” technology, I believe we’ll have a hybrid model. Drivers will be responsible for lower insurance premiums due to dramatically fewer accidents. This will be driven entirely by statistics of declining accidents.

There is also the question of which party will be providing the insurance. And we can already see early signs of what the answer will be. Tesla, for example, is already offering car insurance. Most aren’t aware of this because it is currently only available in the state of California. But in time, we can expect that this model will expand.

It makes perfect sense as well. After all, Teslas are connected cars powered by artificial intelligence (AI). Tesla will be able to offer insurance and monitor owners’ driving skills, offering further reductions in rates for good drivers.

And as Tesla’s full self-driving technology is perfected and put more widely into use, the rates will drop even more.

Other car manufacturers will catch on to the fact that insurance is a profitable line of business, more profitable than the margins on manufacturing cars. Some will follow this path.

Another new business model that will emerge is companies that manage fleets of shared autonomous vehicles (SAVs), which will be responsible for the insurance.

SAVs will be popular because they will be extremely affordable. Rides will be even cheaper than an Uber or Lyft, and consumers will never have to worry about car maintenance. Whenever they need a car, the SAV company will have one available, waiting to pick them up and transport them in a quiet, clean car.

Some SAVs may even be free to ride in. I can anticipate a company like Google’s Waymo offering free rides in exchange for exposing riders to ads and collecting more data on them, for example.

The growing popularity of SAV fleets also means that we will see fewer new car sales to consumers. This will be further amplified by the shift to working remote, some of which will persist post-pandemic.

The reality is that many of us are driving less than ever… So why bother buying a car if we can simply hail a quick, convenient, and cheap ride when we need one?

Ultimately, this transition to self-driving cars will dramatically change the landscape of the automotive industry. It will affect not only IDs and car insurance but also the rental car industry and even pay parking lots.

And I expect we’ll see new businesses crop up, too. For instance, we’ll likely see companies that will clean, charge, and service SAVs.

In the meantime, if any readers would like to learn more about investing in this trend, simply go right here for some of my top recommendations in the future of transportation.

This concrete could charge your car…

Next, a reader wants to know more about how “magment” works:

Hi, Jeff,

Thanks for your wise and valuable opinions on so many technology topics. I’m curious why you suggested using magment for parking lots and implying that the electric vehicle (EV) could just “sit there.”

My physics classes from long, long ago have me thinking that the EV must move through the magnetic field to generate some form of current that would charge its batteries. So I do not understand how the parking lot creates a “recharging venue.” What am I missing?

– David B.

Hi, David, and thanks for writing in.

As a recap, I recently wrote about the firm Magment and its “magnetized cement” that can charge EVs. Right now, its magment product is still in laboratory tests. Assuming those tests look promising, the Indiana Department of Transportation (INDOT) is planning to build a quarter-mile track for more extensive tests.

And if all that goes well, INDOT will deploy some of the magment on public roads. I also noted that parking lots would be another great use case for this material – we’d be able to charge our EVs without a charging station’s stand or cable.

And your question is a good one, David. The answer really all depends on how magment functions.

Magment’s tech works through coils embedded in slabs of magnetized concrete. Each EV will install a similar coil in its base, which will connect to the car’s charging system.

The charge can then transfer rapidly between the ground coil and the onboard coil – and this works whether the vehicle is stationary or in motion.

In fact, Magment has already demonstrated its technology with its MagPad, which recharges electric forklifts in warehouses, and MagDock, which wirelessly charges e-scooters. EVs are the natural next step up.

Magment’s technology increases productivity by reducing the time a vehicle will be unavailable due to charging, and it extends a vehicle’s range. And the company notes that its concrete product has high strength and can be easily scaled.

These are just a few of the reasons we’ll be keeping a close eye on this project over the coming months. If Magment can perfect its design, this would be an interesting addition to EV charging infrastructure.

And that’s something we’ll definitely keep in mind as investors as well. In the meantime, readers can find my latest recommendations following the “future of transportation” trend right here.

The downside to hydrogen…

Let’s conclude with a question about hydrogen cars:

Hi, Jeff Brown,

Aren’t hydrogen-powered vehicles both more economical and more environmentally friendly, producing only water as a byproduct? Aren’t hydrogen-powered vehicles more powerful? Their only lack is a convenient network of hydrogen power stations nationwide.

No lithium mining. No battery dumping. Vehicles with less weight. More economical than gas (petrol) or lithium-ion electric vehicles.

What are leading hydrogen power company stock plays? Shall hydrogen cars beat out Tesla’s lithium-powered EVs? I believe China- and Europe-made vehicles, in the future, are going to be hydrogen-powered vehicles, and if so, they may beat out Tesla worldwide. Cheers.

 – Dr. Robert O.

Hi, Robert, and thanks for sending in your question.

I’m often asked about hydrogen as a source of clean energy to fuel our cars. It’s an exciting topic, and I share your enthusiasm about hydrogen’s potential.

Powering our cars, trucks, trains, and even planes with the most abundant element in the universe sounds like the perfect solution to reduce global carbon emissions. As you said, its only byproduct is water.

And hydrogen seems perfect on the surface. It stores three times as much energy per unit of mass compared to gasoline. When it is combined with air, the energy that is released can power a vehicle. And it combines with oxygen to produce water.

We can’t do much better than that, right?

Yet that’s not the whole picture.

About 70 million tons of hydrogen are produced each year, primarily for ammonia fertilizer. And 96% of hydrogen production is made through “steam-methane reformation.”

Here’s the problem. This process uses energy created by natural gas, coal, and oil to produce hydrogen. In all, the industry produces 830 million metric tons of carbon dioxide every year to produce this “clean” hydrogen fuel.

Electrolysis is responsible for the remaining 4% of hydrogen production. This process uses electricity to split the hydrogen out of the water.

On the surface, this sounds better than steam-methane reformation. But the electricity that’s used comes almost entirely from fossil fuel power plants or nuclear fission power plants (which create radioactive waste).

Even if we use carbon-capture technology to offset the carbon dioxide that’s emitted when we produce hydrogen, it’s not perfect. Around 10–20% isn’t captured – and the cost means the hydrogen ultimately is twice as expensive.

That means we have to keep price in mind. When using hydrogen as fuel, consumers have to pay for it. A gallon of gas is a similar price to a kilo of hydrogen.

To put things in perspective, it takes about 50–55 kilowatt-hours (kWh) of electricity to produce a single kilogram of hydrogen fuel. That’s the equivalent of almost two days of electricity consumption for an average home in America. Does it make sense to spend that much energy to produce 1 kilogram – enough to go 70 miles?

Without billions of dollars in subsidies, hydrogen just doesn’t make economic sense right now. And because of where the energy comes from – mainly fossil fuels and other “dirty” energy sources – it doesn’t even make environmental sense.

So until we find a way to make hydrogen fuel cheaply, and preferably without fossil fuels, we just won’t see major adoption of this fuel source or major investment in hydrogen infrastructure.

Lithium-ion batteries, on the other hand, are well established and continue to improve in energy density incrementally, year after year. They’ve continued to fall in price as well. It’s very hard to make an argument to switch to hydrogen right now.

However, my largest disappointment with EVs is that they share a similar problem that hydrogen has with its production. Most of the electricity produced to “fuel” an EV comes from carbon-based fuels or nuclear fission plants.

When people drive EVs that are fueled by dirty energy, what’s the point? And it gets worse. Somewhere between 7–20% of electricity is lost as it is transmitted over the electrical grid. Additional dirty energy needs to be produced to account for transmission losses.

The only scenario where EVs are actually clean is if we can fuel them with clean energy. If someone lives near a geothermal or hydroelectric plant and is receiving 100% clean energy to their home, that’s a great option.

Or a project that I’ve been working on for my own home is to install Tesla’s solar tiles on my roof with Powerwalls (battery storage) in the garage. I’ll be able to power a car entirely from the solar energy produced.

And we should also remember that EVs and hydrogen vehicles are all produced in manufacturing plants fueled by carbon-based electricity.

A prominent MIT professor estimates that we must drive 50,000–60,000 miles in an EV before we can offset the carbon used to manufacture it… And that assumes that 100% of our electricity used for charging the car was clean, which is rarely the case.

With all that said, I am keeping a close eye on these industries, as well as promising new industries like nuclear fusion (not fission) as a possibility to meet our clean energy goals.

My wish is that the industry and policy makers are open and honest about the entire end-to-end system needed for 100% clean, sustainable energy. That includes everything from how the vehicles are produced to where the electricity, or hydrogen, comes from.

And my dream is that, in my lifetime, we’ll see the world shift entirely to clean energy for all of our needs.

That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.

Have a great weekend.

Regards,

Jeff Brown
Editor, The Bleeding Edge

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