E2208
Intel's Turnaround, MPGe, Natural gas pricing, Interest rates, and more...
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1. This week’s Topics
1.1 Intel’s Turnaround
This week we discussed Pat Gelsinger and the Intel turnaround story. It’s an exciting story, but an especially challenging turnaround. We elaborate on this story and more the podcast this week. I mention chip designer Jim Keller. If you are interested in learning more about the future of chip and computer architecture, the talk he gave at the TSMC Open Innovation Summit last month is well worth the 30 minutes.
1.2 MPGe, your mileage may vary
We didn’t talk about this on the podcast, but I thought you all might find this interesting… I was chatting with my family in Virginia about electricity bills a few days ago - shockingly (pun intended) electricity is almost 5x more expensive in San Diego vs where my family is in Virginia.
Since I had our electricity bill out, I thought It’d be fun to see how the advertised EPA MPGe stacks up against what we will actually pay to fuel the Rivian R1S we are getting in June or July.
A few takeaways…
MPGe is based on the EPAs determination that 33.7 kwh = 1 gallon of gas. We can debate if this is a good measure, but more importantly, you should know that your results will be different and it will vary based on energy prices and equivalency will depend on your gas prices.
California has both high electricity costs and high gas prices, but the gas prices are dirt cheap relative to electricity. The image below shows dollar for dollar calculations of MPG adjusted for the most efficient Tesla models as well as the Rivian R1S, with my actual gas and kwh pricing. Your mileage may vary.
Interestingly, California (or at least San Diego), for all of its efforts to push EVs, is actually disincentivizing EV adoption because electricity prices are so high relative to gas prices. You can see this in the difference between EPA MPGe and your actual (localized) MPGe.
Furthermore, from a purely economic perspective, most gas cars and many gas SUVs and trucks will pencil out to be cheaper to run than the electric counterparts where I live.
I ran the numbers for a friend in Colorado and his EPA MPGe vs Actual (localized) MPGe difference was about -20%, which makes EVs make a lot more sense where he lives.
This analysis certainly doesn’t include forward looking energy prices. It also a purely economic analysis, and doesn’t include externalities (like carbon, though it’s easy to account for this… it’s about $0.20 / gallon to offset1).
Download the spreadsheet below and input your own gas and marginal electricity rates to see what your Actual Localized MPGe equivalency is.
2. Supplemental Data
2.1 SuperCompounders
2.2 Macro
2.3 Energy
2.4 Tech
Cloud Multiples - Check out the most recent edition of Clouded Judgement for the latest SaaS multiples.
Semiconductors
Semiconductor Industry Association Global Billings Report
Bureau of Economic Analysis Semiconductor Import / Export
Cryptocurrency
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This post and the information herein are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future.
1 gallon of gas = 20lbs CO2. It costs $240 dollars to offset 25,000 lbs of CO2 emissions, so that’s about $0.01 per lb of CO2, or ~$0.20 per gallon of gas.