Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Chinese Government plans to Scrap Gas and Diesel Vehicles

The People’s Republic of China; the world’s largest automobile market, is planning to ban the sale of vehicles with gasoline or diesel burning engines at some point.

A deadline for an end to sale and production of internal-combustion engine vehicles is in the works, Vice Minister of Industry and Information Technology Xin Guobin told reporters on September 9. Xin made the announcement at an auto forum in Tianjin, Bloomberg reported.

Chinese cities are plagued by some of the world’s air pollution which the government wants to reduce. Another goal is to limit or end dependence on foreign oil which has both strategic and financial implications.

China is Smart to Scrap the Internal Combustion Engine

The Chinese government wants to end dependence on questionable oil suppliers -such as Russia and Venezuela. It also wants to avoid America’s mistake of getting bogged down in wars for oil in the Middle East. Somebody in Beijing appears to have learned a few lessons from recent American history, even if nobody in Washington has.

Another good reason for China to go electric is to stop shipping money to foreign oil suppliers such as the United States. Electricity can be produced in the People’s Republic in a wide variety of ways, oil cannot.

Patriotic Americans should hope that our leaders are taking notes rather than checks from big oil companies. This move will make China a leader in electric cars and potentially doom the United States to second rate power status.

More Electric Cars Coming Fast

One group that is paying attention to developments in China is automakers. Honda Motor Company (NYSE: HMC) is planning to launch an electric car in China, next year Bloomberg reported.

Another Japanese automaker Mazda is planning to launch an electric car in 2019, Auto Trader reported. Toyota (NYSE: TM) will supply Mazda with powertrain components for the vehicle. Toyota is developing a profitable sideline of supplying electronic components to other automakers.

Lovers of classic vehicles need not despair because Jaguar Land Rover Classic Works in Coventry, England, is building drivetrains for vintage Jaguar E-types, Tech Crunch reported. That way gearheads can keep driving their favorite old cars without hurting the environment or threatening national security.

To add icing to the cake the electric-drive-train E-types are faster than the originals. One went from 0 to 60 miles per hour in 5.5 seconds – which was faster than the gas car.

Providing electric drivetrains for classics might be a huge stream of revenue for Jaguar Land Rover’s owner Tata Motors (NYSE: TTM). There are tens of millions of classic cars in the world and untold millions of gearheads out there that will welcome this technology.

It looks as if the death of the internal-combustion engine is coming whether we want it or not. Smart investors had better get ready.