Tesla shares climbed 12% in extended trading after the company’s third-quarter earnings beat Wall Street estimates, following a long slump.
However, Tesla’s revenue for that period, up 8% year on year, marginally missed expectations. “Vehicle growth” will hit up to 20%-30% next year, said CEO Elon Musk, thanks to “lower cost vehicles” and the “advent of autonomy.” Apparently, this was presented as a ‘best guess’.
Profit margins reportedly received a boost from $739 million in automotive regulatory credit revenue during the quarter. Automakers must acquire a certain number of regulatory credits annually. Those unable to meet the requirement can buy credits from companies like Tesla, which has a surplus due to its exclusive production of electric vehicles.
Automotive revenue reportedly rose 2% to $20 billion, up from $19.63 billion in the same quarter the previous year, and has remained roughly stable since late 2022. Energy generation and storage revenue reportedly surged 52% to $2.38 billion, while services and other revenue, which includes income from non-warranty Tesla vehicle repairs, increased by 29% to $2.79 billion.
Tesla quarterly revenues by business section
Tesla quarterly revenues by business section
Tesla share price and close and ‘after hours’ trading 23rd October 2024 (09:15 BST)
Tesla share price and close and ‘after hours’ trading 23rd October 2024 (09:15 BST)
AI systems, particularly generative AI, necessitate substantial computational power, leading to significant energy use. Conventional energy sources might not meet these growing demands.
Environmental Commitments
Numerous tech firms have pledged to lower their carbon emissions. Nuclear power, a low-emission energy source, supports these environmental commitments.
Dependability
Nuclear energy offers a consistent and uninterrupted power supply, essential for data centres that operate around the clock.
Technological Advancements
Progress in nuclear technologies, such as small modular reactors (SMRs), has enhanced the feasibility and appeal of nuclear power for extensive use.
For example, Google has entered into an agreement with Kairos Power for electricity from small modular reactors to bolster its AI operations. In a similar vein, Microsoft has collaborated with Constellation to refurbish an inactive reactor at the Three Mile Island nuclear facility.
These collaborations mark a notable transition in the energy strategies of the tech sector, as they pursue dependable, eco-friendly, and robust power solutions to support their AI initiatives.
Tungsten is a critically important rare earth metal, renowned for its unique and valuable properties.
Tungsten has the highest melting point among all metals, which makes it exceptionally suitable for high-temperature applications.
Key aspects of its importance
Industrial and technological applications
Tungsten is used in many industries where hardness, high density, high wear resistance, and high-temperature resistance are required. This includes mining, construction, energy generation, electronics, aerospace, and defence sectors. It is used in weapons, autos, electric car batteries, semiconductors and industrial machinery.
Fact: approximately 2Kg of tungsten goes into every electric vehicle.
Alloys
Metals are frequently alloyed with Tungsten to enhance their strength without substantially adding to their weight. This property is vital for uses like arc-welding electrodes and heating elements in high-temperature furnaces.
Significance
Tungsten is acknowledged as a critical metal because of its economic significance and the scarcity of its sources. It is reported that China produces the majority of the world’s tungsten, controlling approximately 80% of the supply of this rare earth metal.
Durability and flexibility
Tungsten’s durability, flexibility, and resistance to corrosion contribute to its popularity across various industries and applications. It ranks among the hardest and most resilient materials found in nature.
These characteristics render tungsten not just crucial but also indispensable for numerous high-tech applications. The rarity of tungsten and the intricate nature of its extraction and refinement processes enhance its value even further.
World suppliers of tungsten
According to Statista.com the global tungsten market was valued at over $5 billion USD in 2022. It’s projected to grow significantly, with estimates suggesting it could reach over $9.5 billion USD by 2030
Powering artificial intelligence (AI) models takes a substantial toll on our planet’s energy resources.
Delving deeper into AI, it becomes crucial to comprehend the environmental impact of this technological revolution.
Current trends
A new peer-reviewed study featured in ‘Joule‘ highlights the significant energy requirements of AI. The research, carried out by Alex de Vries, a data scientist at the Dutch central bank, provides a quantification of the energy usage linked to the trends in AI capacity and adoption.
The energy appetite of AI
The AI industry is experiencing rapid growth as major technology companies incorporate AI-driven services into their platforms. These applications require significantly more power than traditional ones, resulting in online interactions that are more energy-intensive.
Projected impact
Continuing on the present course, NVIDIA could be dispatching 1.5 million AI server units each year by 2027. If these servers were to run at maximum capacity, they would consume a minimum of 85.4 terawatt-hours of electricity annually. For comparison, this amount of energy surpasses the yearly consumption of numerous small nations.
Comparisons
By 2027, it is projected that global AI-related electricity consumption may rise by 85 to 134 terawatt-hours (TWh) annually. This estimate is on par with the yearly electricity requirements of nations such as the Netherlands, Argentina, and Sweden.
Why sustainability matters
While AI heralds significant breakthroughs, its sustainability is a crucial risk factor to consider. Picture Google’s search engine evolving into a ChatGPT-style chatbot, managing nine billion interactions daily. This would cause energy demands to soar, matching the consumption of a nation like Ireland. Although this scenario isn’t immediately likely due to logistical limitations, it highlights the resource-intensive nature of generative AI applications.
As we explore the AI domain, sustainability should not be neglected. Discussing AI’s risks, such as errors and biases, should also include its environmental impact. Innovation must be balanced with responsible energy use for a sustainable future.
Conclusion
In essence, AI’s demand for power is substantial, and the challenge is to leverage its capabilities while reducing its environmental impact. We must proceed with caution to ensure our technological advances do not compromise the health of our planet.
Inflation, rose marginally to 4% in December, up from 3.9% in November 2023.
Economists had forecast a slight fall but unexpected rises in alcohol and tobacco prices were behind the surprise rise.
However, with energy bills predicted to come down in 2024, there are still expectations of interest rate cuts later this year.
On target still for 2%?
As we have seen in the Germany, the U.S., and France, inflation does not fall in a straight line, ‘but our plan is working and we should stick to it,‘ Jeremy Hunt reportedly said in a statement.
UK inflation from April 2019 to December 2023
UK inflation from April 2019 to December 2023
Unprepared for both the start and the end of the pandemic
Increases in the cost of energy and food costs, started by pandemic lockdowns ending exasperated further by Russia’s invasion of Ukraine and more recently the conflict in Israel have put household finances under extreme pressure.
The UK and other countries were woefully underprepared for all of these events as they ‘began’ and at the ‘end’. We did not prepare to come out of them – there was no exit plan!
Markets and traders are still expecting BoE to cut its base rate in 2024 due to the fast-falling inflation rate. It peaked at 11.1% in October 2022 – and now sits at 4%.
The question is: will the economic recovery be good enough to allow the Bank of England to start cutting rates?
The UK interest rate currently sits at 5.25%.
‘What’s inflation?’ ‘Dunno, but my beer’s gone up!’
The UK energy price cap is expected to rise by 5% in January 2024, which means that a typical household who pays by Direct Debit will face an annual bill of £1,931, up from £1,834 in the previous quarter.
This increase comes at a “difficult period” for struggling households, as many are already facing higher costs of living due to the pandemic, Brexit, and inflation.
Designed to protect customers
The energy price cap is designed to protect customers from unfair price hikes and ensure that they pay a fair price for their energy. However, it does not limit the total bill, which depends on how much energy is actually used.
Therefore, customers are advised to shop around for better deals and switch to cheaper tariffs if possible. This, however, is easier said than done.
It is also recommended that struggling customers contact suppliers if they have difficulty paying their bills and seek help from schemes, grants, and benefits.
The UK energy price cap is a limit on the maximum amount that energy suppliers can charge customers on standard or default tariffs for each unit of gas and electricity they use. It is set by Ofgem, the energy regulator, every three months based on the underlying costs of energy and inflation.
Will these projects alter the world weather pattern?
According to a study, installing large-scale wind and solar farms in the Sahara desert could increase rainfall and vegetation in the region. The researchers simulated the effects of covering 20% of the Sahara with solar panels and wind turbines and found that it would trigger a feedback loop of more monsoon rain and more plant growth.
This could have benefits for the local environment and the global climate, as well as providing a huge amount of clean energy for the world.
Could it also create a detrimental effect to the ecosystem too?
10.5 GW solar energy
The desert project would produce 10.5 GW of solar power and 3 GW of wind power. However, there are also challenges and uncertainties involved, such as the cost, feasibility, and environmental impacts of such a massive undertaking.
The Sahara is a desert on the African continent. With an area of 9,200,000 square kilometres, it is the largest hot desert in the world and the third-largest desert overall, smaller only than the deserts of Antarctica and the northern Arctic.
Daily global electricity energy demand
The global electricity energy demand is the amount of electricity that the world needs in a given day. It can be calculated by multiplying the average global electricity demand in GW by 24 hours. According to the International Energy Agency (IEA), the average global electricity demand in 2020 was about 3 TW or 3 000 GW. This means that the global electricity energy demand in 2020 was about 72 000 GWh or 72 TWh per day. However, this is an average value, and the actual demand may vary depending on the season, time of day, weather, and other factors.
The researchers simulated the effects of covering 20% of the Sahara with solar panels and wind turbines and found that it would trigger a feedback loop of more monsoon rain and more plant growth.
In the Announced Pledges Scenario, renewables in electricity generation rise from 28% in 2021 to about 50% by 2030 and 80% by 2050.
The UK government has announced a plan to issue over 100 new oil and gas licences in the North Sea, as part of its drive to make Britain more energy independent and reduce reliance on imports. The Prime Minister said that even when the UK reaches net zero by 2050, a quarter of its energy needs will still come from oil and gas.
Carbon Capture
The new licences will be subject to a climate compatibility test and will aim to unlock carbon capture and storage and hydrogen opportunities in the region. The government has also approved two new carbon capture projects in Scotland and the Humber, which are expected to be delivered by 2030.
Criticised
The move has been criticised by environmental groups, who argue that opening up new fossil fuel projects is incompatible with the UK’s climate goals and will undermine its leadership ahead of the COP26 summit in Glasgow.
They also question the claim that domestic production is cleaner than imports, as the UK’s oil and gas sector is still responsible for significant emissions.
The government has said that it will support the transition of the North Sea industry to low-carbon technologies and protect more than 200,000 jobs in the sector. The UK government has also pledged to invest in renewable energy sources, such as offshore wind, to diversify the UK’s energy mix.
British Gas owner Centrica and Shell see profits soar as bills rise.
Profit for the six months ending in June 2023 for British Gas owner Centrica rose to around £1.34bn from £262m a year earlier. The rise in profits came from the company’s nuclear and oil and gas business, rather than from the British Gas energy supply business which performed much worse. The average annual British Gas profit has been £584m in recent years.
Profit increase down to Ofgem ‘tweak’
However, the profit boom is surprisingly down to a ‘tweak’ to the regulator Ofgem’s energy price cap that allows the supplier to recover elements of the costs of supplying its 10 million customers during the energy crisis.
The supplier’s current profit highs are likely to upset consumer groups that have campaigned against the supplier’s treatment of vulnerable energy customers as record energy market prices forced millions into fuel poverty. Some have called the profit making ‘legalised robbery’, and demanded to bring energy into public ownership.
Dividend plans
Centrica plans to raise its interim dividend by around a third but remarks that its underlying profitability will ease significantly in the second half of the year. Energy firms saw their profit margins hit last year when wholesale prices surged in the wake of Russia’s invasion of Ukraine. Wholesale prices also jumped as th UK emerged from the dark cloud Covid as markets undicated that the UK was ill prepared for the enconomic recovery. Brexit blues didn’t help either.
The energy price cap remains £1,000 above its pre-pandemic average, despite oil and natural gas costs easing significantly. It is predicted by industry ‘experts’ to remain around the £2,000 a year average for the coming winter months, maintaining excessive pressure on household budgets.
Some ‘windfall’ tax recovery, over the years will apparently go back to ‘society’, British Gas says.
Centrica chief executive reportedly said that a lot of the firm’s profits were ‘going back into society’.
‘I know it’s difficult to see the word profits, or dividends, or similar words when people are having a tough time. I’m very conscious of this,’ he reportedly said.
Windfall
‘Bear in mind, over the next couple of years we are expecting to pay a windfall tax of ‘probably‘ well over £600m on our UK gas business off the back of the profits that we’re seeing, so a lot of this is going back into society.’
A contentious thought
A business needs to make profits otherwise there is no business. It exits to make a profit and to supply a service or product – but it is about how that business makes its profit, isn’t it?
Token windfall tax temporarily slapped on by the UK government is only payable on UK profits. Oil and gas recovery companies will only pay a tax windfall on UK related profits not on overseas returns!
Profits from fossil fuel recovery invested in greener energy for the future – that’s a topic for another article.
