The author of this blog is having a challenging time writing this post as we have been fortunate enough to have received a very kind letter from Warren Buffet complimenting our writing. On the other hand, we are also impressed with Elon Musk and his achievements as we recently outlined.
Today’s news puts us at a crossroads as this week has seen news of all auto makers (GM for example) realizing they need electric vehicles. Moreover, there are now pictures of what seems to be a Tesla electric truck.
We know there are some major issues with electric trucks – they need to recharge often – every few hours or so. Furthermore, the infrastructure to achieve these goals isn’t in place yet.
There is one thing worth noting though. If the trucks are allowed to travel autonomously, the trucking industry will be able to easily afford to outfit the entire country with chargers through the arbitrage of not needing to hire drivers anymore. In short, the truck driver’s salary pays for the chargers.
Could this happen in the next five years? We say yes, absolutely. In the next three years or so we will see autonomous vehicles widely accepted. Within the next five, the country will be blanketed with chargers.
Knowing this, why would Warren Buffet make an investment in truck stops? When asked, he said trucks are going to be around for a very long time. He also said, who knows when driverless trucks are going to come along and what level of penetration they have.
The answer is obvious to us. Half a decade. (barring any catastrophic incidents). When this happens, the increased cost of drivers will make them rapidly take over the market.
Let’s do the math. If a driver gets $60,000 per year, and a truck lasts seven years, an autonomous vehicle can save $420,000. Some trucks will last ten years at 100,000 miles per year.
Let’s also keep in mind Tesla is not the only company making autonomous vehicles – they don’t have to be electric to work. Non-electric autonomous vehicles will still need gas, so perhaps this is what Buffet is banking on.
While Warren Buffet has made more good bets than virtually anyone in the investing world, he said he was absolutely certain Hillary Clinton would be our next president. We’ll see if he redeems himself with this investment in Pilot Flying J.