Hertz Buys 100k Tesla Cars, Dangote Refinery Suddenly Looks Imperiled

Hertz Buys 100k Tesla Cars, Dangote Refinery Suddenly Looks Imperiled

A new age has indeed started and Elon Musk is leading it. Yes, car-renting giant, Hertz, has ordered 100,000 units of Tesla vehicles, in a deal valued at $4.2 billion.  With that, Tesla has joined the $1 trillion market cap club. This is legendary. With this move, I expect many car companies to begin to close their fossil-fuel units and focus on electric vehicles. Why? Car companies watch car-renting entities which are major buyers, and now those firms are going EV, the memos have been delivered.

Hertz has ordered 100,000 Tesla cars in a $4.2 billion deal aimed at expanding its electric vehicle fleet, the company announced on Monday. The deal will run until the end of 2022, and includes new EV charging infrastructure across the company’s global operations.

It is the first major step the rental company is taking since it escaped bankruptcy orchestrated by the pandemic. Tesla shares rose more than 9% at the news, selling above $1,000 for the first time and pushing the company across the $1 trillion capitalization threshold. Also, Elon Musk fortune jumped by $28.5 billion to $281 billion.

This is good business because if you use Hertz now, all you need to focus is your rental cost with gasoline largely out. Sure, you may still have to pay a small fee for the charging but that would be marginal.

Dangote Refinery. Dangote Refinery…. It is looking like a very bad call. Yes, unborn tomorrow but died yesterday! I think the only option would be for Dangote to go and acquire the gasoline car unit of Ford or Toyota because they are going to part ways with those ‘pasts” in the next few years. That would be the only way to extend the usage of gasoline cars. If not, if these car companies move on, Nigeria and indeed Africa do not buy a lot of new cars for them to waste efforts making fossil-powered cars for us.

That brings me to the future of Nigeria’s economy and the optimism from the Central Bank of Nigeria. If Elon Musk and other innovators are disintermediating Dangote Refinery, potentially making this a very bad business, the saving moment this refinery will bring to Nigeria and Naira will not be sustained. Why? Not many will be using hydrocarbons to move around; electrons win the future.

Of course, Dangote Refinery is not just about making gasoline. Yet, you will agree that the bulk of the revenue will come from gasoline. Nigeria must not just wait for this refinery as it may have to save itself first before it can save Nigeria and its Naira!

Hertz Orders 100,000 Tesla Vehicles in a $4.2 Billion Deal, Shooting Tesla to $1 Trillion Valuation

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47 thoughts on “Hertz Buys 100k Tesla Cars, Dangote Refinery Suddenly Looks Imperiled

  1. This is like wearing a first world lens while analysing third world problems, and depending on where you are on the equator, it could be good or bad.

    Nigeria’s situation is dire and pressing, it doesn’t have margins to entertain what could be relevant in another decade, because that’s a very long time, going by what is facing us. We are not in the position to sing EV anthem before 2050, no matter how academic or ambitious we choose to appear, so for the short and medium term, we need the refinery like blood, and it’s not even a matter of what if.

    Many of the cars and trucks manufactured today won’t find their way down here till another fifteen years, so if they bar them from plying the roads on the other side of the Atlantic, they will be shifted here. Africa is not joining the EV or green energy economy anytime soon, we have to maximise what is within reach, else we should forget about industrialising this continent.

    In all, the Dangote Refinery remains a good call, because you need to be alive first, before thinking about the type of cloths and shoes to wear. Nothing stops us from growing in multiple sectors, if we truly believe we are that extraordinary.

    Reply
    1. Very good response. I however prefer to be cautious about the alarm raise on EV. Sometime ago, I read in the news of a revolution in tyre technology, the tubeless tyres are coming. It seems quite distant back then. Today, almost everyone is using the tubeless tyres. Same with the EV. One. Was already displayed for sale in a southwest city recently. As you know Nigerians would go for anything that save cost. At the moment, cost of fuel is high and it would go higher once subsidy is removed……paving way for flooding the market with EV as alternative to high cost of fossil fuel vehicles. This is my opinion.

      Reply
      1. Well,in my view,it’s a two way stuff. Firstly,if we are really innovation hungry and desirous of industrialization,we can ramped up the exploration of our oil and gas reserves,while at the same time encourage local entrepreneurs to manufacture automobiles locally and a national policy that will compel all to buy and drive made in Nigeria vehicles et al must be in place and adhered to strictly,in order to evolved industrially as a Nation,just the way the Asians did and still doing date.

        We must equally take cognizance of the fact that China and some Asian Countries are still firing coal furnace(s) to power their industries,despite the global ban of it usages. On the other hand, we must understand that,using what you have to get what you want is part of the rules of survival,as you can’t jump a stage in developmental stages,if others ahead of you are not ready to assist,while not forgetting that, none will hand over their technological know how to you on a platter, it’s not done anywhere and the usual way is to steal it through espionage. How one may ask? We need to sponsor our AA category science and technology students overseas to go and study robotics et al,just like the Asians are doing in the best institutions globally and later repartriates the knowledge home to drive their ICT and technical R&D.

        Therefore,the Dangote Refinery doesn’t necessarily have to be a dead on arrival stuff at this particular stage in the global industrial evolution devolution into nanotechnology age, we can still benefit from it,if we can wake up from our slumbering.

        Reply
      2. We aren’t close to mainstream EV adaptation. Tyres are different in that they are plug and play whereas to use EVs we have to first develop the charging infrastructure nationwide. The lack of EVs hamper investors from putting money into charging stations. And the lack of charging stations stop people from buying EVs. Mind you less than 7% of Nigerians buy new cars. Therefore it’s a really long way before we get to where we’re no longer importing ICE cars.

        Reply
    2. Bravo my friend. What’s happening in the first world in terms of AI advancement will not be here in more than 50 years. We are in 2021 and even the leading companies of our Technology Industry are having common issues that if it was in a developed nation, they could serve a hefty fine. The refinery will help us lot for decades to come.

      Reply
      1. When Obasanjo administration was issuing out mobile phone licenses, many analysts were pessimistic. The legendary NITEL had its hold everywhere.

        Nigerians were thought to be too poor to grow mobile subscribers beyond 500,000 customers.

        In less than 5 years, NITEL was on life support, mobile phone subscribers had grown beyond 5 million customers. MTN, and then ECONET were daily smiling to the bank.

        The same thing happened to Cassette Player companies like Philip in Nigeria. CD Players were still novel, while these companies were busy investing more billions to expand their cassette manufacturing facilities.

        The avalanche have begun, and it is looking unstoppable. The United Nations and the undeniable dare consequences of climate change are driving this sustainable energy push.

        I wish Dangote Refinery all the best.

        Reply
    3. This is crucially on point,not for another 15 years in the least would we stop using fossil vehicles. Knowing us we will even come up with regulations to bar EV vehicles. Dangote is good.

      Reply
    4. Your submission is good but there are things you’re not accounting for which is largely consumer behaviour. First off I have personally seen a couple of Tesla’s in Lagos Nigeria, however that’s not even important. Look at how easily we adopt new tech in Africa like phones, 5g, computers etc. Remember that even as gasoline cars will end up getting dumped in Africa so also will the first generation EV vehicles that many consumers have moved on from. Consumers will now have a choice between an amazing electric low maintenance vehicle and a gasoline powered vehicle.
      I can immediately imagine which one everyone goes for irrespective of whether we refine or not.
      Except if the govt then imposes a ban on electric vehicle importation.

      Reply
    5. Very well said, I am tilted to think that the author of the write-up is too accelerated in his thoughts which is founded… Very founded but not in this era of ours given the fact that no one is thinking green right now talk less of using EV.

      Reply
    6. The EV revolution is what is making an oil refinery viable in Africa. Because Africa would most likely be the last to hop on to the EV revolution.

      Reply
  2. Excellent response Francis, secondly Nigeria need to free up resources in the next 20 years to build power plants and more to sustain EV drive – when viewed this way, Dangote’s refinery is a well placed short and medium term objective that will help Sub-saharan Africa, not just Nigeria

    Reply
    1. I believe this alarm is too pessimistic. Cars alone cannot cut emission to zero. Already, a few days to the Edinburgh Conference, fears are being expressed that the set targets will not be met. If Dangote by God’s grace keep to 2022 commissioning, it will make profit by the end of the decade and not the whole world will be on EV. What about the fertilizer and petro chemicals side of the business? I have not heard of Electro Fertilizer or electro petro chemicals.

      Reply
      1. Well said. Fertiliser / Petro chemicals have unending demand not just in Nigeria, but entire Africa (talk less for the rest of the world). For decades to come, one cannot change its consumption pattern. Rest assured Dangote refinery is one of the finest investments in the right direction, one of the jewels in the crown. I am just too optimistic and await thier commissioning of all productive units. We’ll done Nigeria! Proud moment… Take a bow and clap for yourself. (An Indian)

        Reply
      2. Cutting edge technologies will always bring about new ways of doing things, render the old ways at best, redundant.
        The said new ways of doing doing thing things are then not only protected but also backed by legislation/ laws so that penalties can be applied for offending such laws.
        Depletion of ozone layer may therefore not be the primary aim of wanting to do away with vehicles powered by fossil fuel but by innovations which the developed world can afford to adapt at the moment.
        Who does not know that the combined effects of the emissions from fighter jets, planes, bombers and missiles hurt the ozone layer even more.

        Reply
  3. I think technology transfer is becoming quicker and quicker, young Nigerian tech start ups are becoming billion dollar entities and even going global. I wouldn’t be surprised if at least Lagos Island is set up to sustain EV drive by 2030. That said, I’m worried the Dangote refinery is under several attacks to sabotage it and even more worried that they might succeed, which is conflicting because I also worry about climate change but I’m African and Nigerian first…

    Reply
  4. Just like Africa leapfrogged the age of landlines and desktop computers due to the proliferation of mobile phones, China is going to play a major role in helping Africa especially Nigeria leapfrog Fossil driven automobile engines to EV. This will be done not because we think it’s good for the environment, (both government careless), but because the government at that time will as usual, implement this for selfish reasons without thinking of the effect on our major earner i.e. oil. At this stage, nigeria will then become fullly dependent on foreign imports and with the continued scarcity of forex the inevitable will happen.

    Reply
    1. This is exactly my fear considering the amount of loan we had borrowed from China I wonder if they will not trick our government into giving directive to import EV without considering the negative effect this will cause on our economy.

      However fossil fuel would not be completely rule out in a decade to come as some sectors such as aviation etc will not immediately go on electric system of power.

      Reply
  5. This giant leap will not happen in the next 20 years by then Dangote would have recovered it to investment and profit. What of diesel engines that will be around for many years, what of aviation. Noise about Tesla is in the future.

    Reply
  6. Oluwaseun Olayiwola · Edit

    There would always be a time-frame of probably a decade before most of Sub-Saharan Africa catches up with the energy of the EV drive in Europe, North America, Japan, China etc. Our auto market is not majorly a new-car market and the current economic pocket of Nigerians wont be able to afford the new EV cars at the moment. That been said over-time, Nigerians and their sub-saharan counterparts will begin to see the marginal benefit in costs of operating an EV over conventional, cost of aftersales servicing (which will eventually rise in conventional cars as their parts production will reduce with an increase in EV usage in the major markets thereby reducing the supply of conventional car parts) and this will make them shift towards EVs eventually even though that might be around 2032. Hence Dangote has the opportunity if its refinery commences operation in 2022 to recoup its investments in the space of that 10 years, hopefully. If you ask me, since he has decided to invest in the energy sector, i’d advise he diversifies proceeds from the Dangote refinery into Energy R&D and its technological innovations i.e. energy innovations majorly renewable. This would ensure he is not cut-off from the emerging global opportunities in the energy sector and the technologies that rely on these forms of energy to work. Technologies that would run the immediate future.
    Come to think of it, this is supposed to be the government’s goal not an individual.
    Nigeria my country.
    “Exhales”.

    Reply
    1. Hopefully, Dangote Refinery will be proactive to use 69% of its allotted Crude Oil to produce Diesel, Fertilizer, Polyethylene, Propylene and other derivatives.
      In 5 years time, our GENCOS AND DISCOS will be so greedy that electricity tariff will become unbearable. There will be Private and Cooperative ownership of charging Centres, where Gas and Diesel Power Generating sets will be used.
      For the first time, personal ownership of Cars will become unreasonable while Co owning, Car rentals and Communal vehicle administration will become popular.
      We must devolve to producing Raw materials massively to make our economy sustainable. Food and Nickel would become top of the export list.
      We may hope, beyond Dangote for a global participation in the emerging fiscal race.

      Reply
  7. Daniel Iliyasu Lawrence · Edit

    How vehicles does Hertz in Sub-saharan Africa which is largely a dumping ground of second hand vehicles without power infrastructure for EVs? How is that affecting the Market of Dangote Refinery which is built to serve an under regional market is dependent on imported fuel.

    Reply
  8. Let it be on record that I posited the actions expected from dangote and Co (top politicians) to ensure they at least get back the cash invested on this project. I mean, if its going to take them the risk to hike the price of fuel just to get back their capital within certain years, trust me they will.

    Reply
  9. I don’t think Dangote wasn’t aware of the trend when he started this refinery business and that means he had something else in mind as his purpose for building it or for venturing… I don’t think he planned making money from refining petroleum products.
    Meanwhile, power distributors should start thinking about divesting into EVs in Nigeria. Both for rentals, car mortgages and so on, if they do, they’ll rule the economy… Well why am I saying this here for free, Contact me??

    Reply
  10. No one is talking about the corruption factor here. Whether or not Nigeria divest to EV in the next 5,10,20 or 50 years, someone somewhere would position himself to take full advantage of the situation to the detriment of the nation and the masses.

    Reply
  11. I partly share the writer’s sentiment on EV disrupting the long term economic benefits of Dangote Refinery. The pace at which change is being enbraced nowadays is faster than it use to be.

    The strategists of Dangote should be thinking about alternatives that will be available to them in in fifteen, twenty years. Especially when the refinery is still under construction as we speak.

    The EV disruption will definitely happen, Saudi Arabia is opening up it’s economy, Aramco is being unbundled, these are signs.

    Dangote cannot afford to sleep!!!

    Reply
  12. This is Nigeria, and everything here is politicised. Many politicians in the government have shares in the Refinery. This is a good advantage for the company. Secondly, if the company can commence production and sales next year, in the next seven years the will break-even. I don’t see EV taken over Nigeria markets in the next decade and besides, Dangote is not only selling to Nigerians alone. So, we need the Refinery and am very optimistic that the company will make it gains before EV may take over the markets.

    Reply
  13. Well, the EV revolution is here and it should be an issue when African countries are still struggling to utilize the abundant hydrocarbon resources for our industrialization. But I beg to ask, when will the Dangote Refinery commence its refining…?

    Reply
  14. This EV issue in Africa will take long time to actualised. Dangote refinery is good not only for Naija but also West Africa.
    By the way, Dangote said once he’s finished with the refinery, will move to Power sector because right now he’s the infrastructure to generate 10K MW of electricity, it means by the right the EV arrived in Naija he would have disproportional share of the Market.
    Do you know that as at today Dangote is the major share at Peugeot Company in Naija
    The man is a shreud business man

    Reply
  15. The EV revolution is not ready for Africa. It has a long transition period and not until 2050.The infrastructure requires for EVs is capital intensive. Converting some our petrol stations to charging stations across the length and breath of the country with poor power supply is a long rope already.Dangote would have had a breakthrough in his investment.

    Reply
  16. In my opinion, EVs and fossil fuel spaces should be allowed to grow and play their critical roles when mostly appropriate. EVs will serve its purpose, and Fossil fuel will equally serve its purpose. There’s a big opportunity for both spaces. I am very sure Dangote and the likes understand this better than some of us. I don’t think they unaware. The truth is EVs will grow to replace the fossil fuel vehicles momentarily but not instantly. Therefore, let both grow.

    Reply
  17. The sooner Nigeria massively deploy its oil and gas reserves to develop essential sectors of the economy, especially transportation and power infrastructure, the better for the future. Gradually Nigeria can transit to EV. Leadership is key….we must get it right, going forward

    Reply
  18. Your article on Dangote Refinery is rather harsh,

    In your submission, you ignored prevailing realities. It does not reflect reality even in the America where you live. That Hertz has ordered 100,000 Tesla cars in a $4.2 billion is not an indication that petrol , diesel will lose relevance immidiately. Yes,
    it is that electric propelled vehicles so also are vehicles without driver are already around but it is going quite sometimes for them to go universal. This will take a minimum of 50 years. Heavy duty vehicles, caterpillers among others are still going to use fossil fuel for a long time. Automatic has been around for some decades now, but manual gear vehicles are still very much in use. Aviation fuel is fossil. So, there is future for Dangote Refinery. Desides , the owner , Aliko Dangote , is a shrewed businessman and a vissionary. He is very much aware of electric cars. Electric or not , Dangote Refinery is the best thing that has happened to Nigeria. Do you know how much the country annually on importation of petroleum products? That will be drastically reduced when Dangote Refinery becomes operational. Dangote is our brother. Instead of maligning him we should all join hands to make him succeed for over all benefit of Nigerians.

    The electric cars are charged with electricity meaning that one will always be ready to charge the auto at all times in order to be on the road. The electricity is not free. So, it’s a cost. Now , compare the cost of electricity and that gasoline. Some will prefer to stick with the later. If it’s like this in advanced society, what will be the situation in an African countries like Nigeria where electricity is a luxury the cannot be afforded for now. In Nigeria , almost everybody owns aowns a power generator, which must be fueled.
    I am not holding brief for Dangote Refinery, but we should not badmouth his effort.
    You should have gone ahead with your analysis than saying that arrival of electricity imperiled Dangote Refinery which is about to take off. Nigeria has been importing refined oil for many years . The emergence of Dangote is the best that’s happened to the country. Please let us support our brother to succeed . 100,000 electric cars is not enough serious threat to the first private refinery in the country.

    Reply
    1. ……Dangote Refinery will survive irrespective of the EV evolution. Remember, Nigeria is a 3rd world country though our pple tend to appeàr First World! Appropriate legislation will be enacted to regulate influx of unsustainable technologies like the EV as we strive to enthrone the right leadership in the country. The power generation component of the refinery will be a game changer in our developmental agenda. Fossil fuel will still be around till 2060

      Reply
  19. When Senator “Common Sense” (Ben Bruce) tried to inform Nigeria senators several years back. They stopped him, the red chamber with their myopic and selfish self preservation preferred to remain in the stone age, instead of preparing to the future. Now it’s here. There may still be need on for the fossil fuel as some are saying. But the swiftness of the future change will sweep Nigeria off her feet.
    Except the Government as usual, starts banning certain development just like they did to cryptocurrency dealings, only to reopen it as they introduced the enaira.
    Truth be told, our Govt are inhibitors to change.

    Reply
  20. Why the regulation? Can you see why the Govt are obstacles to change.
    After the regulation, then 70 years later, they will lift it to allow us join the developed world. What a bondage!
    A clear example is the recent crypto and e-naira romance.

    Reply
  21. This article is yet another wake up call for Nigerian policy makers and Africa as a whole. This is a disruption century in all areas of our life including energy. The clean energy revolution waves are real and the thinkers are figuring out how to make it happen, provide a new and better ways to do things cheaper and better while helping the environment. The Dangote refinery is still vital to the African and that is if it’s used to industrilize Africa, because there will be no more export of fossil fuel to the industrialized world after the transition period, just as we had it in the last fifty years. Tesla is just a warm up for what is coming. Hertz was in bankruptcy few months ago because of the effects of covid 19, couple with bad management only today to come in and swept Tesla up as if Tesla needs while bringing Hertz name back. It’s all about strategic thinking, innovation and disruption. Hertz is not the only car rental company, other are now in strategic moves to counter their competitors. And I sure it will be EV, may not be Tesla. It is always a fact that Nigeria have no clue concerning how blessed we are with huge resources all aspects that the world needs, our coal will remain buried untouched in the ground , and soon our oil will go the same way. We have about 20 years to do something with our gas not the oil and that’s only if we focus on using it to industrilize the nation not export. But knowing the way our policy makers think, it’s all export or nothing. EV automobile, charging stations is coming to to disrupt the world’s automobile, and it’s brother hydrogen is right behind him to power heavy trucks, trains, heavy industries, power plants and everything else that needs serious energy. The good thing about that is that Dangote is ready for that through it’s petrochemical plant coming with the refinery. My hope is that the policy makers will take a Longview of what is coming towards them in terms of building the economy of Nigeria, otherwise the giant of Africa will continue to play catch up to the world where we can be part of the contributor and an important driver of energy solutions. Name it we have everything any nation would need. Use what we have in abundance for industrialization as priorities with finished goods and services for export and make export of raw resources a low distance priority.

    Reply
    1. A very nice thought. No doubt the adoption of Evs in Nigeria will take nothing less than 20 years; in this period Dangote refinery should have recouped its investment. The government on the other hand can take this time to begin to think long-term support and invest in Green technologies and Energy while still supporting the current status quo.
      However, I fear that the govt in sympathy/support for Dangote will consciously stall the progress of Ending the power challenge just so we can be very much dependent on the Dangote refinery.
      Nigeria industrialization doesn’t naturally have to follow the path of countries like America or China, we have ample opportunity to industrialise by adopting and developing Green and renewable technologies. We have the natural resources for that and then we can even become net exporters of energy and related tech. We are even in a better position to transit seamlessly into the Ev era since we currently have scanty infrastructures and buildings. Building EVs infrastructure will be easy.

      Reply
  22. Abdullah KB Jantuah · Edit

    Has any body thought of how fast electric cars can be ” re-fuelled “. Can it be done as fast as refuelling a 2 litre car engine.?

    Reply
  23. “…Nigeria and indeed Africa do not buy a lot of new cars for them to waste efforts making fossil-powered cars for us”.

    The above,to me is the crux of the matter; we must understand that Dangote’s major customers are foreign entities with FOREX and NNPC had to tie him down with around 20% equity in order for him to agree to sell some refined products to Nigeria, within Nigeria. So, the author is on point. The EV revolution started over a decade ago and Nigeria still does not have any blueprint for making the necessary transition from its over-reliance on crude revenues to proper diversification. Of course, Dangote refinery is coming a bit late in the day, but we pray as Nigerians that the business can be sustained for the foreseeable future because the survivability of the refinery is paramount for us as a country.

    Reply
  24. Lots of wise comments here; and thanks prof for opening up this conversation. That are probably so many valid sides to the matter. I’ll comment on three sides.

    Side 1 is the quantum of local consumption of PMS and other associated products, which isn’t likely going anywhere down soonest. So, here, DangRef will remain highly useful.

    Side 2 is a fact already well mentioned in comments above: less than 10% of Nigerian vehicle purchases are new. That said, no meaningful threat to local consumption of PMS is anticipated in the near term, given that there’s not likely to be any radical uplift in the purchasing muscle for new cars (EV- or fossil-powered).

    Side 3 is to do a comparison of the adoption of the EV campaign with similar applications of green energy initiatives. There’s still so much being said about solar power alternatives for instance, and surely there’s been increased adoption at impressive rates, but the overall impact of such disruption (if any yet) is still minimal and will likely remain so for a while. Just how many Nigerian households have moved away from augmenting their power needs with solar/inverter? And by how much exactly has the generator market been disrupted? Reason for slow uptake? Affordability! I expect a similar narrative for EVs in Nigeria. Surely, you’ll see a few EVs here and there over the next couple of years…but before used EVs become prominent in Nigeria, it’ll probably be at least 10 years. My logic rests on a casual observation of the average age of cars on our roads: probably more than 70% is more than 10years old (I drive a 12-year old! lol).

    Again, thanks prof for the opportunity

    Reply

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