Dividends and EU countries approve law to end sale of new CO2 emitting cars by 2035

If you are an investor, you tend to believe technology and continued improvements will make the world a better place, otherwise why invest money? Sometimes governments get ahead of the technology and sometimes the technology gets ahead of government rules and regulations. In Europe, the politicians in the European Union believe climate change is the world’s most important issue and want to reduce the amount of carbon Europe releases in the atmosphere.

In an article by Kate Abnett of Reuters, transport accounts for nearly a quarter of EU emissions and the EU gave final approval to end sales of new CO2 emitting cars in 2035.

This means cars sold in Europe can either be electric or run on e-fuels. This type of fuel is considered carbon neutral because they are made using captured CO2 emissions. Although at the moment, e-fuels are not produced at scale.

Porsche and Ferrari are among the supporters of e-fuels, while VW, Mercedes-Benz and Ford favor battery electric vehicles.

Linking to dividend paying stocks, most of these companies are similar to ocean liners in the sense they need a large space to make turns. There will be divisions which are very nimble and quick to decision making, but due to the infrastructure the company has built up, it is very hard to turn on a dime. The companies can believe in the intent of the government legislation, the company can want to follow the legislation but often times it has millions of dollars in sunk costs dealing with the present system. It takes time and government subsidies to change. If the government wants change and provides the correct incentives, the company can more easily embrace the changes.

There are more questions than answers, till the next time – to raising questions.


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