Straws In The Wind, February Edition
Biden Jumps the Shark, or is it the Balloon?
I watched President Biden’s State of the Union speech, where he blurted out “name me a world leader that’d change places with Xi Jinping, name me one, name me one!”. As Shakespeare put it so well “thou protest too much”, at that point Biden looked like a little boy so desperately trying not to show how pathetic he felt when he compared himself to Xi Jinping. The uncomfortable lack of response from the crowd of senators, representatives, and military leaders showed that they understood the pathetic nature of such an utterance. Biden reflects a United States desperately trying to maintain its waning position through bluster rather than accepting the reality of the slowly appearing multi-polar world. In addition, a US economic elite unwilling to make the personal financial sacrifices required to rebuild US manufacturing and provide a positive future for the mass of the population. It was fitting that this took place only a few days after an F22, supposedly the Unites States’ most advanced fighter jet, was ordered by Biden to shoot down a balloon. Also, that these words said by President Biden seem to have been expunged from the official text of his speech.
During COVID it was the West that had looked weak and pathetic, not China. The “sanctions from hell” failed to collapse Russia as had been assumed, as the rest of the world refused to join them. And now the Chinese economy is accelerating as it reopens. The statement should be “name me one world leader that would want to change places with me”; the list may be quite small. Significantly smaller than those that would be happy to change places with Xi Jinping.
https://www.news24.com/news24/world/news/biden-says-xi-jinping-faces-enormous-problems-20230209
Syria: the US once again shows its true face
After the US and other Western forces were unceremoniously kicked out of Afghanistan the US stole the foreign exchange reserves of the nation to make sure that the poorest citizens of an already poor nation would feel the full force of its wrath. During the decade of sanctions against Iraq prior to its invasion, the US officials worked hard to extend the suffering by not allowing through even basic medicines, just as they have done with Venezuela and Iran. After the regime change operation in Syria failed, the US and Europe passed punishing sanctions that can only act as an illegal collective punishment of the Syrian people for their unwillingness to have their nation destroyed and rent into a never-ending period of chaos and foreign exploitation. To add to the collective punishment, US troops illegally occupied parts of Syria and stole both oil and wheat whilst protecting murderous extremists.
Then the earthquake in Turkey happened that has extensively affected northern Syria. The US has stated that it will do nothing to stop humanitarian aid reaching Syria, but these are simply meaningless words designed to assuage public pressure. The US will not stop stealing Syria’s oil and wheat, supporting the terrorists, nor scaring financial organizations from facilitating monetary aid flows. It is also using aid as a weapon, refusing to work with the UN-recognized head of state but rather bolstering the position of its allies. This is the true face of the US, and Europe, collective punishment will be continued until the people learn to say “uncle” to their Western masters.
https://www.aljazeera.com/news/2023/2/10/us-issues-sanctions-general-exemption-for-aid-to-syria
Handfuls of way too heavy tanks, old tanks, and mythical tanks in the future
The West has stepped over another “red line” and decided to provide main battle tanks to the Ukrainian forces. Like most things about Ukraine we have to be very careful what the West is really supplying and when. Given that very few Ukrainian Soviet-era tanks, T-64s, T-62s, T-72s are being seen at the front, including those given to Ukraine by other nations, we can assume that there are relatively few of them left. These are the tanks that Ukrainian personnel have operated for decades, and therefore were perfect for immediate use on the battlefield. The Ukrainian tankers, and maintenance crews, have no experience of utilizing Western tanks and therefore extensive training will be required before they can even adequately operate them.
The UK is supplying all of 14 Challenger 2 tanks, together with 30 155mm self-propelled guns, which have a design dating back to 1990. It takes months to train the operating and maintenance crews for such tanks so we can assume that Ukrainian-operated Challenger 2’s will not be arriving in Ukraine anytime soon; unless they will be serving as tracked coffins. Will we be seeing more UK mercenaries, who happened to recently be tankers in the UK army, operating some of these Challenger 2’s? The Challenger tank also weighs in at over 60 tons (versus the approx. 40 tons of the Leopard 1 and the Russian tanks). This will cause serious difficulties with the Ukrainian bridges and roads that are not designed to hold such loads. They also may not fare well in the notorious Ukrainian “seasons of mud”.
Between them, Germany, Denmark and Holland have committed to supply at least 100 Leopard 1 tanks within “months”. Apart from the same training issues that there will be with the UK tanks, the Leopard 1 was designed in the early 1960s. This is a good assessment of the possible uses by the Ukrainian army of Leopard 1 tanks and their serious lack of capabilities with respect to the Russian tanks:
Germany has promised the delivery of 14 of the more advanced Leopard 2 tanks, which weigh about 60 tons each, probably toward the end of the year. The Turkish army used Leopard 2’s in Syria against ISIS and the result was the destruction of “ten of the supposedly invincible Leopard 2s; five reportedly by antitank missiles, two by mines or IEDs, one to rocket or mortar fire, and the others to more ambiguous causes”. The Russian T-90 fared better in the Syrian conflict, especially against anti-tank guided missiles (it is notable that videos of ATGMs destroying Russian tanks quickly dwindled after the first months of the Ukraine conflict). None of the Western tanks have been utilized in an environment of opposition air supremacy with tank-hunting helicopter gunships, suicide drones, massive amounts of drone corrected heavy artillery, and advanced antitank missiles in addition to advanced Russian tanks with highly experienced crews. In addition, much of the support vehicles and echelons of a combined arms structure no longer exist in the Ukrainian army, making the tanks much more vulnerable to attack.
With the use of three new types of tank (Challenger 2’s, Leopard 1’s and Leopard 2’s), each of which is dependent on different ammunition, maintenance materials and specialist skilled personnel, a huge maintenance and support headache will be provided for the Ukrainian army. Any seriously difficult maintenance and repair will probably have to be carried out by Western specialist located in Poland or even farther away. With probably high levels of losses and disabled tanks requiring repair, the number of the Western-supplied tanks on the battlefield may rapidly diminish. The US has promised 31 Abrams tanks, but they will not show up until the end of this year. There is some discussion that the US “promise” was really a bluff to force the Germans to drop their resistance to sending the German-made Leopard tanks to Ukraine. In addition, if the other Western tanks start to quickly be destroyed the US may decide to delay their use in Ukraine further so that its image is not tarnished by pictures and videos of destroyed Abrams. As with the Leopard 2, the Abrams weighs in at 60 tons.
The main effect of these limited supplies of main battle tanks to the Ukraine will be to extend the period of the fighting and make sure that more Ukrainian men die. In the medium term they will have little or no effect on the final outcome of the conflict.
https://www.aljazeera.com/news/2023/2/7/european-countries-promise-ukraine-more-tanks
https://frontierindia.com/how-does-russian-t-90m-proryv-compare-against-western-heavy-tanks/
Fighting Russia to the last Ukrainian, does the West return the fighting age male refugees?
Due to the large-scale emigration of young adult Ukrainians in the years prior to the current conflict, and the additional young men that managed to leave during the conflict (even after 18-60 year old men were banned from leaving the country at the start of the conflict), a very large number of conscription-eligible Ukrainians live abroad. In addition, the collapse in Ukrainian birth rates in the 1990s has produced a significantly smaller number of Ukrainian men in that age cohort. With the massive losses experienced by the Ukrainian army in the first year of the war, quite possibly as much as 250,000 dead and an equal number irretrievably wounded, its recruitment officers are finding it more and more difficult to find replacements. There are many stories and supporting videos of Ukrainian army recruitment officers taking extreme measures to force young (and many not so young) men to go to the front. There are also many cases of Russian troops finding little-trained middle-aged and older men in the trenches facing them.
During wartime countries blatantly lie about losses, both their own (lower) and those of the enemy (higher). So, we have to look beyond these utterances to the realities of the battlefield and other information to gain a more realistic insight. The Russian army enjoys an overwhelming superiority in artillery pieces and the ammunition they use, together with missiles, air power, drones and electronic warfare. The Russian tactics utilized after the first few months of the conflict are designed to minimize their own casualties while maximizing those of their enemy; even to the point of giving up territory to reduce losses in some cases. The core of these tactics is the use of artillery, air power and drones to pulverize fixed Ukrainian positions before any assault by Russian troops. By continuously reinforcing troops under such pulverizing attack, the Ukrainian army helps create a “meat grinder” into which a new set of victims are regularly fed. The natural result is a casualty ratio of as high a 10 to 1 between the Ukrainian and Russian forces. The current Ukrainian refusal to retreat from Bakhmut, and the feeding in of more and more of the Ukrainian army’s reserves into the doomed fight for the city, serves the objectives of the Russian army. Those objectives are the destruction of the Ukrainian army as a fighting force first and secondly the taking of Ukrainian territory.
In recent months the Ukrainian losses will have been exacerbated by the increasing shortages of even shells and bullets on the Ukrainian side as the massive Soviet-era stocks have been run down and the West lacks the industrial capability to replace them; exacerbated by Russian actions to destroy as many stores of arms and ammunition, together with military production and repair facilities, as possible. We can assume that Russian casualties are far less than the Ukrainian ones, ignoring the ridiculous Western estimates for the former; while also understanding that Russia has a much larger mobilization pool than Ukraine.
All of those conscription-age Ukrainian men living abroad, mostly in European nations, are becoming more and more a tempting target for deportation back to Ukraine, irrespective of the legal niceties involved. The acceptance of such men within European nations that are sending large amounts of money and war material to Ukraine, and providing social assistance to those men, may become less and less politically acceptable. Especially as more reports of the deaths of Western “mercenaries” (many of which seem to have suspiciously easily left their nation’s armed forces and immediately gone fight in Ukraine) appear and Western governments acknowledge the presence of members of their own armed forces in Ukraine.
Russia slowly turns up the heat in Ukraine
In recent months the Russian army has significantly increased the intensity of its attacks upon the whole of the front line that runs from near Kupyansk in the north to Vuhledar in the south. The main result has been the increasing encirclement of Bakhmut and some progress toward Kupyansk, together with increasing Ukrainian casualty rates and more of Ukraine’s reserves pulled up to plug gaps as they appear. With the intensity of modern warfare, especially with the Russian advantages in artillery, drones and air power, soldiers cannot spend long at the front before their fighting abilities start to rapidly deteriorate. This is why troops need to be rotated out regularly from the front line to rest and recover, as well as to replace the dead and treat the injured. With the possibility of such rotation becoming less and less, the Ukrainian army is not just being reduced through death and injuries but even the uninjured troops left will be losing their capability to fight effectively. Add to this the depletion of Ukrainian stocks of shells and bullets and the degradation of the Ukrainian military’s fighting abilities are significant.
Unlike the Ukrainians, the Russians possess large numbers of well-trained, well-rested, and well-equipped troops across the border north of Kharkov. With the Ukrainian forces, including much of their reserves, tied down on the front line and being significantly degraded, the question is what will Russia do with their reserve forces? There is some talk that a new offensive will be launched around the anniversary of the start of the conflict, but only the Russian leadership knows whether or not this will come to pass. The addition of a large new offensive Russian group to the conflict will deeply destabilize the Ukrainian military, as the Russian military may be able to advance through areas with relatively little Ukrainian military resistance. Any attempt to rapidly pull forces from the front line to stop the Russian forces may result in a rapid collapse of that front line. Such a setup for a new offensive lends itself to a flanking manoeuvre to cut off the Ukrainian forces tied down at the front line. The more the Ukrainian leadership commit to the defence of the current front lines, the more they expose themselves to the possibility of a chaotic retreat west to escape encirclement; with the massive losses of men and material that such a retreat would entail.
Not so good for Tesla?
Normally when a company slashes prices to deal with a fall in demand for its product its share price would be expected to go down. But this is Tesla, and after many months of disappointments and a collapsing share price the Tesla fans and ever optimistic media were desperate for some more Tesla BS, especially after months of impresario Musk being more interested in Twitter.
Coming into the end of last year Tesla had a very big problem, it was delivering to its previously huge backlog of customer orders faster than new orders were coming in with the result that the order backlog was rapidly approaching zero (from 478,000 at the end of July to only 74,000 at the end of December 2022) and it would be left with a rate of incremental new demand that was significantly lower than it current sale level. A big price cut in China in October had proven to be a damp squib and only the rapid filling of the European and rest of the world order backlog allowed Tesla to get close to fourth quarter delivery forecasts. Since the first quarter of 2020 Tesla’s market share of the combined China + Europe + USA battery electric vehicle market (i.e. not including PHEVs etc.) has halved from 30.4% to 14.8%, which is not good for a company valued as if it’s going to take a major share of the overall car market. During that period Tesla’s share of the Chinese BEV market has fallen from 26.4% to 7.3%, showing what may happen as Chinese manufacturers enter other markets. In the US, Tesla’s share fell from 71% to 63%, reflecting the much lower level of competition there. In Europe it went from 18.1% to 16.2% although the latter figure may be inflated by Tesla’s delivery of nearly all of its remaining European order book in that final quarter of 2022 and a low level of deliveries in Q2 of that year. So, Tesla slashed prices across all of its markets by big percentages, BUT this wasn’t a desperate attempt to keep demand up, NO rather it was a genius move to kill off the competition given Tesla’s much higher profit margins! Magically Tesla’s share price joined the hopium rally in the stock market and doubled from around $100 to more than $200, the old days were back baby! But if you actually look at the numbers, they aren’t.
In China, the order book hardly moved, and delivery times increased only for the cheaper two versions of the Model Y and then only by one measly week – even with Shanghai factory shutdowns and significant car exports. In January Tesla delivered just under 27,000 cars (14,184 Model Y, 12,659 Model 3) and given recent new energy vehicle registration data looks set to deliver about 30,000 cars in February – not exactly a roaring response to the price cuts (Tesla recently announced further disruptions to Shanghai production for the balance of February to facilitate delivery of a revamped Model 3 later in the year). The big test will come in March, the third month of a quarter in China usually being the one when production is most focused on domestic deliveries. There is a significant possibility that Tesla will deliver less cars in Q1 2023 than in Q1 2022 or Q4 2022, at much lower levels of per unit profitability. The order backlog also fell in the rest of the world in January, much of which is Australia. With a number of car-carrying ship deliveries from Shanghai to Australia, together with BYD’s entry into the Australian market, the order backlog in that country may soon reach the zero level.
Europe may turn out to be the biggest problem for Tesla in the first quarter of 2023. The order book halved in the month of January and given the number of car-carrying ships that have delivered to Europe and are on the way from Shanghai, together with the increasing production from the Berlin plant, Tesla may start to have a serious inventory problem there. The latest data does point to increasing levels of inventory build-up in Europe, with model Y levels approaching those at the end of 2022 and Model 3 levels well above. There are 5 car-carrying ships within a couple of weeks at most of delivering to Europe and at least 2 more on their way; each ship can carry up to 6,000 cars. If inventory levels continue to escalate in Europe a new round of European price cuts may be needed.
The less competitive US market stands out as an area of relative strength, especially with all variations of the Model Y now being eligible for the full US$7500 electric vehicle subsidy. There is nearly no current inventory available for the Model Y in the US, and relatively little for the Model 3. With the Model 3 probably not being eligible within a few months for the EV subsidy given its Shanghai produced battery, Tesla may have to take action this quarter or next if it cannot provide the 4680 US-made batteries for the Model 3.
Overall, Tesla looks to have bolstered demand in the US – aided by the US$7500 EV subsidy that adds to its price cuts. In China, incremental demand may actually be lower than in Q4 or Q1 2022 as all of the “early-adopter” orders have now been delivered, with the same possibly happening in the rest of the world. European demand looks the weakest, with inventory building up and many more ships on the way to deliver cars from Shanghai. The increasing presence of the Chinese brands in Europe and the rest of the world will only add to any Tesla demand issues.
https://cnevpost.com/2023/02/10/full-list-cpcas-jan-sales-rankings/
https://cnevpost.com/2023/02/15/tesla-shanghai-plant-more-upgrades-to-produce-new-model-3-report/
https://tesladata.mattjung.net/tesla-europe-inventory-per-model-all-countries/?days=&model=m3
https://tesladata.mattjung.net/tesla-europe-inventory-per-model-all-countries/?days=&model=my