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1. The EV revolution has stalled…

The electric vehicle (EV) revolution has stalled over the past 12 months. EV share of the total US car market has declined from 8% a year ago to 7.5% today. While the US Inflation Reduction Act is doing its best to jumpstart sales through big subsidies, cyclical headwinds are pulling the handbrake.

While prices are coming down over time, there is still limited choice of EVs in the sub-$40,000 price range. High inflation and interest rates are causing mid-to-high income earners to dial back big-ticket purchases. At the same time, internal combustion engine (ICE) vehicles are being sold at a discount due to excess inventory in the system.

EV Penetration in the US

Source: UBS

2. Deepening divide between China and the West…

Economic integration between the West and China has continued to detach in recent years. China’s share of US imports has fallen from ~23% to ~13% since 2017. Foreign direct investment into China has also fallen off a cliff.

The deepening economic divide has created exciting new opportunities in countries like Mexico, who are taking increasing share of importance in western supply chains.

Source: Morgan Stanley

Source: Macquarie

3. The best way to lower your carbon footprint? Get the bus!

Firetrail Small Companies Fund portfolio manager, Matt Fist, spent a day with key portfolio holding Kelsian (ASX:KLS) this week. Kelsian is Australia’s largest operator of public transport. While buses might sound boring, the investment opportunity looks very exciting!

One of the best ways to lower Australia’s carbon footprint is to use cars less, and public transport more. The Federal Government realises that meeting transport decarbonisation targets will require 3.5x the number of public transport services over the next decade. To accelerate the decarbonisation benefits, NSW is pushing to increase the proportion of electric buses on the roads from 25% of buses today, to 100% by 2026.

Kelsian will be a key beneficiary of increased bus services and the shift to electric. It owns the largest fleet of electric buses in Australia. The maintenance requirements of electric buses are also much lower than ICE buses. You might be able to see why comparing the two pictures below!


Electric bus engine

ICE bus engine

Source: Firetrail


This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

Links to the Product Disclosure Statement: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

Links to the Target Market Determination: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email

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