Shell has lost its fondness for biofuels, though it isn’t saying why. We think it’s because the market really stinks, though it’s still an important one. 

The oil giant announced on Tuesday that it’s hitting pause on a major biofuel project in the Netherlands, one of the biggest in Europe. Shell said it’s just taking a minute to think about the plant, which broke ground in 2021, in order to “address project delivery and ensure future competitiveness given current market conditions.” Exactly what market conditions it means, it’s being coy about.

Running on an Empty Biotank

When Shell first signed off on the Rotterdam biofuel facility, it said the project would eventually produce enough renewable diesel equivalent to taking 1 million cars off Europe’s roads every year. More than half of the Rotterdam plant’s production was earmarked for sustainable aviation fuel, with the rest planned to make renewable diesel — although Shell noted at the time it could rejig that equation to meet customer demand.

But the Shell of 2024 is not quite as bullish on renewable energy as three years ago. In June 2023, it reversed a promise to steadily cut oil production in the run-up to 2030, and in March it announced a watering-down of its energy transition goals. Both the Financial Times and Wall Street Journal reported that Shell hitting the brakes coincides with a slowdown in Europe’s biofuel market owing to a supply glut versus tepid demand:

• Finnish biofuel producer Neste has seen its stock slide about 51% over the past 12 months, and German producer Verbio is down 53% over the same period. 
• It’s not a universal downward trend: Norwegian biorefinery company Borregaard’s stock is up 23% over the past 12 months, but its shares are a euro or so cheaper than Neste and Verbio’s.

Geography Puzzle: Part of the soft demand for biodiesel in the US and Europe is down to the growing number of electric vehicles on the road, according to the International Energy Agency. “In the United States and Europe, large-scale electric vehicle growth contributes to declining gasoline demand,” per the IEA’s biofuel report. Globally, however, the IEA says biofuel has a pretty big role to play in the energy transition. “Biofuels remain the primary decarbonisation option, accounting for near 90% of avoided oil demand in 2028,” it says, adding the biggest demand comes from Brazil, Indonesia, and India. 

It’s official: Tesla is on a losing streak.

Elon Musk’s high-flying company said Tuesday that sales fell for the second straight quarter, marking its first back-to-back sales drops since 2012. But its stock still rose 10%. Sometimes all you have to be is not as bad as Wall Street feared.

Less is More (Than Expected)

Tesla has been downplaying expectations since early this year, when executives adopted the talking point that they are “between two major growth waves.” It’s a tacit acknowledgement that the Model 3, introduced in 2017, and Model Y, introduced in 2020, are hot new commodities no more. Earlier this year, the company announced plans to cut 10% of staff to shore up operating margins, which were squeezed by cuts to vehicle prices meant to fend off burgeoning competition from rival automakers in China and the US. Tuesday’s sales numbers, meanwhile, did enough to impress in the face of lowered expectations:

• The company delivered 443,956 vehicles in the second quarter — while that’s 4.8% less than a year ago, it comfortably beat the FactSet consensus estimate of 436,000. Tesla also manufactured 410,831 electric vehicles in the quarter, or 14.3% less than a year ago — a positive sign, because it suggests the company is managing its unsold inventory to prevent buildup.
• Tesla will report its full second-quarter results on July 23, but an arguably more important harbinger of the company’s future will take place on Aug. 8, when it plans to host a “Robotaxi day.” CEO Elon Musk claimed last month that Tesla, which has a $724 billion market cap, could one day be worth $30 trillion on the strength of robotics and artificial intelligence innovations — we’d like to see the robotaxi survive 10 minutes on the New Jersey Turnpike before placing any bets.

Little Trouble in Big China: Tesla maintained the crown of the world’s top-selling electric carmaker, but the race is tightening, and its prospects in the highly competitive Chinese market took a major dent Tuesday. Chinese rival BYD sold 426,039 electric vehicles worldwide in the second quarter, a 21% year-over-year increase, putting it within striking distance of being the top seller. Meanwhile, the China Passenger Car Association said sales of Tesla’s China-manufactured vehicles fell 24% year-over-year and 2.2% in June.

No one can remember the last time there was a buyer’s market in New York. We may be looking at one now. 

With a glut of for-sale apartments and prices that are finally starting to creep down, a handful of appraisal firms are officially labeling New York City a “buyer’s market.” (Sorry, renters; we looked for good news, but couldn’t find any.) 

Augmented Realty

Manhattan is now home to over 8,000 for-sale apartments, or around 1,000 more than the 10-year average, Jonathan Miller, CEO of research and appraisal firm Miller Samuel, told CNBC on Tuesday. That’s enough for a 9.8-month supply of for-sale apartments — far higher than the six months’ supply that typically delineates a seller’s and buyer’s market, according to a recent report from Brown Harris Stevens.

In the second quarter of the year, it was enough to spur a busy market, with a 12% increase in closed deals compared to a year ago, according to a Douglas Elliman and Miller Samuel report. The average sale price fell 3%. One major reason: The reality of higher-for-longer rates is setting in, and sellers are realizing they need to meet buyers in the middle. “Many [sellers], though definitely not enough, are at this point where they realize that they need to sell — a [rate cut] is not going to happen,” Adie Kriegstein, a New York City-based real estate agent at Compass, told The Daily Upside.

It’s the first sales rebound in two years. But renters have yet to feel any relief:

• The rental vacancy rate is another story entirely, sitting at just 1.4%, per a Bloomberg report published Tuesday. Rents, meanwhile, are up 33% from pre-pandemic levels.
• Between 2010 and 2023, the city saw a 25% increase in the number of jobs, but just a 7% increase in housing supply, per local and federal government data; and while Mayor Eric Adams has set a lofty goal of 500,000 new homes built over the next 10 years, 2023 saw just 16,300 new units proposed.

Commerce Department: One oft-floated solution? Repurposing old commercial real estate, particularly office space left unused in the remote work era, as residential living. The city already offers an accelerator program seeking to convert office buildings into residential space; nearly 70 buildings were in the program as of June, Bloomberg reports. Makes sense to us, seeing as the typical Manhattan studio apartment is about the size of an office cubicle anyway.