The Electric Battlefield

The Ukrainian War Showcased the Electric Battlefield

I used to joke that we’d never see a battery powered tank, as a point that we will never get rid of petroleum. And I may be technically correct. But the Ukrainian war just showed us that we may get rid of tanks, entirely.

The M1 Abrams main battle tank is the most advanced tank in the world. It is 68 tons of front-line domination. It has advanced armor, firepower, and unmatched mobility…

And it got chased off the battlefield by Russian kamikaze drones. The U.S. sent thirty-one $10 million Abrams to Ukraine. Seven died by “hunter killer” drone. The Ukrainians had to pull the tanks back from the front line.

That reality will reshape military doctrine around the world. You can make a lot of $500 drones for the price of one Abrams tank – 20,000 to be exact. 

And according to the authors of Unit X: How the Pentagon and Silicon Valley are Transforming the Future of War, there are massive transformations going on right now:

In an era when America’s chief rival, China, has ordered that all commercial firms within its borders make their research and technology available for military exploitation, strengthening the relationship between Washington and Silicon Valley was always advisable. Today, it is an urgent necessity.

This is the introduction of the electric battlefield. The giant, high-dollar unicorns of war like aircraft carriers, Abrams tanks, and F-35 Raptors are being swept away by massive volumes of cheap, smart, electric vehicles. 
From an investment point of view, we have to take a hard look at who makes these drones. According to a research report by Markets and Markets, companies like Northrop Grumman, Raytheon Technologies, Israel Aerospace Industries, General Atomics Aeronautical Systems, and Teledyne FLIR.

The most important takeaway from this is that it solidifies the position of batteries in the world. This isn’t some fad that will go away. War is a huge business. According to William Hartung’s paper: Reality Check: Chinese Military Spending in Context,

The analysis of official military spending figures, taking into account purchasing power and the full range of China’s military-related activities, estimates China’s spending was between $292 – $476 billion in 2022. The annual analysis by the Stockholm International Peace Research Institute (SIPRI), which estimates the full range of military spending by country beyond official figures, puts China’s military spending at $292 billion in 2022, compared to U.S. spending of $877 billion in the same year. Accounting for the full range of military spending and purchasing power parity, Chinese spending ($476 billion) was 59% of U.S. spending ($806 billion) in 2022.

And with drones proven effective in a hot war in Ukraine, you can be a larger chunk of that spending will go into autonomous, battery-powered units going forward.

For the Good,

The Mangrove Investor Team

Numbers You Need to Know

1/2

“It’s the new way or a new path in modern war. In 2022 it was only infantry war and today one half is only a war of drone, a battle between Russian drones and ours,” Senior Lt Yevhenii (BBC)

1 Billion

Pentagon leaders outlined plans to spend $1 billion over two years on drones for its new Replicator initiative, but are remaining mum about several factors, including their picks and funding streams. (Breaking Defense)

3000

The International Institute for Strategic Studies (IISS), a London-based defence- and security-focused think-tank, believes Russia has lost at least 3,000 tanksduring its Ukraine campaign. (CBC)

What’s New in Sustainable Investing

Outflows from sustainable funds slow down

The record-pace outflows from US sustainable mutual funds and ETFs abated in April and May, as investors were slower to pull their money from them.(Investment News)

Airbus and partners invest in Sustainable Aviation Fuel financing fund

Airbus, the Air France-KLM Group, Associated Energy Group, LLC, BNP Paribas, Burnham Sterling, Mitsubishi HC Capital Inc. and Qantas Airways Limited co-invested in a Sustainable Aviation Fuel (SAF) financing fund to accelerate the production of SAF. (Airbus)

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