Diversified Royalty Corp T.DIV

Overlooked aspect of the Mr.Lube business

[MelodicHysteria]

While currently the elephant in the room is what will happen in 10 years once oil changes start to become a thing of the past, what is overlooked are the tire and brake system.

Not only do these systems require even more servicing then the typical combustion vehicle for this specific area of the vehicle, they are far more lucrative. Often requiring several 1000s of dollars of repairs every year due to the regenerative braking and unique make up of the tire and supporting structure to do that. Ontop of this, manufacturers are purposely putting up blocks for consumers to replace them yourself. You will NEED to go to a registered Garage (hence it costing 1000s). The Model 3 brake job is 4k alone (enough to make anyones head spin) 

Due to the connected nature of vehicles, if the manufacture sees you tampering with the vehicle, they simply disable it so a registered garage is mandatory.

Battery replacements will probably never be a thing Mr.Lube does (not exactly a quick job), but servicing the battery is part of the maintance schedule on every electric vehicle manual I have seen twice a year regardless of travel distance, This will more then likely become the bread and butter of Mr. Lube (Mr. Electric name change anyone?) 

Now the locked firmware issue we should pay attention to as the court battles play out with John Deere in the US on farmers rights to repair their tractors, combines, seeders and other farming equipment that have done exactly just that but otherwise, 10 years is probably an appropriate year range for the run down in mr.lube's oil change structure of the business

[Tommy123]

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[hawk35]

Sorry but I don't agree.  Today oil change brings in the customer.  Mr. Lube tells them their breaks need servicing and they get additional revenue.  With EV oil change is gone and so is the opportunity to upsell break and other services every 3 or 4 months.  Their revenue will take a hit unless they can find another captive service that will bring in the customers so they

[Capharnaum]

The risk right now is high? That's a dubious statement. Mr Lube still has another couple years of growth ahead, even if they keep the same offer as right now. I don't think this qualifies as high risk.

[Capharnaum]

Just to provide additional context... There are 23 million registered light weight vehicles in Canada with a CAGR around 2% (so 450k vehicles growth per year). New vehicle sales are about 1.6 million per year, which considering the vehicles growth mean that it takes around 20 years to replace the full fleet. In 2021, about 80k new vehicles were EVs in Canada. It is projected that EV car sales

[Martincat]

When ev can go 1500 kms on one charge, year round (winter, summer), with 3-4 people onboard, driving at 120 kph, with 10-minute quick charge widely available, and maintenance available at most garages, and lastly at an affordable price, then maybe I`ll buy one....In the meantime, I am sticking with what is proven technology, my gas powered model....JHMO!

[Martincat]

Could Mr. Lube not provide quick charging stns service to remedy possible lost of oil change income?

[Capharnaum]

They could, but before they do, they need the EVs on the road need to grow by leaps and bounds. According to projections (I have a detailed post about it), in 2024, EVs could reach 4% of the vehicles on the road, with the 96% of gas cars on the road being larger than today. Maybe when EVs reach 10%, they'll start having an offer for them, but that's likely only happening around 2028.

[Tommy123]

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[hawk35]

No it is not likely that doing quick charging is reaslistic for Mr. Lube.  Petro Canada and other national gas station providers are currently looking at the same thing.  They have determined that people won't wait around even for a quick charge.  Most gas stations have a lot of land so they are looking at offering services that a customer can use while waiting for the charge.&

[TheBridge]

Where in the world other than India do you have gas stations with a lot of land around them, they are tight knit businesses with no land to spare. Time for new prescription glasses.

[hawk35]

So you say gas stations have no space?  Not so.  Look at Petro Can and Esso stations.  Three or four rows of gas pumps, a convenience store, a car wash, air pumps, vacuum cleaners, outdoor sales of propane, outdoor sales of ice and other products plus a green space that is required by municipalities.  The gas majors are looking at reallocating how the space is used to offer

[TheBridge]

Vacuum cleaners, air pumps, outdoor ice sales and other products are on the sidewalks around the buildings, EVs need to washed as well so that's not moving and neither is the convenience store area................so the gas pump area is what has to become the EV space? What are we tallking of here.......two or three EV cars at a time? They will need a lot of space and current gas stations aren

[MelodicHysteria]

Just thought I would circle back to a concern made here. Oil changes are roughly 70-130 dollars on average and a good chunk of that money goes to the oil and staff income to do said oil change. This is done 2-4 times a year. To do a battery inspection on an electric vehicle, this is required in order to keep any warranties valid on the battery, is twice a year. Saying that, this has a cost of 150

[Shirtlessnomore]

Good post and I agree, I did mention awhile back that oil changes themselves are almost a loss leader to sell you other higher margin parts and services, it's no different then walking into costco for an item a friend mentioned was on sale for 20 bucks and checking out 200 bucks worth of stuff you didnt even go there for, another point I made before was the "tire" part, they now are

[Capharnaum]

Think about Mr Lube that are next to Walmarts, people can go shopping while the car is being charged.

[hawk35]

I'm quite aware of Mr Lube and their Walmart locations.  But remember this.  Mr Lube does not own the land or the leases.  Walmart does.  If there is money to be made from quick charging, Walmart will be offering it (just like many shopping centres today offer it in major cities).  You don't need special expertise to offer fast charging.  Just startup money

[hawk35]

Be very careful with the numbers you are using.  Most projections are now obsolete.  The reason is, the catalyst for moving to EV was the carbon tax being fully implement which increases the cost of gasoline.  All that changed with Russia.  Gas prices are now higher than the target for full implementation of the carbon tax.  And the carbon tax will continue to be added on

[Capharnaum]

Don't get me wrong, I believe in EVs and follow that market closely. However, supply limits will limit sales for a long time (at least 2025). The 20% new vehicle sales in 2025 is a current projection, based on current supply and supply being built at the moment. It takes 3-4  years to develop an EV and the manufacturing capacity, including the car battery assembly. That's the first

[maypeters]

you must be dreaming if all the cars on the road are EV in the near future. 

[Tommy123]

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[Tommy123]

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