1 00:00:00,480 --> 00:00:03,160 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,440 --> 00:00:07,560 Speaker 1: the BNAF podcast. Today, we are going to revisit one 3 00:00:07,600 --> 00:00:10,799 Speaker 1: of our favorite topics on this show, that is electric vehicles, 4 00:00:10,920 --> 00:00:13,480 Speaker 1: and we're going to go specifically to the United States, 5 00:00:13,760 --> 00:00:16,360 Speaker 1: and that's because this has been a really interesting week 6 00:00:16,400 --> 00:00:19,440 Speaker 1: in that space, with developments in regard to the Inflation 7 00:00:19,520 --> 00:00:22,800 Speaker 1: Reduction Act and announcements about things like the cyber truck. 8 00:00:22,960 --> 00:00:25,439 Speaker 1: But before we go there, let's talk a little bit 9 00:00:25,520 --> 00:00:28,080 Speaker 1: about the current state of play at the state level. 10 00:00:28,200 --> 00:00:31,200 Speaker 1: You actually have California, which has one of the highest 11 00:00:31,240 --> 00:00:34,080 Speaker 1: electric vehicle ownership rates in the world, backed up by 12 00:00:34,120 --> 00:00:37,400 Speaker 1: an extensive charging network to service its fleet. But with 13 00:00:37,479 --> 00:00:40,160 Speaker 1: the US as a whole, the nation is lagging behind 14 00:00:40,280 --> 00:00:43,120 Speaker 1: China and Europe in terms of electric vehicles sold and 15 00:00:43,159 --> 00:00:46,440 Speaker 1: the proportion of new car sales that electric vehicles actually 16 00:00:46,440 --> 00:00:48,839 Speaker 1: make up. When we look at the manufacturers in the 17 00:00:48,960 --> 00:00:52,320 Speaker 1: US like GM and Ford, they recently delayed their near 18 00:00:52,400 --> 00:00:56,280 Speaker 1: term EV sales targets, citing falling demand as the primary reason. 19 00:00:56,640 --> 00:00:59,440 Speaker 1: But does this reason actually hold up when we're looking 20 00:00:59,480 --> 00:01:01,600 Speaker 1: at the hard data that we have available to us 21 00:01:01,680 --> 00:01:05,360 Speaker 1: right now. Well, to answer that question, we have EV 22 00:01:05,480 --> 00:01:09,319 Speaker 1: analyst Corey Cantor. He sits on our Advanced Transport team, 23 00:01:09,440 --> 00:01:11,720 Speaker 1: and he returns to the podcast to give us a 24 00:01:11,760 --> 00:01:15,480 Speaker 1: review of the US electric vehicle market and discuss benef's figures. 25 00:01:15,680 --> 00:01:18,479 Speaker 1: They indicate that US EV sales are not only rising, 26 00:01:18,560 --> 00:01:21,959 Speaker 1: but are actually about to pass an important milestone. We 27 00:01:22,000 --> 00:01:24,759 Speaker 1: also get into some of the new entrants on the show, 28 00:01:24,959 --> 00:01:28,840 Speaker 1: an electric vehicle manufacturer called Rivian who recently ended their 29 00:01:28,840 --> 00:01:32,120 Speaker 1: exclusivity deal with Amazon for their commercial vehicles and are 30 00:01:32,200 --> 00:01:35,200 Speaker 1: now attempting to cross the EV Valley of death, where 31 00:01:35,200 --> 00:01:38,520 Speaker 1: a startup tries to scale to mass production. We also 32 00:01:38,560 --> 00:01:41,720 Speaker 1: assess the BENF data about whether being in a red 33 00:01:41,880 --> 00:01:44,960 Speaker 1: or a blue that is Republican or Democrat state means 34 00:01:45,080 --> 00:01:48,480 Speaker 1: higher or lower rates of electric vehicle ownership, and some 35 00:01:48,600 --> 00:01:51,880 Speaker 1: of the results might surprise you. Finally, we talk about 36 00:01:51,920 --> 00:01:54,640 Speaker 1: the role that policy plays and electric vehicle ownership in 37 00:01:54,680 --> 00:01:57,000 Speaker 1: the US, both in a national level and with the 38 00:01:57,040 --> 00:01:59,960 Speaker 1: Inflation Reduction Act on a state by state basis, where 39 00:02:00,000 --> 00:02:03,600 Speaker 1: our further states are now joining California to match their 40 00:02:03,640 --> 00:02:08,200 Speaker 1: domestic electric vehicle policies. To access insights and reports related 41 00:02:08,240 --> 00:02:10,880 Speaker 1: to this episode, BNF subscribers are going to be able 42 00:02:10,880 --> 00:02:13,800 Speaker 1: to find those at BNF dot com, on BENFO on 43 00:02:13,800 --> 00:02:16,840 Speaker 1: the Bloomberg terminal, or at bnfsmobile app. If you like 44 00:02:16,919 --> 00:02:19,880 Speaker 1: this podcast, if you subscribe, you'll receive an update when 45 00:02:19,880 --> 00:02:22,120 Speaker 1: we publish a future episode. And if you give us 46 00:02:22,120 --> 00:02:24,880 Speaker 1: a review on Apple Podcasts or Spotify, it'll make us 47 00:02:24,919 --> 00:02:27,800 Speaker 1: more discoverable by others. But right now, let's jump into 48 00:02:27,880 --> 00:02:41,680 Speaker 1: the conversation with Corey about evs in the US. Corey, 49 00:02:41,760 --> 00:02:44,320 Speaker 1: thank you very much for coming back on the show today. 50 00:02:44,520 --> 00:02:46,520 Speaker 2: Thanks Dana, happy to be here and we. 51 00:02:46,520 --> 00:02:49,000 Speaker 1: Have you back because we're here to talk about the 52 00:02:49,160 --> 00:02:52,440 Speaker 1: US vehicle market again, and it continues to be an 53 00:02:52,480 --> 00:02:56,840 Speaker 1: important theme on this show because transport related emissions constitute 54 00:02:56,960 --> 00:03:00,680 Speaker 1: the largest share of US emissions overall, so it's worth 55 00:03:00,720 --> 00:03:04,519 Speaker 1: spending our time on. And two of the large auto 56 00:03:04,560 --> 00:03:08,120 Speaker 1: manufacturers in the US are General Motors and Ford, and 57 00:03:08,240 --> 00:03:12,120 Speaker 1: recently they noted that they would be delaying their near 58 00:03:12,240 --> 00:03:15,960 Speaker 1: term electric vehicle targets and cited that there's falling demand 59 00:03:16,000 --> 00:03:18,480 Speaker 1: for electric vehicles in the US. And I want to know, 60 00:03:18,520 --> 00:03:21,600 Speaker 1: from your perspective, have we seen a precipitous fall off 61 00:03:21,960 --> 00:03:24,520 Speaker 1: in electric vehicle demand in the States. 62 00:03:24,520 --> 00:03:27,600 Speaker 2: Yeah, Dana, interesting question, and quite frankly, this has been 63 00:03:27,720 --> 00:03:30,880 Speaker 2: something that has been not only a discussion within the 64 00:03:30,960 --> 00:03:35,040 Speaker 2: Advanced Transport team at the NF, but really countless newspaper articles, 65 00:03:35,520 --> 00:03:39,440 Speaker 2: discussions in trade press like Inside EVS of course covered 66 00:03:39,440 --> 00:03:41,760 Speaker 2: by Bloomberg. And the answer is, at least as far 67 00:03:41,800 --> 00:03:44,120 Speaker 2: as the data that we've received through the third quarter 68 00:03:44,160 --> 00:03:47,800 Speaker 2: of this year, EV sales both for battery electric vehicles 69 00:03:47,880 --> 00:03:50,600 Speaker 2: and battery electric and plug and hybrid electric vehicles is 70 00:03:50,680 --> 00:03:53,720 Speaker 2: up above fifty percent. So BEVs through the first three 71 00:03:53,800 --> 00:03:56,240 Speaker 2: quarters of twenty twenty three are actually up fifty five 72 00:03:56,280 --> 00:03:59,080 Speaker 2: percent year on year over the first three quarters of 73 00:03:59,160 --> 00:04:01,600 Speaker 2: twenty twenty two. We'll have to see what happens in 74 00:04:01,640 --> 00:04:04,080 Speaker 2: this final quarter. There is an element of until we 75 00:04:04,080 --> 00:04:05,920 Speaker 2: get the data to know for sure. I don't want 76 00:04:05,960 --> 00:04:07,960 Speaker 2: to come on and say that there won't be less 77 00:04:07,960 --> 00:04:10,440 Speaker 2: growth than in previous years. But I think the big 78 00:04:10,480 --> 00:04:12,840 Speaker 2: caveat to what GM and Porter are saying that I've 79 00:04:12,880 --> 00:04:15,880 Speaker 2: thinking is growth expectation. So what it did four than 80 00:04:15,960 --> 00:04:19,320 Speaker 2: GM expect for their particular scale up of ebs, and 81 00:04:19,360 --> 00:04:21,560 Speaker 2: how has that differed from what has actually happened. And 82 00:04:21,600 --> 00:04:23,560 Speaker 2: the more I kind of look at the data. The 83 00:04:23,560 --> 00:04:25,480 Speaker 2: more I've been thinking, and I think a few of 84 00:04:25,560 --> 00:04:27,200 Speaker 2: us on the team have been thinking, maybe this is 85 00:04:27,240 --> 00:04:29,600 Speaker 2: more of a four than GM issue to date than 86 00:04:29,640 --> 00:04:31,599 Speaker 2: an overall US EV market issue. 87 00:04:31,640 --> 00:04:34,360 Speaker 1: And we're going to talk about well Ford and GM 88 00:04:34,400 --> 00:04:37,560 Speaker 1: and then other manufacturers that are actually selling into the 89 00:04:37,680 --> 00:04:40,840 Speaker 1: United States, but there is a whole world of different 90 00:04:40,880 --> 00:04:44,080 Speaker 1: types of electric vehicles under different brands that are sold 91 00:04:44,120 --> 00:04:46,440 Speaker 1: in different countries. I can think of a few off 92 00:04:46,480 --> 00:04:48,560 Speaker 1: the top of my head that are China specific, like 93 00:04:48,600 --> 00:04:51,120 Speaker 1: Build Your Dreams or BID, which is what they go by. 94 00:04:51,360 --> 00:04:54,520 Speaker 1: So let's just put the US in global perspective for 95 00:04:54,600 --> 00:04:57,680 Speaker 1: a minute. The US recently hit a critical target of 96 00:04:57,720 --> 00:05:01,560 Speaker 1: reaching one million in annual electric vehicle sales. Now that 97 00:05:01,640 --> 00:05:04,279 Speaker 1: was of September. What I'm asking is is that a 98 00:05:04,279 --> 00:05:06,920 Speaker 1: big deal? And is that leading the way or lagging 99 00:05:06,960 --> 00:05:08,320 Speaker 1: behind other parts of the world. 100 00:05:08,560 --> 00:05:10,080 Speaker 2: I mean, I think it's a big deal in the 101 00:05:10,160 --> 00:05:13,560 Speaker 2: sense of the US's overall EV trajectory right now. In 102 00:05:13,640 --> 00:05:16,680 Speaker 2: terms of China and Europe, they hit one million passenger 103 00:05:16,760 --> 00:05:19,760 Speaker 2: EV sales in twenty eighteen and twenty twenty specifically, and 104 00:05:19,839 --> 00:05:22,760 Speaker 2: again that's what he has included, But actually when it 105 00:05:22,760 --> 00:05:25,240 Speaker 2: comes to fully electric vehicles, the US is only two 106 00:05:25,320 --> 00:05:28,520 Speaker 2: years behind Europe. In China, which was more of a 107 00:05:28,560 --> 00:05:31,040 Speaker 2: twenty twenty one story, so p has have played a 108 00:05:31,120 --> 00:05:33,760 Speaker 2: larger role in the European market, for example, today than 109 00:05:33,760 --> 00:05:35,800 Speaker 2: they have in the US. In the US, given the 110 00:05:35,800 --> 00:05:38,920 Speaker 2: dominance of Tesla, really to split on a quarterly basis 111 00:05:38,960 --> 00:05:42,279 Speaker 2: as usually eighty percent fully electric vehicles and twenty percent 112 00:05:42,320 --> 00:05:45,200 Speaker 2: plug in hybrid electric vehicles. So I think in terms 113 00:05:45,240 --> 00:05:47,400 Speaker 2: of EV's share of sale, which is the other metric 114 00:05:47,480 --> 00:05:49,520 Speaker 2: we said a lot, the US is lagging quite a 115 00:05:49,560 --> 00:05:51,680 Speaker 2: bit behind Europe. You know, you see countries like the 116 00:05:51,800 --> 00:05:56,040 Speaker 2: UK around twenty two percent or so. You see China, France, 117 00:05:56,120 --> 00:05:59,840 Speaker 2: Germany more in the kind of low thirty percent quarterly 118 00:06:00,320 --> 00:06:02,159 Speaker 2: in the first half of the year. The US for 119 00:06:02,240 --> 00:06:04,680 Speaker 2: the first half of twenty twenty three was it about 120 00:06:04,760 --> 00:06:08,040 Speaker 2: nine percent EV share of sale. So again in terms 121 00:06:08,040 --> 00:06:10,400 Speaker 2: of share of the overall market, definitely trailing, But in 122 00:06:10,440 --> 00:06:12,839 Speaker 2: terms of absolute numbers, the US is trying to see 123 00:06:12,839 --> 00:06:15,440 Speaker 2: EV growth at a pretty impressive rate. And last thing 124 00:06:15,480 --> 00:06:18,160 Speaker 2: I'll say data is now we hit one million BEVs 125 00:06:18,200 --> 00:06:21,000 Speaker 2: plus pebs in September. We put out a piece earlier 126 00:06:21,040 --> 00:06:23,120 Speaker 2: this month, saying that we expect in November, and I 127 00:06:23,120 --> 00:06:24,719 Speaker 2: think the data will show it at the end of 128 00:06:24,720 --> 00:06:27,080 Speaker 2: the week that in November there have been a million 129 00:06:27,200 --> 00:06:30,120 Speaker 2: fully electric vehicle sales in the US with about a 130 00:06:30,160 --> 00:06:32,080 Speaker 2: month to spare and all the data to come in. 131 00:06:32,120 --> 00:06:34,000 Speaker 2: So we're not quite there yet with the data that 132 00:06:34,040 --> 00:06:35,720 Speaker 2: we have, but we were quite close at the end 133 00:06:35,720 --> 00:06:38,520 Speaker 2: of October. So we're anticipating seeing that when the data 134 00:06:38,560 --> 00:06:39,400 Speaker 2: comes in next week. 135 00:06:39,600 --> 00:06:42,279 Speaker 1: Well, so let's talk about some brands, and one of 136 00:06:42,279 --> 00:06:45,520 Speaker 1: the new brands that is coming out was Rivian. But 137 00:06:45,560 --> 00:06:47,839 Speaker 1: before we get to that, I actually think it's important 138 00:06:47,880 --> 00:06:50,479 Speaker 1: to think about it in light of Tesla. One of 139 00:06:50,520 --> 00:06:53,200 Speaker 1: the reasons I think people find Tesla's so fascinating as 140 00:06:53,240 --> 00:06:56,440 Speaker 1: a company is because they broke into what is a 141 00:06:56,560 --> 00:07:00,719 Speaker 1: very capital intensive and very established market. Get where you 142 00:07:00,839 --> 00:07:05,120 Speaker 1: had a number of vehicle manufacturers car manufacturers around the 143 00:07:05,160 --> 00:07:08,320 Speaker 1: world that I could probably count on a certain number 144 00:07:08,320 --> 00:07:11,040 Speaker 1: of fingers in toes, and they broke into that market 145 00:07:11,160 --> 00:07:14,720 Speaker 1: and became, at least in the US, the dominant fully 146 00:07:14,760 --> 00:07:18,480 Speaker 1: electric car in terms of sales. Rivian are now coming 147 00:07:18,560 --> 00:07:22,840 Speaker 1: up as a intriguing option. Where are they at in 148 00:07:22,880 --> 00:07:26,880 Speaker 1: this process and are they following in the paths of Tesla, 149 00:07:26,920 --> 00:07:28,640 Speaker 1: and are they going to be something we're going to 150 00:07:28,680 --> 00:07:32,000 Speaker 1: talk about increasingly on the show or are they going 151 00:07:32,040 --> 00:07:35,040 Speaker 1: to potentially not make it as far as they'd like, 152 00:07:35,160 --> 00:07:38,680 Speaker 1: because that is really the story of many vehicle startups 153 00:07:38,680 --> 00:07:41,320 Speaker 1: over the years, given that it is this difficult place 154 00:07:41,360 --> 00:07:41,960 Speaker 1: to break into. 155 00:07:42,400 --> 00:07:45,320 Speaker 2: Yeah, and Dan, that is a perfect segue and a 156 00:07:45,360 --> 00:07:47,200 Speaker 2: perfect topic for how we should think about it. I 157 00:07:47,240 --> 00:07:50,080 Speaker 2: think the ev industry writ large, not just in the US, 158 00:07:50,080 --> 00:07:52,840 Speaker 2: but globally. My colleague Nico and I wrote this piece 159 00:07:53,040 --> 00:07:57,200 Speaker 2: around Rivian's transition, arguing that their path towards that optimistic 160 00:07:57,320 --> 00:08:00,560 Speaker 2: or positive outcome is getting clearer. This idea in clean 161 00:08:00,640 --> 00:08:03,560 Speaker 2: energy finance around a value of death, which is basically saying, 162 00:08:03,560 --> 00:08:06,080 Speaker 2: when you're an early stage startup and an early stage company, 163 00:08:06,120 --> 00:08:08,600 Speaker 2: there's a lot of hype, there's a lot of enthusiasm 164 00:08:08,680 --> 00:08:10,760 Speaker 2: for an idea, and a lot of investors are likely 165 00:08:10,800 --> 00:08:12,480 Speaker 2: to kind of prop a company up or be willing 166 00:08:12,480 --> 00:08:14,080 Speaker 2: to invest in it. But then of course you need 167 00:08:14,120 --> 00:08:16,480 Speaker 2: to show that your product over time is scaling up 168 00:08:16,520 --> 00:08:18,480 Speaker 2: and can reach the mass market, and so you reach 169 00:08:18,560 --> 00:08:20,520 Speaker 2: this value of death in the moment where your old 170 00:08:20,560 --> 00:08:22,400 Speaker 2: news in the sense that you're not getting buy on 171 00:08:22,520 --> 00:08:24,880 Speaker 2: hype anymore, but you haven't made a profit yet and 172 00:08:24,920 --> 00:08:27,720 Speaker 2: you haven't built a sustainable company. We've seen earlier this 173 00:08:27,880 --> 00:08:30,960 Speaker 2: year around Protera, for example, in the commercial vehicle space 174 00:08:31,080 --> 00:08:34,760 Speaker 2: that had promising founder, a good story, good product, but 175 00:08:34,920 --> 00:08:38,280 Speaker 2: just couldn't get all the way to profitability Rivian. What 176 00:08:38,360 --> 00:08:40,959 Speaker 2: we've seen in twenty twenty three that makes me more 177 00:08:40,960 --> 00:08:44,240 Speaker 2: optimistic about their chances in twenty four is we've seen 178 00:08:44,320 --> 00:08:47,800 Speaker 2: sales and production increase without any major battery issues. And 179 00:08:47,840 --> 00:08:49,320 Speaker 2: I think that's kind of the name of the game 180 00:08:49,360 --> 00:08:51,880 Speaker 2: for these ev makers, even with Tesla, and I think 181 00:08:51,920 --> 00:08:54,400 Speaker 2: part of the reason why there's always this angst around 182 00:08:54,520 --> 00:08:56,679 Speaker 2: why isn't everyone scaling up so quickly? Why is this 183 00:08:56,760 --> 00:08:59,560 Speaker 2: taking so long? Tesla really had about a decade between 184 00:08:59,679 --> 00:09:02,120 Speaker 2: the Roadster in two thousand and eight and the Model 185 00:09:02,120 --> 00:09:04,720 Speaker 2: three and twenty eighteen to really figure things out. And 186 00:09:04,760 --> 00:09:07,280 Speaker 2: even if you cut off five of those years and say, okay, 187 00:09:07,960 --> 00:09:10,400 Speaker 2: eight to twenty thirteen really doesn't count because it was 188 00:09:10,520 --> 00:09:13,439 Speaker 2: a lot of low volume models. The Model S came 189 00:09:13,480 --> 00:09:15,600 Speaker 2: out for Tesla in twenty thirteen, and then it still 190 00:09:15,600 --> 00:09:18,680 Speaker 2: took them five years to release a mass consumer model. 191 00:09:18,800 --> 00:09:21,000 Speaker 2: So in the case of Rivian, they've only had their 192 00:09:21,080 --> 00:09:23,679 Speaker 2: vehicles on sale since the end of twenty twenty one, 193 00:09:23,800 --> 00:09:25,679 Speaker 2: so we're coming up on two years now. I think 194 00:09:25,720 --> 00:09:28,840 Speaker 2: if we were at five years and Rivian hadn't really achieved, 195 00:09:28,880 --> 00:09:31,800 Speaker 2: then you could basically say, Okay, maybe they're floundering. But 196 00:09:31,840 --> 00:09:34,720 Speaker 2: we've seen real growth in terms of their overall sales volume. 197 00:09:34,760 --> 00:09:37,000 Speaker 2: I think it was up over two hundred and forty 198 00:09:37,040 --> 00:09:39,320 Speaker 2: percent in terms of the quarters that we've seen this 199 00:09:39,400 --> 00:09:42,440 Speaker 2: year compared to the previous year. Again the first through 200 00:09:42,480 --> 00:09:44,000 Speaker 2: the third quarter. We have to see how the fourth 201 00:09:44,040 --> 00:09:47,120 Speaker 2: quarter lines up. But they've been raising their guidance multiple times, 202 00:09:47,240 --> 00:09:49,280 Speaker 2: so there's a lot to look forward to for them 203 00:09:49,320 --> 00:09:51,880 Speaker 2: as we head into twenty twenty four. With the caveat being, 204 00:09:51,920 --> 00:09:54,320 Speaker 2: you know, no major battery issues. There's even been some 205 00:09:54,440 --> 00:09:57,200 Speaker 2: software hiccups, but Rivian's been able to adapt quite quickly 206 00:09:57,280 --> 00:09:58,160 Speaker 2: to resolve those. 207 00:09:58,360 --> 00:10:01,600 Speaker 1: Now. In addition to passenger vehicles, which we all like 208 00:10:01,640 --> 00:10:03,600 Speaker 1: to talk about because we think about them in our 209 00:10:03,679 --> 00:10:06,959 Speaker 1: daily lives, there are also those commercial vehicles that are 210 00:10:07,160 --> 00:10:10,840 Speaker 1: moving things around part of critically important supply chains. Rivian 211 00:10:10,960 --> 00:10:12,920 Speaker 1: is looking to play in that space as well. Can 212 00:10:12,960 --> 00:10:15,120 Speaker 1: you talk a little bit about their commercial fleet. 213 00:10:15,360 --> 00:10:17,880 Speaker 2: Yeah. Rivian, I think early on was even more so 214 00:10:18,080 --> 00:10:21,600 Speaker 2: known for their exclusivity deal with Amazon to provide them 215 00:10:21,600 --> 00:10:25,400 Speaker 2: with commercial electric vans. So Amazon essentially signed a deal 216 00:10:25,640 --> 00:10:29,160 Speaker 2: for one hundred thousand commercial evvans from Ribbean, and for 217 00:10:29,200 --> 00:10:31,360 Speaker 2: a while the partnership kind of worked on both ends 218 00:10:31,360 --> 00:10:33,760 Speaker 2: because Rivian could say we have a set buyer, just 219 00:10:33,800 --> 00:10:35,600 Speaker 2: like in other forms of clean energy, when you have 220 00:10:35,600 --> 00:10:37,880 Speaker 2: a PPA, it's always more of a guarantee. But in 221 00:10:37,960 --> 00:10:41,360 Speaker 2: recent years, I think the Amazon exclusivity contract became a 222 00:10:41,360 --> 00:10:43,640 Speaker 2: little bit of a hindrance because Ribean couldn't go to 223 00:10:44,120 --> 00:10:46,760 Speaker 2: the market, to Wall Street to say, hey, we're expanding 224 00:10:46,760 --> 00:10:49,880 Speaker 2: our customer base because other people are interested in our 225 00:10:49,880 --> 00:10:53,520 Speaker 2: commercial van. Now today, one of Rivian's problems has been 226 00:10:53,600 --> 00:10:56,200 Speaker 2: they've had one facility in Illinois and they've been making 227 00:10:56,240 --> 00:10:58,920 Speaker 2: three different electric models. Even for if you count, there's 228 00:10:58,960 --> 00:11:02,280 Speaker 2: two van variants in one assembly plants. So every time 229 00:11:02,360 --> 00:11:04,800 Speaker 2: you only have so many lines and so many workers 230 00:11:04,880 --> 00:11:06,400 Speaker 2: to have to make a bunch of different models in 231 00:11:06,400 --> 00:11:08,960 Speaker 2: one place isn't the most efficient. But Amazon has been 232 00:11:09,000 --> 00:11:10,800 Speaker 2: happy with the quality, and I think the drivers have 233 00:11:10,840 --> 00:11:14,080 Speaker 2: been relatively so as well, and now they've been able 234 00:11:14,120 --> 00:11:17,400 Speaker 2: to get out of that exclusivity contract. So what Rivian 235 00:11:17,520 --> 00:11:20,439 Speaker 2: CEO said on the previous investor call is that they 236 00:11:20,440 --> 00:11:22,640 Speaker 2: expect over the next couple of months to begin announcing 237 00:11:22,640 --> 00:11:25,360 Speaker 2: other pilot deals with other companies who may be interested 238 00:11:25,360 --> 00:11:28,079 Speaker 2: in electrifying And to your point on emissions, at the beginning, 239 00:11:28,400 --> 00:11:31,640 Speaker 2: passenger vehicles make up a lot of those US carbon emissions, 240 00:11:31,640 --> 00:11:34,040 Speaker 2: but moving forward, the commercial space is going to be 241 00:11:34,120 --> 00:11:37,000 Speaker 2: imperative to reduce those emissions given that they make up 242 00:11:37,040 --> 00:11:39,319 Speaker 2: a large part. Of course, Rivian really only focuses on 243 00:11:39,360 --> 00:11:41,679 Speaker 2: the light commercial vehicle space, so we're not even talking 244 00:11:41,679 --> 00:11:44,480 Speaker 2: about long haul trucking, medium and heavy duty vehicles that 245 00:11:44,520 --> 00:11:46,760 Speaker 2: we at BNAF have a whole team for. But again 246 00:11:46,840 --> 00:11:49,240 Speaker 2: they're early in the space and by building that brand 247 00:11:49,280 --> 00:11:52,760 Speaker 2: recognition and also most importantly economies of scale, they have 248 00:11:52,800 --> 00:11:54,880 Speaker 2: another potential money maker moving forward. 249 00:11:55,360 --> 00:11:58,560 Speaker 1: Can we talk about one of the recent issues of 250 00:11:58,600 --> 00:12:02,560 Speaker 1: the day, which was this strike by the United Autoworkers. 251 00:12:02,800 --> 00:12:06,520 Speaker 1: How has that impacted some of the different companies that 252 00:12:06,520 --> 00:12:09,360 Speaker 1: we've talked about thus far, and has it had a 253 00:12:09,400 --> 00:12:13,559 Speaker 1: particular impact or less significant impact on the electric vehicle 254 00:12:13,600 --> 00:12:14,400 Speaker 1: and hybrid space. 255 00:12:14,920 --> 00:12:17,600 Speaker 2: Yeah, I think the UAW strike is going to be 256 00:12:17,640 --> 00:12:20,120 Speaker 2: really fascinating to look at in four or five years. 257 00:12:20,400 --> 00:12:23,560 Speaker 2: What I'm pretty confident about at this point is that 258 00:12:23,679 --> 00:12:27,640 Speaker 2: the unions were mostly arguing over gaining back some of 259 00:12:27,640 --> 00:12:29,560 Speaker 2: what had been lost in two thousand and eight. So, 260 00:12:29,679 --> 00:12:31,920 Speaker 2: for those of you who aren't familiar, right the Big 261 00:12:31,960 --> 00:12:35,920 Speaker 2: three GM for the in Stallantis mostly GM and Stallantis 262 00:12:35,920 --> 00:12:38,079 Speaker 2: went through tough times and had to be bailed out 263 00:12:38,120 --> 00:12:41,120 Speaker 2: by the federal government, and so unions at that time 264 00:12:41,200 --> 00:12:43,360 Speaker 2: gave up a lot in terms of pensions, in terms 265 00:12:43,360 --> 00:12:46,959 Speaker 2: of wages, and even contracts. In between that financial crisis 266 00:12:47,040 --> 00:12:49,760 Speaker 2: and the most recent contract negotiations weren't as high of 267 00:12:49,960 --> 00:12:52,800 Speaker 2: rays as the union workers may have wanted. So enter 268 00:12:52,920 --> 00:12:55,640 Speaker 2: Sean Fain, the head of the UAW, who wins an 269 00:12:55,640 --> 00:12:59,120 Speaker 2: election last year, and he takes a completely different negotiating 270 00:12:59,160 --> 00:13:02,400 Speaker 2: tact from the pre VISUAW leaders, who in fact had 271 00:13:02,440 --> 00:13:05,120 Speaker 2: gone in some cases got in trouble for corruption. And 272 00:13:05,240 --> 00:13:07,760 Speaker 2: Bain's perspective was we're going to be more combative, we're 273 00:13:07,800 --> 00:13:10,120 Speaker 2: going to not shake hands with the automakers to open 274 00:13:10,120 --> 00:13:12,680 Speaker 2: the negotiations, and we're going to be quite difficult, and 275 00:13:12,679 --> 00:13:16,080 Speaker 2: then striking not all at one automaker all plants, but 276 00:13:16,320 --> 00:13:18,760 Speaker 2: surprising and popping up in ways that the automakers may 277 00:13:18,760 --> 00:13:20,800 Speaker 2: not have expected. At the end of the day, basically, 278 00:13:20,880 --> 00:13:23,920 Speaker 2: the UAW one about twenty five percent of wage increases. 279 00:13:24,160 --> 00:13:27,280 Speaker 2: For the purposes of our conversation, the most important gain 280 00:13:27,440 --> 00:13:30,800 Speaker 2: moving forward that they achieved was around putting the battery 281 00:13:30,880 --> 00:13:34,480 Speaker 2: plant joint ventures at GM and Stilantis under what is 282 00:13:34,480 --> 00:13:37,480 Speaker 2: known as the UAW Master Agreement. Now, those battery workers 283 00:13:37,600 --> 00:13:39,840 Speaker 2: aren't getting paid as much as an assembly worker yet, 284 00:13:39,880 --> 00:13:42,040 Speaker 2: but what that means is that in the future when 285 00:13:42,120 --> 00:13:45,800 Speaker 2: UAW has to negotiate another contract in May of twenty 286 00:13:45,840 --> 00:13:47,960 Speaker 2: twenty eight, about four and a half years from now, 287 00:13:48,280 --> 00:13:50,640 Speaker 2: they basically will be able to negotiate on behalf of 288 00:13:50,760 --> 00:13:53,720 Speaker 2: not just the EV manufacturers, but the EB battery workers, 289 00:13:53,960 --> 00:13:56,400 Speaker 2: and so they can move in a collective unit. Prior 290 00:13:56,440 --> 00:13:59,880 Speaker 2: to this negotiation, the UAW had to almost organize on 291 00:14:00,160 --> 00:14:03,199 Speaker 2: a battery plant by battery plant basis, which was difficult, 292 00:14:03,280 --> 00:14:06,640 Speaker 2: and even negotiate those contracts differently. So you can't understand 293 00:14:06,640 --> 00:14:08,600 Speaker 2: what that means moving forward in terms of the upfront 294 00:14:08,640 --> 00:14:11,280 Speaker 2: price of evs. I think one thing, and it's not 295 00:14:11,360 --> 00:14:13,320 Speaker 2: just union workers, because I think there's been a kind 296 00:14:13,360 --> 00:14:16,720 Speaker 2: of oh, because the UIW got twenty five percent of 297 00:14:16,720 --> 00:14:19,560 Speaker 2: wage hikes, GM and Ford are now even more in danger. 298 00:14:19,760 --> 00:14:21,880 Speaker 2: And that may be true. But also GM and Ford 299 00:14:21,920 --> 00:14:25,160 Speaker 2: have had other issues with ev scale up, including investing 300 00:14:25,200 --> 00:14:28,160 Speaker 2: in battery manufacturing, including the dealer network. When you add 301 00:14:28,200 --> 00:14:30,360 Speaker 2: all some of these parts together, you can see why 302 00:14:30,440 --> 00:14:32,680 Speaker 2: GM and Ford may be wanting to move these near 303 00:14:32,760 --> 00:14:35,360 Speaker 2: term targets back because they just aren't hitting the metrics 304 00:14:35,400 --> 00:14:37,520 Speaker 2: that they need to hit and making enough profit in 305 00:14:37,560 --> 00:14:38,640 Speaker 2: the time that they expected to. 306 00:14:39,240 --> 00:14:42,280 Speaker 1: So on one hand, you have the wage hikes from 307 00:14:42,480 --> 00:14:45,480 Speaker 1: the United Autoworkers, but on the other hand, you have 308 00:14:45,760 --> 00:14:49,000 Speaker 1: this almost wind at the electric vehicle side of the 309 00:14:49,040 --> 00:14:52,320 Speaker 1: industries back in the form of the Inflation Reduction Act. Now, 310 00:14:52,360 --> 00:14:54,120 Speaker 1: one of these days in the future, I will be 311 00:14:54,120 --> 00:14:55,880 Speaker 1: able to make it through one of these shows without 312 00:14:55,960 --> 00:14:58,920 Speaker 1: referring to the IRA. But today is not that day. 313 00:14:59,120 --> 00:15:02,040 Speaker 1: And actually this week in particular, there have been some 314 00:15:02,120 --> 00:15:05,520 Speaker 1: announcements that pertain to the IRA. So Corey, can you 315 00:15:05,600 --> 00:15:08,520 Speaker 1: talk us through some of the more recent developments for 316 00:15:08,640 --> 00:15:11,200 Speaker 1: electric vehicles and the inflation Reduction Act. 317 00:15:11,600 --> 00:15:14,120 Speaker 2: Yeah, happy to Dana, and I think unfortunately it's going 318 00:15:14,200 --> 00:15:17,160 Speaker 2: to be or fortunately from maybe the industry's perspective, it's 319 00:15:17,160 --> 00:15:18,720 Speaker 2: going to be a while before you can talk about 320 00:15:18,760 --> 00:15:21,360 Speaker 2: the EV industry without talking about the IRA. To break 321 00:15:21,360 --> 00:15:24,320 Speaker 2: it down into a few things. Firstly, the IRA credit 322 00:15:24,360 --> 00:15:26,880 Speaker 2: as it pertains to electric vehicles, I like to break 323 00:15:26,920 --> 00:15:30,040 Speaker 2: it into almost two different pieces. You've got the battery 324 00:15:30,080 --> 00:15:32,560 Speaker 2: production Tax credit up to forty five dollars per kilo 325 00:15:32,560 --> 00:15:34,960 Speaker 2: one hour if you meet certain requirements, and that's really 326 00:15:35,000 --> 00:15:38,400 Speaker 2: incentivized a lot of on shoring of battery manufacturing in 327 00:15:38,480 --> 00:15:41,640 Speaker 2: North America, in the US particular. And so we at THENEF, 328 00:15:41,880 --> 00:15:44,400 Speaker 2: as I think may have said the last time we chatted, 329 00:15:44,520 --> 00:15:47,760 Speaker 2: have tracked IRA investments since the law was signed in 330 00:15:47,880 --> 00:15:50,600 Speaker 2: the EV and battery supply chain. And so what we 331 00:15:50,680 --> 00:15:52,760 Speaker 2: find is as of the beginning of November, there were 332 00:15:52,800 --> 00:15:55,920 Speaker 2: over one hundred billion dollars in those investments here in 333 00:15:55,960 --> 00:15:59,840 Speaker 2: North America. And so what that means is companies like Samsung, 334 00:16:00,160 --> 00:16:04,280 Speaker 2: Skon LG, they are looking to build up these battery facilities. 335 00:16:04,480 --> 00:16:06,920 Speaker 2: I mentioned joint ventures before. Some of those are included 336 00:16:06,960 --> 00:16:08,880 Speaker 2: in that. Some of those are in addition, and then 337 00:16:08,920 --> 00:16:11,760 Speaker 2: you also have the passenger EV tax credit to Clean 338 00:16:11,800 --> 00:16:14,920 Speaker 2: Car tax credit, which is seventy five hundred dollars starting 339 00:16:14,920 --> 00:16:18,040 Speaker 2: in January. Actually that seventy five hundred dollars, which previously 340 00:16:18,080 --> 00:16:21,080 Speaker 2: had only been receivable at tax time, is going to 341 00:16:21,120 --> 00:16:23,480 Speaker 2: be possible at the point of sale. This actually makes 342 00:16:23,480 --> 00:16:26,360 Speaker 2: the US EV tax credit more of a rebate similar 343 00:16:26,400 --> 00:16:28,760 Speaker 2: to some other countries. So if you go and you 344 00:16:28,840 --> 00:16:31,040 Speaker 2: get that EV you've always wanted to you to be 345 00:16:31,080 --> 00:16:32,520 Speaker 2: back here in the US. But if you go to 346 00:16:32,560 --> 00:16:34,880 Speaker 2: a US dealer, as opposed to waiting for the following 347 00:16:34,920 --> 00:16:37,480 Speaker 2: year's tax time, they can take seventy five hundred dollars 348 00:16:37,560 --> 00:16:39,720 Speaker 2: or thirty seven to fifty off right at the start, 349 00:16:39,760 --> 00:16:41,920 Speaker 2: which means that EV ownership is going to become a 350 00:16:41,920 --> 00:16:44,200 Speaker 2: lot easier for people who can't afford to wait a 351 00:16:44,280 --> 00:16:46,880 Speaker 2: year to get that tax credit. Now. On the other hand, 352 00:16:46,920 --> 00:16:50,040 Speaker 2: there is another provision that just prior to our recording 353 00:16:50,120 --> 00:16:52,560 Speaker 2: came up in some news stories around what is called 354 00:16:52,560 --> 00:16:55,560 Speaker 2: a foreign entity of concern restriction. This term hasn't been 355 00:16:55,600 --> 00:16:58,320 Speaker 2: fully defined, but a lot in the industry are waiting 356 00:16:58,360 --> 00:17:01,400 Speaker 2: to see how strict this provision is before making future 357 00:17:01,400 --> 00:17:05,879 Speaker 2: investment decisions or even future EV strategies in the US marketplace. 358 00:17:06,119 --> 00:17:07,879 Speaker 2: A lot of the thinking is, and the kind of 359 00:17:07,880 --> 00:17:10,080 Speaker 2: intent around the provision is to make the US less 360 00:17:10,119 --> 00:17:14,600 Speaker 2: reliant on China and other i'd say US non friendly countries. 361 00:17:14,960 --> 00:17:17,520 Speaker 2: And so basically the thinking is, we're going to be 362 00:17:17,560 --> 00:17:20,439 Speaker 2: on shoring more of the free trade agreement countries with 363 00:17:20,560 --> 00:17:23,240 Speaker 2: the US and more of Mexico and Canada. And so 364 00:17:23,320 --> 00:17:25,439 Speaker 2: we'll see how strict because some have argued, you know, 365 00:17:25,440 --> 00:17:28,320 Speaker 2: maybe having less stringent terms in terms of foreign entities 366 00:17:28,320 --> 00:17:31,000 Speaker 2: of concern might be good for helping the industry move 367 00:17:31,040 --> 00:17:33,359 Speaker 2: a little bit faster, and China has really built up 368 00:17:33,400 --> 00:17:35,720 Speaker 2: a lot of battery expertise, so there's a bit of 369 00:17:35,720 --> 00:17:37,480 Speaker 2: a push and pull with this no matter how you 370 00:17:37,480 --> 00:17:40,040 Speaker 2: slice it, though, this is big news coming over the 371 00:17:40,080 --> 00:17:42,840 Speaker 2: next week or so and starting in January, we're going 372 00:17:42,920 --> 00:17:45,560 Speaker 2: to see how many evs are actually able to receive 373 00:17:45,560 --> 00:17:48,439 Speaker 2: the tax credit, because if you violate the foreign entities 374 00:17:48,480 --> 00:17:51,240 Speaker 2: of concern provision, then that EV is going to be 375 00:17:51,320 --> 00:17:54,480 Speaker 2: ineligible for either half or the full tax credit, depending 376 00:17:54,560 --> 00:17:55,680 Speaker 2: on how the role is structured. 377 00:17:56,880 --> 00:18:00,359 Speaker 1: An adoption also differs from state by state, and one 378 00:18:00,440 --> 00:18:02,840 Speaker 1: of the things that I'd like to draw parallel with 379 00:18:03,000 --> 00:18:06,720 Speaker 1: right now is renewable energy, where it has been a 380 00:18:06,760 --> 00:18:10,919 Speaker 1: polarized issue where you've seen it as something that Blue 381 00:18:10,920 --> 00:18:13,360 Speaker 1: states are really a proponent of, and then Red states 382 00:18:13,480 --> 00:18:17,400 Speaker 1: from an ideology standpoint, are not necessarily a proponent of. However, 383 00:18:17,720 --> 00:18:19,880 Speaker 1: we have this year seen a bit of a breakthrough 384 00:18:19,920 --> 00:18:22,879 Speaker 1: on that in that Texas now has more wind capacity 385 00:18:22,920 --> 00:18:25,880 Speaker 1: on their grid or got than any other state. And 386 00:18:26,160 --> 00:18:28,960 Speaker 1: what I want to know is with electric vehicles, are 387 00:18:29,000 --> 00:18:32,240 Speaker 1: we seeing the same thing. Is it a polarized issue 388 00:18:32,280 --> 00:18:35,480 Speaker 1: where Blue states love electric vehicles and Red states do not? 389 00:18:36,000 --> 00:18:40,199 Speaker 1: Or is the function and the benefits of evs that 390 00:18:40,240 --> 00:18:42,639 Speaker 1: make them a very different car? Has there been higher 391 00:18:42,720 --> 00:18:45,479 Speaker 1: uptake in some Red states over others. 392 00:18:45,840 --> 00:18:47,760 Speaker 2: Yeah, and that's a really good question, and I think 393 00:18:47,800 --> 00:18:50,679 Speaker 2: that's going to be one of the big questions moving forward. 394 00:18:51,080 --> 00:18:53,760 Speaker 2: It's not so black and white. Come back to the 395 00:18:53,760 --> 00:18:55,800 Speaker 2: point that it's more complicated than just Blue states like 396 00:18:55,800 --> 00:18:58,040 Speaker 2: in the Red States don't And I'll give some examples. 397 00:18:58,040 --> 00:18:59,960 Speaker 2: So I let a piece that we put that into 398 00:19:00,040 --> 00:19:02,960 Speaker 2: Timber on Ust TV markets and one of the charts 399 00:19:02,960 --> 00:19:05,200 Speaker 2: we put out in there looked at the correlation between 400 00:19:05,240 --> 00:19:08,080 Speaker 2: Biden vote share in twenty twenty and eb fleet share 401 00:19:08,160 --> 00:19:11,320 Speaker 2: in twenty twenty two, and there was a fairly strong 402 00:19:11,359 --> 00:19:14,480 Speaker 2: positive correlation, actually stronger than median income, which I was 403 00:19:14,560 --> 00:19:17,760 Speaker 2: kind of surprised about. And so you saw states like California, 404 00:19:17,960 --> 00:19:21,320 Speaker 2: states like Colorado, states like Washington that had high Biden 405 00:19:21,359 --> 00:19:23,239 Speaker 2: vote share doing well on EV's and then you had 406 00:19:23,240 --> 00:19:26,119 Speaker 2: swing states like Georgia and Arizona actually pretty much in 407 00:19:26,160 --> 00:19:28,040 Speaker 2: the middle, and then red states for the most part 408 00:19:28,080 --> 00:19:30,960 Speaker 2: lagging those blue states. But there were some outliers, so 409 00:19:31,080 --> 00:19:34,240 Speaker 2: Florida and Utah actually performed best amongst the red states, 410 00:19:34,240 --> 00:19:37,480 Speaker 2: and those were often wealthier folk within there. So it's 411 00:19:37,520 --> 00:19:39,800 Speaker 2: not purely on politics, but you know, you got to 412 00:19:39,800 --> 00:19:42,160 Speaker 2: look at the wealth aspect of it. And what I'd 413 00:19:42,200 --> 00:19:44,520 Speaker 2: say is, in terms of how things will change, you 414 00:19:44,600 --> 00:19:46,800 Speaker 2: bring up Texas, and where my head goes to is 415 00:19:46,840 --> 00:19:49,560 Speaker 2: the fact that Tesla has its gigafactory in Texas. I 416 00:19:49,640 --> 00:19:53,040 Speaker 2: was actually down in downtown New York looking at the 417 00:19:53,080 --> 00:19:55,920 Speaker 2: cyber truck. They had the first cyber truck spread out 418 00:19:55,960 --> 00:19:58,399 Speaker 2: across the country over the past couple weeks, and so 419 00:19:58,440 --> 00:20:00,000 Speaker 2: there were a lot of people who were truck owners 420 00:20:00,040 --> 00:20:01,800 Speaker 2: as we'd never bought e these before. Who came to 421 00:20:01,840 --> 00:20:03,480 Speaker 2: take a look at the cyber truck and whether or 422 00:20:03,520 --> 00:20:05,080 Speaker 2: not you like the design of it, and I think 423 00:20:05,080 --> 00:20:08,120 Speaker 2: it is a unique design. I think that you could 424 00:20:08,119 --> 00:20:11,560 Speaker 2: see the potential if EV continue and their different model 425 00:20:11,600 --> 00:20:14,000 Speaker 2: offerings to reach more of that mass consumer market who 426 00:20:14,080 --> 00:20:15,639 Speaker 2: may not have considered an EV before. 427 00:20:16,000 --> 00:20:18,840 Speaker 1: Unique design. I feel like that is just the perfect 428 00:20:18,880 --> 00:20:21,520 Speaker 1: thing to get somebody listening to something on the audio 429 00:20:21,560 --> 00:20:24,399 Speaker 1: format to go and actually search up what it looks like. 430 00:20:24,560 --> 00:20:28,760 Speaker 1: So that's everyone's next assignment to see the unique design. 431 00:20:29,000 --> 00:20:31,680 Speaker 1: But pivoting actually to something that is also differing state 432 00:20:31,720 --> 00:20:35,760 Speaker 1: by state, is this direct to consumer model where selling 433 00:20:36,200 --> 00:20:41,600 Speaker 1: the vehicles directly to individuals is not always allowed. And 434 00:20:42,160 --> 00:20:44,119 Speaker 1: the question I want to ask is what's the deal 435 00:20:44,480 --> 00:20:46,240 Speaker 1: with dealerships? 436 00:20:47,040 --> 00:20:49,120 Speaker 2: I mean, it's like the million dollar question I think 437 00:20:49,280 --> 00:20:51,680 Speaker 2: we were talking about before with the UAW and four 438 00:20:51,720 --> 00:20:54,600 Speaker 2: than GM. Another potential hurdle that they've had to kind 439 00:20:54,600 --> 00:20:57,640 Speaker 2: of tackle is educating dealers and encouraging them to sell 440 00:20:57,640 --> 00:21:00,600 Speaker 2: electric vehicles. You could do a whole topic. Colleague Eric 441 00:21:00,720 --> 00:21:03,560 Speaker 2: Alex Haring has a great research note on dealerships and 442 00:21:03,600 --> 00:21:06,640 Speaker 2: really the additional costs they've added to this EV transition 443 00:21:06,760 --> 00:21:09,920 Speaker 2: for the legacy companies. In some cases and in some states, 444 00:21:10,000 --> 00:21:13,000 Speaker 2: if you're at Tesla or a Rivian, you can't actually 445 00:21:13,040 --> 00:21:15,199 Speaker 2: sell to a consumer or have a showroom because it 446 00:21:15,280 --> 00:21:19,080 Speaker 2: violates dealer laws. In other states, Tesla has been exempt, 447 00:21:19,160 --> 00:21:22,119 Speaker 2: but other automakers like rivinan Lucid can't sell directly to 448 00:21:22,160 --> 00:21:24,920 Speaker 2: consumers who are an online platform dealers. In the case 449 00:21:24,960 --> 00:21:27,080 Speaker 2: of Ford, for example, they've been trying to reform their 450 00:21:27,119 --> 00:21:29,960 Speaker 2: relationship and hold EV dealers to a higher standard, but 451 00:21:30,000 --> 00:21:32,240 Speaker 2: some of those dealers that push back and said use 452 00:21:32,280 --> 00:21:35,640 Speaker 2: are expensive to put in charging stations or this certain 453 00:21:35,720 --> 00:21:38,720 Speaker 2: dealer education. So you're seeing the automakers and the dealers 454 00:21:38,800 --> 00:21:42,520 Speaker 2: tussle over new relations but the dealers are pretty strong 455 00:21:42,760 --> 00:21:46,480 Speaker 2: I'd say lobbying forced in Washington. So how the legacy 456 00:21:46,520 --> 00:21:48,920 Speaker 2: OEMs are able to build with this partnership. I think 457 00:21:48,920 --> 00:21:51,399 Speaker 2: there's also different views within the automotive space on if 458 00:21:51,400 --> 00:21:54,120 Speaker 2: they're going to be a hindrance moving forward. I definitely 459 00:21:54,160 --> 00:21:57,200 Speaker 2: see some of the potential issues, but maybe to flip 460 00:21:57,240 --> 00:21:59,359 Speaker 2: the problem on its head, it could be an asset 461 00:21:59,400 --> 00:22:03,040 Speaker 2: in terms of like repairs. Right, Tesla has had issues 462 00:22:03,080 --> 00:22:05,880 Speaker 2: with customer service in terms of the repair side, while 463 00:22:05,920 --> 00:22:08,679 Speaker 2: dealers historically have helped with maintenance, and so if you 464 00:22:08,720 --> 00:22:12,280 Speaker 2: turn that negative asset into some reforms. The biggest issue 465 00:22:12,280 --> 00:22:15,080 Speaker 2: has been around this idea of dealer markup, so we 466 00:22:15,119 --> 00:22:16,800 Speaker 2: didn't get too much into it, but part of the 467 00:22:16,840 --> 00:22:19,160 Speaker 2: issue for Ford and GM has also been at their 468 00:22:19,200 --> 00:22:22,439 Speaker 2: upfront cost of EVS is higher than say Tesla. So 469 00:22:22,600 --> 00:22:25,080 Speaker 2: if you go to buy a Chevy Blazer EV which 470 00:22:25,119 --> 00:22:27,640 Speaker 2: is a new, pretty good looking model from GM, originally 471 00:22:27,640 --> 00:22:30,080 Speaker 2: they sold it as starting at about forty five thousand dollars, 472 00:22:30,080 --> 00:22:32,359 Speaker 2: but after all of like scale up issues, they priced 473 00:22:32,400 --> 00:22:34,480 Speaker 2: it at about fifty six thousand dollars. Now that's just 474 00:22:34,560 --> 00:22:37,080 Speaker 2: the MSR pay. If you go into a dealer, there's 475 00:22:37,119 --> 00:22:38,919 Speaker 2: something known as the dealer markup, and they can make 476 00:22:38,960 --> 00:22:41,560 Speaker 2: it even more expensive. What Ford is trying to do 477 00:22:41,880 --> 00:22:44,760 Speaker 2: is to essentially make sure that the online pricing for 478 00:22:44,840 --> 00:22:47,159 Speaker 2: EVS is what you actually end up paying for a 479 00:22:47,200 --> 00:22:49,879 Speaker 2: base price when you walk in to a dealer. So 480 00:22:49,920 --> 00:22:52,399 Speaker 2: again we'll see how it changes over time, but it 481 00:22:52,480 --> 00:22:55,040 Speaker 2: is another hurdle on top of maybe the labor costs, 482 00:22:55,080 --> 00:22:57,119 Speaker 2: on top of the batteries, scaling concerns, and I think 483 00:22:57,119 --> 00:22:58,919 Speaker 2: then if it could be any more clear, it's that 484 00:22:58,960 --> 00:23:00,639 Speaker 2: there's a lot of issue in the way of these 485 00:23:00,720 --> 00:23:03,040 Speaker 2: legacy companies that they have to tackle now at risk 486 00:23:03,119 --> 00:23:05,600 Speaker 2: of falling behind not only Tesla and Rivian, but other 487 00:23:05,720 --> 00:23:08,520 Speaker 2: companies like Hondai, Kia and Volvo that are interested in 488 00:23:08,640 --> 00:23:10,359 Speaker 2: gaining market share in the US market. 489 00:23:10,560 --> 00:23:13,080 Speaker 1: So it continues to be a hotly debated topic that 490 00:23:13,160 --> 00:23:15,720 Speaker 1: we'll have to watch because we don't really know which 491 00:23:15,760 --> 00:23:18,480 Speaker 1: way it's going to go with the dealerships, do we no? 492 00:23:18,880 --> 00:23:21,159 Speaker 2: And I think if anything, they've pushed back on it 493 00:23:21,160 --> 00:23:23,040 Speaker 2: more so I don't want to sound pollyannage that it's 494 00:23:23,080 --> 00:23:25,600 Speaker 2: going to nestarly work out well. I think basically it 495 00:23:25,720 --> 00:23:28,399 Speaker 2: is a reality of the US policy framework that there 496 00:23:28,400 --> 00:23:30,200 Speaker 2: are a lot of dealer laws at the state level, 497 00:23:30,320 --> 00:23:33,440 Speaker 2: and you've seen actually advocacy groups go out and advocating 498 00:23:33,480 --> 00:23:36,760 Speaker 2: for more direct sales policy provisions in places like New York, 499 00:23:36,840 --> 00:23:39,480 Speaker 2: which is quite limited, and to date there haven't been 500 00:23:39,560 --> 00:23:41,920 Speaker 2: much success on that. So we'll see how that develops too. 501 00:23:42,119 --> 00:23:44,679 Speaker 2: Maybe not only will there be more pressure on dealers 502 00:23:44,720 --> 00:23:47,600 Speaker 2: from the automakers, but from folks in the environmental community, 503 00:23:47,640 --> 00:23:50,160 Speaker 2: and if things don't change, maybe they'll be even increase pressure. 504 00:23:50,440 --> 00:23:52,400 Speaker 1: So now let's go to the state that I grew 505 00:23:52,480 --> 00:23:55,719 Speaker 1: up in, California, which has often when I was growing up, 506 00:23:55,880 --> 00:23:59,400 Speaker 1: referred to as the incubator for the rest of the country. 507 00:23:59,520 --> 00:24:04,520 Speaker 1: And that's because they tend to try different laws that 508 00:24:04,680 --> 00:24:07,280 Speaker 1: then have an impact on other parts of the country. 509 00:24:07,320 --> 00:24:10,640 Speaker 1: And with vehicles, what I'm referring to specifically is fuel 510 00:24:10,640 --> 00:24:14,280 Speaker 1: economy standards, which the California fuel economy standards we know 511 00:24:14,600 --> 00:24:17,920 Speaker 1: have impacted then the fuel economy standards in more lenient 512 00:24:18,000 --> 00:24:22,600 Speaker 1: states because the vehicle manufacturers essentially work towards that one car. 513 00:24:22,640 --> 00:24:25,159 Speaker 1: It doesn't make sense to have multiple different cars that 514 00:24:25,200 --> 00:24:27,760 Speaker 1: are emitting in different ways if you've already achieved the 515 00:24:27,840 --> 00:24:30,639 Speaker 1: higher standards. So when it comes to other parts of 516 00:24:30,920 --> 00:24:33,600 Speaker 1: the vehicle space, and specifically what we're talking about today 517 00:24:33,600 --> 00:24:38,640 Speaker 1: are the battery and hybrids, what ways has California been 518 00:24:39,000 --> 00:24:42,920 Speaker 1: an influencer, if you will, of other states in addition 519 00:24:42,960 --> 00:24:44,720 Speaker 1: to fuel economy standards. 520 00:24:44,480 --> 00:24:47,520 Speaker 2: Yeah, I think the two biggest ones is one the 521 00:24:47,600 --> 00:24:50,879 Speaker 2: Serra Mission vehicle program, which is not on top of 522 00:24:50,880 --> 00:24:54,600 Speaker 2: the fuel economy standards, encouraging more battery electric vehicles, fuel 523 00:24:54,600 --> 00:24:57,919 Speaker 2: cell previously, and plug and hybrids to be sold not 524 00:24:57,960 --> 00:25:00,600 Speaker 2: only California, but what are known as the Californi So 525 00:25:00,640 --> 00:25:02,639 Speaker 2: these are the states that again have signed on to 526 00:25:02,760 --> 00:25:05,640 Speaker 2: California's policies. And then one that's been making waves over 527 00:25:05,680 --> 00:25:08,600 Speaker 2: the last i'd say three years is basically states that 528 00:25:08,720 --> 00:25:10,880 Speaker 2: sign on to what is called Advanced Clean Cars too. 529 00:25:11,000 --> 00:25:13,960 Speaker 2: So Advanced Clean Cars Too is California using that fuel 530 00:25:14,000 --> 00:25:16,720 Speaker 2: economy standards in order to build a pathway through the 531 00:25:16,720 --> 00:25:19,760 Speaker 2: phase out of sales of internal combustion vehicles by twenty 532 00:25:19,800 --> 00:25:21,879 Speaker 2: thirty five. Now it doesn't mean that plug and hybrids 533 00:25:21,880 --> 00:25:24,600 Speaker 2: won't be sold. I think they essentially allow for twenty 534 00:25:24,600 --> 00:25:27,000 Speaker 2: percent of sales in twenty thirty five to BP haves 535 00:25:27,080 --> 00:25:29,960 Speaker 2: at a pretty strict all electric range minimum of about 536 00:25:30,000 --> 00:25:32,680 Speaker 2: fifty miles. But other states has signed on and Dana, 537 00:25:32,760 --> 00:25:34,520 Speaker 2: you know you grew up in California. I grew up 538 00:25:34,520 --> 00:25:38,720 Speaker 2: in the California of the East, New Jersey, and basically 539 00:25:38,760 --> 00:25:41,080 Speaker 2: New Jersey has followed a lot of that policy as 540 00:25:41,080 --> 00:25:43,400 Speaker 2: well in terms of signing on to the Advanced Clean 541 00:25:43,440 --> 00:25:46,720 Speaker 2: Cars too. Just like California had a subsidy for electric vehicles, 542 00:25:46,840 --> 00:25:51,160 Speaker 2: New Jersey does, but also beyond New Jersey, Massachusetts, Maryland 543 00:25:51,240 --> 00:25:53,200 Speaker 2: and other states have signed on to Advanced Clean Cars 544 00:25:53,200 --> 00:25:54,960 Speaker 2: too and are kind of working through the process of 545 00:25:55,040 --> 00:25:57,720 Speaker 2: ratifying it. So, you know, stepping back from the bigger 546 00:25:57,760 --> 00:26:00,040 Speaker 2: picture or to the bigger picture. How this ties in 547 00:26:00,080 --> 00:26:02,600 Speaker 2: to some of these automaker announcements. Even with the delay 548 00:26:02,640 --> 00:26:04,840 Speaker 2: of these new year term goals by GM and FORD, 549 00:26:05,160 --> 00:26:07,879 Speaker 2: what hasn't really happened to date is more of the 550 00:26:07,920 --> 00:26:10,560 Speaker 2: sticks that are coming in the future. Right. We've talked 551 00:26:10,560 --> 00:26:13,440 Speaker 2: a lot about IRA and the potential parrots, but automakers 552 00:26:13,480 --> 00:26:15,320 Speaker 2: can ignore the fact that we are now at the 553 00:26:15,400 --> 00:26:18,399 Speaker 2: end of twenty twenty three and in about eleven years 554 00:26:18,440 --> 00:26:21,280 Speaker 2: from now in many states in the US, and as 555 00:26:21,320 --> 00:26:23,800 Speaker 2: more sign on, there will not be the ability to 556 00:26:23,840 --> 00:26:27,600 Speaker 2: sell purely guest line cars anymore. So. California again started 557 00:26:27,600 --> 00:26:30,640 Speaker 2: with the idea first in twenty twenty and went through 558 00:26:30,640 --> 00:26:33,200 Speaker 2: that process. It was actually right around the presidential election 559 00:26:33,280 --> 00:26:35,919 Speaker 2: that Governor Gavin Newsom indicated that he was going for it, 560 00:26:35,960 --> 00:26:37,840 Speaker 2: and it took a couple of years for a CARB 561 00:26:38,040 --> 00:26:40,800 Speaker 2: and other policymakers to essentially write up the roles. But 562 00:26:40,920 --> 00:26:43,679 Speaker 2: now that they're finalized, it's beginning to have pressure, and 563 00:26:43,720 --> 00:26:46,960 Speaker 2: that goes beyond any future presidential election. California has always 564 00:26:47,000 --> 00:26:50,440 Speaker 2: been willing to stick out ahead to push environmental standards 565 00:26:50,480 --> 00:26:53,040 Speaker 2: hire especially in this transportation space where they have the 566 00:26:53,119 --> 00:26:54,800 Speaker 2: California Waiver accessibility. 567 00:26:55,119 --> 00:26:57,600 Speaker 1: So, with COP twenty eight just about to begin, and 568 00:26:57,680 --> 00:27:01,200 Speaker 1: with the missions coming from the trans rotation sector being 569 00:27:01,280 --> 00:27:04,600 Speaker 1: the largest share of emissions coming out of the US, 570 00:27:04,760 --> 00:27:08,960 Speaker 1: how optimistic are you that the vehicle space is going 571 00:27:09,000 --> 00:27:12,240 Speaker 1: to reduce its emissions and at some point not be 572 00:27:12,440 --> 00:27:14,919 Speaker 1: the primary source of emissions coming from the US. 573 00:27:15,440 --> 00:27:17,560 Speaker 2: Yeah, it's a good question, Dan, and also is a 574 00:27:17,560 --> 00:27:20,920 Speaker 2: really good plug for a material that we're putting out 575 00:27:20,960 --> 00:27:23,800 Speaker 2: next week, our third Zero Mission Vehicle Factbook, which is 576 00:27:23,840 --> 00:27:27,360 Speaker 2: beearheaded by our team leader Alexandro o'dnovan, that will cover 577 00:27:27,440 --> 00:27:30,119 Speaker 2: many of these facts in terms of emissions and how 578 00:27:30,200 --> 00:27:32,879 Speaker 2: people should be feeling. I won't bury the lead, but 579 00:27:32,960 --> 00:27:35,440 Speaker 2: what I will say is that what's interesting about evs 580 00:27:35,760 --> 00:27:38,159 Speaker 2: is they are closely tied to that power sector. So 581 00:27:38,200 --> 00:27:41,359 Speaker 2: the cleaner that the US grid gets, the more beneficial 582 00:27:41,760 --> 00:27:45,200 Speaker 2: electric vehicles are moving forward, just on a life cycle basis. 583 00:27:45,280 --> 00:27:48,439 Speaker 2: Given the electricity efficiency over gasoline, I think we're going 584 00:27:48,520 --> 00:27:50,359 Speaker 2: to get there. I think the big question of this 585 00:27:50,440 --> 00:27:53,159 Speaker 2: decade is less about if the US is going to 586 00:27:53,200 --> 00:27:56,080 Speaker 2: make an ev transition, but one how fast and two 587 00:27:56,200 --> 00:27:58,359 Speaker 2: who is going to be the market leaders by the 588 00:27:58,440 --> 00:28:00,800 Speaker 2: end of the decade. It's still early to tell, and 589 00:28:00,800 --> 00:28:02,520 Speaker 2: I don't think this is going to become a single 590 00:28:02,720 --> 00:28:05,440 Speaker 2: test the only dominated market by the end of the decade. 591 00:28:05,560 --> 00:28:08,159 Speaker 2: But if GM and Ford or not just to you know, 592 00:28:08,160 --> 00:28:10,960 Speaker 2: pick on them, but Toyota, Honda all too far behind 593 00:28:11,119 --> 00:28:13,280 Speaker 2: in a kind of growing market space, they could be 594 00:28:13,320 --> 00:28:16,919 Speaker 2: losing out on valuable learnings that these other automakers have 595 00:28:16,960 --> 00:28:19,280 Speaker 2: already undergone. So I think we're going to get there. 596 00:28:19,400 --> 00:28:21,800 Speaker 2: And I think globally we at BNEF in our long 597 00:28:21,840 --> 00:28:25,800 Speaker 2: termyby outlook cepeak emmissions from road transport happening in twenty 598 00:28:25,840 --> 00:28:27,760 Speaker 2: twenty nine globally, so we do have a bit of 599 00:28:27,800 --> 00:28:29,440 Speaker 2: time to go. We got to build up that eb 600 00:28:29,520 --> 00:28:31,960 Speaker 2: fleet over time to really start to see emissions reduction. 601 00:28:32,160 --> 00:28:35,439 Speaker 2: But you'll see in the backbook not only impressive charts 602 00:28:35,480 --> 00:28:38,640 Speaker 2: on emissions but also on oil demand reduction, and so 603 00:28:38,680 --> 00:28:40,040 Speaker 2: that's something folks shoul look forward to. 604 00:28:40,480 --> 00:28:43,120 Speaker 1: Great well, Corey, thank you very much for joining us 605 00:28:43,120 --> 00:28:45,680 Speaker 1: today and talking about a wide range of issues facing 606 00:28:45,800 --> 00:28:48,880 Speaker 1: the US and the transition on the vehicle side. 607 00:28:49,080 --> 00:28:51,200 Speaker 2: Thanks Dana, I really appreciate you having here. 608 00:29:00,160 --> 00:29:03,520 Speaker 1: Bloomberg NEF is a service provided by Bloomberg Finance LP 609 00:29:03,680 --> 00:29:07,080 Speaker 1: in its affiliates. This recording does not constitute, nor should 610 00:29:07,080 --> 00:29:11,120 Speaker 1: it be construed as investment advice, investment recommendations, or a 611 00:29:11,160 --> 00:29:15,080 Speaker 1: recommendation as to an investment or other strategy. Bloomberg NEF 612 00:29:15,280 --> 00:29:18,400 Speaker 1: should not be considered as information sufficient upon which to 613 00:29:18,400 --> 00:29:22,200 Speaker 1: base an investment decision. Neither Bloomberg Finance LP nor any 614 00:29:22,200 --> 00:29:25,560 Speaker 1: of its affiliates makes any representation or warranty as to 615 00:29:25,600 --> 00:29:29,040 Speaker 1: the accuracy or completeness of the information contained in this recording, 616 00:29:29,400 --> 00:29:32,200 Speaker 1: and any liability as a result of this recording is 617 00:29:32,240 --> 00:29:33,320 Speaker 1: expressly disclaimed.