1 00:00:02,440 --> 00:00:10,240 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I'm Stephen Carol and 2 00:00:10,400 --> 00:00:12,880 Speaker 1: this is Here's Why, where we take one news story 3 00:00:12,920 --> 00:00:14,880 Speaker 1: and explain it in just a few minutes with our 4 00:00:14,920 --> 00:00:20,239 Speaker 1: experts here at Bloomberg. It's the biggest transformation of the 5 00:00:20,280 --> 00:00:23,640 Speaker 1: auto industry in a century. The electric cars are having 6 00:00:23,680 --> 00:00:27,280 Speaker 1: a moment. The demand for electric vehicles is booming worldwide. 7 00:00:27,280 --> 00:00:29,920 Speaker 1: Sales of electric vehicles are projected to boom over the 8 00:00:30,000 --> 00:00:32,400 Speaker 1: next few years. The heavy boom is here to stay. 9 00:00:32,600 --> 00:00:35,600 Speaker 1: The massive growth in electric vehicles has come thanks to 10 00:00:35,720 --> 00:00:39,480 Speaker 1: generous subsidies from governments in many parts of the world, 11 00:00:39,640 --> 00:00:44,400 Speaker 1: and with it cries of unfair competition, particularly directed at China, 12 00:00:44,600 --> 00:00:48,960 Speaker 1: whose subsidies range from cheap land to buying incentives. That's 13 00:00:49,000 --> 00:00:52,760 Speaker 1: caused trade and diplomatic tensions with the United States and 14 00:00:53,000 --> 00:00:54,160 Speaker 1: the European Union. 15 00:00:54,280 --> 00:00:56,360 Speaker 2: Biden came out with his terrors from the Chinese cars 16 00:00:56,400 --> 00:00:58,200 Speaker 2: going over to the US, But now the EU is 17 00:00:58,560 --> 00:00:59,640 Speaker 2: sort of prepping their ters. 18 00:00:59,680 --> 00:01:03,680 Speaker 1: Canada is now preparing potential new tarrisl on Chinese electric vehicles. 19 00:01:03,840 --> 00:01:08,000 Speaker 2: This new range of tariffs all increases no decreases on 20 00:01:08,080 --> 00:01:10,600 Speaker 2: a range of industries, including EV's. 21 00:01:10,360 --> 00:01:13,320 Speaker 1: But at the same time, demand for electric vehicles may 22 00:01:13,319 --> 00:01:17,160 Speaker 1: be leveling off, and the question of affordability makes subsidies 23 00:01:17,240 --> 00:01:21,400 Speaker 1: all the more important. So here's why governments are desperate 24 00:01:21,440 --> 00:01:25,440 Speaker 1: to defend their EV industries, and our Global Autos editor 25 00:01:25,480 --> 00:01:29,200 Speaker 1: Craig Trudall joins us now for more. Hey, Greg, great 26 00:01:29,240 --> 00:01:33,200 Speaker 1: to see you. How much are governments putting into supporting 27 00:01:33,400 --> 00:01:34,200 Speaker 1: EV production? 28 00:01:34,720 --> 00:01:37,640 Speaker 2: Yeah, the numbers, if you look globally, are staggering. But 29 00:01:37,800 --> 00:01:40,280 Speaker 2: just to pick out one number in particular, and this 30 00:01:40,480 --> 00:01:43,880 Speaker 2: comes recently from the Center for Strategic and International Studies, 31 00:01:43,920 --> 00:01:47,920 Speaker 2: they estimated last month that China's EV sector received at 32 00:01:48,040 --> 00:01:51,200 Speaker 2: least two hundred and thirty one billion dollars in government 33 00:01:51,280 --> 00:01:54,360 Speaker 2: subsidies and aid from two thousand and nine through the 34 00:01:54,480 --> 00:01:57,480 Speaker 2: end of last year, and that was about eighteen point 35 00:01:57,560 --> 00:02:00,640 Speaker 2: eight percent of total sales in that span. So we're 36 00:02:00,640 --> 00:02:03,080 Speaker 2: talking about a serious amount of money. And the other 37 00:02:03,160 --> 00:02:06,040 Speaker 2: thing I think that really stuck out for me from 38 00:02:06,080 --> 00:02:09,200 Speaker 2: that report was just how sustained that is? Right, We're 39 00:02:09,240 --> 00:02:11,600 Speaker 2: talking about from two thousand and nine to last year, 40 00:02:11,639 --> 00:02:13,760 Speaker 2: so quite a bit of time that has passed, and 41 00:02:14,080 --> 00:02:17,000 Speaker 2: that helps you understand that when you read these figures, 42 00:02:17,360 --> 00:02:20,160 Speaker 2: whether it's the Biden administration and all the money they're 43 00:02:20,200 --> 00:02:22,720 Speaker 2: pumping into this through the IRA, whether you look at 44 00:02:22,800 --> 00:02:26,320 Speaker 2: the European Union and individual countries how much they're pumping in. 45 00:02:26,560 --> 00:02:29,000 Speaker 2: The reason they're doing so is because they are on 46 00:02:29,080 --> 00:02:31,720 Speaker 2: the back foot as a result of the significant amount 47 00:02:31,720 --> 00:02:34,760 Speaker 2: of money and sustained support that China has put into 48 00:02:34,760 --> 00:02:35,480 Speaker 2: this sector. 49 00:02:35,720 --> 00:02:38,680 Speaker 1: So is this about protectionism them we think about the 50 00:02:38,680 --> 00:02:41,680 Speaker 1: sums of money involved or is it a push towards 51 00:02:41,680 --> 00:02:44,800 Speaker 1: the green translation that's motivating governments to put this amount 52 00:02:44,800 --> 00:02:45,560 Speaker 1: of money involved. 53 00:02:45,639 --> 00:02:48,000 Speaker 2: I think it's both, and when you look back over 54 00:02:48,200 --> 00:02:51,360 Speaker 2: many years, this is an industry that governments have been 55 00:02:51,400 --> 00:02:53,840 Speaker 2: willing to protect right and for good reason. I mean, 56 00:02:53,840 --> 00:02:56,680 Speaker 2: the auto industry accounts for about seven percent of total 57 00:02:56,720 --> 00:03:00,160 Speaker 2: employment in the EU. Some two point four million Europeans 58 00:03:00,200 --> 00:03:04,880 Speaker 2: are directly involved in manufacturing of cars and vans and trucks. 59 00:03:05,080 --> 00:03:07,440 Speaker 2: The industry is something like three to three point five 60 00:03:07,480 --> 00:03:10,760 Speaker 2: percent of USGDP. So you know, if you are assuming 61 00:03:10,840 --> 00:03:13,800 Speaker 2: that in order for this industry to continue, it needs 62 00:03:13,840 --> 00:03:17,200 Speaker 2: to go greener and it needs to electrify and this 63 00:03:17,240 --> 00:03:20,560 Speaker 2: is the way forward, then you absolutely need to protect 64 00:03:20,680 --> 00:03:23,720 Speaker 2: companies that are trying to make that long and costly transition. 65 00:03:24,000 --> 00:03:27,120 Speaker 2: China didn't become so big overnight. It took quite a 66 00:03:27,120 --> 00:03:30,160 Speaker 2: bit of money and a long period of sort of patients. 67 00:03:30,200 --> 00:03:32,400 Speaker 2: And I do think that we're going to see some 68 00:03:32,440 --> 00:03:34,760 Speaker 2: real sort of questions being raised as to are we 69 00:03:34,800 --> 00:03:37,680 Speaker 2: throwing good money after bad. On the other side of that, 70 00:03:37,800 --> 00:03:40,080 Speaker 2: you have to say, this is an industry with so 71 00:03:40,120 --> 00:03:42,880 Speaker 2: many jobs to protect that if the state doesn't step in, 72 00:03:43,080 --> 00:03:44,400 Speaker 2: then a lot of people are going to be out 73 00:03:44,440 --> 00:03:44,800 Speaker 2: of work. 74 00:03:45,040 --> 00:03:47,200 Speaker 1: What about the free market argument? Though, wouldn't it be 75 00:03:47,240 --> 00:03:50,040 Speaker 1: just easier if we let the cheaper cars subsidized by 76 00:03:50,120 --> 00:03:52,560 Speaker 1: China come into the market, bring down costs, more people 77 00:03:52,600 --> 00:03:54,240 Speaker 1: will spend, stimulate the markets. 78 00:03:54,480 --> 00:03:57,960 Speaker 2: I think there are totally valid arguments for at least 79 00:03:58,000 --> 00:04:00,480 Speaker 2: being more open than we've seen some government and so 80 00:04:00,600 --> 00:04:04,000 Speaker 2: you've seen the Biden administration recently announced that they're going 81 00:04:04,040 --> 00:04:07,080 Speaker 2: to take tariffs on Chinese evs north of one hundred percent. 82 00:04:07,280 --> 00:04:10,560 Speaker 2: That's really, really substantial. And I do think it's a 83 00:04:10,640 --> 00:04:13,960 Speaker 2: case where when we talk about election politics, even in 84 00:04:14,000 --> 00:04:16,960 Speaker 2: spite of that when he levels attacks against this former 85 00:04:17,040 --> 00:04:20,520 Speaker 2: president Donald Trump still uses this rhetoric of this idea 86 00:04:20,560 --> 00:04:23,640 Speaker 2: that Biden wants to have all of Americans driving evs 87 00:04:24,000 --> 00:04:25,400 Speaker 2: and oh, by the way, they're all going to come 88 00:04:25,400 --> 00:04:27,800 Speaker 2: from China, even in spite of the fact that the 89 00:04:27,839 --> 00:04:31,720 Speaker 2: administration is taking such a dramatic measures to prevent that 90 00:04:31,920 --> 00:04:34,680 Speaker 2: very future that Trump has warned about. So I do 91 00:04:34,760 --> 00:04:36,960 Speaker 2: think that politics really comes into play here as well 92 00:04:37,000 --> 00:04:39,920 Speaker 2: in terms of protectionism, and it plays well, and Trump, 93 00:04:39,960 --> 00:04:42,920 Speaker 2: I think is quite honest about that being something that 94 00:04:42,960 --> 00:04:45,520 Speaker 2: he's proud of that this was an observation that he 95 00:04:45,880 --> 00:04:48,719 Speaker 2: has made that was right and has proven right in 96 00:04:48,720 --> 00:04:50,440 Speaker 2: the sense that it plays well with voters. 97 00:04:50,560 --> 00:04:53,080 Speaker 1: Yeah, because electric vehicles have been caught up in these 98 00:04:53,320 --> 00:04:56,640 Speaker 1: geopolitical tensions between the US and China, as you mentioned, 99 00:04:56,640 --> 00:05:00,200 Speaker 1: but the measures being used the taris, for example, those 100 00:05:00,200 --> 00:05:03,640 Speaker 1: tireffs on imports of Chinese electric cars not terribly effective 101 00:05:03,880 --> 00:05:06,400 Speaker 1: given that there aren't that many Chinese electric cars sold 102 00:05:06,440 --> 00:05:07,080 Speaker 1: in the US. 103 00:05:07,400 --> 00:05:10,200 Speaker 2: I think the terriff rate under the Trump administration went 104 00:05:10,279 --> 00:05:13,120 Speaker 2: up significantly and already was prohibitive. And I do think 105 00:05:13,160 --> 00:05:16,760 Speaker 2: that while there has been some flirtation among some companies, 106 00:05:16,760 --> 00:05:19,520 Speaker 2: some of the manufacturers in China that do obviously see 107 00:05:19,520 --> 00:05:21,440 Speaker 2: the US for what it is, which is quite a 108 00:05:21,440 --> 00:05:24,240 Speaker 2: big market, and a market that not only is big, 109 00:05:24,279 --> 00:05:26,520 Speaker 2: but is where more than anywhere else in the world, 110 00:05:26,560 --> 00:05:28,960 Speaker 2: people are willing to pay significant amounts of money for 111 00:05:29,000 --> 00:05:31,960 Speaker 2: each vehicle that is purchased. It is a really attractive market. 112 00:05:32,040 --> 00:05:35,039 Speaker 2: And yet even still companies like buyd this is a 113 00:05:35,040 --> 00:05:37,479 Speaker 2: company that's been lighting the world on fire lately, even 114 00:05:37,520 --> 00:05:40,760 Speaker 2: they have really had trepidation before these recent measures that 115 00:05:40,800 --> 00:05:44,520 Speaker 2: the Biden administration have announced about entering that market. They 116 00:05:44,680 --> 00:05:46,960 Speaker 2: just don't feel like they are welcome, and I think 117 00:05:47,000 --> 00:05:49,520 Speaker 2: for good reason, given where the winds are blowing. 118 00:05:49,680 --> 00:05:52,240 Speaker 1: How did drivers feel about all of this? Where is 119 00:05:52,360 --> 00:05:55,760 Speaker 1: demand for electric vehicles and is it on pace to 120 00:05:56,240 --> 00:05:59,000 Speaker 1: replace in a big way the traditional combustion engine. 121 00:05:59,040 --> 00:06:02,159 Speaker 2: I think we really got very excited over the last 122 00:06:02,240 --> 00:06:05,719 Speaker 2: few years about the momentum that was seen in electric vehicles, 123 00:06:05,760 --> 00:06:07,880 Speaker 2: and for the most part, even with this sort of 124 00:06:08,200 --> 00:06:10,359 Speaker 2: slowdown that we've seen in the last year or so, 125 00:06:10,720 --> 00:06:13,360 Speaker 2: it is the case that when people buy evs, they 126 00:06:13,400 --> 00:06:16,120 Speaker 2: generally are quite happy with them. And you do talk 127 00:06:16,200 --> 00:06:18,840 Speaker 2: with people who know this industry well and even just 128 00:06:19,080 --> 00:06:22,240 Speaker 2: make the transition without necessarily being car buffs. They will 129 00:06:22,240 --> 00:06:25,560 Speaker 2: tell you the faster acceleration if you don't have to 130 00:06:25,600 --> 00:06:28,279 Speaker 2: worry about stopping for gas all the time or paying 131 00:06:28,320 --> 00:06:30,120 Speaker 2: for gas that's a quite nice perk. 132 00:06:30,520 --> 00:06:32,600 Speaker 1: How far away is the infrastructure from being able to 133 00:06:32,680 --> 00:06:33,480 Speaker 1: provide us. 134 00:06:33,520 --> 00:06:36,640 Speaker 2: That's the rub right, and also just concerns about even 135 00:06:36,680 --> 00:06:39,320 Speaker 2: if the infrastructure is there, how often am I going 136 00:06:39,360 --> 00:06:41,159 Speaker 2: to need it? And I do think that this is 137 00:06:41,440 --> 00:06:46,080 Speaker 2: the ultimate sort of case of consumers not necessarily making 138 00:06:46,120 --> 00:06:48,919 Speaker 2: purchases rationally. It very much comes from a sort of 139 00:06:48,920 --> 00:06:53,200 Speaker 2: psychological aspect of do I need charging even if I'm 140 00:06:53,240 --> 00:06:55,239 Speaker 2: only going to need it just a handful of times 141 00:06:55,240 --> 00:06:58,280 Speaker 2: of year tops. This is generally the case that most 142 00:06:58,320 --> 00:07:01,719 Speaker 2: trips are quite short, electric vehicles from more than capable 143 00:07:01,720 --> 00:07:02,440 Speaker 2: of handling them. 144 00:07:02,520 --> 00:07:04,440 Speaker 1: Yeah, and of course an interesting factor to consider the 145 00:07:04,480 --> 00:07:06,880 Speaker 1: future of this industry as well. Craig Trudell, our Global 146 00:07:06,920 --> 00:07:09,600 Speaker 1: Autos Editor, thank you very much for joining us with 147 00:07:09,680 --> 00:07:12,720 Speaker 1: that explanation of the centrality of the EV industry to 148 00:07:12,960 --> 00:07:16,640 Speaker 1: those trade tensions as well. Thanks to Craig Trudell, our 149 00:07:16,720 --> 00:07:20,320 Speaker 1: Global Autos Editor. For more explanations like this from our 150 00:07:20,360 --> 00:07:23,600 Speaker 1: team of twenty seven hundred journalists and analysts around the world. 151 00:07:23,880 --> 00:07:26,760 Speaker 1: Search for Quick Take on the Bloomberg website or Bloomberg 152 00:07:26,800 --> 00:07:30,920 Speaker 1: Business app. I'm Stephen Carol. This is Here's why. I'll 153 00:07:30,920 --> 00:07:33,160 Speaker 1: be back next week with more. Thanks for listening.