1 00:00:00,080 --> 00:00:03,480 Speaker 1: Hi everyone. On June ninth, BENEF published its annual flagship 2 00:00:03,520 --> 00:00:07,480 Speaker 1: report on transport, the Long Term Electric Vehicle Outlook, or 3 00:00:07,720 --> 00:00:11,880 Speaker 1: EVO for short. The report looks at how electrification, shared mobility, 4 00:00:11,920 --> 00:00:14,480 Speaker 1: and autonomous driving will impact road transport from now out, 5 00:00:15,800 --> 00:00:17,079 Speaker 1: and a couple of weeks will have the head of 6 00:00:17,079 --> 00:00:20,079 Speaker 1: Transport for BENF and evo's lead author Colin mccaracter on 7 00:00:20,120 --> 00:00:22,239 Speaker 1: the show to run us through what they found. But 8 00:00:22,280 --> 00:00:24,720 Speaker 1: today we've got kind of a preview or trailer for it, 9 00:00:25,120 --> 00:00:27,600 Speaker 1: or at least an important part of it, which is China. 10 00:00:27,800 --> 00:00:29,880 Speaker 1: In the report, Colin and the authors state that they 11 00:00:29,920 --> 00:00:33,640 Speaker 1: expect evs to account for passenger vehicle sales in China 12 00:00:35,080 --> 00:00:41,520 Speaker 1: rising and seventy. Now, this will put about two twenty 13 00:00:41,600 --> 00:00:43,960 Speaker 1: million e vs on the road in China at that point. 14 00:00:44,440 --> 00:00:46,000 Speaker 1: Needless to say, this is going to be a huge 15 00:00:46,040 --> 00:00:48,599 Speaker 1: chunk of the global market. But how will things get there? 16 00:00:48,640 --> 00:00:51,400 Speaker 1: How will the market grow to that point? Sure, there'll 17 00:00:51,400 --> 00:00:53,680 Speaker 1: be a build out of robust charging infrastructure that's needed, 18 00:00:54,640 --> 00:00:57,360 Speaker 1: and there are direct purchasing centers for consumers, but those 19 00:00:57,400 --> 00:00:59,800 Speaker 1: are being phased out this weekend the show. We've got 20 00:01:00,280 --> 00:01:03,320 Speaker 1: me Electric Vehicles analysts for BENF based out of Beijing. 21 00:01:03,600 --> 00:01:05,039 Speaker 1: She's going to tell us about some of the government 22 00:01:05,080 --> 00:01:07,640 Speaker 1: policies put into place to help accelerate e V adoption. 23 00:01:08,080 --> 00:01:10,640 Speaker 1: See what I did there? Sorry, I couldn't resist. In particular, 24 00:01:10,959 --> 00:01:13,120 Speaker 1: she'll tell us about the New Energy Vehicle or any 25 00:01:13,200 --> 00:01:16,800 Speaker 1: V targets and corporate average fuel consumption credit systems. Under 26 00:01:16,800 --> 00:01:19,200 Speaker 1: the n e V credit system, automakers are required to 27 00:01:19,200 --> 00:01:21,880 Speaker 1: generate any V credits from the production of battery, electric, 28 00:01:22,160 --> 00:01:25,160 Speaker 1: plug and hybrid and fuel cell vehicles in order to 29 00:01:25,160 --> 00:01:28,800 Speaker 1: meet the government assigned any V targets. Manufacturers that do 30 00:01:28,920 --> 00:01:32,120 Speaker 1: not generate enough credits can purchase them from other automakers 31 00:01:32,160 --> 00:01:34,720 Speaker 1: to avoid penalties. It's kind of like cap and trade, 32 00:01:34,760 --> 00:01:36,720 Speaker 1: but for cars. And see he's going to tell us 33 00:01:36,720 --> 00:01:39,080 Speaker 1: all about it. Our discussion is based on a report 34 00:01:39,720 --> 00:01:43,200 Speaker 1: China's New Energy Vehicle Credit system. Being a user can 35 00:01:43,200 --> 00:01:45,279 Speaker 1: get this report on benef go on the Bloomberg terminal, 36 00:01:45,600 --> 00:01:48,639 Speaker 1: BENIF dot com and the beanof mobile app. As a reminder, 37 00:01:48,680 --> 00:01:50,840 Speaker 1: Beanis does not provide investment or strategy advice, and you 38 00:01:50,840 --> 00:01:52,560 Speaker 1: can hear the full disclaimer at the end of the show. 39 00:01:53,000 --> 00:01:55,120 Speaker 1: I'm Mark Taylor, and you're listening to switch on the 40 00:01:55,120 --> 00:02:05,160 Speaker 1: BENF podcast see thanks for joining today, Thanks for having me. 41 00:02:05,480 --> 00:02:07,920 Speaker 1: Can you start us off just with a very very 42 00:02:08,160 --> 00:02:13,880 Speaker 1: high level overview of China's emission reduction target. China's presidents 43 00:02:13,919 --> 00:02:18,680 Speaker 1: EMP actually announced that zero carbon neutrality targets in September. 44 00:02:18,880 --> 00:02:22,320 Speaker 1: So the goal is to have China reach the carbon 45 00:02:22,400 --> 00:02:27,040 Speaker 1: peak by and to reach carbon neutral by. So what 46 00:02:27,240 --> 00:02:30,400 Speaker 1: it translated into the world transport sector is that well, 47 00:02:30,440 --> 00:02:34,400 Speaker 1: although there's no specific targets set for particular sector, paints 48 00:02:34,440 --> 00:02:37,720 Speaker 1: a very direct picture that the country, the central government 49 00:02:37,800 --> 00:02:41,440 Speaker 1: wants all sectors in the in the country to essentially 50 00:02:41,440 --> 00:02:44,720 Speaker 1: to de carbonized and the passway for different for different 51 00:02:44,760 --> 00:02:47,160 Speaker 1: sectors company as far as a lot. So they want 52 00:02:47,160 --> 00:02:52,000 Speaker 1: to hit their peak of emissions. Would you say, okay, wow, 53 00:02:52,040 --> 00:02:55,320 Speaker 1: and then start coming down to zero by so thirty 54 00:02:55,360 --> 00:02:58,840 Speaker 1: years too to come down the mountain. I guess today 55 00:02:58,880 --> 00:03:01,200 Speaker 1: we're going to focus mostly on e v s or 56 00:03:01,200 --> 00:03:05,560 Speaker 1: electric vehicles and a policy that's come into play to 57 00:03:05,680 --> 00:03:07,920 Speaker 1: try to get those sales up and therefore get the 58 00:03:07,919 --> 00:03:12,120 Speaker 1: emissions down from the transportation sector, can you explain to 59 00:03:12,240 --> 00:03:15,120 Speaker 1: us just the well, start us off with the name 60 00:03:15,120 --> 00:03:18,400 Speaker 1: of the policy and a bit about its objectives. These 61 00:03:18,480 --> 00:03:22,200 Speaker 1: policy tools actually called New Energy Vehicle Mandate, So New 62 00:03:22,320 --> 00:03:26,080 Speaker 1: endin Vehicle is kind of China's definition of the electric vehicle, 63 00:03:26,160 --> 00:03:30,280 Speaker 1: which include battery, electric, plug in hybrid, and fuel cell vehicles. 64 00:03:30,280 --> 00:03:33,880 Speaker 1: So the mandate itself is very similar to California Stereo 65 00:03:33,960 --> 00:03:39,480 Speaker 1: Emission Vehicle or the mandate, and it requires automakers to 66 00:03:39,760 --> 00:03:45,040 Speaker 1: sell electric vehicles in order to produce NAP credit that's 67 00:03:45,040 --> 00:03:49,600 Speaker 1: going to meet a government assigned target. So essentially the 68 00:03:49,640 --> 00:03:55,600 Speaker 1: policy tool is designed to push automakers to sell more 69 00:03:55,680 --> 00:04:00,280 Speaker 1: electric vehicles, which the broader goal of China's push behind 70 00:04:00,320 --> 00:04:04,440 Speaker 1: the autric vehicle is not only to reduce carbon emission, 71 00:04:04,640 --> 00:04:07,480 Speaker 1: but also to reduce all the import and to transform 72 00:04:07,680 --> 00:04:11,880 Speaker 1: is industry towards more advance. Okay, so the idea is 73 00:04:11,960 --> 00:04:15,120 Speaker 1: that to reduce emissions by getting more electric vehicles out 74 00:04:15,120 --> 00:04:18,000 Speaker 1: on the road, and they do that by giving in 75 00:04:18,040 --> 00:04:21,400 Speaker 1: a new Energy Vehicle or an any V credit for 76 00:04:21,440 --> 00:04:24,080 Speaker 1: each electric vehicle sold to the automakers. Is that how 77 00:04:24,080 --> 00:04:27,040 Speaker 1: it works? Yeah, I think the policy itself is kind 78 00:04:27,040 --> 00:04:30,240 Speaker 1: of like just to force automakers, essentially to push automaker 79 00:04:30,320 --> 00:04:33,280 Speaker 1: to sell more evs. I think that's like the one 80 00:04:33,320 --> 00:04:36,520 Speaker 1: I subject for this policy. So the government will sign 81 00:04:36,640 --> 00:04:41,400 Speaker 1: like a target just in proportion to an automaker's domestic 82 00:04:41,440 --> 00:04:45,080 Speaker 1: production and imports of internal combustion and general ice vehicles. 83 00:04:45,440 --> 00:04:49,040 Speaker 1: So the more ice vehicles and automaket selling, the higher 84 00:04:49,040 --> 00:04:51,600 Speaker 1: target they will face. That means they will need to 85 00:04:51,640 --> 00:04:54,240 Speaker 1: sell more credits in order to meet the target, or 86 00:04:54,320 --> 00:04:57,240 Speaker 1: they have to buy credits from their competitors. I think. 87 00:04:57,279 --> 00:04:59,600 Speaker 1: Also the second part of the net credit met or 88 00:04:59,640 --> 00:05:04,240 Speaker 1: the ne credit mandate is that it's linked with China's 89 00:05:04,680 --> 00:05:08,800 Speaker 1: few economy regulations that some of the automakers can use 90 00:05:08,839 --> 00:05:12,680 Speaker 1: the MAP credit to offset there or two as a 91 00:05:12,720 --> 00:05:15,640 Speaker 1: compliance tool to help them meet to the stringent few 92 00:05:15,640 --> 00:05:20,520 Speaker 1: economy regulations. Okay, so the government sets a target. It 93 00:05:20,680 --> 00:05:24,080 Speaker 1: started I think last year at ten of all sales 94 00:05:24,800 --> 00:05:27,640 Speaker 1: having to go to e vs. Is that right? And 95 00:05:27,640 --> 00:05:30,800 Speaker 1: then this year it's yeah, the target set up ten 96 00:05:30,880 --> 00:05:36,400 Speaker 1: percent for so the new energy vehicle credit policy. Can 97 00:05:36,400 --> 00:05:39,200 Speaker 1: you explain just very basically how that works. China's new 98 00:05:39,320 --> 00:05:42,760 Speaker 1: editor vehicle credit system is kind of a policy that 99 00:05:42,880 --> 00:05:46,599 Speaker 1: requires automakers to sell electrical vehicles in order to meet 100 00:05:46,720 --> 00:05:50,039 Speaker 1: and government assigned the target. And when did it start? 101 00:05:50,080 --> 00:05:52,839 Speaker 1: It started last year. So the policy was actually is 102 00:05:52,839 --> 00:05:56,039 Speaker 1: shooting into A seventeen, but it came into effact throughout 103 00:05:56,080 --> 00:05:59,000 Speaker 1: a nineteen national And what does the government target mean? 104 00:05:59,160 --> 00:06:02,160 Speaker 1: How does that work? So the government target is set 105 00:06:02,160 --> 00:06:06,200 Speaker 1: ten percent in twenty nineteen and twelve percent in and 106 00:06:06,200 --> 00:06:11,080 Speaker 1: we'll kind of linearly increase to eighteen percent in. So 107 00:06:11,120 --> 00:06:17,159 Speaker 1: the ten percent is proportional to an automaker's dometics, domestic production, 108 00:06:17,360 --> 00:06:21,880 Speaker 1: imports of internal combustion, and general ice vehicle. But this 109 00:06:21,960 --> 00:06:24,840 Speaker 1: doesn't mean that the e V share of their total 110 00:06:25,200 --> 00:06:28,560 Speaker 1: cells have to be reached ten percent in twenty nineteen. Okay. 111 00:06:28,960 --> 00:06:33,680 Speaker 1: So if I'm an automaker and I sold a hundred vehicles, 112 00:06:33,839 --> 00:06:36,560 Speaker 1: you know, a hundred ice vehicles during I don't know 113 00:06:36,760 --> 00:06:40,000 Speaker 1: during this year, that means I'm on the hook to 114 00:06:40,560 --> 00:06:43,280 Speaker 1: produce ten n V credits, is that right? And then 115 00:06:43,480 --> 00:06:47,280 Speaker 1: twelve in the next year. Ten credits in twenty nineteen. 116 00:06:47,480 --> 00:06:52,200 Speaker 1: First one, you have to have at least like fourteen 117 00:06:52,279 --> 00:06:55,400 Speaker 1: and you BI credits this is fourteen, okay, So how 118 00:06:55,400 --> 00:06:59,120 Speaker 1: do I get those credits? So there's a few different options, right, Yes, 119 00:06:59,279 --> 00:07:01,360 Speaker 1: I think the simple as option is that you just 120 00:07:01,480 --> 00:07:05,280 Speaker 1: produce more evs, which kind of include very large joy 121 00:07:05,320 --> 00:07:08,159 Speaker 1: plug in hybrid or fuel cell vehicles. I think the 122 00:07:08,200 --> 00:07:11,200 Speaker 1: second option is that if you cannot have that enough, 123 00:07:11,520 --> 00:07:13,720 Speaker 1: or if you do not have enough e B cells, 124 00:07:13,760 --> 00:07:17,320 Speaker 1: you can buy credits from your competitors, or you can 125 00:07:17,480 --> 00:07:20,480 Speaker 1: have some of the credit transfer from like your joid 126 00:07:20,560 --> 00:07:23,840 Speaker 1: venture set. Okay, so this is kind of like cap 127 00:07:23,880 --> 00:07:26,800 Speaker 1: and trade in power, right, So you you cap the 128 00:07:26,840 --> 00:07:30,040 Speaker 1: emissions I guess in this this case instead of two 129 00:07:30,040 --> 00:07:33,360 Speaker 1: commune smokestack, it's from a tailpipe. This is kind of 130 00:07:33,400 --> 00:07:35,920 Speaker 1: like cap and trade for for for power plants, right, 131 00:07:36,360 --> 00:07:39,920 Speaker 1: but instead of capping CEO two from the exhaust from smokestack, 132 00:07:40,040 --> 00:07:43,920 Speaker 1: it's from tailpipe. Is that right? Yes? Okay, you know 133 00:07:43,960 --> 00:07:46,600 Speaker 1: you can either switch you know, to renewables or in 134 00:07:46,600 --> 00:07:49,040 Speaker 1: this case e V s and if you don't have 135 00:07:49,160 --> 00:07:52,480 Speaker 1: the the capability of doing that, you can buy credits 136 00:07:52,480 --> 00:07:55,800 Speaker 1: so you can keep selling internal combustion or ice vehicles. 137 00:07:55,880 --> 00:08:00,400 Speaker 1: Is that right? Yes? So does this result in twelve 138 00:08:00,400 --> 00:08:03,920 Speaker 1: percent higher e V sales or how does that work? 139 00:08:04,280 --> 00:08:06,400 Speaker 1: So the twelve percent doesn't mean that each other maker 140 00:08:06,480 --> 00:08:09,120 Speaker 1: have to have twelve percent of your total sales to 141 00:08:09,160 --> 00:08:12,160 Speaker 1: be electric. For each electric vehicle they can generate more 142 00:08:12,160 --> 00:08:15,960 Speaker 1: than one credit, and for bettery luxury they can generate 143 00:08:16,000 --> 00:08:21,400 Speaker 1: up to five actually six credits in the period, and 144 00:08:21,440 --> 00:08:25,160 Speaker 1: it's like around like somewhere like nearly four credits starting 145 00:08:25,160 --> 00:08:28,800 Speaker 1: from this year, and for plugging hybrids is normally just 146 00:08:28,840 --> 00:08:32,040 Speaker 1: like two credits. Oh wow. Okay, so that's pretty cool. 147 00:08:32,080 --> 00:08:34,760 Speaker 1: So there's kind of a sliding skill, and I hate 148 00:08:34,760 --> 00:08:36,600 Speaker 1: to keep going back to power, but it's kind of like, 149 00:08:37,040 --> 00:08:40,000 Speaker 1: you know, there's a little bit of credit for gas, 150 00:08:40,000 --> 00:08:42,199 Speaker 1: you know, a little bit fewer emissions, you know, you 151 00:08:42,240 --> 00:08:44,920 Speaker 1: can equate that to a plug in hybrid, but then 152 00:08:44,960 --> 00:08:47,320 Speaker 1: going fully electric you get more credits, kind of like 153 00:08:47,320 --> 00:08:49,760 Speaker 1: going fully renewable in power. I guess you could say 154 00:08:50,120 --> 00:08:54,719 Speaker 1: that's cool. So if I'm a pure play electric vehicle manufacturer, 155 00:08:54,760 --> 00:08:58,199 Speaker 1: I'm producing all kinds of credits exactly. I think pure 156 00:08:58,559 --> 00:09:02,160 Speaker 1: electric vehicle manufact are in a really poor position is 157 00:09:02,200 --> 00:09:05,280 Speaker 1: credit because all they can have or they can generate 158 00:09:05,960 --> 00:09:09,640 Speaker 1: thousands or hundred tons of thousands of credit without having 159 00:09:09,640 --> 00:09:12,880 Speaker 1: any liabilities. Okay, so let's let's get into that in 160 00:09:12,880 --> 00:09:15,760 Speaker 1: a second. But before we do, can we go a 161 00:09:15,800 --> 00:09:19,520 Speaker 1: little bit further with the policy itself. You mentioned it 162 00:09:19,600 --> 00:09:22,360 Speaker 1: started off at ten percent. Now it's at next year 163 00:09:22,400 --> 00:09:26,080 Speaker 1: it's at four percent, and where will it go at 164 00:09:26,120 --> 00:09:29,560 Speaker 1: the end the government sets the target will be fourteen 165 00:09:29,600 --> 00:09:32,920 Speaker 1: percent for one and will kind of increase to eighteen 166 00:09:32,960 --> 00:09:38,280 Speaker 1: percent in three and beyond that the government hasn't specified 167 00:09:38,440 --> 00:09:40,760 Speaker 1: kind of a target. We expect there will be a 168 00:09:40,760 --> 00:09:44,280 Speaker 1: more exponential increase. That's not really going to be linearly 169 00:09:44,400 --> 00:09:46,599 Speaker 1: increased anymore. So the idea is to kind of to 170 00:09:46,640 --> 00:09:49,720 Speaker 1: push automantor will sound more and more evs in by 171 00:09:49,920 --> 00:09:52,600 Speaker 1: setting a higher target. Okay, so you expect they're using 172 00:09:52,600 --> 00:09:54,880 Speaker 1: this is kind of a ramping period to where in 173 00:09:54,920 --> 00:09:57,040 Speaker 1: a few years the target to be much higher and 174 00:09:57,400 --> 00:09:59,400 Speaker 1: hopefully they'll just be producing whole bunch of vs at 175 00:09:59,440 --> 00:10:01,600 Speaker 1: that point. Yeah, just stepping back a little bit. We 176 00:10:01,679 --> 00:10:05,040 Speaker 1: talked in a recent show, I think it was four 177 00:10:05,120 --> 00:10:10,480 Speaker 1: or five weeks ago about GM and Volkswagen taking on 178 00:10:10,559 --> 00:10:13,320 Speaker 1: Tesla in the US and Europe. But we set an 179 00:10:13,320 --> 00:10:16,319 Speaker 1: impediment to growth in those markets was a charging network. 180 00:10:16,480 --> 00:10:18,160 Speaker 1: You know that most people would buy e v s, 181 00:10:18,240 --> 00:10:22,199 Speaker 1: myself included, actually if the charging network were better. So 182 00:10:22,880 --> 00:10:25,040 Speaker 1: how is the charging network in China? Is it an 183 00:10:25,080 --> 00:10:28,440 Speaker 1: impediment to the NTV program or an enabling feature of it. 184 00:10:28,880 --> 00:10:32,000 Speaker 1: So I think having a bar in order to reach 185 00:10:32,080 --> 00:10:34,080 Speaker 1: count and ask if you have the option that trying 186 00:10:34,120 --> 00:10:38,800 Speaker 1: to really need a better charging infrastructure network. By that 187 00:10:38,920 --> 00:10:42,160 Speaker 1: I mean both for for the public chargers that also 188 00:10:42,400 --> 00:10:46,599 Speaker 1: there there should be chargers available for a home or 189 00:10:46,720 --> 00:10:49,800 Speaker 1: at the workplace. So I think China is still account 190 00:10:49,840 --> 00:10:53,679 Speaker 1: for accounts on the half of the global public charger installations. 191 00:10:53,679 --> 00:10:55,600 Speaker 1: So there has been a quick ramp up of public 192 00:10:55,679 --> 00:11:00,240 Speaker 1: charging infrastructure, but all that's mostly because the buildings still 193 00:11:00,320 --> 00:11:03,320 Speaker 1: kind of in China is mostly high high rise buildings 194 00:11:03,440 --> 00:11:08,360 Speaker 1: that limits people's access to the private parking spaces. What 195 00:11:08,400 --> 00:11:10,559 Speaker 1: are you seeing where you live and based in Beiging, 196 00:11:10,760 --> 00:11:13,200 Speaker 1: So since Veiging in such a like a metropolitan city, 197 00:11:13,320 --> 00:11:17,120 Speaker 1: I see public chargers almost everywhere in the hotels and 198 00:11:17,600 --> 00:11:21,440 Speaker 1: the never office, so every almost everywhere. But I think 199 00:11:22,160 --> 00:11:25,600 Speaker 1: what's been challenging for people living in major cities in 200 00:11:25,679 --> 00:11:29,920 Speaker 1: China is to have access to home chargers because now 201 00:11:29,920 --> 00:11:34,559 Speaker 1: all of them can guarantee a a private parking space. Yeah, 202 00:11:34,640 --> 00:11:37,240 Speaker 1: that's the challenge for me here in London as well, 203 00:11:37,480 --> 00:11:40,120 Speaker 1: or access to to charging. Okay, so moving on to 204 00:11:40,559 --> 00:11:44,840 Speaker 1: a different part of the policy, the corporate average fuel 205 00:11:44,880 --> 00:11:48,480 Speaker 1: consumption target sounds captivating. It's the C a f C. 206 00:11:49,080 --> 00:11:51,560 Speaker 1: Can you explain what that is? So essentially it's a 207 00:11:51,679 --> 00:11:55,120 Speaker 1: it does a few economy regulations for passenger cars. So 208 00:11:55,160 --> 00:11:58,599 Speaker 1: many countries actually used for economy regulations to reduce the 209 00:11:58,679 --> 00:12:01,360 Speaker 1: carbon mention as well as the few consumption so the 210 00:12:01,360 --> 00:12:04,439 Speaker 1: average presenter car fleet. And as we also a way 211 00:12:04,520 --> 00:12:08,400 Speaker 1: to to promote EVS by signing a really low few 212 00:12:08,679 --> 00:12:13,800 Speaker 1: consumption or few consumption values for evs. So for China's policies, 213 00:12:13,920 --> 00:12:16,640 Speaker 1: in the kind of the Chinese few economy regulation, it 214 00:12:16,720 --> 00:12:20,640 Speaker 1: sets a target for the average passenger vehicle car fleet 215 00:12:20,720 --> 00:12:24,680 Speaker 1: to ridge for leaders for a hundred kilometers by twenty 216 00:12:24,920 --> 00:12:28,880 Speaker 1: which is very stringent, almost on par with that in Europe, 217 00:12:29,040 --> 00:12:32,400 Speaker 1: and it's also more strangent than that team that's in 218 00:12:32,480 --> 00:12:35,400 Speaker 1: place in Japan and the United States. Okay, so the 219 00:12:35,440 --> 00:12:39,040 Speaker 1: government is setting a target for fuel economy and you 220 00:12:39,080 --> 00:12:43,720 Speaker 1: can get there by having really ridiculously efficient ice vehicles, 221 00:12:43,840 --> 00:12:46,720 Speaker 1: and I guess in evs which bring down the average 222 00:12:46,720 --> 00:12:49,880 Speaker 1: to make you more efficient or more fuel economic. Is 223 00:12:49,880 --> 00:12:52,560 Speaker 1: that right? Yes? I think the benefits of selling e 224 00:12:52,679 --> 00:12:57,280 Speaker 1: VS is not only evs are are given basically zero 225 00:12:57,679 --> 00:13:00,719 Speaker 1: few consumption values, but also because there's sometimes it will 226 00:13:00,760 --> 00:13:04,760 Speaker 1: sign a multiplier too, So so producing each electric vehicle 227 00:13:04,920 --> 00:13:08,360 Speaker 1: is counted twice or three times that of the ice car. 228 00:13:08,600 --> 00:13:12,240 Speaker 1: Let's talk about the impact of these two policies, So 229 00:13:12,559 --> 00:13:15,959 Speaker 1: the impact of the NYV credits and the c a 230 00:13:16,120 --> 00:13:19,480 Speaker 1: f C there the corporate average fuel consumption target on 231 00:13:19,600 --> 00:13:21,920 Speaker 1: sales and emissions. Can you can? I just walk us 232 00:13:21,920 --> 00:13:24,400 Speaker 1: through both those for the n e V credit system, 233 00:13:24,720 --> 00:13:27,640 Speaker 1: so it's just kind of push automakers to sell more 234 00:13:27,720 --> 00:13:31,600 Speaker 1: e v s unless you lowered your overall ice production, 235 00:13:31,640 --> 00:13:34,040 Speaker 1: which is something that automate hasn't really wants to lose 236 00:13:34,040 --> 00:13:37,760 Speaker 1: their market share. I think for the few economy regulation, 237 00:13:38,000 --> 00:13:41,960 Speaker 1: as you mentioned earlier, it's about forcing automakers to either 238 00:13:42,000 --> 00:13:46,640 Speaker 1: have really efficient ice vehicles like hybrid or mildhabber, et cetera, 239 00:13:47,240 --> 00:13:49,640 Speaker 1: or you have to sell more evs. So I think 240 00:13:49,679 --> 00:13:53,959 Speaker 1: combining these two policies, the overall objective is just to 241 00:13:54,920 --> 00:13:58,720 Speaker 1: accelerate the cells or the adoption of electric vehicles in China, 242 00:13:58,960 --> 00:14:01,280 Speaker 1: and is it working to some extent, It is hard 243 00:14:01,280 --> 00:14:04,480 Speaker 1: to say that it's working because China also have the 244 00:14:04,600 --> 00:14:07,480 Speaker 1: kind of the some more more direct policy tools in place, 245 00:14:07,520 --> 00:14:10,040 Speaker 1: like the purchase subsidies, which has been very powerful to 246 00:14:10,200 --> 00:14:13,559 Speaker 1: in promoting the V cells. But I think as China 247 00:14:13,720 --> 00:14:17,160 Speaker 1: plans to kind of phase out EV subsidies by the 248 00:14:17,240 --> 00:14:20,120 Speaker 1: end of twenty two, the country will rely more and 249 00:14:20,200 --> 00:14:23,240 Speaker 1: more on this sort of the supply side policies like 250 00:14:23,280 --> 00:14:26,440 Speaker 1: the V credit system as well as a few economy 251 00:14:26,760 --> 00:14:31,120 Speaker 1: or the CFC credit system, so essentially that automakers have 252 00:14:31,240 --> 00:14:34,920 Speaker 1: to fulfill those targets. Okay, So there's kind of a 253 00:14:34,960 --> 00:14:37,160 Speaker 1: carrot and a stick in place, So you have a 254 00:14:37,200 --> 00:14:40,880 Speaker 1: subsidy for the purchasers or the buyers of evs, and 255 00:14:40,920 --> 00:14:44,080 Speaker 1: I think he said in the report that made sales, 256 00:14:44,600 --> 00:14:49,600 Speaker 1: you saw an eleven percent increase on evs. Is that right? Well, 257 00:14:49,880 --> 00:14:52,720 Speaker 1: it's hard to say that it's kind of the subsidies 258 00:14:52,800 --> 00:14:56,440 Speaker 1: is the most important factor or driver in EV cells 259 00:14:56,600 --> 00:14:58,680 Speaker 1: last year, but yeah, I think it's still a very 260 00:14:58,840 --> 00:15:01,720 Speaker 1: very useful to loosing place. Okay, So you have the 261 00:15:01,720 --> 00:15:04,000 Speaker 1: carrot and the sticks, and so the carrot is going 262 00:15:04,040 --> 00:15:06,600 Speaker 1: to be phased out so the e V subsidy, but 263 00:15:06,680 --> 00:15:11,640 Speaker 1: the stick is going to be well more more powerful 264 00:15:12,320 --> 00:15:14,240 Speaker 1: in terms of you know that the targets that will 265 00:15:14,280 --> 00:15:17,120 Speaker 1: go up for the n e V and the c 266 00:15:17,240 --> 00:15:20,840 Speaker 1: A f C. Is that right? Yeah, okay, cool, Let's 267 00:15:20,840 --> 00:15:23,040 Speaker 1: talk about some of the other impacts of the policy. 268 00:15:23,160 --> 00:15:26,360 Speaker 1: So what happens to companies in a credit deficit? So 269 00:15:27,000 --> 00:15:30,800 Speaker 1: what is the penalty if an automaker fills to to 270 00:15:30,920 --> 00:15:33,920 Speaker 1: meet the government assigned target, So it will kind of 271 00:15:34,160 --> 00:15:37,520 Speaker 1: in a in a deficit of the a V credits. 272 00:15:37,560 --> 00:15:40,960 Speaker 1: So to offsete those the credit deficit, they have to 273 00:15:41,040 --> 00:15:44,160 Speaker 1: either buy or transfer some of the credits from their 274 00:15:44,200 --> 00:15:48,880 Speaker 1: competitors and joint ventures. And if they still cannot make 275 00:15:48,960 --> 00:15:52,360 Speaker 1: up the deficit. Right now, China doesn't really have a 276 00:15:52,520 --> 00:15:57,200 Speaker 1: financial penalties and like those in California or elsewhere, so 277 00:15:57,360 --> 00:16:00,760 Speaker 1: basically you won't face a like a fine for it. 278 00:16:00,800 --> 00:16:03,880 Speaker 1: But but I think on the other side said the 279 00:16:03,920 --> 00:16:06,400 Speaker 1: government do has a kind of a wet list for 280 00:16:06,600 --> 00:16:10,120 Speaker 1: models that are can be available to solve. So that 281 00:16:10,200 --> 00:16:13,040 Speaker 1: means that if you cannot need that that or if 282 00:16:13,040 --> 00:16:16,560 Speaker 1: you if an automaker has a has a credit deficit 283 00:16:16,600 --> 00:16:21,680 Speaker 1: that it cannot be ballanced out. It cannot sell particularly 284 00:16:21,720 --> 00:16:26,200 Speaker 1: ice vehicles that's not really fuel efficient, So it's just 285 00:16:26,240 --> 00:16:29,360 Speaker 1: that kind of losing market shares, So that's your real risk. 286 00:16:29,600 --> 00:16:33,040 Speaker 1: It's not necessarily a penalty risk, but it's a risk 287 00:16:33,080 --> 00:16:35,720 Speaker 1: of not being able to sell your car, yes, particularly 288 00:16:35,720 --> 00:16:39,080 Speaker 1: like pickups, as you'll be sold those with like more 289 00:16:39,320 --> 00:16:42,960 Speaker 1: higher fuel consumptions. And this means that EV credits have 290 00:16:43,040 --> 00:16:45,760 Speaker 1: been sold and traded right, So if companies are in 291 00:16:45,800 --> 00:16:48,080 Speaker 1: a deficit and they want to to get credits to 292 00:16:48,120 --> 00:16:52,320 Speaker 1: cover their their deficit, they can buy from other manufacturers. 293 00:16:52,320 --> 00:16:55,840 Speaker 1: As you mentioned, do we have an indication of either 294 00:16:55,880 --> 00:16:58,640 Speaker 1: how this works or even the price for buying the credits. 295 00:16:58,880 --> 00:17:02,320 Speaker 1: I think first is that the price is still where 296 00:17:02,320 --> 00:17:05,760 Speaker 1: the preced is still very limited. First because China doesn't 297 00:17:05,800 --> 00:17:09,640 Speaker 1: really have like a fine which always kind of serves 298 00:17:09,680 --> 00:17:12,560 Speaker 1: as a price sailing for for the maximum level of 299 00:17:12,680 --> 00:17:16,240 Speaker 1: the credit or the max level of the value per credit. 300 00:17:16,640 --> 00:17:19,120 Speaker 1: So that means a lot of automakers right now are 301 00:17:19,119 --> 00:17:24,080 Speaker 1: actually negotiating the the price of the table, so rather 302 00:17:24,119 --> 00:17:27,840 Speaker 1: than entering into like a feed or except or an auction. 303 00:17:28,400 --> 00:17:31,760 Speaker 1: We do think because like back in twenty nineteen, there's 304 00:17:32,040 --> 00:17:36,800 Speaker 1: or in there's has been an over supply of a 305 00:17:36,960 --> 00:17:42,240 Speaker 1: V credits in the market, which translated into probably lower 306 00:17:42,320 --> 00:17:46,760 Speaker 1: credits or lower value per per credit. But however, we 307 00:17:46,840 --> 00:17:50,440 Speaker 1: do see that because there's the supply of the n 308 00:17:50,560 --> 00:17:55,000 Speaker 1: V credit has been decreasing because of the strandent target, 309 00:17:55,480 --> 00:17:57,800 Speaker 1: and that will kind of help drop at the price. 310 00:17:59,000 --> 00:18:02,280 Speaker 1: So some of the report or some of the articles 311 00:18:02,280 --> 00:18:06,960 Speaker 1: suggested that back in nineteen the price per AV credits 312 00:18:07,040 --> 00:18:11,760 Speaker 1: around like seventy dollars per credit, but now it had 313 00:18:11,760 --> 00:18:14,800 Speaker 1: an increased to over two hundred dollars, which is still 314 00:18:15,480 --> 00:18:20,440 Speaker 1: relatively low compared to other markets, etcetera. Relatively low, it 315 00:18:20,480 --> 00:18:23,520 Speaker 1: seems high to me. Well, we we do expect that 316 00:18:23,720 --> 00:18:28,520 Speaker 1: as the supplies of the credits decreases, the price of 317 00:18:29,240 --> 00:18:32,240 Speaker 1: per any credit will definitely be going up in the 318 00:18:32,280 --> 00:18:36,120 Speaker 1: next few years and even probably even double the current level. 319 00:18:36,359 --> 00:18:39,159 Speaker 1: So that could be an expensive prospect for manufacturers that 320 00:18:39,320 --> 00:18:42,439 Speaker 1: are in a deficit. So once again pushing for more 321 00:18:42,480 --> 00:18:45,480 Speaker 1: actual evs to be sold in the market. Okay, so 322 00:18:45,480 --> 00:18:47,080 Speaker 1: we're gonna take a quick break, and when we come back, 323 00:18:47,119 --> 00:18:49,640 Speaker 1: we're going to talk about what this all means for manufacturers, 324 00:18:49,640 --> 00:18:52,160 Speaker 1: both for and domestic in China, what this means for 325 00:18:52,240 --> 00:19:06,000 Speaker 1: their sales in that market. Stay with us, Okay, let's 326 00:19:06,040 --> 00:19:08,960 Speaker 1: talk about who's active in China and who's actually having 327 00:19:08,960 --> 00:19:12,399 Speaker 1: to be concerned about these ny V credits and the 328 00:19:12,480 --> 00:19:14,560 Speaker 1: c A f C. Can you tell us a bit 329 00:19:14,560 --> 00:19:17,840 Speaker 1: about who the foreign and domestic players are in the 330 00:19:17,920 --> 00:19:20,879 Speaker 1: Chinese auto market. So I think it really has to 331 00:19:20,880 --> 00:19:24,080 Speaker 1: look down to bost the ice vehicle market, but also 332 00:19:24,119 --> 00:19:27,159 Speaker 1: the EV market. I think for ice vehicle markets that 333 00:19:27,359 --> 00:19:30,080 Speaker 1: a lot of the foreign manufacturers are still dominating trying 334 00:19:30,080 --> 00:19:34,440 Speaker 1: to see your market Lexposkwagan General Motors and they sell 335 00:19:34,600 --> 00:19:38,440 Speaker 1: through their Chinese story adventures. But for EV market it's 336 00:19:38,480 --> 00:19:42,480 Speaker 1: mostly local brand particularly like b y D or b 337 00:19:42,640 --> 00:19:46,480 Speaker 1: a Isa, etcetera. But there's also an increasing number of 338 00:19:46,640 --> 00:19:50,399 Speaker 1: either the foreign companies as well as kind of pure 339 00:19:50,440 --> 00:19:53,960 Speaker 1: e V players like Tessa being actively selling e V 340 00:19:54,119 --> 00:19:59,520 Speaker 1: s in China for both credits and the few consumption 341 00:20:00,040 --> 00:20:03,640 Speaker 1: CFC credit positions. So because a lot of the four 342 00:20:04,280 --> 00:20:08,040 Speaker 1: international automakers, as just say like Bothwaga and they sell 343 00:20:08,080 --> 00:20:10,560 Speaker 1: a lot of ice vehicles in China, that means they 344 00:20:10,640 --> 00:20:14,119 Speaker 1: have a huge credits epicite in terms of both an 345 00:20:14,119 --> 00:20:17,119 Speaker 1: EV credits but also the CFC credits. So on the 346 00:20:17,160 --> 00:20:21,399 Speaker 1: other side, small domestic manufacturers like b y D and 347 00:20:21,600 --> 00:20:24,280 Speaker 1: because they have a large portfolio or evs in their 348 00:20:24,400 --> 00:20:29,040 Speaker 1: total stills and they get both surplus for an EV 349 00:20:29,160 --> 00:20:33,200 Speaker 1: credits and CFC credits. Domestic automakers tend to have more 350 00:20:33,240 --> 00:20:35,639 Speaker 1: an EV credits or the time to have a surplus 351 00:20:35,640 --> 00:20:38,879 Speaker 1: of any credits. So my initial thought on that was that, okay, 352 00:20:39,000 --> 00:20:41,320 Speaker 1: so it sounds like VW might want to rush to 353 00:20:41,320 --> 00:20:43,880 Speaker 1: get it with I D three or electric vehicle into 354 00:20:43,880 --> 00:20:46,919 Speaker 1: that market to kind of offset its ICE sales. Is 355 00:20:46,960 --> 00:20:49,400 Speaker 1: that kind of what we're seeing happen or are they 356 00:20:49,440 --> 00:20:52,960 Speaker 1: buying credits from other manufacturers? Yeah, I mean totally. I 357 00:20:53,000 --> 00:20:55,760 Speaker 1: think what's fun is exactly in the position of they 358 00:20:55,760 --> 00:20:59,080 Speaker 1: have to sell more evast in order to to meet 359 00:20:59,320 --> 00:21:03,359 Speaker 1: the target. But unfortunately for probably the past few years, 360 00:21:03,400 --> 00:21:06,680 Speaker 1: because there's such a huge amount of like ice be 361 00:21:06,760 --> 00:21:10,280 Speaker 1: a coast with sol each year. So I think it's 362 00:21:10,280 --> 00:21:13,440 Speaker 1: reported that VOT, one of the joint venture, is about 363 00:21:13,480 --> 00:21:16,399 Speaker 1: to buy credits from Tesla in China out of price 364 00:21:16,400 --> 00:21:21,760 Speaker 1: about like four four or four hundred sixty dollars per credit. Overall, 365 00:21:21,800 --> 00:21:24,600 Speaker 1: I think the strategy for companies that Volts Wagening is 366 00:21:24,640 --> 00:21:28,320 Speaker 1: skilled to ramp up their BB productions in China and 367 00:21:28,400 --> 00:21:31,600 Speaker 1: to increase their EB lineup as like I D three, 368 00:21:31,640 --> 00:21:34,280 Speaker 1: I D four at least six, So essentially they want 369 00:21:34,280 --> 00:21:38,040 Speaker 1: to so increase the evselves by themselves. Wow. Okay, So 370 00:21:38,080 --> 00:21:40,800 Speaker 1: it seems, going back to guess big picture, that you 371 00:21:40,880 --> 00:21:45,560 Speaker 1: have Chinese peer play EV manufacturers and well, I guess 372 00:21:45,600 --> 00:21:49,200 Speaker 1: Tesla and other foreign peer play EV manufacturers that are 373 00:21:49,400 --> 00:21:52,399 Speaker 1: selling as much as they can in China to bank 374 00:21:52,400 --> 00:21:54,240 Speaker 1: as many of these credits as they can to be 375 00:21:54,280 --> 00:21:56,160 Speaker 1: able to use them in the future or sell them 376 00:21:56,160 --> 00:21:58,920 Speaker 1: on to companies and deficits. That kind of how it's 377 00:21:58,920 --> 00:22:02,040 Speaker 1: playing out. I think for for incumbent manufacturers like volt 378 00:22:02,080 --> 00:22:05,560 Speaker 1: Swamen as well as their joint ventures with domestic players 379 00:22:05,600 --> 00:22:08,679 Speaker 1: like w or I C I S, they're in a 380 00:22:08,760 --> 00:22:12,399 Speaker 1: rough position this year. But therefore pew EV manufacturers like 381 00:22:12,520 --> 00:22:16,880 Speaker 1: Testa or even domestic ones like Neal or x Poon, 382 00:22:17,440 --> 00:22:20,840 Speaker 1: they're in a poll position because all the conset get 383 00:22:20,840 --> 00:22:23,040 Speaker 1: is the pure credits and they can bank them and 384 00:22:23,520 --> 00:22:26,399 Speaker 1: probably when the price reads of in futures they can 385 00:22:26,400 --> 00:22:31,040 Speaker 1: sell them to or establish modermakers got a new revenue 386 00:22:31,080 --> 00:22:33,920 Speaker 1: scream somehow, But it seems it seems like a short 387 00:22:34,000 --> 00:22:36,879 Speaker 1: term game, right, It's short term pain for maybe v 388 00:22:37,040 --> 00:22:39,400 Speaker 1: W I keep you know, VW is kind of an example, 389 00:22:39,440 --> 00:22:42,520 Speaker 1: but it can mean any you know, ice dominant manufacturer. 390 00:22:42,560 --> 00:22:45,879 Speaker 1: I guess that they're using this time, you know, to 391 00:22:46,359 --> 00:22:49,680 Speaker 1: I guess pay other manufacturers for the credits while they 392 00:22:49,720 --> 00:22:53,160 Speaker 1: bring in their evs into the market. Is that right, Yeah, 393 00:22:53,160 --> 00:22:55,800 Speaker 1: it's that kind of the time they buy into become 394 00:22:56,000 --> 00:22:59,840 Speaker 1: or when they try to ramp up BV production. Yeah. 395 00:23:00,280 --> 00:23:04,359 Speaker 1: And so once I'm just trying to make sure I 396 00:23:04,400 --> 00:23:08,360 Speaker 1: get this is that it would seem that as more 397 00:23:08,480 --> 00:23:11,240 Speaker 1: evs enter the market, it's a revenue stream for nobody. 398 00:23:11,680 --> 00:23:14,919 Speaker 1: That the the ultimate result of the policy is simply 399 00:23:14,960 --> 00:23:17,119 Speaker 1: that you know, there's just more evs in the market 400 00:23:17,160 --> 00:23:20,800 Speaker 1: and nobody's making money from this scheme through selling credits. 401 00:23:20,840 --> 00:23:23,800 Speaker 1: Is that right or no? I think definitely having more 402 00:23:23,880 --> 00:23:27,720 Speaker 1: evs is like one of the main objections for this policy. 403 00:23:27,800 --> 00:23:29,800 Speaker 1: So if if each of them makers having like a 404 00:23:29,840 --> 00:23:33,520 Speaker 1: huge amount of evs ev sales, I think the sort 405 00:23:33,560 --> 00:23:37,159 Speaker 1: of indicative policy is successful. Okay, I'm asking all the 406 00:23:37,160 --> 00:23:41,520 Speaker 1: wrong questions. No, I mean it's yeah, I think as 407 00:23:41,560 --> 00:23:43,560 Speaker 1: you're right, it's so kind of a short term game 408 00:23:43,680 --> 00:23:47,240 Speaker 1: for the STARTUF, but also my personal senses that it 409 00:23:47,280 --> 00:23:50,800 Speaker 1: depends on if be double can actually sell that many EPs, 410 00:23:50,960 --> 00:23:53,680 Speaker 1: because it's not really up to them, or is more 411 00:23:53,880 --> 00:23:56,600 Speaker 1: up to consumers whether they want to buy a Tesla 412 00:23:56,760 --> 00:24:00,120 Speaker 1: or or re double car. Right, well, fair play, Yeah, sure, 413 00:24:00,280 --> 00:24:02,880 Speaker 1: are you seeing longer term I guess winners and losers 414 00:24:02,920 --> 00:24:06,760 Speaker 1: in this this scheme. So any automakers whospian batting on 415 00:24:06,960 --> 00:24:09,280 Speaker 1: or increasing their bad on ebs, it's going to be 416 00:24:09,359 --> 00:24:11,640 Speaker 1: a winner in this in this scheme. So I think 417 00:24:11,640 --> 00:24:14,760 Speaker 1: there are automakers of horrible were we're relying more on 418 00:24:14,920 --> 00:24:18,640 Speaker 1: hybridization or hybrid vehicles as a complise tool like Toyota 419 00:24:18,800 --> 00:24:20,919 Speaker 1: or Honda. It's kind of make it more challenge for 420 00:24:20,920 --> 00:24:23,520 Speaker 1: them to meet the target because so the hybrid doesn't 421 00:24:23,560 --> 00:24:27,280 Speaker 1: really account for the EV credits. So I think that's 422 00:24:27,520 --> 00:24:30,840 Speaker 1: kind of a trick for or that's challenging for for 423 00:24:30,840 --> 00:24:33,760 Speaker 1: for those automans because for those incombents. Okay, can we 424 00:24:33,800 --> 00:24:35,640 Speaker 1: go back to the really high level overview and talk 425 00:24:35,680 --> 00:24:38,199 Speaker 1: about just kind of who's in deficit and who's in 426 00:24:38,240 --> 00:24:41,480 Speaker 1: surplus after NYV credits and you know, kind of who's 427 00:24:41,480 --> 00:24:45,440 Speaker 1: winning at this game. Most Chinese automakers are having a 428 00:24:45,560 --> 00:24:48,200 Speaker 1: surplus of both the EV credit as well as a 429 00:24:48,280 --> 00:24:51,760 Speaker 1: C physic credit because they're they're high relatively high EV 430 00:24:51,880 --> 00:24:55,000 Speaker 1: share in their total sales and on the contrares that 431 00:24:55,240 --> 00:25:01,000 Speaker 1: automakers most international automakers of either European or either domicide 432 00:25:01,040 --> 00:25:04,000 Speaker 1: in Europe or in the United States like Volkswaga and 433 00:25:04,000 --> 00:25:07,399 Speaker 1: General Motors for etcetera. So these automakers tend to have 434 00:25:07,480 --> 00:25:11,080 Speaker 1: a huge deficit of a UNI credit as well as 435 00:25:11,080 --> 00:25:16,120 Speaker 1: their CFC credits. I think for Japanese automakers, they used 436 00:25:16,119 --> 00:25:19,879 Speaker 1: to have some surplus of the CFC credit because they 437 00:25:19,880 --> 00:25:22,639 Speaker 1: sell hybrids, which is good to offer them to to 438 00:25:22,760 --> 00:25:26,480 Speaker 1: meet the fewer consumption targets. But nowadays because hybrid doesn't 439 00:25:26,480 --> 00:25:30,920 Speaker 1: really take account towards EV credits, that means that they 440 00:25:30,920 --> 00:25:34,120 Speaker 1: still have a huge or they still have a deficit 441 00:25:34,200 --> 00:25:37,040 Speaker 1: of the EV credits. Are you saying that the Japanese 442 00:25:37,080 --> 00:25:40,359 Speaker 1: manufacturers can meet the c A f C with the 443 00:25:40,440 --> 00:25:43,679 Speaker 1: hybrid but they're they're generating fury n e V s 444 00:25:43,920 --> 00:25:47,240 Speaker 1: through the scheme. They meant the target in twenty nineteen, 445 00:25:47,280 --> 00:25:50,520 Speaker 1: but not because it's kind of getting it harder to 446 00:25:50,600 --> 00:25:54,800 Speaker 1: meet from selling hybrid only. I see this is really interesting. 447 00:25:54,840 --> 00:25:57,639 Speaker 1: It seems like we know that the auto manufacturing industry 448 00:25:57,680 --> 00:26:01,159 Speaker 1: is relatively young. Is that fair to say? Yeah, And 449 00:26:01,200 --> 00:26:05,239 Speaker 1: it seems that the old legacy, you know, manufacturers are 450 00:26:05,280 --> 00:26:08,280 Speaker 1: the ones that are in deficit. So you have your GM, 451 00:26:08,359 --> 00:26:10,880 Speaker 1: and you know your American manufacturers, they've been making ice 452 00:26:10,960 --> 00:26:14,480 Speaker 1: vehicles forever, your European ones, same thing. And then you 453 00:26:14,520 --> 00:26:18,560 Speaker 1: have your Japanese manufacturers that have been doing hybrids for 454 00:26:18,560 --> 00:26:20,640 Speaker 1: a long time, and they're the ones that have been 455 00:26:20,640 --> 00:26:23,639 Speaker 1: in deficit. And your newer ones, your Chinese manufacturers and 456 00:26:23,680 --> 00:26:26,240 Speaker 1: your Tesla's and your pure players, they're doing really great 457 00:26:26,280 --> 00:26:28,800 Speaker 1: at this. Is that fair to say? Policy is probably 458 00:26:28,840 --> 00:26:31,040 Speaker 1: just like the government is trying to send a signal 459 00:26:31,119 --> 00:26:33,960 Speaker 1: that if you want Chinese car market, you have to 460 00:26:34,000 --> 00:26:35,800 Speaker 1: focus on a lot for the vehicles, which is a 461 00:26:35,800 --> 00:26:38,159 Speaker 1: lot of the domestic governament whose are doing. If they 462 00:26:38,359 --> 00:26:40,919 Speaker 1: wanted to that onto the Tinnis market, they have to 463 00:26:40,920 --> 00:26:44,520 Speaker 1: be go for for life for vehicles. Yeah. I think 464 00:26:44,520 --> 00:26:47,000 Speaker 1: the signal is getting pretty clear. That's it's really interesting. 465 00:26:47,280 --> 00:26:49,480 Speaker 1: A couple of shows ago, we we talked about the 466 00:26:49,480 --> 00:26:52,879 Speaker 1: EU e t S or the European Emissions Trading scheme, 467 00:26:53,520 --> 00:26:55,640 Speaker 1: and I was kind of surprised, you know, I was like, Oh, 468 00:26:55,800 --> 00:26:58,280 Speaker 1: it's actually having an impact, it's has teeth, it's actually 469 00:26:58,320 --> 00:27:01,359 Speaker 1: doing something. I guess I'm a skeptic most of the 470 00:27:01,400 --> 00:27:03,399 Speaker 1: time and a lot of these things like this, but 471 00:27:03,440 --> 00:27:05,520 Speaker 1: it seems like this is kind of working too that 472 00:27:05,640 --> 00:27:08,000 Speaker 1: it's the signal is pretty clear, and then it's driving 473 00:27:08,320 --> 00:27:10,480 Speaker 1: more EV sales in the market, and it will in 474 00:27:10,520 --> 00:27:13,760 Speaker 1: the future, as you said, the target will ramp up 475 00:27:13,800 --> 00:27:16,760 Speaker 1: most likely. Can we talk a little bit more about 476 00:27:16,800 --> 00:27:21,160 Speaker 1: access to the market. So if I'm an American manufacturer 477 00:27:21,200 --> 00:27:22,760 Speaker 1: and I want access to the market, I have to 478 00:27:22,760 --> 00:27:25,520 Speaker 1: do a joint venture with the Chinese company. Is that right? 479 00:27:25,640 --> 00:27:27,760 Speaker 1: Is that still how it works? Kind I used to 480 00:27:27,840 --> 00:27:32,000 Speaker 1: have the stowing venture or restrictions for any automakers want 481 00:27:32,040 --> 00:27:35,240 Speaker 1: to enter the domestic market, but the restriction has been lifted. 482 00:27:35,400 --> 00:27:38,879 Speaker 1: So TESTA is the first one the stoptics. I can 483 00:27:38,960 --> 00:27:44,040 Speaker 1: established Holly owned foreign manufacturing plan in China. And we 484 00:27:44,080 --> 00:27:47,560 Speaker 1: also see a lot of like BMW, there's either increasing 485 00:27:47,600 --> 00:27:51,159 Speaker 1: their their shares in their existing joint ventures or they 486 00:27:51,160 --> 00:27:56,400 Speaker 1: are kind of thinking about maybe setting up like their own, 487 00:27:56,640 --> 00:28:00,840 Speaker 1: the Holy owned one in the future. Okay, so access 488 00:28:00,880 --> 00:28:02,760 Speaker 1: to the market is going to be much more about 489 00:28:02,840 --> 00:28:05,080 Speaker 1: the technology selling a n V than it is about 490 00:28:05,080 --> 00:28:07,520 Speaker 1: a j V in the future. Yeah, because I don't 491 00:28:07,520 --> 00:28:11,680 Speaker 1: think there's will be any restriction or probably I didn't 492 00:28:11,680 --> 00:28:14,760 Speaker 1: really touch but her purpose anyway. So I think there's 493 00:28:14,800 --> 00:28:17,719 Speaker 1: other ways to kind of restrict access to the market 494 00:28:18,000 --> 00:28:20,760 Speaker 1: when to specify kind of which we are called will 495 00:28:20,800 --> 00:28:24,960 Speaker 1: receive the credits or receive subsidies, and they may kind 496 00:28:25,000 --> 00:28:27,920 Speaker 1: of discount some of the or take some of the foreigning, 497 00:28:27,960 --> 00:28:30,639 Speaker 1: may vehicles aut of the equation or out of the 498 00:28:30,880 --> 00:28:33,040 Speaker 1: kind of the white list. I think that's also maybe 499 00:28:33,040 --> 00:28:36,800 Speaker 1: a more subtle tool to block for an automakers from 500 00:28:36,880 --> 00:28:39,720 Speaker 1: entering the Chinese market. I guess the final question from 501 00:28:39,720 --> 00:28:44,520 Speaker 1: me is did this policy make it into your modeling 502 00:28:44,600 --> 00:28:48,360 Speaker 1: for the upcoming electric vehicle outlook? You know, did it 503 00:28:48,480 --> 00:28:51,800 Speaker 1: make it into the forecasting for the Chinese market growth? 504 00:28:52,280 --> 00:28:54,360 Speaker 1: I mean totally. I mean I think particular for the 505 00:28:54,400 --> 00:28:58,320 Speaker 1: short term forecast, we do factor allotting the policy impact 506 00:28:58,400 --> 00:29:01,040 Speaker 1: in China, like the V credit as well as a 507 00:29:01,040 --> 00:29:04,720 Speaker 1: few economy credits. These are two very important policies. They're 508 00:29:04,760 --> 00:29:06,520 Speaker 1: going to drive a V adoption in China in the 509 00:29:06,560 --> 00:29:10,800 Speaker 1: short term. A short term we've been period, so we 510 00:29:10,920 --> 00:29:14,959 Speaker 1: do increase because of the hard to meet. So for 511 00:29:15,080 --> 00:29:17,000 Speaker 1: the n e V credits, we do see that it's 512 00:29:17,040 --> 00:29:20,480 Speaker 1: relatively easy to meet for the industry as a whole, 513 00:29:20,560 --> 00:29:23,800 Speaker 1: So it requires around like fift to eleven percent of 514 00:29:23,960 --> 00:29:26,320 Speaker 1: the total sales to be electrics by like in around 515 00:29:27,040 --> 00:29:30,120 Speaker 1: one So that target is easy to meet. But for 516 00:29:30,320 --> 00:29:34,440 Speaker 1: the few consumption targets, for the few CFC targets, that's 517 00:29:34,480 --> 00:29:38,160 Speaker 1: really challenging, and we we do expect that will help 518 00:29:38,240 --> 00:29:41,880 Speaker 1: drive up the EV cells. We do expect EV sells 519 00:29:41,880 --> 00:29:49,040 Speaker 1: in China to be around that's a lot and soon 520 00:29:49,520 --> 00:29:51,720 Speaker 1: is that going to be the biggest market? I think, yeah, yeah, 521 00:29:51,720 --> 00:29:53,320 Speaker 1: it's gonna be the biggest thing. There, you have it. 522 00:29:53,720 --> 00:29:56,280 Speaker 1: What are you gonna be watching for in the Chinese 523 00:29:56,280 --> 00:29:58,400 Speaker 1: EV market next? Like, what's the thing that you're you're 524 00:29:58,440 --> 00:30:00,640 Speaker 1: looking out for in your research? Well, I think policy 525 00:30:00,680 --> 00:30:03,360 Speaker 1: is definitely something that we watch a lot in the 526 00:30:03,360 --> 00:30:06,800 Speaker 1: past because it's such an important driver in EV adoption. 527 00:30:07,520 --> 00:30:10,040 Speaker 1: But as kind of the evy adoptions is now regular 528 00:30:10,080 --> 00:30:12,800 Speaker 1: about five percent, we see consumers moving from the from 529 00:30:12,920 --> 00:30:15,680 Speaker 1: this early adopter to be gradually and enter into the 530 00:30:15,680 --> 00:30:18,600 Speaker 1: to them what a mass adoption faces, that's why we 531 00:30:18,640 --> 00:30:21,120 Speaker 1: observe a lot more nuanced factors are going to drive 532 00:30:21,160 --> 00:30:24,920 Speaker 1: ev adoptions such as the charging infrastructure coverage as well 533 00:30:24,960 --> 00:30:28,080 Speaker 1: as maybe the resell values of the lactural vehicles, and 534 00:30:28,160 --> 00:30:31,440 Speaker 1: we do observe all other kind of the more other 535 00:30:31,560 --> 00:30:34,880 Speaker 1: factors are going to drive or potentially drive drive or 536 00:30:34,960 --> 00:30:37,560 Speaker 1: become a bottom act to the to the massive adoption 537 00:30:37,560 --> 00:30:40,960 Speaker 1: in the in the future. So basically watching for signs 538 00:30:41,000 --> 00:30:42,840 Speaker 1: at the tipping point or whether that tipping point is 539 00:30:42,840 --> 00:30:46,479 Speaker 1: going to be blocked somehow. Yeah, wow, cool sounds exciting. 540 00:30:46,920 --> 00:30:57,680 Speaker 1: See thanks for joining, Thanks for having me. Today's episode 541 00:30:57,680 --> 00:30:59,960 Speaker 1: of Switched On was edited by Rex Warner the Great 542 00:31:00,000 --> 00:31:02,560 Speaker 1: Stoke Media. Bloombergin e F is a service provided by 543 00:31:02,600 --> 00:31:06,160 Speaker 1: Bloomberg Finance LP and its affiliates. 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