1 00:00:00,360 --> 00:00:03,560 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:04,000 --> 00:00:07,440 Speaker 1: the bn EF podcast. At the beginning of every year, 3 00:00:07,680 --> 00:00:10,680 Speaker 1: several of b and EF's teams publish their things to 4 00:00:10,760 --> 00:00:13,720 Speaker 1: Watch research notes for the year ahead. In addition to 5 00:00:13,800 --> 00:00:17,360 Speaker 1: our weekly episodes on this show. In January, we're going 6 00:00:17,360 --> 00:00:20,720 Speaker 1: to be sprinkling in a few shorter bonus shows and 7 00:00:20,760 --> 00:00:23,239 Speaker 1: they will focus on some of these things to watch. 8 00:00:23,560 --> 00:00:25,400 Speaker 1: Hopefully they'll be as fun for you to listen to 9 00:00:25,640 --> 00:00:28,560 Speaker 1: as they were for our team to write and then record, 10 00:00:28,800 --> 00:00:31,360 Speaker 1: because these shows are really a chance for our team 11 00:00:31,480 --> 00:00:34,440 Speaker 1: to digest everything that happened in twenty twenty three and 12 00:00:34,479 --> 00:00:37,120 Speaker 1: think about what all of this means for the year ahead. 13 00:00:37,159 --> 00:00:40,320 Speaker 1: To kick off our series of things to Watch shows today, 14 00:00:40,440 --> 00:00:43,560 Speaker 1: I am joined by bn EF's head of Advanced Transport, 15 00:00:43,800 --> 00:00:47,159 Speaker 1: Colin Mcerriker, and he talks to us about electric vehicles 16 00:00:47,240 --> 00:00:50,680 Speaker 1: and clean transport. In twenty twenty four, we discussed the 17 00:00:50,720 --> 00:00:54,560 Speaker 1: biggest electric vehicle manufacturers in the world, Tesla and BYD, 18 00:00:54,880 --> 00:00:57,520 Speaker 1: and which one could come out on top for car 19 00:00:57,560 --> 00:00:59,720 Speaker 1: sales during the year ahead. We also talk a bit 20 00:00:59,800 --> 00:01:03,200 Speaker 1: of the United States and whether crossing the one million 21 00:01:03,280 --> 00:01:06,720 Speaker 1: EV's soul mark in twenty twenty three, will or won't 22 00:01:06,800 --> 00:01:10,040 Speaker 1: mean new milestones met in twenty twenty four, and we'll 23 00:01:10,040 --> 00:01:13,600 Speaker 1: discuss whether developing markets will be taking advantage of cheaper 24 00:01:13,680 --> 00:01:17,039 Speaker 1: electric vehicles. And finally we turn to oil demand and 25 00:01:17,080 --> 00:01:21,160 Speaker 1: whether we expect to see significant demand destruction from transport 26 00:01:21,280 --> 00:01:25,000 Speaker 1: owing to electric vehicles. To access the research note that 27 00:01:25,040 --> 00:01:29,160 Speaker 1: our team wrote titled EV's and Clean Transport Ten things 28 00:01:29,200 --> 00:01:31,320 Speaker 1: to Watch in twenty twenty four, B and e F 29 00:01:31,400 --> 00:01:34,600 Speaker 1: subscribers can find them at BNF dot com or at 30 00:01:34,600 --> 00:01:37,800 Speaker 1: BNF go on the Bloomberg terminal. If you like this podcast, 31 00:01:37,880 --> 00:01:40,360 Speaker 1: if you subscribe or give us a review, it'll help 32 00:01:40,400 --> 00:01:43,199 Speaker 1: make us more discoverable by others. But right now, let's 33 00:01:43,280 --> 00:01:46,920 Speaker 1: jump into our conversation about twenty twenty four for Electric 34 00:01:47,040 --> 00:02:00,840 Speaker 1: Vehicles and Transport with Colin. Colin, thank you for joining 35 00:02:00,920 --> 00:02:02,000 Speaker 1: us again today. 36 00:02:02,440 --> 00:02:03,680 Speaker 2: Thanks Dana Greig to be here. 37 00:02:03,840 --> 00:02:05,680 Speaker 1: We are here at the beginning of the year. It 38 00:02:05,760 --> 00:02:09,320 Speaker 1: is still January, and we're talking about EV's and Clean 39 00:02:09,360 --> 00:02:12,760 Speaker 1: Transport Ten things to watch in twenty twenty four. Now, 40 00:02:12,800 --> 00:02:16,160 Speaker 1: how many years running have we been doing things to watch? 41 00:02:16,480 --> 00:02:18,799 Speaker 1: Note for the clean transport space, so. 42 00:02:18,760 --> 00:02:21,800 Speaker 3: We've had a broader Bloomberg one. Since BNF was founded, 43 00:02:21,840 --> 00:02:24,160 Speaker 3: there's been one, but for transport, we've just been doing 44 00:02:24,200 --> 00:02:27,040 Speaker 3: it since twenty sixteen, and that was because I liked 45 00:02:27,120 --> 00:02:29,440 Speaker 3: what we were doing company wide and I decided, actually, 46 00:02:29,480 --> 00:02:31,240 Speaker 3: we should start doing one on First it was just 47 00:02:31,240 --> 00:02:33,560 Speaker 3: on electric vehicles, and then as our scope has expanded 48 00:02:33,560 --> 00:02:36,280 Speaker 3: to include other parts of transport, we've started adding predictions 49 00:02:36,280 --> 00:02:37,040 Speaker 3: in on that as well. 50 00:02:37,080 --> 00:02:40,079 Speaker 1: Everybody likes a good predictions note, but I would actually 51 00:02:40,120 --> 00:02:43,959 Speaker 1: say this is just as much looking back and digesting 52 00:02:44,200 --> 00:02:47,160 Speaker 1: really what happened in the previous year. I want to know, 53 00:02:47,400 --> 00:02:50,320 Speaker 1: how do you rate your scorecard for your twenty twenty 54 00:02:50,320 --> 00:02:51,160 Speaker 1: three predictions? 55 00:02:51,560 --> 00:02:52,679 Speaker 3: Yeah, I mean this is one of the things that 56 00:02:52,720 --> 00:02:54,480 Speaker 3: we think is we've always said is really important, is 57 00:02:54,520 --> 00:02:55,720 Speaker 3: you have to go back and see what did you 58 00:02:55,720 --> 00:02:59,320 Speaker 3: actually get right. Otherwise you sort of don't really absorb 59 00:02:59,400 --> 00:03:01,359 Speaker 3: the learnings it and you see lots of groups make 60 00:03:01,400 --> 00:03:04,280 Speaker 3: prognostications but not actually come back and revisit them. So 61 00:03:04,760 --> 00:03:06,320 Speaker 3: what we do is we go and say, okay, we 62 00:03:06,400 --> 00:03:07,840 Speaker 3: pull in all the data at the end of the year, 63 00:03:07,840 --> 00:03:09,120 Speaker 3: and we say, look what did we get right and 64 00:03:09,200 --> 00:03:11,079 Speaker 3: what did we get wrong? And then across the group, 65 00:03:11,120 --> 00:03:13,400 Speaker 3: we try and give ourselves a score on each one 66 00:03:13,440 --> 00:03:16,040 Speaker 3: of the ten predictions we made. So, just as an example, 67 00:03:16,160 --> 00:03:18,919 Speaker 3: last year, we predicted fourteen million EV sold. We're still 68 00:03:18,960 --> 00:03:21,520 Speaker 3: tabulating a bit of December data, but it looks like 69 00:03:21,520 --> 00:03:23,880 Speaker 3: that's going to be within about one percent of the 70 00:03:23,919 --> 00:03:26,680 Speaker 3: actual total. So there, we'd give ourselves ten out of ten. Right, 71 00:03:26,720 --> 00:03:28,320 Speaker 3: we'd give ourselves a pat on the back and say. 72 00:03:28,200 --> 00:03:28,840 Speaker 2: We did that. Well. 73 00:03:29,000 --> 00:03:30,920 Speaker 3: There's a couple other good predictions. There's some that didn't 74 00:03:30,919 --> 00:03:33,640 Speaker 3: go as well. So we also had one around battery prices. 75 00:03:33,680 --> 00:03:35,920 Speaker 3: We thought this time last year we thought raw material 76 00:03:35,920 --> 00:03:38,680 Speaker 3: prices might stay higher for longer, battery prices would stay 77 00:03:38,720 --> 00:03:40,960 Speaker 3: kind of elevated the way they were in twenty twenty two, 78 00:03:41,000 --> 00:03:43,320 Speaker 3: but in fact they dropped really sharply in twenty twenty three, 79 00:03:43,360 --> 00:03:45,440 Speaker 3: so down fourteen percent. So in that case, we gave 80 00:03:45,440 --> 00:03:47,720 Speaker 3: ourselves zero out of ten. So overall we I think 81 00:03:47,760 --> 00:03:49,520 Speaker 3: our predictions end up coming out pretty good, but there's 82 00:03:49,520 --> 00:03:51,560 Speaker 3: always one or two misses, And I think that's kind 83 00:03:51,560 --> 00:03:53,240 Speaker 3: of the point, right. You don't want to only predict 84 00:03:53,240 --> 00:03:55,520 Speaker 3: safe things, or predict things that are so generic that 85 00:03:55,560 --> 00:03:58,120 Speaker 3: you can't really test them. So we try and have quantifiable, 86 00:03:58,280 --> 00:04:00,880 Speaker 3: testable things that we're making predictions because that's part of 87 00:04:00,880 --> 00:04:02,200 Speaker 3: the value and it's also part of the fun of 88 00:04:02,200 --> 00:04:02,440 Speaker 3: it too. 89 00:04:02,720 --> 00:04:04,920 Speaker 1: Yeah, I mean it's interesting to actually see what does 90 00:04:05,000 --> 00:04:07,280 Speaker 1: end up happening. And also if you're surprised by it, 91 00:04:07,360 --> 00:04:09,800 Speaker 1: surely there are other people out there who are supplied 92 00:04:09,840 --> 00:04:12,800 Speaker 1: by it in the industry. So so let's jump right 93 00:04:12,840 --> 00:04:15,480 Speaker 1: into some of these predictions. So in twenty twenty three, 94 00:04:15,600 --> 00:04:20,919 Speaker 1: passenger EV sales actually broke the one million vehicles sold mark. 95 00:04:21,160 --> 00:04:24,719 Speaker 1: Do we see this momentum continuing in the US in 96 00:04:24,839 --> 00:04:26,960 Speaker 1: twenty twenty four because one of the things we also 97 00:04:27,000 --> 00:04:29,599 Speaker 1: talked about on the show is that US auto manufacturers 98 00:04:29,640 --> 00:04:32,880 Speaker 1: have started to temper their production. 99 00:04:33,320 --> 00:04:35,200 Speaker 3: Yeah, this was the US is probably the most the 100 00:04:35,240 --> 00:04:37,520 Speaker 3: trickiest region to forecast this year. And yeah, they broke 101 00:04:37,520 --> 00:04:39,080 Speaker 3: a million with a few months to spare, so they're 102 00:04:39,120 --> 00:04:40,680 Speaker 3: well over a million for the year. Around one point 103 00:04:40,720 --> 00:04:43,039 Speaker 3: four million plug in vehicles sold in the US last year. 104 00:04:43,160 --> 00:04:45,880 Speaker 3: We think they're going to keep growing up to around 105 00:04:45,920 --> 00:04:48,000 Speaker 3: somewhere between one point eight and one point nine million. 106 00:04:48,080 --> 00:04:49,719 Speaker 3: But I would say the US is the region where 107 00:04:49,920 --> 00:04:53,000 Speaker 3: we're the most uncertain, and that's because of multiple factors. 108 00:04:53,000 --> 00:04:55,520 Speaker 3: One of them is that this incentive that's available in 109 00:04:55,560 --> 00:04:59,200 Speaker 3: the US, the tax credits, it's significantly harder to access 110 00:04:59,240 --> 00:05:02,400 Speaker 3: them this year because that's because there's this Foreign Entities 111 00:05:02,400 --> 00:05:06,080 Speaker 3: of Concern guidance that restricts the number of models that 112 00:05:06,120 --> 00:05:07,880 Speaker 3: are going to be eligible, as well as the existing 113 00:05:08,040 --> 00:05:10,760 Speaker 3: caps on incommon caps on retail price. So there's a 114 00:05:10,800 --> 00:05:13,360 Speaker 3: lot fewer models that are available for incentives, at least 115 00:05:13,360 --> 00:05:16,159 Speaker 3: at the federal level. And then on the pushing on 116 00:05:16,160 --> 00:05:17,600 Speaker 3: the other end of that is those incentives in the 117 00:05:17,680 --> 00:05:20,080 Speaker 3: US are now available at the point of purchase instead 118 00:05:20,080 --> 00:05:21,640 Speaker 3: of at the end of the tax here like they've 119 00:05:21,680 --> 00:05:23,600 Speaker 3: previously been, or at the end of the calendar year 120 00:05:23,640 --> 00:05:25,920 Speaker 3: like they've previously been. So I think that's where we 121 00:05:26,240 --> 00:05:27,719 Speaker 3: had a bit of trouble calling it. And then you 122 00:05:27,760 --> 00:05:30,719 Speaker 3: do see something from the established automakers like Ford and 123 00:05:30,839 --> 00:05:33,599 Speaker 3: GM where they're saying, look, actually inventory levels are pretty high. 124 00:05:33,839 --> 00:05:37,000 Speaker 3: They've downgraded there where they think their targets are going 125 00:05:37,080 --> 00:05:40,360 Speaker 3: to land and push back their manufacturing ramput plans a bit. 126 00:05:40,440 --> 00:05:41,680 Speaker 3: But on the other side of that, then you see 127 00:05:41,720 --> 00:05:44,880 Speaker 3: groups like Hindai Kia selling really well, Tesla selling really well, 128 00:05:45,000 --> 00:05:47,320 Speaker 3: Tesla's about four percent of the overall US auto market 129 00:05:47,360 --> 00:05:49,520 Speaker 3: right now, and the US auto market's quite fragmented, so 130 00:05:49,520 --> 00:05:52,279 Speaker 3: that's actually quite a decent share, ahead of groups like 131 00:05:52,320 --> 00:05:53,400 Speaker 3: BMW and others. 132 00:05:53,560 --> 00:05:55,280 Speaker 2: So it's a tricky one right now. 133 00:05:55,600 --> 00:05:58,039 Speaker 3: I do think the biggest thing I would say about 134 00:05:58,080 --> 00:06:00,560 Speaker 3: the US market is it will have an outsized impact 135 00:06:00,720 --> 00:06:03,480 Speaker 3: on the headlines that you see written about the global 136 00:06:03,520 --> 00:06:06,000 Speaker 3: EV market, but it's not the most important region for 137 00:06:06,040 --> 00:06:08,239 Speaker 3: the global EV market. It's going to be about eleven 138 00:06:08,279 --> 00:06:11,720 Speaker 3: percent of global EV sales this year the US and 139 00:06:11,960 --> 00:06:15,080 Speaker 3: the US share of the global EV market has declined 140 00:06:15,120 --> 00:06:18,400 Speaker 3: almost every year for the last decade, so really that's 141 00:06:18,520 --> 00:06:21,279 Speaker 3: reflecting much more rapid ad option in places like China 142 00:06:21,279 --> 00:06:21,720 Speaker 3: and Europe. 143 00:06:21,920 --> 00:06:24,520 Speaker 1: Well, so let's talk about that Tesla and BYD so 144 00:06:24,640 --> 00:06:27,120 Speaker 1: the US and China specifically. You know, at the end 145 00:06:27,120 --> 00:06:30,839 Speaker 1: of twenty twenty three, Tesla delivered this cybertruck that people 146 00:06:30,839 --> 00:06:33,280 Speaker 1: have been waiting for for some time now, and at 147 00:06:33,320 --> 00:06:37,080 Speaker 1: the same time, BOID has been making headlines because they 148 00:06:37,240 --> 00:06:40,839 Speaker 1: have also been growing. We're already a very significant player 149 00:06:40,839 --> 00:06:44,960 Speaker 1: in Asia, but have expanded further. So how are these 150 00:06:45,000 --> 00:06:48,360 Speaker 1: two companies positioned? I guess versus one another in terms 151 00:06:48,400 --> 00:06:52,440 Speaker 1: of growth and who will be the dominant EV auto 152 00:06:52,520 --> 00:06:54,200 Speaker 1: manufacturer next year. 153 00:06:54,880 --> 00:06:56,599 Speaker 3: Yeah, I think it's probably going to go to BYD 154 00:06:56,720 --> 00:06:59,720 Speaker 3: this year. So we actually predicted that in twenty twenty 155 00:06:59,720 --> 00:07:02,119 Speaker 3: three that BID would edge out. Tesla is the largest 156 00:07:02,160 --> 00:07:04,320 Speaker 3: seller of battery electric vehicles at the end of twenty 157 00:07:04,320 --> 00:07:06,080 Speaker 3: twenty three, and that is pretty much what happened in 158 00:07:06,120 --> 00:07:08,360 Speaker 3: the final quarter. Bid edge them out, and I think 159 00:07:08,400 --> 00:07:10,760 Speaker 3: they will continue to have an advantage there, and that's 160 00:07:10,800 --> 00:07:12,760 Speaker 3: really because they've spent a lot more time in the 161 00:07:12,800 --> 00:07:16,160 Speaker 3: last few years launching new models in many different price segments, 162 00:07:16,240 --> 00:07:18,520 Speaker 3: whereas Tesla still has quite a limited model range, and 163 00:07:18,560 --> 00:07:20,720 Speaker 3: those models that it sells, particularly the Model Y and 164 00:07:20,760 --> 00:07:23,000 Speaker 3: the Model three, do extremely well. So it's not to 165 00:07:23,040 --> 00:07:25,280 Speaker 3: take anything away from those, but they are all at 166 00:07:25,280 --> 00:07:27,360 Speaker 3: a minimum price point that is higher than the average 167 00:07:27,360 --> 00:07:30,280 Speaker 3: price point BID. And so while BID has been pushing 168 00:07:30,320 --> 00:07:32,080 Speaker 3: into all these different segments and pushing down all the 169 00:07:32,080 --> 00:07:34,040 Speaker 3: way down to sort of an eleven thousand dollars car 170 00:07:34,080 --> 00:07:37,040 Speaker 3: that it can sell in emerging economies, Tesla the cyber 171 00:07:37,080 --> 00:07:39,680 Speaker 3: truck is going to be a relatively low volume vehicle 172 00:07:39,760 --> 00:07:42,080 Speaker 3: for in our view, this year, and Tesla just doesn't 173 00:07:42,080 --> 00:07:43,840 Speaker 3: really have anything at that entry level in the market 174 00:07:43,880 --> 00:07:46,200 Speaker 3: where a lot of the volume sits, especially in countries 175 00:07:46,240 --> 00:07:49,720 Speaker 3: outside of North America and Europe. So I think BID's 176 00:07:49,760 --> 00:07:51,320 Speaker 3: probably gonna edge it. Bid is probably going to be 177 00:07:51,360 --> 00:07:53,520 Speaker 3: ahead of Tesla this year for the whole year. But 178 00:07:53,640 --> 00:07:56,000 Speaker 3: I think what's most important to recognize that these two 179 00:07:56,000 --> 00:07:58,760 Speaker 3: companies are way ahead of everyone else. So they're miles 180 00:07:58,760 --> 00:08:00,760 Speaker 3: ahead of all of the legacy autit makers. So we 181 00:08:00,800 --> 00:08:02,720 Speaker 3: can get a bit fixated on this race between at 182 00:08:02,760 --> 00:08:04,560 Speaker 3: the very top. In some ways, it doesn't matter. You 183 00:08:04,560 --> 00:08:07,800 Speaker 3: would just say there's two breakout winners, they're beating everyone, 184 00:08:07,880 --> 00:08:09,480 Speaker 3: and then everyone else is a long way back. 185 00:08:09,680 --> 00:08:11,160 Speaker 2: And you can also look at it in different ways. 186 00:08:11,160 --> 00:08:13,280 Speaker 3: You can look at volume, you clink a profit generated, 187 00:08:13,600 --> 00:08:16,680 Speaker 3: there's different ways to cut this, but certainly we see 188 00:08:16,680 --> 00:08:19,240 Speaker 3: a gap opening up at the top between those two 189 00:08:19,280 --> 00:08:20,000 Speaker 3: and everyone else. 190 00:08:20,200 --> 00:08:22,040 Speaker 1: Okay, so let's stick on one of these. So b 191 00:08:22,120 --> 00:08:24,440 Speaker 1: WHYD one of the things they've done is actually taken 192 00:08:24,440 --> 00:08:28,920 Speaker 1: over a Ford plant in Brazil. What does this really signify? 193 00:08:28,960 --> 00:08:32,200 Speaker 1: What does it tell us about growth markets and developing 194 00:08:32,240 --> 00:08:34,200 Speaker 1: economies in terms of electric vehicles? 195 00:08:34,480 --> 00:08:36,240 Speaker 3: Yeah, I think it's a fascinating case study. So you 196 00:08:36,280 --> 00:08:38,120 Speaker 3: look at a lot of the places BYD's planning on 197 00:08:38,200 --> 00:08:40,200 Speaker 3: expanding to. They do have a plant that they're going 198 00:08:40,240 --> 00:08:41,599 Speaker 3: to build in Eastern Europe, but a lot of the 199 00:08:41,600 --> 00:08:44,240 Speaker 3: places that are going to expand to are in emerging economies. 200 00:08:44,280 --> 00:08:46,200 Speaker 3: And if you look at the portfolio of vehicles they have, 201 00:08:46,320 --> 00:08:48,160 Speaker 3: they have all these ev models that are in this 202 00:08:48,280 --> 00:08:51,319 Speaker 3: kind of ten to fifteen to twenty thousand dollars range, 203 00:08:51,320 --> 00:08:53,079 Speaker 3: which are much cheaper than the vehicles you see on 204 00:08:53,120 --> 00:08:55,560 Speaker 3: average in North American Europe, but really appealing to an 205 00:08:55,559 --> 00:08:59,080 Speaker 3: emerging market buyer. And that place, that plant in Brazil 206 00:08:59,160 --> 00:09:01,720 Speaker 3: is really fascinating because it used to be a Ford plant, 207 00:09:01,880 --> 00:09:04,120 Speaker 3: and Ford pulled out a few years ago from Brazil, 208 00:09:04,400 --> 00:09:06,000 Speaker 3: and there's sort of this I mean, you don't want 209 00:09:06,000 --> 00:09:07,880 Speaker 3: to overdo the symbolism too much, but the idea of 210 00:09:07,880 --> 00:09:10,400 Speaker 3: like a Western automaker not fully pulling out of Latin America, 211 00:09:10,440 --> 00:09:12,480 Speaker 3: but pulling out of that plan, pulling out of there, 212 00:09:12,520 --> 00:09:15,160 Speaker 3: and bid coming in, taking it over, relaunching with a 213 00:09:15,200 --> 00:09:17,960 Speaker 3: whole bunch more investment. It's kind of emblematic of a 214 00:09:18,000 --> 00:09:20,480 Speaker 3: broader shift in the overall auto industry, and that's that 215 00:09:20,640 --> 00:09:23,360 Speaker 3: Chinese automakers are about to have their moment. They have 216 00:09:23,440 --> 00:09:25,520 Speaker 3: been building towards this for a long time. They've been 217 00:09:25,559 --> 00:09:28,920 Speaker 3: building up to know how, and they are exporting more 218 00:09:29,000 --> 00:09:31,719 Speaker 3: vehicles now than the Japanese. They overtook Germany two years ago, 219 00:09:31,760 --> 00:09:34,800 Speaker 3: overtook Japan last year. We think they'll be ahead of 220 00:09:34,880 --> 00:09:37,480 Speaker 3: Japan again this year. And so I think there's a 221 00:09:37,520 --> 00:09:40,840 Speaker 3: really fascinating thing to watch there on these emerging economies, 222 00:09:40,880 --> 00:09:43,319 Speaker 3: because there is still this narrative that EV adoption is 223 00:09:43,360 --> 00:09:46,200 Speaker 3: primarily a wealthy economy thing, and there's some truth to 224 00:09:46,240 --> 00:09:48,120 Speaker 3: that now. But if you look at the vehicles that 225 00:09:48,120 --> 00:09:51,120 Speaker 3: the Chinese automakers are launching, many of them are not premium, 226 00:09:51,200 --> 00:09:54,320 Speaker 3: high end vehicles. They're ones that are very much aimed 227 00:09:54,360 --> 00:09:57,520 Speaker 3: at average buyers, and so I think we're going to 228 00:09:57,559 --> 00:09:59,800 Speaker 3: be watching that quite closely. We're expecting almost a million 229 00:10:00,040 --> 00:10:03,160 Speaker 3: evs sold in places like India, Southeast Asia, Latam other 230 00:10:03,520 --> 00:10:06,040 Speaker 3: emerging economies this year, which is just quite a jump 231 00:10:06,120 --> 00:10:08,240 Speaker 3: versus where we've been in other other years before. 232 00:10:08,600 --> 00:10:11,600 Speaker 1: I mean, this is a story about expansion, but really 233 00:10:11,679 --> 00:10:13,839 Speaker 1: one of the themes that ran across all of twenty 234 00:10:13,840 --> 00:10:16,920 Speaker 1: twenty three was supply chain disruption, not just by the 235 00:10:16,960 --> 00:10:19,320 Speaker 1: way for transportation, but for a number of the different 236 00:10:19,320 --> 00:10:22,880 Speaker 1: industries that we cover. It benfter talking about higher material 237 00:10:22,960 --> 00:10:25,679 Speaker 1: costs and higher interest rates. Where do you see that 238 00:10:25,800 --> 00:10:28,560 Speaker 1: going in twenty twenty four as it relates to the 239 00:10:28,600 --> 00:10:32,520 Speaker 1: transport space. Do we foresee a more stable environment for 240 00:10:32,760 --> 00:10:33,840 Speaker 1: auto manufacturing? 241 00:10:34,360 --> 00:10:36,400 Speaker 3: So what kind of happened through last year is that 242 00:10:36,559 --> 00:10:39,600 Speaker 3: raw material prices started out high and then they really plummeted. 243 00:10:39,760 --> 00:10:42,280 Speaker 3: So they were already sort of turning this time last year, 244 00:10:42,360 --> 00:10:45,000 Speaker 3: and then they really went further. So lithium, cobalt, nico, 245 00:10:45,000 --> 00:10:47,040 Speaker 3: all these things way way down. And so when we 246 00:10:47,080 --> 00:10:49,199 Speaker 3: looked at the battery prices this year, they were down 247 00:10:49,240 --> 00:10:52,400 Speaker 3: fourteen percent on average, and in some cases down significantly 248 00:10:52,440 --> 00:10:54,880 Speaker 3: more than that. And that's for lithium I own battery packs. 249 00:10:55,000 --> 00:10:57,880 Speaker 3: So that's really reflecting a couple things. One of them 250 00:10:57,960 --> 00:11:00,240 Speaker 3: is this drop in raw material costs. Another No One 251 00:11:00,280 --> 00:11:03,559 Speaker 3: is just intense price competition between manufacturers because they have 252 00:11:03,600 --> 00:11:06,439 Speaker 3: built a lot of manufacturing capacity and again really driven 253 00:11:06,440 --> 00:11:09,559 Speaker 3: out of China. So some quick number crunching we did 254 00:11:09,800 --> 00:11:11,520 Speaker 3: this at the end of this year, was that China 255 00:11:11,600 --> 00:11:14,280 Speaker 3: produced enough batteries to more than supply all of the 256 00:11:14,320 --> 00:11:17,480 Speaker 3: world's evs and all of the world's stationary storage deployed 257 00:11:17,480 --> 00:11:20,400 Speaker 3: in twenty twenty three, So just produced in China significantly 258 00:11:20,440 --> 00:11:23,160 Speaker 3: more than was needed globally. So that just kind of 259 00:11:23,160 --> 00:11:25,760 Speaker 3: gives you a sense of how competitive this market is, 260 00:11:25,920 --> 00:11:27,560 Speaker 3: and that's sort of part of one of the reasons 261 00:11:27,600 --> 00:11:29,880 Speaker 3: we saw those declines. I think on the supply chain, 262 00:11:29,920 --> 00:11:31,959 Speaker 3: the really interesting story that I would take cut of 263 00:11:32,040 --> 00:11:33,960 Speaker 3: last year and that I think will continue into this 264 00:11:34,040 --> 00:11:38,160 Speaker 3: year is this tension between localization and on one side, 265 00:11:38,200 --> 00:11:40,760 Speaker 3: and then cost reduction and deployment on the other. So 266 00:11:40,960 --> 00:11:42,600 Speaker 3: for most of the last decade, we've been talking about 267 00:11:42,600 --> 00:11:44,720 Speaker 3: how do we get this stuff deployed really quickly, and 268 00:11:44,760 --> 00:11:47,040 Speaker 3: now increasingly we're saying talking about okay, but we also 269 00:11:47,040 --> 00:11:49,319 Speaker 3: want it made locally. We also want it made in Europe. 270 00:11:49,360 --> 00:11:51,000 Speaker 3: We also want it made in North America, not just 271 00:11:51,080 --> 00:11:54,240 Speaker 3: the cheapest and that's those two things are sometimes at 272 00:11:54,280 --> 00:11:56,800 Speaker 3: odds with each other, right, Sometimes the cheapest way to 273 00:11:56,840 --> 00:11:59,000 Speaker 3: do it would be too important from the cheapest producer, 274 00:11:59,000 --> 00:12:01,920 Speaker 3: which is still know right now. So I think those 275 00:12:02,040 --> 00:12:04,280 Speaker 3: all that effort to try and localize supply chains in 276 00:12:04,320 --> 00:12:06,280 Speaker 3: the long term will be a very positive thing, but 277 00:12:06,320 --> 00:12:08,600 Speaker 3: in the short term actually think it's driving up costs 278 00:12:08,640 --> 00:12:11,480 Speaker 3: and in some ways going to slow down deployment. So 279 00:12:11,840 --> 00:12:13,600 Speaker 3: this is kind of where we got a bit uncomfortable 280 00:12:13,640 --> 00:12:15,600 Speaker 3: with this year, is there may be some real hiccups 281 00:12:15,600 --> 00:12:18,320 Speaker 3: this year around deployment, and we could even see sales 282 00:12:18,360 --> 00:12:21,120 Speaker 3: be significantly lower than we thought. But that's the number 283 00:12:21,120 --> 00:12:23,280 Speaker 3: we went out with. That's sort of sixteen about seventeen 284 00:12:23,360 --> 00:12:25,920 Speaker 3: million headline number. We'll see where it lands. 285 00:12:25,960 --> 00:12:28,160 Speaker 1: Yeah, we'll see your scorecard this time next year. Let's 286 00:12:28,200 --> 00:12:30,640 Speaker 1: talk about some of the implications for other industries, so 287 00:12:30,840 --> 00:12:34,280 Speaker 1: specifically oil. How much oil demand is being destroyed by 288 00:12:34,400 --> 00:12:37,200 Speaker 1: electric vehicles becoming more popular. 289 00:12:37,559 --> 00:12:39,920 Speaker 3: Yeah, this is one of those things that's probably it's 290 00:12:39,960 --> 00:12:41,840 Speaker 3: been hyped a bit too early in some ways. So 291 00:12:41,880 --> 00:12:43,840 Speaker 3: you go back a few years and everyone's talking about 292 00:12:43,880 --> 00:12:47,559 Speaker 3: how there's stories about EV's and peak demand, and if 293 00:12:47,559 --> 00:12:50,040 Speaker 3: you look at the impact, it was pretty modest so far. 294 00:12:50,160 --> 00:12:53,400 Speaker 3: Really it's a relatively modest amount of displacement. But that's 295 00:12:53,440 --> 00:12:55,199 Speaker 3: really going to start to change this year. And so 296 00:12:55,240 --> 00:12:58,000 Speaker 3: there's about fifty seven million evs on the road by 297 00:12:58,000 --> 00:12:59,360 Speaker 3: the end of this year, that's going to be about 298 00:12:59,360 --> 00:13:01,360 Speaker 3: four percent of the passenger vehicle fleet. And if you 299 00:13:01,440 --> 00:13:04,040 Speaker 3: just break down where oil consumption goes, road transport is 300 00:13:04,080 --> 00:13:06,880 Speaker 3: still the largest source of oil demand, and passenger cars 301 00:13:06,880 --> 00:13:09,559 Speaker 3: are still the largest source of oil demand within road transport. 302 00:13:09,600 --> 00:13:11,360 Speaker 3: So there's sometimes said, oh, no, the really important thing 303 00:13:11,400 --> 00:13:13,600 Speaker 3: is plastics or aviation, and those are important for growth, 304 00:13:13,600 --> 00:13:17,280 Speaker 3: but in absolute numbers, displacement from passenger cars is where 305 00:13:17,440 --> 00:13:19,720 Speaker 3: the biggest chunk of oil demand is, or that's where 306 00:13:19,720 --> 00:13:22,160 Speaker 3: the largest absolute share of oil demand comes from. So 307 00:13:22,280 --> 00:13:25,760 Speaker 3: what we're kind of watching right now is internal combustion 308 00:13:25,800 --> 00:13:28,520 Speaker 3: engine vehicle sales are still down about twenty percent from 309 00:13:28,559 --> 00:13:31,160 Speaker 3: their twenty seventeen peak. They're significantly off that peak we 310 00:13:31,160 --> 00:13:33,720 Speaker 3: think they peaked in twenty seventeen, or internal decline. We've 311 00:13:33,760 --> 00:13:35,880 Speaker 3: been saying that for a long time or long term decline. 312 00:13:35,880 --> 00:13:37,840 Speaker 3: There might be bumps upward or downward here and there, 313 00:13:37,920 --> 00:13:40,120 Speaker 3: and that twenty seventeen peak is starting to flow into 314 00:13:40,160 --> 00:13:42,480 Speaker 3: the fleet. So there's a big lag between what happens 315 00:13:42,520 --> 00:13:44,920 Speaker 3: on sale new sales and the fleet. So it's not 316 00:13:45,000 --> 00:13:47,520 Speaker 3: going to turn the corner anytime immediately. But we think 317 00:13:47,559 --> 00:13:50,599 Speaker 3: broadly the fleet of internal combustion engine vehicle starts to 318 00:13:50,640 --> 00:13:52,760 Speaker 3: sort of plateau in the next few years. And those 319 00:13:52,840 --> 00:13:54,880 Speaker 3: vehicles are also more efficient than the ones that were 320 00:13:54,880 --> 00:13:56,920 Speaker 3: sold twenty years ago or fifteen years ago the ones 321 00:13:56,920 --> 00:13:59,720 Speaker 3: that are being retired. So all that together means we 322 00:13:59,800 --> 00:14:01,760 Speaker 3: think think that there is a start to become a 323 00:14:01,800 --> 00:14:04,880 Speaker 3: material impact from electric vehicles this year. 324 00:14:04,880 --> 00:14:05,760 Speaker 2: On oil demand. 325 00:14:06,040 --> 00:14:08,800 Speaker 3: Now, most of the displacement that we've had historically from 326 00:14:08,840 --> 00:14:11,319 Speaker 3: electrified electric vehicles has been on the two and three 327 00:14:11,320 --> 00:14:14,440 Speaker 3: wheeler segment that's been relatively stable. That's because China deployed 328 00:14:14,480 --> 00:14:17,000 Speaker 3: a huge number of these over the last decade. But 329 00:14:17,320 --> 00:14:20,040 Speaker 3: now passenger vehicles will start to play a material role. 330 00:14:20,080 --> 00:14:22,040 Speaker 3: So by the end of this year, we think passenger 331 00:14:22,120 --> 00:14:24,160 Speaker 3: vehicles will be displacing our a little over six hundred 332 00:14:24,200 --> 00:14:26,880 Speaker 3: thousand barrels per day of oil demand. That's relatively small 333 00:14:26,960 --> 00:14:29,920 Speaker 3: still against over one hundred million barrels per day of 334 00:14:29,960 --> 00:14:32,320 Speaker 3: oil demand, But if you think about what is the 335 00:14:32,360 --> 00:14:35,560 Speaker 3: additional demand going forward in the twenty twenty in the 336 00:14:35,560 --> 00:14:37,760 Speaker 3: second half of the twenty twenties year, that starts to 337 00:14:37,800 --> 00:14:40,600 Speaker 3: be quite material because the annual additions to oil demand 338 00:14:40,720 --> 00:14:43,640 Speaker 3: are starting to decrease. There's this been this COVID rebound. 339 00:14:43,720 --> 00:14:45,360 Speaker 3: We think they're going to start to decrease next year, 340 00:14:45,520 --> 00:14:48,040 Speaker 3: So then that effect from EV's becomes more visible because 341 00:14:48,080 --> 00:14:50,320 Speaker 3: it's not being overwhelmed by a pigger increase. So I 342 00:14:50,320 --> 00:14:52,040 Speaker 3: think you're going to start to see more groups kind 343 00:14:52,080 --> 00:14:53,920 Speaker 3: of acknowledging that. Like I said, I think the hype 344 00:14:53,960 --> 00:14:55,240 Speaker 3: on this was a bit early, but I think that 345 00:14:55,280 --> 00:14:58,000 Speaker 3: starts to play in a real way now. And the 346 00:14:58,000 --> 00:15:00,360 Speaker 3: place to watch there is China. So China has seven 347 00:15:00,400 --> 00:15:02,960 Speaker 3: percent of the vehicle fleet is now electric. Sinopek has 348 00:15:03,000 --> 00:15:05,120 Speaker 3: said that it thinks gasoline demand has already peaked in 349 00:15:05,120 --> 00:15:07,280 Speaker 3: the country and that it's long term declined from here. 350 00:15:07,520 --> 00:15:10,200 Speaker 3: We overall think the road fuel demand globally has still 351 00:15:10,240 --> 00:15:11,560 Speaker 3: going to a rise for a couple more years till 352 00:15:11,600 --> 00:15:13,560 Speaker 3: around twenty twenty seven, and then it's a bit of 353 00:15:13,560 --> 00:15:15,520 Speaker 3: a plateau before it starts to come down more sharply 354 00:15:15,560 --> 00:15:17,560 Speaker 3: in the twenty thirties. But I think what we're flagging 355 00:15:17,600 --> 00:15:19,400 Speaker 3: with this prediction is that this is the year that 356 00:15:19,520 --> 00:15:23,280 Speaker 3: actually marks real materiality for the energy that's consumed and 357 00:15:23,320 --> 00:15:24,920 Speaker 3: displaced from evs, and. 358 00:15:24,880 --> 00:15:26,880 Speaker 1: If we're not putting oil in the vehicles we're putting 359 00:15:26,880 --> 00:15:30,200 Speaker 1: electricity in, which then brings us to charging networks, which 360 00:15:30,200 --> 00:15:32,280 Speaker 1: we have talked about on this show. And you know, 361 00:15:32,360 --> 00:15:35,280 Speaker 1: one of the themes across twenty twenty three was grids 362 00:15:35,560 --> 00:15:37,960 Speaker 1: and whether or not grids can handle all of the 363 00:15:37,960 --> 00:15:40,800 Speaker 1: additional demand on them as well as all of the 364 00:15:40,840 --> 00:15:44,560 Speaker 1: new renewable energy in producing infrastructure. On the other end, 365 00:15:44,640 --> 00:15:48,360 Speaker 1: when it comes to charging infrastructure, which really helps with 366 00:15:48,720 --> 00:15:51,360 Speaker 1: actually getting these vehicles on the road, what is the 367 00:15:51,360 --> 00:15:53,040 Speaker 1: outlook for public chargers? 368 00:15:53,240 --> 00:15:54,880 Speaker 3: So you're going to see a lot more charging infrastructure 369 00:15:54,880 --> 00:15:56,840 Speaker 3: built next year. We think there's about one point two 370 00:15:56,880 --> 00:16:00,880 Speaker 3: million public charging connectors, so not stations, but in outlets 371 00:16:00,960 --> 00:16:04,040 Speaker 3: public chargers that is installed in twenty twenty three. So 372 00:16:04,080 --> 00:16:06,320 Speaker 3: that brought the total to just under four million, which 373 00:16:06,400 --> 00:16:08,360 Speaker 3: instenttally is where we predicted it would be. I think 374 00:16:08,360 --> 00:16:10,200 Speaker 3: we said four point one million and it came out 375 00:16:10,200 --> 00:16:12,440 Speaker 3: at three point nine or something, so pretty good there. 376 00:16:13,040 --> 00:16:14,800 Speaker 3: We think it's gonna be about one point six million 377 00:16:14,840 --> 00:16:17,080 Speaker 3: this year. Now it's important to recognize there that this 378 00:16:17,200 --> 00:16:20,320 Speaker 3: doesn't mean charging is solved everywhere. It's going in much 379 00:16:20,360 --> 00:16:23,160 Speaker 3: faster in some places than others. So China is installing 380 00:16:23,440 --> 00:16:25,960 Speaker 3: more public charging than the rest of the world combined, 381 00:16:26,160 --> 00:16:28,800 Speaker 3: and when it comes to ultra other types of fast charging, 382 00:16:28,800 --> 00:16:31,160 Speaker 3: it's that ratio is even more than that. So there 383 00:16:31,200 --> 00:16:32,680 Speaker 3: is going to be a lot more chargers go in. 384 00:16:32,840 --> 00:16:34,600 Speaker 3: But I think you're still going to see charging as 385 00:16:34,640 --> 00:16:37,200 Speaker 3: a as a challenge and as a barrier, particularly in 386 00:16:37,240 --> 00:16:39,120 Speaker 3: the US where some of the chargers that are in 387 00:16:39,160 --> 00:16:42,560 Speaker 3: there are not especially reliable. And I think what we're 388 00:16:42,560 --> 00:16:44,920 Speaker 3: seeing kind of globally is a very uneven picture on 389 00:16:45,160 --> 00:16:47,840 Speaker 3: the degree to which people trust the charging infrastructure and 390 00:16:47,920 --> 00:16:50,840 Speaker 3: should trust the charging infrastructure to be honest. So the 391 00:16:50,920 --> 00:16:54,320 Speaker 3: other thing is that the public charging networks are starting 392 00:16:54,360 --> 00:16:57,720 Speaker 3: to be pretty big dispensers of electricity when you look 393 00:16:57,720 --> 00:17:00,480 Speaker 3: at the total demand for electricity that is going to 394 00:17:00,480 --> 00:17:04,399 Speaker 3: come from public charging. So we have ev charging in 395 00:17:04,480 --> 00:17:07,840 Speaker 3: China representing the same amount of total electricity consumption as 396 00:17:08,000 --> 00:17:10,760 Speaker 3: a sort of small to mid sized country, and last 397 00:17:10,800 --> 00:17:12,520 Speaker 3: year we think it was about the same as all 398 00:17:12,520 --> 00:17:15,080 Speaker 3: of Ireland. So we'll we'll keep going with these country 399 00:17:15,080 --> 00:17:17,399 Speaker 3: comparisons to hopefully make it a bit more tangible to 400 00:17:17,440 --> 00:17:19,639 Speaker 3: people who don't think in tear what hours. 401 00:17:21,200 --> 00:17:23,439 Speaker 1: So Colin, you and I are about to head to 402 00:17:23,480 --> 00:17:26,920 Speaker 1: California for our summit that is in San Francisco, which 403 00:17:27,000 --> 00:17:30,240 Speaker 1: is specifically focused on the transport space. One of the 404 00:17:30,280 --> 00:17:33,800 Speaker 1: areas that has been tricky for zero missions vehicles across 405 00:17:33,800 --> 00:17:36,080 Speaker 1: the board has been in the medium and heavy duty 406 00:17:36,160 --> 00:17:39,600 Speaker 1: vehicle space. And in California they are soon to implement 407 00:17:39,680 --> 00:17:44,679 Speaker 1: the Advance Clean Truck Legislation, which is abbreviated as ACT 408 00:17:44,880 --> 00:17:49,480 Speaker 1: and the Advanced Clean Fleets Rules ACF. What do you 409 00:17:49,560 --> 00:17:52,879 Speaker 1: think is going to happen then in terms of commercial 410 00:17:52,960 --> 00:17:56,679 Speaker 1: vehicle sales and is this going to essentially spur that 411 00:17:56,840 --> 00:17:59,199 Speaker 1: part of electric vehicle transition on? 412 00:18:00,119 --> 00:18:01,280 Speaker 2: Yeah, we think it is. 413 00:18:01,440 --> 00:18:04,840 Speaker 3: So there has been more activity around heavy trucks in 414 00:18:04,880 --> 00:18:07,280 Speaker 3: some other markets, but the US it's been relatively slow 415 00:18:07,320 --> 00:18:07,640 Speaker 3: so far. 416 00:18:07,840 --> 00:18:09,119 Speaker 2: The ACT marks. 417 00:18:08,840 --> 00:18:10,840 Speaker 3: That change for that. There are some other states that 418 00:18:10,880 --> 00:18:13,520 Speaker 3: follow it. The ACT is essentially a quota system for 419 00:18:13,600 --> 00:18:16,320 Speaker 3: zero missions trucks that the manufacturers who sell trucks there 420 00:18:16,359 --> 00:18:18,240 Speaker 3: have to meet and the fleets on the fleet side. 421 00:18:18,280 --> 00:18:20,240 Speaker 3: And we think for twenty twenty four somewhe around five 422 00:18:20,280 --> 00:18:22,560 Speaker 3: to nine percent of sales in California will have to 423 00:18:22,600 --> 00:18:25,919 Speaker 3: be zero missions in the heavy medium truck segment to 424 00:18:26,000 --> 00:18:27,800 Speaker 3: meet that, and it depends a bit on the segment, 425 00:18:27,800 --> 00:18:29,640 Speaker 3: but that's sort of an overall it's not a bad 426 00:18:29,680 --> 00:18:32,120 Speaker 3: guideline number, and that's a big jump up from where 427 00:18:32,119 --> 00:18:33,960 Speaker 3: we've been in the last few years. So there is 428 00:18:34,000 --> 00:18:35,639 Speaker 3: going to be a big surge we think. We know 429 00:18:35,680 --> 00:18:37,520 Speaker 3: a lot of groups have been preparing for that. There's 430 00:18:37,560 --> 00:18:40,000 Speaker 3: also been a lot of lobbying and maneuvering behind the 431 00:18:40,040 --> 00:18:42,800 Speaker 3: scenes on this, So some of the groups that might 432 00:18:42,800 --> 00:18:45,959 Speaker 3: make more publicly supportive statements behind the scenes have been 433 00:18:46,000 --> 00:18:48,480 Speaker 3: lobbying against some of the provisions of the Act. So 434 00:18:48,720 --> 00:18:51,359 Speaker 3: it's like any other policy around vehicles, there's sort of 435 00:18:51,400 --> 00:18:54,359 Speaker 3: this fight between the regulators and the manufacturers, most of 436 00:18:54,359 --> 00:18:58,200 Speaker 3: whom are not that keen on being pushed into new 437 00:18:58,400 --> 00:19:00,920 Speaker 3: drive train types. But also, as with passenger cars, you've 438 00:19:00,920 --> 00:19:03,200 Speaker 3: got some that are going down that path as pure 439 00:19:03,240 --> 00:19:05,720 Speaker 3: plays and are happy to keep pushing things forward, and 440 00:19:05,760 --> 00:19:08,800 Speaker 3: this does create a significant opportunity for them. So I 441 00:19:08,800 --> 00:19:11,040 Speaker 3: think we're going to see a big jump there, and 442 00:19:11,040 --> 00:19:13,919 Speaker 3: you're going to hear a lot more about charging big trucks, 443 00:19:14,040 --> 00:19:18,439 Speaker 3: about fleets going electric, and just about the major cost 444 00:19:18,520 --> 00:19:21,120 Speaker 3: savings that can be available in terms of fuel costs, 445 00:19:21,119 --> 00:19:23,040 Speaker 3: because you've got to remember, for some of these fleets, 446 00:19:23,080 --> 00:19:26,159 Speaker 3: fuels is a big part of the cost. And if 447 00:19:26,200 --> 00:19:28,040 Speaker 3: they can get more evs into their fleet, because most 448 00:19:28,040 --> 00:19:29,840 Speaker 3: of them are going to v's, there'll be some hydrogen 449 00:19:29,880 --> 00:19:31,399 Speaker 3: fuel cell vehicles in there too, but most of them 450 00:19:31,440 --> 00:19:34,959 Speaker 3: are going to be EV's, they can significantly cut their 451 00:19:35,000 --> 00:19:36,679 Speaker 3: operating costs. So I think you're going to hear more 452 00:19:36,720 --> 00:19:39,800 Speaker 3: about both the challenges and the success stories that come 453 00:19:39,840 --> 00:19:40,080 Speaker 3: from that. 454 00:19:40,480 --> 00:19:43,800 Speaker 1: Now pivoting away from the electrification of fleets, but still 455 00:19:43,840 --> 00:19:47,560 Speaker 1: in decarbonizing, let's talk a little bit about airlines and shipping, 456 00:19:47,800 --> 00:19:52,120 Speaker 1: where electrification isn't necessarily going to be the most obvious 457 00:19:52,280 --> 00:19:55,760 Speaker 1: path forward. It's in these kind of sustainable aviation fuels 458 00:19:55,840 --> 00:20:00,760 Speaker 1: and cleaner burning fuels. With a number of shipping and 459 00:20:01,119 --> 00:20:04,760 Speaker 1: airlines looking at emissions reduction, is there going to be 460 00:20:05,160 --> 00:20:08,200 Speaker 1: enough clean fuel to meet demand? And what does twenty 461 00:20:08,240 --> 00:20:09,040 Speaker 1: twenty four hold. 462 00:20:09,359 --> 00:20:12,000 Speaker 3: Yeah, this is an important point and it may seem 463 00:20:12,040 --> 00:20:14,000 Speaker 3: like a bit of an abrupt pivot when we talk 464 00:20:14,000 --> 00:20:16,320 Speaker 3: about from cars to ships and planes, but one of 465 00:20:16,320 --> 00:20:18,280 Speaker 3: the things you have to realize is the ways to 466 00:20:18,359 --> 00:20:21,199 Speaker 3: decarbonize these things are linked and one of the reasons 467 00:20:21,200 --> 00:20:23,600 Speaker 3: they're linked is that there is a scarcity of supply 468 00:20:23,800 --> 00:20:26,240 Speaker 3: to decarbonizing some of the hardest things, and those things 469 00:20:26,240 --> 00:20:28,240 Speaker 3: are things like shipping and aviation. So a big part 470 00:20:28,240 --> 00:20:30,159 Speaker 3: of the reason you need to push hard on electrifying 471 00:20:30,160 --> 00:20:32,119 Speaker 3: the things you can electrify is because there's going to 472 00:20:32,119 --> 00:20:34,680 Speaker 3: be really intense competition for the supply. 473 00:20:34,440 --> 00:20:36,160 Speaker 2: Of those liquid renewable. 474 00:20:35,720 --> 00:20:37,959 Speaker 3: Fuels for things like shipping and aviation. So that's kind 475 00:20:38,000 --> 00:20:40,320 Speaker 3: of why they're linked, and in our view, it doesn't 476 00:20:40,359 --> 00:20:42,840 Speaker 3: make sense to do anything other than electrify, at least 477 00:20:42,840 --> 00:20:45,560 Speaker 3: in terms of the most efficient route to getting there. 478 00:20:45,600 --> 00:20:48,600 Speaker 3: In terms of decarbonizing passenger cars, that's by far the 479 00:20:48,640 --> 00:20:52,840 Speaker 3: most cost effective and efficient way of getting there. So 480 00:20:53,080 --> 00:20:54,960 Speaker 3: on the fuel side, yes, what we're starting to see 481 00:20:54,960 --> 00:20:57,760 Speaker 3: is this competition shaping up between the shipping sector and 482 00:20:57,800 --> 00:21:01,520 Speaker 3: the aviation sector for supply some of those clean fuels 483 00:21:01,520 --> 00:21:03,879 Speaker 3: that can be used either directly or to make sustainable 484 00:21:03,880 --> 00:21:06,919 Speaker 3: aviation fuel through a different conversion pathway. And we've actually 485 00:21:06,920 --> 00:21:10,280 Speaker 3: we track every off take agreement between an airline and 486 00:21:10,560 --> 00:21:13,919 Speaker 3: a fuel producer of sustainable aviation fuel. We've tracked one 487 00:21:13,960 --> 00:21:15,879 Speaker 3: hundred of those deals since twenty nineteen. We have a 488 00:21:15,960 --> 00:21:17,760 Speaker 3: database on this if anybody wants to see it. We've 489 00:21:17,760 --> 00:21:19,600 Speaker 3: got quite a bit of coverage of this now and 490 00:21:19,640 --> 00:21:22,240 Speaker 3: that amounts to the total amount of purchase about thirty 491 00:21:22,240 --> 00:21:25,040 Speaker 3: seven billion leaders and that looks like an amount that 492 00:21:25,119 --> 00:21:27,159 Speaker 3: can be supplied. But the point is is that not 493 00:21:27,200 --> 00:21:30,600 Speaker 3: everyone's entered the market yet, so more what we're expecting 494 00:21:30,600 --> 00:21:32,280 Speaker 3: to see is more and more groups saying, look, we're 495 00:21:32,280 --> 00:21:35,320 Speaker 3: trying to purchase sustainable aviation fuel, but we can't necessarily 496 00:21:35,359 --> 00:21:37,960 Speaker 3: find the supply, the reliable supply to do that. And 497 00:21:38,000 --> 00:21:39,480 Speaker 3: I think that's where you're going to see this sort 498 00:21:39,520 --> 00:21:42,479 Speaker 3: of intense this competition ramp up between the shippers and 499 00:21:42,560 --> 00:21:44,760 Speaker 3: the aviation sector. And so far, what we're seeing is 500 00:21:44,760 --> 00:21:46,720 Speaker 3: the aviation sector is jumping out ahead, so they're the 501 00:21:46,720 --> 00:21:48,880 Speaker 3: ones signing many more of these deals. There is some 502 00:21:48,920 --> 00:21:51,440 Speaker 3: activity on the shipping side, but it's generally much smaller, 503 00:21:51,440 --> 00:21:54,360 Speaker 3: and that might just be because those are less consumer 504 00:21:54,440 --> 00:21:57,919 Speaker 3: facing brands than airlines are. But the pressure is going 505 00:21:57,960 --> 00:21:59,680 Speaker 3: to start to come on them too, So I think 506 00:21:59,720 --> 00:22:02,400 Speaker 3: you are going to see this continued competition and that's 507 00:22:02,440 --> 00:22:04,640 Speaker 3: going to probably be a good thing for catalyzing more 508 00:22:04,680 --> 00:22:08,280 Speaker 3: supply to help these others harder to abate sectors decarbonise 509 00:22:08,320 --> 00:22:08,640 Speaker 3: as well. 510 00:22:09,040 --> 00:22:09,240 Speaker 2: Well. 511 00:22:09,280 --> 00:22:12,119 Speaker 1: Colin, thank you for joining today and talking through some 512 00:22:12,200 --> 00:22:14,520 Speaker 1: of the points that came out of ten Things to Watch, 513 00:22:14,600 --> 00:22:16,359 Speaker 1: and we'll have you back to give as a scorecard, 514 00:22:16,400 --> 00:22:18,600 Speaker 1: and certainly we'll be digging in on a number of 515 00:22:18,680 --> 00:22:21,480 Speaker 1: these topics with members of your team throughout the course 516 00:22:21,480 --> 00:22:22,400 Speaker 1: of this upcoming year. 517 00:22:22,560 --> 00:22:24,919 Speaker 3: Thanks Dana, and we will definitely revisit them. There's no 518 00:22:24,960 --> 00:22:26,879 Speaker 3: point in doing these things if you're not accountable on them, 519 00:22:26,880 --> 00:22:28,560 Speaker 3: So looking forward to joining in a year's time and 520 00:22:28,640 --> 00:22:36,639 Speaker 3: we can score them and see how we did. 521 00:22:38,640 --> 00:22:41,960 Speaker 1: Bloomberg NEF is a service provided by Bloomberg Finance LP 522 00:22:42,160 --> 00:22:45,520 Speaker 1: and its affiliates. This recording does not constitute, nor should 523 00:22:45,560 --> 00:22:49,600 Speaker 1: it be construed as investment advice, investment recommendations, or a 524 00:22:49,640 --> 00:22:53,200 Speaker 1: recommendation as to an investment or other strategy. Bloomberg n 525 00:22:53,200 --> 00:22:56,720 Speaker 1: EF should not be considered as information sufficient upon which 526 00:22:56,760 --> 00:23:00,640 Speaker 1: to base an investment decision. 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