Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the bn EF podcast. At the beginning of every year,
Speaker 1: several of b and EF's teams publish their things to
Speaker 1: Watch research notes for the year ahead. In addition to
Speaker 1: our weekly episodes on this show. In January, we're going
Speaker 1: to be sprinkling in a few shorter bonus shows and
Speaker 1: they will focus on some of these things to watch.
Speaker 1: Hopefully they'll be as fun for you to listen to
Speaker 1: as they were for our team to write and then record,
Speaker 1: because these shows are really a chance for our team
Speaker 1: to digest everything that happened in twenty twenty three and
Speaker 1: think about what all of this means for the year ahead.
Speaker 1: To kick off our series of things to Watch shows today,
Speaker 1: I am joined by bn EF's head of Advanced Transport,
Speaker 1: Colin Mcerriker, and he talks to us about electric vehicles
Speaker 1: and clean transport. In twenty twenty four, we discussed the
Speaker 1: biggest electric vehicle manufacturers in the world, Tesla and BYD,
Speaker 1: and which one could come out on top for car
Speaker 1: sales during the year ahead. We also talk a bit
Speaker 1: of the United States and whether crossing the one million
Speaker 1: EV's soul mark in twenty twenty three, will or won't
Speaker 1: mean new milestones met in twenty twenty four, and we'll
Speaker 1: discuss whether developing markets will be taking advantage of cheaper
Speaker 1: electric vehicles. And finally we turn to oil demand and
Speaker 1: whether we expect to see significant demand destruction from transport
Speaker 1: owing to electric vehicles. To access the research note that
Speaker 1: our team wrote titled EV's and Clean Transport Ten things
Speaker 1: to Watch in twenty twenty four, B and e F
Speaker 1: subscribers can find them at BNF dot com or at
Speaker 1: BNF go on the Bloomberg terminal. If you like this podcast,
Speaker 1: if you subscribe or give us a review, it'll help
Speaker 1: make us more discoverable by others. But right now, let's
Speaker 1: jump into our conversation about twenty twenty four for Electric
Speaker 1: Vehicles and Transport with Colin. Colin, thank you for joining
Speaker 1: us again today.
Speaker 2: Thanks Dana Greig to be here.
Speaker 1: We are here at the beginning of the year. It
Speaker 1: is still January, and we're talking about EV's and Clean
Speaker 1: Transport Ten things to watch in twenty twenty four. Now,
Speaker 1: how many years running have we been doing things to watch?
Speaker 1: Note for the clean transport space, so.
Speaker 3: We've had a broader Bloomberg one. Since BNF was founded,
Speaker 3: there's been one, but for transport, we've just been doing
Speaker 3: it since twenty sixteen, and that was because I liked
Speaker 3: what we were doing company wide and I decided, actually,
Speaker 3: we should start doing one on First it was just
Speaker 3: on electric vehicles, and then as our scope has expanded
Speaker 3: to include other parts of transport, we've started adding predictions
Speaker 3: in on that as well.
Speaker 1: Everybody likes a good predictions note, but I would actually
Speaker 1: say this is just as much looking back and digesting
Speaker 1: really what happened in the previous year. I want to know,
Speaker 1: how do you rate your scorecard for your twenty twenty
Speaker 1: three predictions?
Speaker 3: Yeah, I mean this is one of the things that
Speaker 3: we think is we've always said is really important, is
Speaker 3: you have to go back and see what did you
Speaker 3: actually get right. Otherwise you sort of don't really absorb
Speaker 3: the learnings it and you see lots of groups make
Speaker 3: prognostications but not actually come back and revisit them. So
Speaker 3: what we do is we go and say, okay, we
Speaker 3: pull in all the data at the end of the year,
Speaker 3: and we say, look what did we get right and
Speaker 3: what did we get wrong? And then across the group,
Speaker 3: we try and give ourselves a score on each one
Speaker 3: of the ten predictions we made. So, just as an example,
Speaker 3: last year, we predicted fourteen million EV sold. We're still
Speaker 3: tabulating a bit of December data, but it looks like
Speaker 3: that's going to be within about one percent of the
Speaker 3: actual total. So there, we'd give ourselves ten out of ten. Right,
Speaker 3: we'd give ourselves a pat on the back and say.
Speaker 2: We did that. Well.
Speaker 3: There's a couple other good predictions. There's some that didn't
Speaker 3: go as well. So we also had one around battery prices.
Speaker 3: We thought this time last year we thought raw material
Speaker 3: prices might stay higher for longer, battery prices would stay
Speaker 3: kind of elevated the way they were in twenty twenty two,
Speaker 3: but in fact they dropped really sharply in twenty twenty three,
Speaker 3: so down fourteen percent. So in that case, we gave
Speaker 3: ourselves zero out of ten. So overall we I think
Speaker 3: our predictions end up coming out pretty good, but there's
Speaker 3: always one or two misses, And I think that's kind
Speaker 3: of the point, right. You don't want to only predict
Speaker 3: safe things, or predict things that are so generic that
Speaker 3: you can't really test them. So we try and have quantifiable,
Speaker 3: testable things that we're making predictions because that's part of
Speaker 3: the value and it's also part of the fun of
Speaker 3: it too.
Speaker 1: Yeah, I mean it's interesting to actually see what does
Speaker 1: end up happening. And also if you're surprised by it,
Speaker 1: surely there are other people out there who are supplied
Speaker 1: by it in the industry. So so let's jump right
Speaker 1: into some of these predictions. So in twenty twenty three,
Speaker 1: passenger EV sales actually broke the one million vehicles sold mark.
Speaker 1: Do we see this momentum continuing in the US in
Speaker 1: twenty twenty four because one of the things we also
Speaker 1: talked about on the show is that US auto manufacturers
Speaker 1: have started to temper their production.
Speaker 3: Yeah, this was the US is probably the most the
Speaker 3: trickiest region to forecast this year. And yeah, they broke
Speaker 3: a million with a few months to spare, so they're
Speaker 3: well over a million for the year. Around one point
Speaker 3: four million plug in vehicles sold in the US last year.
Speaker 3: We think they're going to keep growing up to around
Speaker 3: somewhere between one point eight and one point nine million.
Speaker 3: But I would say the US is the region where
Speaker 3: we're the most uncertain, and that's because of multiple factors.
Speaker 3: One of them is that this incentive that's available in
Speaker 3: the US, the tax credits, it's significantly harder to access
Speaker 3: them this year because that's because there's this Foreign Entities
Speaker 3: of Concern guidance that restricts the number of models that
Speaker 3: are going to be eligible, as well as the existing
Speaker 3: caps on incommon caps on retail price. So there's a
Speaker 3: lot fewer models that are available for incentives, at least
Speaker 3: at the federal level. And then on the pushing on
Speaker 3: the other end of that is those incentives in the
Speaker 3: US are now available at the point of purchase instead
Speaker 3: of at the end of the tax here like they've
Speaker 3: previously been, or at the end of the calendar year
Speaker 3: like they've previously been. So I think that's where we
Speaker 3: had a bit of trouble calling it. And then you
Speaker 3: do see something from the established automakers like Ford and
Speaker 3: GM where they're saying, look, actually inventory levels are pretty high.
Speaker 3: They've downgraded there where they think their targets are going
Speaker 3: to land and push back their manufacturing ramput plans a bit.
Speaker 3: But on the other side of that, then you see
Speaker 3: groups like Hindai Kia selling really well, Tesla selling really well,
Speaker 3: Tesla's about four percent of the overall US auto market
Speaker 3: right now, and the US auto market's quite fragmented, so
Speaker 3: that's actually quite a decent share, ahead of groups like
Speaker 3: BMW and others.
Speaker 2: So it's a tricky one right now.
Speaker 3: I do think the biggest thing I would say about
Speaker 3: the US market is it will have an outsized impact
Speaker 3: on the headlines that you see written about the global
Speaker 3: EV market, but it's not the most important region for
Speaker 3: the global EV market. It's going to be about eleven
Speaker 3: percent of global EV sales this year the US and
Speaker 3: the US share of the global EV market has declined
Speaker 3: almost every year for the last decade, so really that's
Speaker 3: reflecting much more rapid ad option in places like China
Speaker 3: and Europe.
Speaker 1: Well, so let's talk about that Tesla and BYD so
Speaker 1: the US and China specifically. You know, at the end
Speaker 1: of twenty twenty three, Tesla delivered this cybertruck that people
Speaker 1: have been waiting for for some time now, and at
Speaker 1: the same time, BOID has been making headlines because they
Speaker 1: have also been growing. We're already a very significant player
Speaker 1: in Asia, but have expanded further. So how are these
Speaker 1: two companies positioned? I guess versus one another in terms
Speaker 1: of growth and who will be the dominant EV auto
Speaker 1: manufacturer next year.
Speaker 3: Yeah, I think it's probably going to go to BYD
Speaker 3: this year. So we actually predicted that in twenty twenty
Speaker 3: three that BID would edge out. Tesla is the largest
Speaker 3: seller of battery electric vehicles at the end of twenty
Speaker 3: twenty three, and that is pretty much what happened in
Speaker 3: the final quarter. Bid edge them out, and I think
Speaker 3: they will continue to have an advantage there, and that's
Speaker 3: really because they've spent a lot more time in the
Speaker 3: last few years launching new models in many different price segments,
Speaker 3: whereas Tesla still has quite a limited model range, and
Speaker 3: those models that it sells, particularly the Model Y and
Speaker 3: the Model three, do extremely well. So it's not to
Speaker 3: take anything away from those, but they are all at
Speaker 3: a minimum price point that is higher than the average
Speaker 3: price point BID. And so while BID has been pushing
Speaker 3: into all these different segments and pushing down all the
Speaker 3: way down to sort of an eleven thousand dollars car
Speaker 3: that it can sell in emerging economies, Tesla the cyber
Speaker 3: truck is going to be a relatively low volume vehicle
Speaker 3: for in our view, this year, and Tesla just doesn't
Speaker 3: really have anything at that entry level in the market
Speaker 3: where a lot of the volume sits, especially in countries
Speaker 3: outside of North America and Europe. So I think BID's
Speaker 3: probably gonna edge it. Bid is probably going to be
Speaker 3: ahead of Tesla this year for the whole year. But
Speaker 3: I think what's most important to recognize that these two
Speaker 3: companies are way ahead of everyone else. So they're miles
Speaker 3: ahead of all of the legacy autit makers. So we
Speaker 3: can get a bit fixated on this race between at
Speaker 3: the very top. In some ways, it doesn't matter. You
Speaker 3: would just say there's two breakout winners, they're beating everyone,
Speaker 3: and then everyone else is a long way back.
Speaker 2: And you can also look at it in different ways.
Speaker 3: You can look at volume, you clink a profit generated,
Speaker 3: there's different ways to cut this, but certainly we see
Speaker 3: a gap opening up at the top between those two
Speaker 3: and everyone else.
Speaker 1: Okay, so let's stick on one of these. So b
Speaker 1: WHYD one of the things they've done is actually taken
Speaker 1: over a Ford plant in Brazil. What does this really signify?
Speaker 1: What does it tell us about growth markets and developing
Speaker 1: economies in terms of electric vehicles?
Speaker 3: Yeah, I think it's a fascinating case study. So you
Speaker 3: look at a lot of the places BYD's planning on
Speaker 3: expanding to. They do have a plant that they're going
Speaker 3: to build in Eastern Europe, but a lot of the
Speaker 3: places that are going to expand to are in emerging economies.
Speaker 3: And if you look at the portfolio of vehicles they have,
Speaker 3: they have all these ev models that are in this
Speaker 3: kind of ten to fifteen to twenty thousand dollars range,
Speaker 3: which are much cheaper than the vehicles you see on
Speaker 3: average in North American Europe, but really appealing to an
Speaker 3: emerging market buyer. And that place, that plant in Brazil
Speaker 3: is really fascinating because it used to be a Ford plant,
Speaker 3: and Ford pulled out a few years ago from Brazil,
Speaker 3: and there's sort of this I mean, you don't want
Speaker 3: to overdo the symbolism too much, but the idea of
Speaker 3: like a Western automaker not fully pulling out of Latin America,
Speaker 3: but pulling out of that plan, pulling out of there,
Speaker 3: and bid coming in, taking it over, relaunching with a
Speaker 3: whole bunch more investment. It's kind of emblematic of a
Speaker 3: broader shift in the overall auto industry, and that's that
Speaker 3: Chinese automakers are about to have their moment. They have
Speaker 3: been building towards this for a long time. They've been
Speaker 3: building up to know how, and they are exporting more
Speaker 3: vehicles now than the Japanese. They overtook Germany two years ago,
Speaker 3: overtook Japan last year. We think they'll be ahead of
Speaker 3: Japan again this year. And so I think there's a
Speaker 3: really fascinating thing to watch there on these emerging economies,
Speaker 3: because there is still this narrative that EV adoption is
Speaker 3: primarily a wealthy economy thing, and there's some truth to
Speaker 3: that now. But if you look at the vehicles that
Speaker 3: the Chinese automakers are launching, many of them are not premium,
Speaker 3: high end vehicles. They're ones that are very much aimed
Speaker 3: at average buyers, and so I think we're going to
Speaker 3: be watching that quite closely. We're expecting almost a million
Speaker 3: evs sold in places like India, Southeast Asia, Latam other
Speaker 3: emerging economies this year, which is just quite a jump
Speaker 3: versus where we've been in other other years before.
Speaker 1: I mean, this is a story about expansion, but really
Speaker 1: one of the themes that ran across all of twenty
Speaker 1: twenty three was supply chain disruption, not just by the
Speaker 1: way for transportation, but for a number of the different
Speaker 1: industries that we cover. It benfter talking about higher material
Speaker 1: costs and higher interest rates. Where do you see that
Speaker 1: going in twenty twenty four as it relates to the
Speaker 1: transport space. Do we foresee a more stable environment for
Speaker 1: auto manufacturing?
Speaker 3: So what kind of happened through last year is that
Speaker 3: raw material prices started out high and then they really plummeted.
Speaker 3: So they were already sort of turning this time last year,
Speaker 3: and then they really went further. So lithium, cobalt, nico,
Speaker 3: all these things way way down. And so when we
Speaker 3: looked at the battery prices this year, they were down
Speaker 3: fourteen percent on average, and in some cases down significantly
Speaker 3: more than that. And that's for lithium I own battery packs.
Speaker 3: So that's really reflecting a couple things. One of them
Speaker 3: is this drop in raw material costs. Another No One
Speaker 3: is just intense price competition between manufacturers because they have
Speaker 3: built a lot of manufacturing capacity and again really driven
Speaker 3: out of China. So some quick number crunching we did
Speaker 3: this at the end of this year, was that China
Speaker 3: produced enough batteries to more than supply all of the
Speaker 3: world's evs and all of the world's stationary storage deployed
Speaker 3: in twenty twenty three, So just produced in China significantly
Speaker 3: more than was needed globally. So that just kind of
Speaker 3: gives you a sense of how competitive this market is,
Speaker 3: and that's sort of part of one of the reasons
Speaker 3: we saw those declines. I think on the supply chain,
Speaker 3: the really interesting story that I would take cut of
Speaker 3: last year and that I think will continue into this
Speaker 3: year is this tension between localization and on one side,
Speaker 3: and then cost reduction and deployment on the other. So
Speaker 3: for most of the last decade, we've been talking about
Speaker 3: how do we get this stuff deployed really quickly, and
Speaker 3: now increasingly we're saying talking about okay, but we also
Speaker 3: want it made locally. We also want it made in Europe.
Speaker 3: We also want it made in North America, not just
Speaker 3: the cheapest and that's those two things are sometimes at
Speaker 3: odds with each other, right, Sometimes the cheapest way to
Speaker 3: do it would be too important from the cheapest producer,
Speaker 3: which is still know right now. So I think those
Speaker 3: all that effort to try and localize supply chains in
Speaker 3: the long term will be a very positive thing, but
Speaker 3: in the short term actually think it's driving up costs
Speaker 3: and in some ways going to slow down deployment. So
Speaker 3: this is kind of where we got a bit uncomfortable
Speaker 3: with this year, is there may be some real hiccups
Speaker 3: this year around deployment, and we could even see sales
Speaker 3: be significantly lower than we thought. But that's the number
Speaker 3: we went out with. That's sort of sixteen about seventeen
Speaker 3: million headline number. We'll see where it lands.
Speaker 1: Yeah, we'll see your scorecard this time next year. Let's
Speaker 1: talk about some of the implications for other industries, so
Speaker 1: specifically oil. How much oil demand is being destroyed by
Speaker 1: electric vehicles becoming more popular.
Speaker 3: Yeah, this is one of those things that's probably it's
Speaker 3: been hyped a bit too early in some ways. So
Speaker 3: you go back a few years and everyone's talking about
Speaker 3: how there's stories about EV's and peak demand, and if
Speaker 3: you look at the impact, it was pretty modest so far.
Speaker 3: Really it's a relatively modest amount of displacement. But that's
Speaker 3: really going to start to change this year. And so
Speaker 3: there's about fifty seven million evs on the road by
Speaker 3: the end of this year, that's going to be about
Speaker 3: four percent of the passenger vehicle fleet. And if you
Speaker 3: just break down where oil consumption goes, road transport is
Speaker 3: still the largest source of oil demand, and passenger cars
Speaker 3: are still the largest source of oil demand within road transport.
Speaker 3: So there's sometimes said, oh, no, the really important thing
Speaker 3: is plastics or aviation, and those are important for growth,
Speaker 3: but in absolute numbers, displacement from passenger cars is where
Speaker 3: the biggest chunk of oil demand is, or that's where
Speaker 3: the largest absolute share of oil demand comes from. So
Speaker 3: what we're kind of watching right now is internal combustion
Speaker 3: engine vehicle sales are still down about twenty percent from
Speaker 3: their twenty seventeen peak. They're significantly off that peak we
Speaker 3: think they peaked in twenty seventeen, or internal decline. We've
Speaker 3: been saying that for a long time or long term decline.
Speaker 3: There might be bumps upward or downward here and there,
Speaker 3: and that twenty seventeen peak is starting to flow into
Speaker 3: the fleet. So there's a big lag between what happens
Speaker 3: on sale new sales and the fleet. So it's not
Speaker 3: going to turn the corner anytime immediately. But we think
Speaker 3: broadly the fleet of internal combustion engine vehicle starts to
Speaker 3: sort of plateau in the next few years. And those
Speaker 3: vehicles are also more efficient than the ones that were
Speaker 3: sold twenty years ago or fifteen years ago the ones
Speaker 3: that are being retired. So all that together means we
Speaker 3: think think that there is a start to become a
Speaker 3: material impact from electric vehicles this year.
Speaker 2: On oil demand.
Speaker 3: Now, most of the displacement that we've had historically from
Speaker 3: electrified electric vehicles has been on the two and three
Speaker 3: wheeler segment that's been relatively stable. That's because China deployed
Speaker 3: a huge number of these over the last decade. But
Speaker 3: now passenger vehicles will start to play a material role.
Speaker 3: So by the end of this year, we think passenger
Speaker 3: vehicles will be displacing our a little over six hundred
Speaker 3: thousand barrels per day of oil demand. That's relatively small
Speaker 3: still against over one hundred million barrels per day of
Speaker 3: oil demand, But if you think about what is the
Speaker 3: additional demand going forward in the twenty twenty in the
Speaker 3: second half of the twenty twenties year, that starts to
Speaker 3: be quite material because the annual additions to oil demand
Speaker 3: are starting to decrease. There's this been this COVID rebound.
Speaker 3: We think they're going to start to decrease next year,
Speaker 3: So then that effect from EV's becomes more visible because
Speaker 3: it's not being overwhelmed by a pigger increase. So I
Speaker 3: think you're going to start to see more groups kind
Speaker 3: of acknowledging that. Like I said, I think the hype
Speaker 3: on this was a bit early, but I think that
Speaker 3: starts to play in a real way now. And the
Speaker 3: place to watch there is China. So China has seven
Speaker 3: percent of the vehicle fleet is now electric. Sinopek has
Speaker 3: said that it thinks gasoline demand has already peaked in
Speaker 3: the country and that it's long term declined from here.
Speaker 3: We overall think the road fuel demand globally has still
Speaker 3: going to a rise for a couple more years till
Speaker 3: around twenty twenty seven, and then it's a bit of
Speaker 3: a plateau before it starts to come down more sharply
Speaker 3: in the twenty thirties. But I think what we're flagging
Speaker 3: with this prediction is that this is the year that
Speaker 3: actually marks real materiality for the energy that's consumed and
Speaker 3: displaced from evs, and.
Speaker 1: If we're not putting oil in the vehicles we're putting
Speaker 1: electricity in, which then brings us to charging networks, which
Speaker 1: we have talked about on this show. And you know,
Speaker 1: one of the themes across twenty twenty three was grids
Speaker 1: and whether or not grids can handle all of the
Speaker 1: additional demand on them as well as all of the
Speaker 1: new renewable energy in producing infrastructure. On the other end,
Speaker 1: when it comes to charging infrastructure, which really helps with
Speaker 1: actually getting these vehicles on the road, what is the
Speaker 1: outlook for public chargers?
Speaker 3: So you're going to see a lot more charging infrastructure
Speaker 3: built next year. We think there's about one point two
Speaker 3: million public charging connectors, so not stations, but in outlets
Speaker 3: public chargers that is installed in twenty twenty three. So
Speaker 3: that brought the total to just under four million, which
Speaker 3: instenttally is where we predicted it would be. I think
Speaker 3: we said four point one million and it came out
Speaker 3: at three point nine or something, so pretty good there.
Speaker 3: We think it's gonna be about one point six million
Speaker 3: this year. Now it's important to recognize there that this
Speaker 3: doesn't mean charging is solved everywhere. It's going in much
Speaker 3: faster in some places than others. So China is installing
Speaker 3: more public charging than the rest of the world combined,
Speaker 3: and when it comes to ultra other types of fast charging,
Speaker 3: it's that ratio is even more than that. So there
Speaker 3: is going to be a lot more chargers go in.
Speaker 3: But I think you're still going to see charging as
Speaker 3: a as a challenge and as a barrier, particularly in
Speaker 3: the US where some of the chargers that are in
Speaker 3: there are not especially reliable. And I think what we're
Speaker 3: seeing kind of globally is a very uneven picture on
Speaker 3: the degree to which people trust the charging infrastructure and
Speaker 3: should trust the charging infrastructure to be honest. So the
Speaker 3: other thing is that the public charging networks are starting
Speaker 3: to be pretty big dispensers of electricity when you look
Speaker 3: at the total demand for electricity that is going to
Speaker 3: come from public charging. So we have ev charging in
Speaker 3: China representing the same amount of total electricity consumption as
Speaker 3: a sort of small to mid sized country, and last
Speaker 3: year we think it was about the same as all
Speaker 3: of Ireland. So we'll we'll keep going with these country
Speaker 3: comparisons to hopefully make it a bit more tangible to
Speaker 3: people who don't think in tear what hours.
Speaker 1: So Colin, you and I are about to head to
Speaker 1: California for our summit that is in San Francisco, which
Speaker 1: is specifically focused on the transport space. One of the
Speaker 1: areas that has been tricky for zero missions vehicles across
Speaker 1: the board has been in the medium and heavy duty
Speaker 1: vehicle space. And in California they are soon to implement
Speaker 1: the Advance Clean Truck Legislation, which is abbreviated as ACT
Speaker 1: and the Advanced Clean Fleets Rules ACF. What do you
Speaker 1: think is going to happen then in terms of commercial
Speaker 1: vehicle sales and is this going to essentially spur that
Speaker 1: part of electric vehicle transition on?
Speaker 2: Yeah, we think it is.
Speaker 3: So there has been more activity around heavy trucks in
Speaker 3: some other markets, but the US it's been relatively slow
Speaker 3: so far.
Speaker 2: The ACT marks.
Speaker 3: That change for that. There are some other states that
Speaker 3: follow it. The ACT is essentially a quota system for
Speaker 3: zero missions trucks that the manufacturers who sell trucks there
Speaker 3: have to meet and the fleets on the fleet side.
Speaker 3: And we think for twenty twenty four somewhe around five
Speaker 3: to nine percent of sales in California will have to
Speaker 3: be zero missions in the heavy medium truck segment to
Speaker 3: meet that, and it depends a bit on the segment,
Speaker 3: but that's sort of an overall it's not a bad
Speaker 3: guideline number, and that's a big jump up from where
Speaker 3: we've been in the last few years. So there is
Speaker 3: going to be a big surge we think. We know
Speaker 3: a lot of groups have been preparing for that. There's
Speaker 3: also been a lot of lobbying and maneuvering behind the
Speaker 3: scenes on this, So some of the groups that might
Speaker 3: make more publicly supportive statements behind the scenes have been
Speaker 3: lobbying against some of the provisions of the Act. So
Speaker 3: it's like any other policy around vehicles, there's sort of
Speaker 3: this fight between the regulators and the manufacturers, most of
Speaker 3: whom are not that keen on being pushed into new
Speaker 3: drive train types. But also, as with passenger cars, you've
Speaker 3: got some that are going down that path as pure
Speaker 3: plays and are happy to keep pushing things forward, and
Speaker 3: this does create a significant opportunity for them. So I
Speaker 3: think we're going to see a big jump there, and
Speaker 3: you're going to hear a lot more about charging big trucks,
Speaker 3: about fleets going electric, and just about the major cost
Speaker 3: savings that can be available in terms of fuel costs,
Speaker 3: because you've got to remember, for some of these fleets,
Speaker 3: fuels is a big part of the cost. And if
Speaker 3: they can get more evs into their fleet, because most
Speaker 3: of them are going to v's, there'll be some hydrogen
Speaker 3: fuel cell vehicles in there too, but most of them
Speaker 3: are going to be EV's, they can significantly cut their
Speaker 3: operating costs. So I think you're going to hear more
Speaker 3: about both the challenges and the success stories that come
Speaker 3: from that.
Speaker 1: Now pivoting away from the electrification of fleets, but still
Speaker 1: in decarbonizing, let's talk a little bit about airlines and shipping,
Speaker 1: where electrification isn't necessarily going to be the most obvious
Speaker 1: path forward. It's in these kind of sustainable aviation fuels
Speaker 1: and cleaner burning fuels. With a number of shipping and
Speaker 1: airlines looking at emissions reduction, is there going to be
Speaker 1: enough clean fuel to meet demand? And what does twenty
Speaker 1: twenty four hold.
Speaker 3: Yeah, this is an important point and it may seem
Speaker 3: like a bit of an abrupt pivot when we talk
Speaker 3: about from cars to ships and planes, but one of
Speaker 3: the things you have to realize is the ways to
Speaker 3: decarbonize these things are linked and one of the reasons
Speaker 3: they're linked is that there is a scarcity of supply
Speaker 3: to decarbonizing some of the hardest things, and those things
Speaker 3: are things like shipping and aviation. So a big part
Speaker 3: of the reason you need to push hard on electrifying
Speaker 3: the things you can electrify is because there's going to
Speaker 3: be really intense competition for the supply.
Speaker 2: Of those liquid renewable.
Speaker 3: Fuels for things like shipping and aviation. So that's kind
Speaker 3: of why they're linked, and in our view, it doesn't
Speaker 3: make sense to do anything other than electrify, at least
Speaker 3: in terms of the most efficient route to getting there.
Speaker 3: In terms of decarbonizing passenger cars, that's by far the
Speaker 3: most cost effective and efficient way of getting there. So
Speaker 3: on the fuel side, yes, what we're starting to see
Speaker 3: is this competition shaping up between the shipping sector and
Speaker 3: the aviation sector for supply some of those clean fuels
Speaker 3: that can be used either directly or to make sustainable
Speaker 3: aviation fuel through a different conversion pathway. And we've actually
Speaker 3: we track every off take agreement between an airline and
Speaker 3: a fuel producer of sustainable aviation fuel. We've tracked one
Speaker 3: hundred of those deals since twenty nineteen. We have a
Speaker 3: database on this if anybody wants to see it. We've
Speaker 3: got quite a bit of coverage of this now and
Speaker 3: that amounts to the total amount of purchase about thirty
Speaker 3: seven billion leaders and that looks like an amount that
Speaker 3: can be supplied. But the point is is that not
Speaker 3: everyone's entered the market yet, so more what we're expecting
Speaker 3: to see is more and more groups saying, look, we're
Speaker 3: trying to purchase sustainable aviation fuel, but we can't necessarily
Speaker 3: find the supply, the reliable supply to do that. And
Speaker 3: I think that's where you're going to see this sort
Speaker 3: of intense this competition ramp up between the shippers and
Speaker 3: the aviation sector. And so far, what we're seeing is
Speaker 3: the aviation sector is jumping out ahead, so they're the
Speaker 3: ones signing many more of these deals. There is some
Speaker 3: activity on the shipping side, but it's generally much smaller,
Speaker 3: and that might just be because those are less consumer
Speaker 3: facing brands than airlines are. But the pressure is going
Speaker 3: to start to come on them too, So I think
Speaker 3: you are going to see this continued competition and that's
Speaker 3: going to probably be a good thing for catalyzing more
Speaker 3: supply to help these others harder to abate sectors decarbonise
Speaker 3: as well.
Speaker 2: Well.
Speaker 1: Colin, thank you for joining today and talking through some
Speaker 1: of the points that came out of ten Things to Watch,
Speaker 1: and we'll have you back to give as a scorecard,
Speaker 1: and certainly we'll be digging in on a number of
Speaker 1: these topics with members of your team throughout the course
Speaker 1: of this upcoming year.
Speaker 3: Thanks Dana, and we will definitely revisit them. There's no
Speaker 3: point in doing these things if you're not accountable on them,
Speaker 3: So looking forward to joining in a year's time and
Speaker 3: we can score them and see how we did.
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