WEBVTT - Road Ahead for EVs in 2024: BYD and Tesla Break Away 0:00:00.360 --> 0:00:03.560 This is Dana Perkins and you're listening to Switched on 0:00:04.000 --> 0:00:07.440 the bn EF podcast. At the beginning of every year, 0:00:07.680 --> 0:00:10.680 several of b and EF's teams publish their things to 0:00:10.760 --> 0:00:13.720 Watch research notes for the year ahead. In addition to 0:00:13.800 --> 0:00:17.360 our weekly episodes on this show. In January, we're going 0:00:17.360 --> 0:00:20.720 to be sprinkling in a few shorter bonus shows and 0:00:20.760 --> 0:00:23.239 they will focus on some of these things to watch. 0:00:23.560 --> 0:00:25.400 Hopefully they'll be as fun for you to listen to 0:00:25.640 --> 0:00:28.560 as they were for our team to write and then record, 0:00:28.800 --> 0:00:31.360 because these shows are really a chance for our team 0:00:31.480 --> 0:00:34.440 to digest everything that happened in twenty twenty three and 0:00:34.479 --> 0:00:37.120 think about what all of this means for the year ahead. 0:00:37.159 --> 0:00:40.320 To kick off our series of things to Watch shows today, 0:00:40.440 --> 0:00:43.560 I am joined by bn EF's head of Advanced Transport, 0:00:43.800 --> 0:00:47.159 Colin Mcerriker, and he talks to us about electric vehicles 0:00:47.240 --> 0:00:50.680 and clean transport. In twenty twenty four, we discussed the 0:00:50.720 --> 0:00:54.560 biggest electric vehicle manufacturers in the world, Tesla and BYD, 0:00:54.880 --> 0:00:57.520 and which one could come out on top for car 0:00:57.560 --> 0:00:59.720 sales during the year ahead. We also talk a bit 0:00:59.800 --> 0:01:03.200 of the United States and whether crossing the one million 0:01:03.280 --> 0:01:06.720 EV's soul mark in twenty twenty three, will or won't 0:01:06.800 --> 0:01:10.040 mean new milestones met in twenty twenty four, and we'll 0:01:10.040 --> 0:01:13.600 discuss whether developing markets will be taking advantage of cheaper 0:01:13.680 --> 0:01:17.039 electric vehicles. And finally we turn to oil demand and 0:01:17.080 --> 0:01:21.160 whether we expect to see significant demand destruction from transport 0:01:21.280 --> 0:01:25.000 owing to electric vehicles. To access the research note that 0:01:25.040 --> 0:01:29.160 our team wrote titled EV's and Clean Transport Ten things 0:01:29.200 --> 0:01:31.320 to Watch in twenty twenty four, B and e F 0:01:31.400 --> 0:01:34.600 subscribers can find them at BNF dot com or at 0:01:34.600 --> 0:01:37.800 BNF go on the Bloomberg terminal. If you like this podcast, 0:01:37.880 --> 0:01:40.360 if you subscribe or give us a review, it'll help 0:01:40.400 --> 0:01:43.199 make us more discoverable by others. But right now, let's 0:01:43.280 --> 0:01:46.920 jump into our conversation about twenty twenty four for Electric 0:01:47.040 --> 0:02:00.840 Vehicles and Transport with Colin. Colin, thank you for joining 0:02:00.920 --> 0:02:02.000 us again today. 0:02:02.440 --> 0:02:03.680 Thanks Dana Greig to be here. 0:02:03.840 --> 0:02:05.680 We are here at the beginning of the year. It 0:02:05.760 --> 0:02:09.320 is still January, and we're talking about EV's and Clean 0:02:09.360 --> 0:02:12.760 Transport Ten things to watch in twenty twenty four. Now, 0:02:12.800 --> 0:02:16.160 how many years running have we been doing things to watch? 0:02:16.480 --> 0:02:18.799 Note for the clean transport space, so. 0:02:18.760 --> 0:02:21.800 We've had a broader Bloomberg one. Since BNF was founded, 0:02:21.840 --> 0:02:24.160 there's been one, but for transport, we've just been doing 0:02:24.200 --> 0:02:27.040 it since twenty sixteen, and that was because I liked 0:02:27.120 --> 0:02:29.440 what we were doing company wide and I decided, actually, 0:02:29.480 --> 0:02:31.240 we should start doing one on First it was just 0:02:31.240 --> 0:02:33.560 on electric vehicles, and then as our scope has expanded 0:02:33.560 --> 0:02:36.280 to include other parts of transport, we've started adding predictions 0:02:36.280 --> 0:02:37.040 in on that as well. 0:02:37.080 --> 0:02:40.079 Everybody likes a good predictions note, but I would actually 0:02:40.120 --> 0:02:43.959 say this is just as much looking back and digesting 0:02:44.200 --> 0:02:47.160 really what happened in the previous year. I want to know, 0:02:47.400 --> 0:02:50.320 how do you rate your scorecard for your twenty twenty 0:02:50.320 --> 0:02:51.160 three predictions? 0:02:51.560 --> 0:02:52.679 Yeah, I mean this is one of the things that 0:02:52.720 --> 0:02:54.480 we think is we've always said is really important, is 0:02:54.520 --> 0:02:55.720 you have to go back and see what did you 0:02:55.720 --> 0:02:59.320 actually get right. Otherwise you sort of don't really absorb 0:02:59.400 --> 0:03:01.359 the learnings it and you see lots of groups make 0:03:01.400 --> 0:03:04.280 prognostications but not actually come back and revisit them. So 0:03:04.760 --> 0:03:06.320 what we do is we go and say, okay, we 0:03:06.400 --> 0:03:07.840 pull in all the data at the end of the year, 0:03:07.840 --> 0:03:09.120 and we say, look what did we get right and 0:03:09.200 --> 0:03:11.079 what did we get wrong? And then across the group, 0:03:11.120 --> 0:03:13.400 we try and give ourselves a score on each one 0:03:13.440 --> 0:03:16.040 of the ten predictions we made. So, just as an example, 0:03:16.160 --> 0:03:18.919 last year, we predicted fourteen million EV sold. We're still 0:03:18.960 --> 0:03:21.520 tabulating a bit of December data, but it looks like 0:03:21.520 --> 0:03:23.880 that's going to be within about one percent of the 0:03:23.919 --> 0:03:26.680 actual total. So there, we'd give ourselves ten out of ten. Right, 0:03:26.720 --> 0:03:28.320 we'd give ourselves a pat on the back and say. 0:03:28.200 --> 0:03:28.840 We did that. Well. 0:03:29.000 --> 0:03:30.920 There's a couple other good predictions. There's some that didn't 0:03:30.919 --> 0:03:33.640 go as well. So we also had one around battery prices. 0:03:33.680 --> 0:03:35.920 We thought this time last year we thought raw material 0:03:35.920 --> 0:03:38.680 prices might stay higher for longer, battery prices would stay 0:03:38.720 --> 0:03:40.960 kind of elevated the way they were in twenty twenty two, 0:03:41.000 --> 0:03:43.320 but in fact they dropped really sharply in twenty twenty three, 0:03:43.360 --> 0:03:45.440 so down fourteen percent. So in that case, we gave 0:03:45.440 --> 0:03:47.720 ourselves zero out of ten. So overall we I think 0:03:47.760 --> 0:03:49.520 our predictions end up coming out pretty good, but there's 0:03:49.520 --> 0:03:51.560 always one or two misses, And I think that's kind 0:03:51.560 --> 0:03:53.240 of the point, right. You don't want to only predict 0:03:53.240 --> 0:03:55.520 safe things, or predict things that are so generic that 0:03:55.560 --> 0:03:58.120 you can't really test them. So we try and have quantifiable, 0:03:58.280 --> 0:04:00.880 testable things that we're making predictions because that's part of 0:04:00.880 --> 0:04:02.200 the value and it's also part of the fun of 0:04:02.200 --> 0:04:02.440 it too. 0:04:02.720 --> 0:04:04.920 Yeah, I mean it's interesting to actually see what does 0:04:05.000 --> 0:04:07.280 end up happening. And also if you're surprised by it, 0:04:07.360 --> 0:04:09.800 surely there are other people out there who are supplied 0:04:09.840 --> 0:04:12.800 by it in the industry. So so let's jump right 0:04:12.840 --> 0:04:15.480 into some of these predictions. So in twenty twenty three, 0:04:15.600 --> 0:04:20.919 passenger EV sales actually broke the one million vehicles sold mark. 0:04:21.160 --> 0:04:24.719 Do we see this momentum continuing in the US in 0:04:24.839 --> 0:04:26.960 twenty twenty four because one of the things we also 0:04:27.000 --> 0:04:29.599 talked about on the show is that US auto manufacturers 0:04:29.640 --> 0:04:32.880 have started to temper their production. 0:04:33.320 --> 0:04:35.200 Yeah, this was the US is probably the most the 0:04:35.240 --> 0:04:37.520 trickiest region to forecast this year. And yeah, they broke 0:04:37.520 --> 0:04:39.080 a million with a few months to spare, so they're 0:04:39.120 --> 0:04:40.680 well over a million for the year. Around one point 0:04:40.720 --> 0:04:43.039 four million plug in vehicles sold in the US last year. 0:04:43.160 --> 0:04:45.880 We think they're going to keep growing up to around 0:04:45.920 --> 0:04:48.000 somewhere between one point eight and one point nine million. 0:04:48.080 --> 0:04:49.719 But I would say the US is the region where 0:04:49.920 --> 0:04:53.000 we're the most uncertain, and that's because of multiple factors. 0:04:53.000 --> 0:04:55.520 One of them is that this incentive that's available in 0:04:55.560 --> 0:04:59.200 the US, the tax credits, it's significantly harder to access 0:04:59.240 --> 0:05:02.400 them this year because that's because there's this Foreign Entities 0:05:02.400 --> 0:05:06.080 of Concern guidance that restricts the number of models that 0:05:06.120 --> 0:05:07.880 are going to be eligible, as well as the existing 0:05:08.040 --> 0:05:10.760 caps on incommon caps on retail price. So there's a 0:05:10.800 --> 0:05:13.360 lot fewer models that are available for incentives, at least 0:05:13.360 --> 0:05:16.159 at the federal level. And then on the pushing on 0:05:16.160 --> 0:05:17.600 the other end of that is those incentives in the 0:05:17.680 --> 0:05:20.080 US are now available at the point of purchase instead 0:05:20.080 --> 0:05:21.640 of at the end of the tax here like they've 0:05:21.680 --> 0:05:23.600 previously been, or at the end of the calendar year 0:05:23.640 --> 0:05:25.920 like they've previously been. So I think that's where we 0:05:26.240 --> 0:05:27.719 had a bit of trouble calling it. And then you 0:05:27.760 --> 0:05:30.719 do see something from the established automakers like Ford and 0:05:30.839 --> 0:05:33.599 GM where they're saying, look, actually inventory levels are pretty high. 0:05:33.839 --> 0:05:37.000 They've downgraded there where they think their targets are going 0:05:37.080 --> 0:05:40.360 to land and push back their manufacturing ramput plans a bit. 0:05:40.440 --> 0:05:41.680 But on the other side of that, then you see 0:05:41.720 --> 0:05:44.880 groups like Hindai Kia selling really well, Tesla selling really well, 0:05:45.000 --> 0:05:47.320 Tesla's about four percent of the overall US auto market 0:05:47.360 --> 0:05:49.520 right now, and the US auto market's quite fragmented, so 0:05:49.520 --> 0:05:52.279 that's actually quite a decent share, ahead of groups like 0:05:52.320 --> 0:05:53.400 BMW and others. 0:05:53.560 --> 0:05:55.280 So it's a tricky one right now. 0:05:55.600 --> 0:05:58.039 I do think the biggest thing I would say about 0:05:58.080 --> 0:06:00.560 the US market is it will have an outsized impact 0:06:00.720 --> 0:06:03.480 on the headlines that you see written about the global 0:06:03.520 --> 0:06:06.000 EV market, but it's not the most important region for 0:06:06.040 --> 0:06:08.239 the global EV market. It's going to be about eleven 0:06:08.279 --> 0:06:11.720 percent of global EV sales this year the US and 0:06:11.960 --> 0:06:15.080 the US share of the global EV market has declined 0:06:15.120 --> 0:06:18.400 almost every year for the last decade, so really that's 0:06:18.520 --> 0:06:21.279 reflecting much more rapid ad option in places like China 0:06:21.279 --> 0:06:21.720 and Europe. 0:06:21.920 --> 0:06:24.520 Well, so let's talk about that Tesla and BYD so 0:06:24.640 --> 0:06:27.120 the US and China specifically. You know, at the end 0:06:27.120 --> 0:06:30.839 of twenty twenty three, Tesla delivered this cybertruck that people 0:06:30.839 --> 0:06:33.280 have been waiting for for some time now, and at 0:06:33.320 --> 0:06:37.080 the same time, BOID has been making headlines because they 0:06:37.240 --> 0:06:40.839 have also been growing. We're already a very significant player 0:06:40.839 --> 0:06:44.960 in Asia, but have expanded further. So how are these 0:06:45.000 --> 0:06:48.360 two companies positioned? I guess versus one another in terms 0:06:48.400 --> 0:06:52.440 of growth and who will be the dominant EV auto 0:06:52.520 --> 0:06:54.200 manufacturer next year. 0:06:54.880 --> 0:06:56.599 Yeah, I think it's probably going to go to BYD 0:06:56.720 --> 0:06:59.720 this year. So we actually predicted that in twenty twenty 0:06:59.720 --> 0:07:02.119 three that BID would edge out. Tesla is the largest 0:07:02.160 --> 0:07:04.320 seller of battery electric vehicles at the end of twenty 0:07:04.320 --> 0:07:06.080 twenty three, and that is pretty much what happened in 0:07:06.120 --> 0:07:08.360 the final quarter. Bid edge them out, and I think 0:07:08.400 --> 0:07:10.760 they will continue to have an advantage there, and that's 0:07:10.800 --> 0:07:12.760 really because they've spent a lot more time in the 0:07:12.800 --> 0:07:16.160 last few years launching new models in many different price segments, 0:07:16.240 --> 0:07:18.520 whereas Tesla still has quite a limited model range, and 0:07:18.560 --> 0:07:20.720 those models that it sells, particularly the Model Y and 0:07:20.760 --> 0:07:23.000 the Model three, do extremely well. So it's not to 0:07:23.040 --> 0:07:25.280 take anything away from those, but they are all at 0:07:25.280 --> 0:07:27.360 a minimum price point that is higher than the average 0:07:27.360 --> 0:07:30.280 price point BID. And so while BID has been pushing 0:07:30.320 --> 0:07:32.080 into all these different segments and pushing down all the 0:07:32.080 --> 0:07:34.040 way down to sort of an eleven thousand dollars car 0:07:34.080 --> 0:07:37.040 that it can sell in emerging economies, Tesla the cyber 0:07:37.080 --> 0:07:39.680 truck is going to be a relatively low volume vehicle 0:07:39.760 --> 0:07:42.080 for in our view, this year, and Tesla just doesn't 0:07:42.080 --> 0:07:43.840 really have anything at that entry level in the market 0:07:43.880 --> 0:07:46.200 where a lot of the volume sits, especially in countries 0:07:46.240 --> 0:07:49.720 outside of North America and Europe. So I think BID's 0:07:49.760 --> 0:07:51.320 probably gonna edge it. Bid is probably going to be 0:07:51.360 --> 0:07:53.520 ahead of Tesla this year for the whole year. But 0:07:53.640 --> 0:07:56.000 I think what's most important to recognize that these two 0:07:56.000 --> 0:07:58.760 companies are way ahead of everyone else. So they're miles 0:07:58.760 --> 0:08:00.760 ahead of all of the legacy autit makers. So we 0:08:00.800 --> 0:08:02.720 can get a bit fixated on this race between at 0:08:02.760 --> 0:08:04.560 the very top. In some ways, it doesn't matter. You 0:08:04.560 --> 0:08:07.800 would just say there's two breakout winners, they're beating everyone, 0:08:07.880 --> 0:08:09.480 and then everyone else is a long way back. 0:08:09.680 --> 0:08:11.160 And you can also look at it in different ways. 0:08:11.160 --> 0:08:13.280 You can look at volume, you clink a profit generated, 0:08:13.600 --> 0:08:16.680 there's different ways to cut this, but certainly we see 0:08:16.680 --> 0:08:19.240 a gap opening up at the top between those two 0:08:19.280 --> 0:08:20.000 and everyone else. 0:08:20.200 --> 0:08:22.040 Okay, so let's stick on one of these. So b 0:08:22.120 --> 0:08:24.440 WHYD one of the things they've done is actually taken 0:08:24.440 --> 0:08:28.920 over a Ford plant in Brazil. What does this really signify? 0:08:28.960 --> 0:08:32.200 What does it tell us about growth markets and developing 0:08:32.240 --> 0:08:34.200 economies in terms of electric vehicles? 0:08:34.480 --> 0:08:36.240 Yeah, I think it's a fascinating case study. So you 0:08:36.280 --> 0:08:38.120 look at a lot of the places BYD's planning on 0:08:38.200 --> 0:08:40.200 expanding to. They do have a plant that they're going 0:08:40.240 --> 0:08:41.599 to build in Eastern Europe, but a lot of the 0:08:41.600 --> 0:08:44.240 places that are going to expand to are in emerging economies. 0:08:44.280 --> 0:08:46.200 And if you look at the portfolio of vehicles they have, 0:08:46.320 --> 0:08:48.160 they have all these ev models that are in this 0:08:48.280 --> 0:08:51.319 kind of ten to fifteen to twenty thousand dollars range, 0:08:51.320 --> 0:08:53.079 which are much cheaper than the vehicles you see on 0:08:53.120 --> 0:08:55.560 average in North American Europe, but really appealing to an 0:08:55.559 --> 0:08:59.080 emerging market buyer. And that place, that plant in Brazil 0:08:59.160 --> 0:09:01.720 is really fascinating because it used to be a Ford plant, 0:09:01.880 --> 0:09:04.120 and Ford pulled out a few years ago from Brazil, 0:09:04.400 --> 0:09:06.000 and there's sort of this I mean, you don't want 0:09:06.000 --> 0:09:07.880 to overdo the symbolism too much, but the idea of 0:09:07.880 --> 0:09:10.400 like a Western automaker not fully pulling out of Latin America, 0:09:10.440 --> 0:09:12.480 but pulling out of that plan, pulling out of there, 0:09:12.520 --> 0:09:15.160 and bid coming in, taking it over, relaunching with a 0:09:15.200 --> 0:09:17.960 whole bunch more investment. It's kind of emblematic of a 0:09:18.000 --> 0:09:20.480 broader shift in the overall auto industry, and that's that 0:09:20.640 --> 0:09:23.360 Chinese automakers are about to have their moment. They have 0:09:23.440 --> 0:09:25.520 been building towards this for a long time. They've been 0:09:25.559 --> 0:09:28.920 building up to know how, and they are exporting more 0:09:29.000 --> 0:09:31.719 vehicles now than the Japanese. They overtook Germany two years ago, 0:09:31.760 --> 0:09:34.800 overtook Japan last year. We think they'll be ahead of 0:09:34.880 --> 0:09:37.480 Japan again this year. And so I think there's a 0:09:37.520 --> 0:09:40.840 really fascinating thing to watch there on these emerging economies, 0:09:40.880 --> 0:09:43.319 because there is still this narrative that EV adoption is 0:09:43.360 --> 0:09:46.200 primarily a wealthy economy thing, and there's some truth to 0:09:46.240 --> 0:09:48.120 that now. But if you look at the vehicles that 0:09:48.120 --> 0:09:51.120 the Chinese automakers are launching, many of them are not premium, 0:09:51.200 --> 0:09:54.320 high end vehicles. They're ones that are very much aimed 0:09:54.360 --> 0:09:57.520 at average buyers, and so I think we're going to 0:09:57.559 --> 0:09:59.800 be watching that quite closely. We're expecting almost a million 0:10:00.040 --> 0:10:03.160 evs sold in places like India, Southeast Asia, Latam other 0:10:03.520 --> 0:10:06.040 emerging economies this year, which is just quite a jump 0:10:06.120 --> 0:10:08.240 versus where we've been in other other years before. 0:10:08.600 --> 0:10:11.600 I mean, this is a story about expansion, but really 0:10:11.679 --> 0:10:13.839 one of the themes that ran across all of twenty 0:10:13.840 --> 0:10:16.920 twenty three was supply chain disruption, not just by the 0:10:16.960 --> 0:10:19.320 way for transportation, but for a number of the different 0:10:19.320 --> 0:10:22.880 industries that we cover. It benfter talking about higher material 0:10:22.960 --> 0:10:25.679 costs and higher interest rates. Where do you see that 0:10:25.800 --> 0:10:28.560 going in twenty twenty four as it relates to the 0:10:28.600 --> 0:10:32.520 transport space. Do we foresee a more stable environment for 0:10:32.760 --> 0:10:33.840 auto manufacturing? 0:10:34.360 --> 0:10:36.400 So what kind of happened through last year is that 0:10:36.559 --> 0:10:39.600 raw material prices started out high and then they really plummeted. 0:10:39.760 --> 0:10:42.280 So they were already sort of turning this time last year, 0:10:42.360 --> 0:10:45.000 and then they really went further. So lithium, cobalt, nico, 0:10:45.000 --> 0:10:47.040 all these things way way down. And so when we 0:10:47.080 --> 0:10:49.199 looked at the battery prices this year, they were down 0:10:49.240 --> 0:10:52.400 fourteen percent on average, and in some cases down significantly 0:10:52.440 --> 0:10:54.880 more than that. And that's for lithium I own battery packs. 0:10:55.000 --> 0:10:57.880 So that's really reflecting a couple things. One of them 0:10:57.960 --> 0:11:00.240 is this drop in raw material costs. Another No One 0:11:00.280 --> 0:11:03.559 is just intense price competition between manufacturers because they have 0:11:03.600 --> 0:11:06.439 built a lot of manufacturing capacity and again really driven 0:11:06.440 --> 0:11:09.559 out of China. So some quick number crunching we did 0:11:09.800 --> 0:11:11.520 this at the end of this year, was that China 0:11:11.600 --> 0:11:14.280 produced enough batteries to more than supply all of the 0:11:14.320 --> 0:11:17.480 world's evs and all of the world's stationary storage deployed 0:11:17.480 --> 0:11:20.400 in twenty twenty three, So just produced in China significantly 0:11:20.440 --> 0:11:23.160 more than was needed globally. So that just kind of 0:11:23.160 --> 0:11:25.760 gives you a sense of how competitive this market is, 0:11:25.920 --> 0:11:27.560 and that's sort of part of one of the reasons 0:11:27.600 --> 0:11:29.880 we saw those declines. I think on the supply chain, 0:11:29.920 --> 0:11:31.959 the really interesting story that I would take cut of 0:11:32.040 --> 0:11:33.960 last year and that I think will continue into this 0:11:34.040 --> 0:11:38.160 year is this tension between localization and on one side, 0:11:38.200 --> 0:11:40.760 and then cost reduction and deployment on the other. So 0:11:40.960 --> 0:11:42.600 for most of the last decade, we've been talking about 0:11:42.600 --> 0:11:44.720 how do we get this stuff deployed really quickly, and 0:11:44.760 --> 0:11:47.040 now increasingly we're saying talking about okay, but we also 0:11:47.040 --> 0:11:49.319 want it made locally. We also want it made in Europe. 0:11:49.360 --> 0:11:51.000 We also want it made in North America, not just 0:11:51.080 --> 0:11:54.240 the cheapest and that's those two things are sometimes at 0:11:54.280 --> 0:11:56.800 odds with each other, right, Sometimes the cheapest way to 0:11:56.840 --> 0:11:59.000 do it would be too important from the cheapest producer, 0:11:59.000 --> 0:12:01.920 which is still know right now. So I think those 0:12:02.040 --> 0:12:04.280 all that effort to try and localize supply chains in 0:12:04.320 --> 0:12:06.280 the long term will be a very positive thing, but 0:12:06.320 --> 0:12:08.600 in the short term actually think it's driving up costs 0:12:08.640 --> 0:12:11.480 and in some ways going to slow down deployment. So 0:12:11.840 --> 0:12:13.600 this is kind of where we got a bit uncomfortable 0:12:13.640 --> 0:12:15.600 with this year, is there may be some real hiccups 0:12:15.600 --> 0:12:18.320 this year around deployment, and we could even see sales 0:12:18.360 --> 0:12:21.120 be significantly lower than we thought. But that's the number 0:12:21.120 --> 0:12:23.280 we went out with. That's sort of sixteen about seventeen 0:12:23.360 --> 0:12:25.920 million headline number. We'll see where it lands. 0:12:25.960 --> 0:12:28.160 Yeah, we'll see your scorecard this time next year. Let's 0:12:28.200 --> 0:12:30.640 talk about some of the implications for other industries, so 0:12:30.840 --> 0:12:34.280 specifically oil. How much oil demand is being destroyed by 0:12:34.400 --> 0:12:37.200 electric vehicles becoming more popular. 0:12:37.559 --> 0:12:39.920 Yeah, this is one of those things that's probably it's 0:12:39.960 --> 0:12:41.840 been hyped a bit too early in some ways. So 0:12:41.880 --> 0:12:43.840 you go back a few years and everyone's talking about 0:12:43.880 --> 0:12:47.559 how there's stories about EV's and peak demand, and if 0:12:47.559 --> 0:12:50.040 you look at the impact, it was pretty modest so far. 0:12:50.160 --> 0:12:53.400 Really it's a relatively modest amount of displacement. But that's 0:12:53.440 --> 0:12:55.199 really going to start to change this year. And so 0:12:55.240 --> 0:12:58.000 there's about fifty seven million evs on the road by 0:12:58.000 --> 0:12:59.360 the end of this year, that's going to be about 0:12:59.360 --> 0:13:01.360 four percent of the passenger vehicle fleet. And if you 0:13:01.440 --> 0:13:04.040 just break down where oil consumption goes, road transport is 0:13:04.080 --> 0:13:06.880 still the largest source of oil demand, and passenger cars 0:13:06.880 --> 0:13:09.559 are still the largest source of oil demand within road transport. 0:13:09.600 --> 0:13:11.360 So there's sometimes said, oh, no, the really important thing 0:13:11.400 --> 0:13:13.600 is plastics or aviation, and those are important for growth, 0:13:13.600 --> 0:13:17.280 but in absolute numbers, displacement from passenger cars is where 0:13:17.440 --> 0:13:19.720 the biggest chunk of oil demand is, or that's where 0:13:19.720 --> 0:13:22.160 the largest absolute share of oil demand comes from. So 0:13:22.280 --> 0:13:25.760 what we're kind of watching right now is internal combustion 0:13:25.800 --> 0:13:28.520 engine vehicle sales are still down about twenty percent from 0:13:28.559 --> 0:13:31.160 their twenty seventeen peak. They're significantly off that peak we 0:13:31.160 --> 0:13:33.720 think they peaked in twenty seventeen, or internal decline. We've 0:13:33.760 --> 0:13:35.880 been saying that for a long time or long term decline. 0:13:35.880 --> 0:13:37.840 There might be bumps upward or downward here and there, 0:13:37.920 --> 0:13:40.120 and that twenty seventeen peak is starting to flow into 0:13:40.160 --> 0:13:42.480 the fleet. So there's a big lag between what happens 0:13:42.520 --> 0:13:44.920 on sale new sales and the fleet. So it's not 0:13:45.000 --> 0:13:47.520 going to turn the corner anytime immediately. But we think 0:13:47.559 --> 0:13:50.599 broadly the fleet of internal combustion engine vehicle starts to 0:13:50.640 --> 0:13:52.760 sort of plateau in the next few years. And those 0:13:52.840 --> 0:13:54.880 vehicles are also more efficient than the ones that were 0:13:54.880 --> 0:13:56.920 sold twenty years ago or fifteen years ago the ones 0:13:56.920 --> 0:13:59.720 that are being retired. So all that together means we 0:13:59.800 --> 0:14:01.760 think think that there is a start to become a 0:14:01.800 --> 0:14:04.880 material impact from electric vehicles this year. 0:14:04.880 --> 0:14:05.760 On oil demand. 0:14:06.040 --> 0:14:08.800 Now, most of the displacement that we've had historically from 0:14:08.840 --> 0:14:11.319 electrified electric vehicles has been on the two and three 0:14:11.320 --> 0:14:14.440 wheeler segment that's been relatively stable. That's because China deployed 0:14:14.480 --> 0:14:17.000 a huge number of these over the last decade. But 0:14:17.320 --> 0:14:20.040 now passenger vehicles will start to play a material role. 0:14:20.080 --> 0:14:22.040 So by the end of this year, we think passenger 0:14:22.120 --> 0:14:24.160 vehicles will be displacing our a little over six hundred 0:14:24.200 --> 0:14:26.880 thousand barrels per day of oil demand. That's relatively small 0:14:26.960 --> 0:14:29.920 still against over one hundred million barrels per day of 0:14:29.960 --> 0:14:32.320 oil demand, But if you think about what is the 0:14:32.360 --> 0:14:35.560 additional demand going forward in the twenty twenty in the 0:14:35.560 --> 0:14:37.760 second half of the twenty twenties year, that starts to 0:14:37.800 --> 0:14:40.600 be quite material because the annual additions to oil demand 0:14:40.720 --> 0:14:43.640 are starting to decrease. There's this been this COVID rebound. 0:14:43.720 --> 0:14:45.360 We think they're going to start to decrease next year, 0:14:45.520 --> 0:14:48.040 So then that effect from EV's becomes more visible because 0:14:48.080 --> 0:14:50.320 it's not being overwhelmed by a pigger increase. So I 0:14:50.320 --> 0:14:52.040 think you're going to start to see more groups kind 0:14:52.080 --> 0:14:53.920 of acknowledging that. Like I said, I think the hype 0:14:53.960 --> 0:14:55.240 on this was a bit early, but I think that 0:14:55.280 --> 0:14:58.000 starts to play in a real way now. And the 0:14:58.000 --> 0:15:00.360 place to watch there is China. So China has seven 0:15:00.400 --> 0:15:02.960 percent of the vehicle fleet is now electric. Sinopek has 0:15:03.000 --> 0:15:05.120 said that it thinks gasoline demand has already peaked in 0:15:05.120 --> 0:15:07.280 the country and that it's long term declined from here. 0:15:07.520 --> 0:15:10.200 We overall think the road fuel demand globally has still 0:15:10.240 --> 0:15:11.560 going to a rise for a couple more years till 0:15:11.600 --> 0:15:13.560 around twenty twenty seven, and then it's a bit of 0:15:13.560 --> 0:15:15.520 a plateau before it starts to come down more sharply 0:15:15.560 --> 0:15:17.560 in the twenty thirties. But I think what we're flagging 0:15:17.600 --> 0:15:19.400 with this prediction is that this is the year that 0:15:19.520 --> 0:15:23.280 actually marks real materiality for the energy that's consumed and 0:15:23.320 --> 0:15:24.920 displaced from evs, and. 0:15:24.880 --> 0:15:26.880 If we're not putting oil in the vehicles we're putting 0:15:26.880 --> 0:15:30.200 electricity in, which then brings us to charging networks, which 0:15:30.200 --> 0:15:32.280 we have talked about on this show. And you know, 0:15:32.360 --> 0:15:35.280 one of the themes across twenty twenty three was grids 0:15:35.560 --> 0:15:37.960 and whether or not grids can handle all of the 0:15:37.960 --> 0:15:40.800 additional demand on them as well as all of the 0:15:40.840 --> 0:15:44.560 new renewable energy in producing infrastructure. On the other end, 0:15:44.640 --> 0:15:48.360 when it comes to charging infrastructure, which really helps with 0:15:48.720 --> 0:15:51.360 actually getting these vehicles on the road, what is the 0:15:51.360 --> 0:15:53.040 outlook for public chargers? 0:15:53.240 --> 0:15:54.880 So you're going to see a lot more charging infrastructure 0:15:54.880 --> 0:15:56.840 built next year. We think there's about one point two 0:15:56.880 --> 0:16:00.880 million public charging connectors, so not stations, but in outlets 0:16:00.960 --> 0:16:04.040 public chargers that is installed in twenty twenty three. So 0:16:04.080 --> 0:16:06.320 that brought the total to just under four million, which 0:16:06.400 --> 0:16:08.360 instenttally is where we predicted it would be. I think 0:16:08.360 --> 0:16:10.200 we said four point one million and it came out 0:16:10.200 --> 0:16:12.440 at three point nine or something, so pretty good there. 0:16:13.040 --> 0:16:14.800 We think it's gonna be about one point six million 0:16:14.840 --> 0:16:17.080 this year. Now it's important to recognize there that this 0:16:17.200 --> 0:16:20.320 doesn't mean charging is solved everywhere. It's going in much 0:16:20.360 --> 0:16:23.160 faster in some places than others. So China is installing 0:16:23.440 --> 0:16:25.960 more public charging than the rest of the world combined, 0:16:26.160 --> 0:16:28.800 and when it comes to ultra other types of fast charging, 0:16:28.800 --> 0:16:31.160 it's that ratio is even more than that. So there 0:16:31.200 --> 0:16:32.680 is going to be a lot more chargers go in. 0:16:32.840 --> 0:16:34.600 But I think you're still going to see charging as 0:16:34.640 --> 0:16:37.200 a as a challenge and as a barrier, particularly in 0:16:37.240 --> 0:16:39.120 the US where some of the chargers that are in 0:16:39.160 --> 0:16:42.560 there are not especially reliable. And I think what we're 0:16:42.560 --> 0:16:44.920 seeing kind of globally is a very uneven picture on 0:16:45.160 --> 0:16:47.840 the degree to which people trust the charging infrastructure and 0:16:47.920 --> 0:16:50.840 should trust the charging infrastructure to be honest. So the 0:16:50.920 --> 0:16:54.320 other thing is that the public charging networks are starting 0:16:54.360 --> 0:16:57.720 to be pretty big dispensers of electricity when you look 0:16:57.720 --> 0:17:00.480 at the total demand for electricity that is going to 0:17:00.480 --> 0:17:04.399 come from public charging. So we have ev charging in 0:17:04.480 --> 0:17:07.840 China representing the same amount of total electricity consumption as 0:17:08.000 --> 0:17:10.760 a sort of small to mid sized country, and last 0:17:10.800 --> 0:17:12.520 year we think it was about the same as all 0:17:12.520 --> 0:17:15.080 of Ireland. So we'll we'll keep going with these country 0:17:15.080 --> 0:17:17.399 comparisons to hopefully make it a bit more tangible to 0:17:17.440 --> 0:17:19.639 people who don't think in tear what hours. 0:17:21.200 --> 0:17:23.439