WEBVTT - China Drives Global EV Sales as US Support Fades 0:00:00.200 --> 0:00:02.560 This is Tom Rowland's Reese and you're listening to Switched 0:00:02.600 --> 0:00:05.560 on the podcast brought to you by BNF. Today we're 0:00:05.600 --> 0:00:10.360 discussing BNF's Electric Vehicle Outlook, our annual flagship report, analyzing 0:00:10.360 --> 0:00:14.120 how electrification will impact road transport between now and twenty fifty. 0:00:14.360 --> 0:00:15.280 In the very near. 0:00:15.160 --> 0:00:17.960 Term, electric vehicle sales are set for yet another record 0:00:17.960 --> 0:00:20.759 breaking year. That's a big deal, especially since headlines have 0:00:20.840 --> 0:00:23.440 focused on how the US is slashing support for evs. 0:00:23.720 --> 0:00:26.160 But the EV story isn't just about the US. It's 0:00:26.200 --> 0:00:28.480 a global story and the number of countries getting into 0:00:28.480 --> 0:00:31.240 the EV game is growing. The biggest player is China, 0:00:31.360 --> 0:00:34.400 which continues to lead the EV adoption pack. Over fifty 0:00:34.400 --> 0:00:36.919 percent of new passenger vehicle cells in China this year 0:00:36.960 --> 0:00:39.040 are set to come with a plug. China is also 0:00:39.040 --> 0:00:41.320 a star when it comes to sales of range extender evs, 0:00:41.360 --> 0:00:43.520 which are now the fastest growing drivetrain in the world. 0:00:43.840 --> 0:00:46.640 Even outside of its own borders, China is making a splash. 0:00:46.800 --> 0:00:49.400 The market for electric vehicles was once considered top down, 0:00:49.440 --> 0:00:52.599 with developed economies moving first, but Chinese automakers have been 0:00:52.640 --> 0:00:56.000 targeting developing economies hard As a result. Thailand now has 0:00:56.040 --> 0:00:58.480 a higher passenger EV adoption rate than the US, and 0:00:58.520 --> 0:01:01.600 Brazil's adoption rate is higher than Japants. To learn more 0:01:01.640 --> 0:01:04.319 about this global EV story, I'm joined by bnif's head 0:01:04.319 --> 0:01:07.560 of Clean Transport, Colin Mcherica, to discuss the Electric Vehicle 0:01:07.560 --> 0:01:10.320 Outlook twenty twenty five, which bn EF clients can find 0:01:10.360 --> 0:01:12.720 at BNF go on the Bloomberg terminal or on BNF 0:01:12.760 --> 0:01:14.920 dot com. All right, let's get to talking about the 0:01:14.920 --> 0:01:27.680 Outlook for electric vehicles with Colin. Colin, thank you for 0:01:27.800 --> 0:01:28.959 joining the podcast today. 0:01:29.120 --> 0:01:30.760 Pleasure to be here. Nice to speak to you. Tom. 0:01:31.040 --> 0:01:33.960 We're here to talk about what we at BNF call EVO, 0:01:34.240 --> 0:01:38.000 which stands for our Electric Vehicle Outlook. You've been doing 0:01:38.000 --> 0:01:39.480 this for a really long time, so can you tell 0:01:39.560 --> 0:01:41.600 us a little bit about the history of it and 0:01:41.640 --> 0:01:43.600 what is new Because we do this again and again 0:01:43.680 --> 0:01:46.920 every year, presumably we don't need to just update our 0:01:47.000 --> 0:01:49.600 numbers every year. I'm assuming that we do new and 0:01:49.680 --> 0:01:51.920 cool things and that's what keeps us going because that's 0:01:51.920 --> 0:01:54.040 how it is at BNF. We always have to do 0:01:54.080 --> 0:01:54.560 something new. 0:01:54.760 --> 0:01:56.960 Yeah, definitely, So I've been doing this. I was sort 0:01:57.000 --> 0:01:57.440 of tallying it. 0:01:57.440 --> 0:01:59.680 This is actually the tenth year that I've run this report, 0:02:00.160 --> 0:02:02.880 and obviously a lot has changed since then, and I 0:02:02.880 --> 0:02:05.280 would say sometimes it feels now like everybody and their 0:02:05.320 --> 0:02:07.720 dog has a forecast for how this type of stuff 0:02:07.760 --> 0:02:10.359 is going to evolve. I think back in twenty fifteen sixteen, 0:02:10.400 --> 0:02:12.040 when we were doing the first one, there was kind 0:02:12.040 --> 0:02:14.760 of a few oil companies plus Opek, who are putting 0:02:14.760 --> 0:02:17.880 out long term outlooks, and their view was very down 0:02:18.040 --> 0:02:20.800 on anything to do with electrification and basically saying liquid 0:02:20.800 --> 0:02:23.840 fuels or what's going to power the world's mobility mix indefinitely, 0:02:24.160 --> 0:02:26.440 and none of them saw any significant role reviews, and 0:02:26.440 --> 0:02:27.880 we sort of thought, look, we've been looking at this 0:02:27.919 --> 0:02:29.519 battery cost curve stuff for a while. 0:02:29.680 --> 0:02:32.120 We think we're on the cusp of something about to change. 0:02:32.240 --> 0:02:34.640 So when we try and do things at BNF, we're 0:02:34.639 --> 0:02:36.520 always trying to do things with what's useful for our 0:02:36.520 --> 0:02:39.560 clients and as well try and inform a public debate 0:02:39.600 --> 0:02:41.840 as well. But at the first instance, be useful to 0:02:41.880 --> 0:02:44.440 our clients and provide data to that's helpful. And so 0:02:44.720 --> 0:02:46.639 whenever you get into long term stuff, you always have 0:02:46.720 --> 0:02:48.799 to be a bit careful because I have a sort 0:02:48.840 --> 0:02:51.160 of thesis that the further you go out in time, 0:02:51.280 --> 0:02:54.640 the fewer people that is operationally useful for. So if 0:02:54.680 --> 0:02:56.200 you go all the way out to twenty forty and 0:02:56.240 --> 0:02:58.360 spend a lot of time talking about twenty forty and fifty, 0:02:58.440 --> 0:03:01.119 you just kind of lose people some people along the way. Now, 0:03:01.160 --> 0:03:03.160 it's not to say there aren't useful and interesting things 0:03:03.200 --> 0:03:04.960 to talk about those long term parts, but you have 0:03:05.000 --> 0:03:07.160 to balance it with some near term things that are 0:03:07.200 --> 0:03:09.520 going on. So that's kind of what gets out. Your 0:03:09.560 --> 0:03:12.200 other question is about what do we do that's beyond 0:03:12.200 --> 0:03:14.240 just updating this outlook every year, because we have our 0:03:14.280 --> 0:03:17.200 models and we have our adoption outlook that follows two 0:03:17.240 --> 0:03:18.840 different scenarios and all this sort of stuff, and that 0:03:18.919 --> 0:03:20.960 gets updated with the latest data. But then we do 0:03:21.000 --> 0:03:22.600 try and say, okay, how can we keep making this 0:03:22.680 --> 0:03:24.560 better every year? And after ten years you just keep 0:03:24.600 --> 0:03:28.520 incrementally improving things, and sometimes that's new countries added. This year, 0:03:28.680 --> 0:03:31.280 we've done a bunch of things. We've added a new 0:03:31.360 --> 0:03:34.639 drive train, so there's something called range extended electric vehicles 0:03:34.639 --> 0:03:36.240 that are included in there, and we've done more on 0:03:36.320 --> 0:03:38.840 terrace and trade. How that's impacting things looked at some 0:03:38.880 --> 0:03:41.680 of the regional dynamics for things like flex fuel vehicles 0:03:41.680 --> 0:03:44.720 in Brazil or compressed natural gas vehicles in India, and 0:03:45.440 --> 0:03:46.320 and you have to do a lot of work on 0:03:46.400 --> 0:03:48.960 batteries and the supply chain, so there's a whole new 0:03:49.000 --> 0:03:53.320 forecast there for solid state batteries, looking at electrolyte chemistry 0:03:53.520 --> 0:03:56.920 as well as updating our anode and bathout chemistry forecasts. 0:03:57.080 --> 0:03:59.200 And then also looking at all the battery plants that 0:03:59.240 --> 0:04:01.480 are coming online over capacity issues that are sort of 0:04:01.520 --> 0:04:04.160 not just looming but actually here in that market. And 0:04:04.200 --> 0:04:06.640 then lastly the three other things we've done this year. 0:04:06.880 --> 0:04:09.160 Each year we do three what we call thematic highlights, 0:04:09.360 --> 0:04:12.680 so those are sort of special standalone chapters that look 0:04:12.680 --> 0:04:16.080 at a growing or topical issue around emobility around the world. 0:04:16.120 --> 0:04:19.240 So this year's were the commercialization of solid state batteries, 0:04:19.320 --> 0:04:22.360 the rising cost of ev charging, and a special deep 0:04:22.400 --> 0:04:26.320 dive on Brazil looking at alternative ways that Brazil's ethanol 0:04:26.360 --> 0:04:29.440 could be used in a scenario where electrification displaces a 0:04:29.480 --> 0:04:31.240 lot of ethanol use in road transport. 0:04:31.400 --> 0:04:34.000 It sounds like you've gone above and beyond, because before 0:04:34.000 --> 0:04:37.159 you got even to talk about those thematic highlights. I 0:04:37.320 --> 0:04:40.560 was thinking, Wow, this is already a really complex year, 0:04:40.839 --> 0:04:44.000 particularly with all the tariffs coming in and maybe changing 0:04:44.000 --> 0:04:46.600 the picture, as you say, especially if we're trying to 0:04:46.680 --> 0:04:48.560 make sure we talk about things that are relevant for 0:04:48.560 --> 0:04:51.159 the next few years. I mean, was it more of 0:04:51.200 --> 0:04:54.679 a headache doing EVO this year than in previous years. 0:04:55.000 --> 0:04:57.960 So one of the things I've found after a decade, 0:04:58.279 --> 0:05:00.679 it's ten years now working for me work on auto, 0:05:00.720 --> 0:05:04.160 automotive related topics and transport related topics, and twenty years 0:05:04.200 --> 0:05:05.880 now working in clean energy overall. 0:05:05.920 --> 0:05:06.840 I started in May two. 0:05:06.760 --> 0:05:10.039 Thousand and five, and particularly on the auto stuff, I've 0:05:10.080 --> 0:05:12.960 just kind of realized it's something every year, it's always 0:05:13.000 --> 0:05:15.560 something different, but there's always something that kind of is 0:05:15.839 --> 0:05:17.800 a big spanner in the works for what you might 0:05:17.839 --> 0:05:20.160 think of as this business as usual that never seems 0:05:20.200 --> 0:05:22.960 to go back to usual in the auto sector. And 0:05:23.040 --> 0:05:25.040 so for a while that was COVID and okay, look, 0:05:25.080 --> 0:05:26.920 how do you how many cars are people going to buy? 0:05:26.960 --> 0:05:28.960 What if people aren't moving around as much, what does 0:05:28.960 --> 0:05:30.839 it do to energy demand? And keep in mind that 0:05:30.880 --> 0:05:32.560 we're not just looking at how many cars get sold, 0:05:32.600 --> 0:05:34.599 We're looking at this work is what informs all of 0:05:34.640 --> 0:05:37.000 our things around the road, fuel demand outlook and how 0:05:37.040 --> 0:05:38.960 much gasoline and diesel are going to be consumed and 0:05:39.000 --> 0:05:40.839 all these other things as well. So we're definitely not 0:05:40.920 --> 0:05:43.520 just looking at cars and trucks sold. We're looking at movement, 0:05:43.600 --> 0:05:46.039 and we're actually at the basis level starting with literally 0:05:46.080 --> 0:05:48.239 how much do people and goods move around the world, 0:05:48.240 --> 0:05:51.080 So that's in freight ten kilometers and trillions of passenger 0:05:51.160 --> 0:05:53.640 kilometers traveled, and how is the mix of that changing. 0:05:53.720 --> 0:05:56.520 So with those sort of big, really big picture things 0:05:56.520 --> 0:05:58.480 in mind, and the auto industry is about a two 0:05:58.520 --> 0:06:01.640 and a half trillion dollar annual revenue industry, they're kind 0:06:01.680 --> 0:06:04.440 of affected by everything. So one year it's COVID, the 0:06:04.440 --> 0:06:07.280 next year it's a semiconductor shortage, the year after that 0:06:07.400 --> 0:06:10.160 it's tariffs and trade drama. There's kind of always something, 0:06:10.200 --> 0:06:12.159 and to be honest, that's sort of what keeps it interesting. 0:06:12.200 --> 0:06:14.360 You could sort of look at that and sigh and say, oh, 0:06:14.400 --> 0:06:16.360 why can't we have a normal year, But another way 0:06:16.400 --> 0:06:17.760 to look at it would be like, wow, we get 0:06:17.760 --> 0:06:19.920 to work on some of these topics where the biggest 0:06:19.920 --> 0:06:24.000 things in the world are relevant and are directly impactful, 0:06:24.160 --> 0:06:26.400 and I think automotive is a pretty fascinating lens to 0:06:26.400 --> 0:06:28.400 look at the world through because it does tie in 0:06:28.480 --> 0:06:31.520 technology developments, it tried ties in economics and trade, It 0:06:31.560 --> 0:06:35.120 ties in politics, It ties in job creation and manufacturing 0:06:35.240 --> 0:06:37.680 and industrial policy, and kind of each one of these 0:06:37.720 --> 0:06:39.680 things is sort of getting flexed in a different way 0:06:39.680 --> 0:06:42.000 in every year, So it makes it hard, it makes 0:06:42.040 --> 0:06:44.680 it interesting. It also means that every time we finish 0:06:44.680 --> 0:06:47.000 publishing it, there's already things that have changed, and there's 0:06:47.000 --> 0:06:49.160 things that we wish we could have had time to include. 0:06:49.200 --> 0:06:50.479 But that's just sort of part of the game. 0:06:50.520 --> 0:06:52.200 And that's part of doing it as an annual thing 0:06:52.240 --> 0:06:54.840 and not trying to constantly release this over and over 0:06:54.880 --> 0:06:57.120 throughout the year, but rather sick once a year we're 0:06:57.120 --> 0:06:58.920 going to step back and try and tie it all together. 0:06:59.000 --> 0:07:01.440 The rest of the year we're publicishing much more near term, 0:07:01.480 --> 0:07:03.240 detailed work, and this is the once a year where 0:07:03.279 --> 0:07:04.840 we sort of step back and try and figure out 0:07:04.880 --> 0:07:05.719 how it all fits together. 0:07:06.279 --> 0:07:08.840 It's really interesting. You know, what I'm hearing is kind 0:07:08.839 --> 0:07:12.640 of this electric vehicle outlook. It is literally a forecast 0:07:12.880 --> 0:07:15.240 of the electric vehicle sector. But to what you're saying 0:07:15.600 --> 0:07:18.240 is it's like a lens through which you have to 0:07:18.240 --> 0:07:20.560 look at everything going on in the world. It kind 0:07:20.560 --> 0:07:23.640 of makes sense. I mean we've talked about this before. 0:07:23.640 --> 0:07:26.480 I remember I found this chart on what used to 0:07:26.560 --> 0:07:28.280 be called Twitter, and it was a map of the 0:07:28.320 --> 0:07:31.920 world showing every country's top import really like, so it 0:07:32.000 --> 0:07:35.280 was a map showing what was the nature of global trade. 0:07:35.560 --> 0:07:40.600 And the most imported physical goods were either cars or oil, 0:07:40.840 --> 0:07:44.000 and you know you're looking electric vehicles, which is disrupting 0:07:44.040 --> 0:07:46.360 both of those industries. So in a sense, it's not 0:07:46.400 --> 0:07:49.800 surprising that it's like you say that it touches on 0:07:50.000 --> 0:07:53.160 everything that matters to your report. We were chatting before 0:07:53.160 --> 0:07:55.920 we started recording. You know, you've been doing the rounds 0:07:55.960 --> 0:07:58.360 promoting this report, and I think you said it was 0:07:58.480 --> 0:08:02.040 a list of eleven key takeaways that you'd come up with. 0:08:02.080 --> 0:08:03.320 I didn't know if it was a word, was takeaways. 0:08:03.320 --> 0:08:04.840 I think you had a better word, But could you 0:08:05.040 --> 0:08:07.440 talk us through you know, I think we have time 0:08:07.480 --> 0:08:09.840 to talk through all eleven and you know, our clients 0:08:09.920 --> 0:08:12.360 can access our reports, and I think we're putting out 0:08:12.360 --> 0:08:14.840 a webinar, But what were some of the more important ones? 0:08:15.200 --> 0:08:17.600 Yeah, for sure, and so yeah, when we finished the report, 0:08:17.640 --> 0:08:19.840 the report has hundreds of figures, it's a couple hundred pages. 0:08:19.840 --> 0:08:21.960 There's all sorts of stuff in there, and each one 0:08:22.000 --> 0:08:24.000 of our client we serve a lot of different client 0:08:24.040 --> 0:08:26.680 types and different sectors and different roles, so each one, 0:08:26.760 --> 0:08:29.320 each person gets a slightly different an organization gets a 0:08:29.320 --> 0:08:31.560 slightly different area. It has a slightly different area that 0:08:31.600 --> 0:08:33.880 they're going to be the most interested in. So I 0:08:33.920 --> 0:08:35.840 would say there's lots in there and people can go 0:08:35.880 --> 0:08:37.439 and read it. We try and draw out a few 0:08:37.640 --> 0:08:40.600 just that are make good presentation slides and things, and 0:08:40.679 --> 0:08:42.960 so some of them I guess, just kind of starting 0:08:42.960 --> 0:08:45.079 from the top, is this is going to be another 0:08:45.120 --> 0:08:48.360 record breaking year for EV sales. So we're pretty confident 0:08:48.400 --> 0:08:50.920 on that. About one in four vehicles sold in the 0:08:50.960 --> 0:08:52.920 world this year will be a plug in either battery 0:08:52.960 --> 0:08:54.120 electric or plug in hybrid. 0:08:54.280 --> 0:08:56.640 So that's up from about twenty percent last year. 0:08:56.840 --> 0:08:58.960 If we look at the fleet, about four percent, so 0:08:59.000 --> 0:09:01.240 one in every twenty five five cars on the road 0:09:01.240 --> 0:09:02.760 in the world was electric. 0:09:03.280 --> 0:09:06.440 And was this what you were expecting going into the analysis, 0:09:06.440 --> 0:09:08.679 because I know you say it'll be a record Yeah, 0:09:08.800 --> 0:09:10.720 I feel like you know, like a lot of BNF 0:09:10.800 --> 0:09:12.880 sectors where we're looking at things that are emerging. That's 0:09:12.880 --> 0:09:14.640 what we've said every year, but I know there's been 0:09:14.679 --> 0:09:17.600 a few headwinds. So were you genuinely surprised at this 0:09:17.720 --> 0:09:19.559 finding or were you kind of expecting it? 0:09:20.000 --> 0:09:20.800 I was expecting that. 0:09:20.840 --> 0:09:23.600 I mean, if you work on electric vehicles, especially, you 0:09:23.679 --> 0:09:25.800 hear every year about all the reasons why it's going 0:09:25.840 --> 0:09:27.800 to fail, and then it goes up between twenty and 0:09:27.840 --> 0:09:28.920 sixty percent a year. 0:09:29.480 --> 0:09:30.800 That's been pretty consistent. 0:09:31.040 --> 0:09:33.160 I think what's probably different this year, and that we 0:09:33.240 --> 0:09:35.199 do talk a lot about in the report this year, 0:09:35.240 --> 0:09:37.080 is that the US market is set to slow down 0:09:37.120 --> 0:09:39.960 pretty dramatically, and whatever happens in the US has an 0:09:40.000 --> 0:09:42.560 outsized impact on the headlines that you read, because a 0:09:42.559 --> 0:09:45.120 lot of the new sources or groups covering things our 0:09:45.200 --> 0:09:48.200 English speaking and the US is obviously a pretty dominant 0:09:48.200 --> 0:09:50.080 force in a lot of areas. So if you were 0:09:50.120 --> 0:09:52.280 to follow the US headlines, it's quite dark. And we 0:09:52.320 --> 0:09:55.720 have dramatically reduced our US ev adoption forecast because of 0:09:55.760 --> 0:09:59.280 things like the Trump administration rolling back cafe and taking 0:09:59.360 --> 0:10:02.840 dismantling arts of the Inflation Reduction Act. And so certainly 0:10:02.920 --> 0:10:05.520 that is a very real dynamic, and that is a 0:10:05.760 --> 0:10:07.839 I don't want to downplay that. If we're going to 0:10:07.880 --> 0:10:10.360 get large scale electrification in the US, we need the 0:10:10.440 --> 0:10:12.800 US market to go electric as well. We're not we 0:10:12.800 --> 0:10:15.200 don't take a position on whether that should happen, but 0:10:15.360 --> 0:10:17.600 just by the very nature of the size of the US, 0:10:17.760 --> 0:10:19.760 it's an important part of the global vehicle mix. So 0:10:19.840 --> 0:10:22.000 just to give a sense of that, last year in 0:10:22.040 --> 0:10:25.040 our outlook, we had about forty eight percent by twenty 0:10:25.080 --> 0:10:27.080 thirty of vehicle sales in the US coming. 0:10:26.840 --> 0:10:27.360 With a plug. 0:10:27.480 --> 0:10:30.439 That was again based on really tight fuel economy regulations 0:10:30.520 --> 0:10:33.400 under Biden. We had all the money being pumped in 0:10:33.440 --> 0:10:36.559 by the Inflation Reduction Act, the support for evs from 0:10:36.600 --> 0:10:39.000 tax credits, all these things sort are coming together, plus 0:10:39.080 --> 0:10:42.040 California ZEV mandate and the states that follow it. This 0:10:42.120 --> 0:10:44.240 year we've dramatically reduced that because many of those have 0:10:44.280 --> 0:10:46.560 been rolled back. So now we have it going to 0:10:46.679 --> 0:10:49.199 twenty seven percent of sales by twenty thirty having a plug. 0:10:49.240 --> 0:10:51.640 So that's both battery electrics, employment HIGHBRI and so what 0:10:51.720 --> 0:10:55.200 was the number forty eight twenty seven? 0:10:55.600 --> 0:10:58.959 Yeah, so pretty sharp, pretty sure drug, and to be honest, 0:10:59.000 --> 0:11:01.840 there's actually some downside, further downside risk to that because 0:11:02.200 --> 0:11:05.400 the outlook assumes that California does retain its waiver and 0:11:05.720 --> 0:11:08.680 the Trump administration has gone after that and as of 0:11:08.720 --> 0:11:10.839 now remove that, which is a decision that will get 0:11:10.840 --> 0:11:12.880 tied up in the courts and is being tied up 0:11:12.880 --> 0:11:14.679 in the courts. And to be honest, this was all 0:11:14.760 --> 0:11:16.840 just happening as we were publishing, So our position was 0:11:16.960 --> 0:11:19.280 let's keep it in there. But it means that to 0:11:19.320 --> 0:11:21.680 that twenty seven percent by twenty thirty, there's still a 0:11:21.720 --> 0:11:24.319 fair bit of downside risk because if California loses that 0:11:24.400 --> 0:11:26.800 ability to set its standards and that holds up in court, 0:11:26.960 --> 0:11:30.559 then we would see that for cast go down even further. 0:11:30.559 --> 0:11:31.920 Did you ki Anamba? 0:11:32.280 --> 0:11:34.040 We haven't yet, but that's kind of the next thing 0:11:34.120 --> 0:11:36.120 up is to figure out how much further that goes 0:11:36.160 --> 0:11:38.400 down in that case. But just to kind of give 0:11:38.440 --> 0:11:40.720 a sense of scale, the US is not a huge 0:11:40.760 --> 0:11:44.200 part of the overall TV market today. The biggest market 0:11:44.240 --> 0:11:47.040 course is China, and one of the interesting findings, sometimes 0:11:47.200 --> 0:11:49.240 one of the most interesting charts. So it came right 0:11:49.280 --> 0:11:51.480 at the end and I was thinking, actually China EV 0:11:51.600 --> 0:11:53.640 sales this year are going to get pretty close to 0:11:53.840 --> 0:11:56.439 US total vehicle sales. So well, let's make a chart 0:11:56.480 --> 0:11:59.000 of that, and basically, towards the end of this year, 0:11:59.360 --> 0:12:01.719 we think China's EV sales. 0:12:01.600 --> 0:12:05.199 Will surpass US total vehicle sales. That's pretty remarkable. 0:12:05.240 --> 0:12:07.040 So you see this chart where a few years ago 0:12:07.040 --> 0:12:09.160 there's just a few hundred thousand evs a year sold 0:12:09.160 --> 0:12:10.880 in China, and then now by the end of twenty 0:12:10.920 --> 0:12:14.040 twenty five, there will be more evs sold in China 0:12:14.200 --> 0:12:16.160 than total cars sold in the US. 0:12:16.360 --> 0:12:18.720 And the Chinese market is still growing quickly. The European 0:12:18.720 --> 0:12:20.520 market is also growing quite a bit right now. 0:12:20.600 --> 0:12:24.199 Because there's tightening vehicle CO two regulations. They've backed off 0:12:24.200 --> 0:12:26.160 that a bit and averaged out the CO two regulations, 0:12:26.200 --> 0:12:28.080 so they don't tighten just in twenty twenty five, but 0:12:28.120 --> 0:12:30.400 averaged out from twenty twenty five to twenty twenty seven. 0:12:30.600 --> 0:12:33.200 But so it wasn't a very long winded way of saying, 0:12:33.320 --> 0:12:35.320 it wasn't a real surprise. It was sort of what 0:12:35.320 --> 0:12:36.760 we were expecting that it was going to be a 0:12:36.800 --> 0:12:39.160 record year. But certainly there is a lot of regional 0:12:39.240 --> 0:12:39.959 variation in that. 0:12:40.360 --> 0:12:43.240 So It's really interesting what you're saying about the difference 0:12:43.280 --> 0:12:45.520 between the US and a lot of other markets, and 0:12:45.920 --> 0:12:48.320 it does make me wander two things, and I say 0:12:48.320 --> 0:12:51.280 this as someone who's currently living in the US, is 0:12:51.280 --> 0:12:54.200 is the US missing the boat on the future of 0:12:54.240 --> 0:12:59.079 the automotive sector and any aspirations of becoming a vehicle exporter? 0:12:59.360 --> 0:13:01.400 So first, I what does this mean for the future 0:13:01.400 --> 0:13:03.240 of the US automotive sector? 0:13:03.360 --> 0:13:04.080 And then the other thing I. 0:13:04.080 --> 0:13:06.319 Wonder is, and this is maybe more of a slow 0:13:06.360 --> 0:13:09.160 burn how quickly this begins to dig in, But is 0:13:09.200 --> 0:13:13.160 the US going to be uniquely exposed to oil prices 0:13:13.160 --> 0:13:16.080 in the future because everyone else has more of an 0:13:16.120 --> 0:13:18.920 electric fleet and has less dependency. I don't know if 0:13:18.960 --> 0:13:20.840 this is something you know you have thoughts on. 0:13:21.080 --> 0:13:21.680 Yeah, definitely. 0:13:21.920 --> 0:13:24.679 In terms of the second question actually around whether the 0:13:24.800 --> 0:13:27.440 US is more uniquely exposed to that, the US already 0:13:27.520 --> 0:13:30.600 is more uniquely exposed to that because the efficiency of 0:13:30.640 --> 0:13:33.440 the vehicle fleet is significantly lower than other parts of 0:13:33.440 --> 0:13:36.240 the world and the alternatives are very limited. Right, So 0:13:36.400 --> 0:13:38.960 in cert some countries, if the cost of driving goes up, 0:13:39.000 --> 0:13:41.120 there's a realistic option for some people to shift to 0:13:41.160 --> 0:13:44.520 public transit. Their driving distances aren't as high, and their 0:13:44.960 --> 0:13:47.680 efficiency is better, whereas in the US there's very little 0:13:47.760 --> 0:13:50.200 to do other than just pay it and maybe complaint 0:13:50.280 --> 0:13:53.960 when gasoline prices go up, and understandably so in some cases. 0:13:54.200 --> 0:13:56.119 So I would say that it is already uniquely. 0:13:55.920 --> 0:13:58.840 Exposed when oil prices go up and gasoline prices follow. 0:13:59.040 --> 0:14:01.280 But yes, to sort of zoom out a bit from there, yes, 0:14:01.360 --> 0:14:03.680 there is a real risk that the US, particularly the 0:14:03.760 --> 0:14:06.719 US automakers get left behind in this transition because they 0:14:06.720 --> 0:14:07.920 are sort of protected right now. 0:14:07.960 --> 0:14:09.640 So right now in the US, there's one hundred percent 0:14:09.679 --> 0:14:12.760 tariff on Chinese EV's or Chinese made EV's. 0:14:12.520 --> 0:14:14.679 Even if they're an EV made by a Western automaker 0:14:14.679 --> 0:14:17.360 in China, which I think is important because you were 0:14:17.400 --> 0:14:19.680 starting to see more and more automakers make their vehicles 0:14:19.680 --> 0:14:22.440 in China and then ship them to international markets, so that. 0:14:22.400 --> 0:14:24.760 Means they're not exposed to the full level of competition 0:14:24.800 --> 0:14:26.120 that you're starting to see elsewhere. 0:14:26.160 --> 0:14:28.680 And anytime you have a market that is not exposed 0:14:28.680 --> 0:14:31.360 to the full global competition, then it is possible that 0:14:31.400 --> 0:14:34.480 it sort of evolves down a different evolutionary path. I 0:14:34.520 --> 0:14:36.840 think one of the things that was interesting in digging 0:14:36.840 --> 0:14:39.560 through this year's EV numbers in different countries is that 0:14:39.640 --> 0:14:41.960 the single biggest determinant you could probably look at for 0:14:42.040 --> 0:14:44.680 which countries or regions are going fast on EV adoption 0:14:44.760 --> 0:14:47.000 which ones are going slower, is the ones that are 0:14:47.040 --> 0:14:49.920 open to Chinese automakers are going very fast. Indeed, so 0:14:50.240 --> 0:14:55.120 markets like Brazil or Thailand, or Vietnam, Turkey, Mexico, even 0:14:55.120 --> 0:14:57.880 the UK. The UK doesn't have the same important tariffs 0:14:57.920 --> 0:15:01.000 that the S THEU has on Chinese and the UKs 0:15:01.040 --> 0:15:03.560 that has the highest level of EV adoption amongst major 0:15:03.600 --> 0:15:06.200 economies outside of China, and all these other ones in 0:15:06.240 --> 0:15:09.240 Southeast Asia or Latin America and other places are growing 0:15:09.320 --> 0:15:12.400 quite quickly and are now have significantly higher rates of 0:15:12.400 --> 0:15:16.920 EV adoption than established, wealthier markets, which kind of inverts 0:15:16.960 --> 0:15:18.920 this idea that many people have had for a long 0:15:18.960 --> 0:15:22.120 time that electrification starts purely at the top and slowly 0:15:22.160 --> 0:15:24.240 works its way down top of the market works its 0:15:24.280 --> 0:15:26.240 way down. Instead, what we're seeing is much more sort 0:15:26.240 --> 0:15:29.400 of bottom up electrification happening and in many cases now 0:15:29.440 --> 0:15:34.040 happening in emerging economies significantly faster than developed markets or 0:15:34.080 --> 0:15:37.960 more economically developed markets, particularly those that have large incumbent 0:15:38.000 --> 0:15:41.360 auto manufacturing bases, like Japan, the US, or Germany. So 0:15:41.560 --> 0:15:43.880 there's some really interesting regional dynamics there. I think the 0:15:44.000 --> 0:15:46.560 US is a bit at risk of sort of missing 0:15:46.720 --> 0:15:49.840 this global trend and therefore struggling with some competitiveness as 0:15:49.840 --> 0:15:52.160 a result. It's worth keeping in mind though, that while 0:15:52.200 --> 0:15:55.160 Tesla's sales are faltering, is still a major producer and 0:15:55.320 --> 0:15:57.520 has been very innovative up to date and is an 0:15:57.520 --> 0:16:00.760 American company. So certainly, I don't think it's a foregone 0:16:00.840 --> 0:16:03.880 conclusion that the US and the US automakers are going 0:16:03.960 --> 0:16:06.360 to fall further behind on this, but certainly the policies 0:16:06.400 --> 0:16:08.480 that are in place right now are pushing things in 0:16:08.520 --> 0:16:09.360 that direction. 0:16:09.560 --> 0:16:13.080 Right And you know, in a way, maybe my question 0:16:13.680 --> 0:16:16.320 was predicated on the idea that the profit in the 0:16:16.360 --> 0:16:19.560 future of this industry is going to be in the 0:16:19.600 --> 0:16:23.120 manufacturing of the vehicles, whereas it might be in other 0:16:23.200 --> 0:16:25.560 things like the design. You know, I know that if 0:16:25.560 --> 0:16:29.160 we think of internal combustion engines, they are complex, and 0:16:29.480 --> 0:16:34.840 there's real expertise in certain countries that enables those countries 0:16:34.880 --> 0:16:37.960 to be major players in those areas. And I'm assuming 0:16:38.000 --> 0:16:40.360 that's where there's quite a bit of margin. If the 0:16:40.400 --> 0:16:44.320 majority of the value is shifting towards the battery, maybe 0:16:44.520 --> 0:16:47.080 at some point becomes low margin. It might be that 0:16:47.120 --> 0:16:50.120 the actual profit is not necessarily in the making of 0:16:50.200 --> 0:16:53.120 the vehicle, but in other factors, like you know, I'm 0:16:53.120 --> 0:16:55.280 just thinking of the difference between you know, where is 0:16:55.320 --> 0:16:57.840 the money made from iPhones? Is it made in the 0:16:57.880 --> 0:17:00.840 manufacturing of them, or is it Apple, a US based 0:17:00.880 --> 0:17:03.160 company is making all of that money. Is that something 0:17:03.160 --> 0:17:05.200 you could see happening and is that maybe the sliver 0:17:05.240 --> 0:17:08.480 of hope for some countries that might feel they are 0:17:08.520 --> 0:17:10.560 losing out on manufacturing, right. 0:17:10.880 --> 0:17:11.879 It's a tricky question. 0:17:11.960 --> 0:17:15.040 I mean, what I would say is that automakers over 0:17:15.080 --> 0:17:17.360 the last one hundred years have changed the way they 0:17:17.400 --> 0:17:20.560