Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. It's happening globally.
Speaker 1: The US the latest country to cross the electric car
Speaker 1: tipping point for mass adoption for the past six months,
Speaker 1: the US joining Europe and China collectively the three largest
Speaker 1: car markets, and moving beyond the five percent tipping point.
Speaker 1: If the US follows the overall trend established by eighteen
Speaker 1: countries that came before, a quarter of new car sales
Speaker 1: could be electric by the end of that would be
Speaker 1: a year or two ahead of most major forecasts. That's significant.
Speaker 1: That's just a few years away. Doesn't help that, you know,
Speaker 1: Mike doesn't hurt that gas prices are you know, more
Speaker 1: than four fifty a gallon nationally. That'll chevy in a
Speaker 1: different direction, right, all right, So let's see how the
Speaker 1: folks are at out of you're tackling this dramatic shift
Speaker 1: in our world. We welcome Spencer Reader, director of sustainability
Speaker 1: and government affairs at out of America. He is with
Speaker 1: us via zoom from Sacramento, California. Spencer, nice to have
Speaker 1: you here with Tim and myself How are you great? Yeah,
Speaker 1: thanks for having Well, tell us a little bit about
Speaker 1: different factors that are impacting the shift, the global shift
Speaker 1: to evs. If I think about you know, Tim just
Speaker 1: mentioned energy prices we look at, you know, how they
Speaker 1: have shot up because of the Russian War in Ukraine,
Speaker 1: the regulatory shift, climate change. What do you think is
Speaker 1: the biggest factor that's maybe making everybody shift to e
Speaker 1: vs a lot faster than maybe was originally forecast. Well, listen,
Speaker 1: I think you nailed it with the energy crisis, right,
Speaker 1: I mean, just even anecdotally myself and I drive been
Speaker 1: driving a TV for a while, the amount of inquiries
Speaker 1: I get just from neighbors and others on the streets
Speaker 1: here in California. And you know, keep in mind, you
Speaker 1: guys know this, but the f fifty sort of four
Speaker 1: sixty dollars a gallon uh IS would be a bargain
Speaker 1: here in California, right, I mean, we're closer to six
Speaker 1: six dollars a gallon depending on the day of the week. Um,
Speaker 1: it is the economics. It's the economics of of it
Speaker 1: for families, for individuals when they see what they're paying
Speaker 1: at the pump and so evs now become much more,
Speaker 1: uh in in view on the radar for consideration. Uh,
Speaker 1: And I think it's a you know, it's a fortunate
Speaker 1: coincidence of events. There's a lot more product of products better. Um,
Speaker 1: there's more I think people intersecting others in their world,
Speaker 1: whether it's a family member or someone at work that's
Speaker 1: that's driving a TV. So it's in people's consciousness. And
Speaker 1: now you have the energy prices, which which are really
Speaker 1: focusing the mind. But still hard to get a lot
Speaker 1: of these evs because the components that are involved in
Speaker 1: the manufacturing process, particularly the chips, and then of course
Speaker 1: just the raw materials that go into developing the battery spencer.
Speaker 1: Give us an update on how long someone has to
Speaker 1: wait if they order an EV from Autie oh it.
Speaker 1: You know, it depends on the model and what kind
Speaker 1: of options you want, if you want a specific color,
Speaker 1: of course, if you're willing to take any killer. So
Speaker 1: all of those factor in to the times. And I'd
Speaker 1: be wrong if I gave you any particular number, but
Speaker 1: it's you know, it's more than a few days, unless
Speaker 1: you happen to get lucky and go into a dealership
Speaker 1: or something there you're willing to take. But but they're
Speaker 1: unquestionably the supply is constraint right for a whole host
Speaker 1: of reasons, chips being prominent among those. As you listed,
Speaker 1: demand is that So it's it's all of the coincident
Speaker 1: events on the supply side and the demand side that
Speaker 1: have made it more difficult to get the car of
Speaker 1: your choice these days, for sure, Spenser. How much is
Speaker 1: demand up? I mean we've talked about, you know, how
Speaker 1: the car market has been hot certainly throughout the pandemic
Speaker 1: because people couldn't go anywhere, so they need a car
Speaker 1: so they could go somewhere locally. How much is the
Speaker 1: demand in creature? How much has the demand increase when
Speaker 1: it comes to e V specifically? Well, I think I
Speaker 1: think it's unquestionably up. I'll just give you an example.
Speaker 1: It is more anecdotal than a sort of a global metric. Um.
Speaker 1: So we have two dealerships in California that in the
Speaker 1: month of March of last year. So this is before
Speaker 1: even some of the most h you know, I guess
Speaker 1: forceful events occurred that War Ukraine and others that that
Speaker 1: put the constraint on But we had two dealerships the
Speaker 1: month of March last year that sold more all electric
Speaker 1: vehicles than internal combustion engine vehicles, the first time we
Speaker 1: ever experienced that at an Audi dealership anywhere in the US.
Speaker 1: So I think you already saw that latent demand increasing
Speaker 1: and manifesting even as early as the last year. Spencer
Speaker 1: a few questions here. I mean, California has been a
Speaker 1: leader in the in the country when it comes to evs.
Speaker 1: I mean, it was weird to see Tesla's outside of
Speaker 1: California at certain points over the last ten years. But
Speaker 1: if you go to California, they're all over and they
Speaker 1: have been for years, um wearing California with these dealerships.
Speaker 1: And is this getting close anywhere outside of California? And finally,
Speaker 1: is this because of tax credits at all? And I
Speaker 1: will say I see lots of Tesla's now in the
Speaker 1: East Coast. Oh yeah, now it is, Yeah for sure.
Speaker 1: You know, I don't we haven't like de constructed and
Speaker 1: created the full attribution of why this was the case.
Speaker 1: I mean, all of these things factor and the dealership locations.
Speaker 1: One was in the Bay Area, one was in near
Speaker 1: San Diego, interesting for example, so you know, pretty wide distance.
Speaker 1: I think California has got a lot of programs, but
Speaker 1: there's just the in erecture in place for example, Uh,
Speaker 1: that makes I think people feel that it's it's a
Speaker 1: more realistic option. They can go wherever they need to
Speaker 1: and and like you said, in some places seven dollar
Speaker 1: gas at some points, that doesn't Again remember March where
Speaker 1: we saw this behavior. Um. I think you see in
Speaker 1: the Pacific Northwest and Clarry demands quite high. But even
Speaker 1: in places like Texas and Florida, we're selling a bunch
Speaker 1: of our electric vehicles. I think it's it's a it's
Speaker 1: a great product. Um. You know, if the prices weren't
Speaker 1: so high, I think again you'd still see really higher
Speaker 1: demand outpacing lopally projections from even two years ago. And
Speaker 1: I think it is just the quality of the product.
Speaker 1: We we put a lot of thought in, we rolled
Speaker 1: out and it's a great experience for our drivers. Spencer,
Speaker 1: hang on for a second, going to do a little
Speaker 1: bit of news, But we want to come back, and
Speaker 1: I do want to get into government policies globally and
Speaker 1: how that can kind of change even the metrics going forward.
Speaker 1: Spencer reader over at Out of America will come back
Speaker 1: in just a moment I want to get back to
Speaker 1: our guests. Spencer readers with US director of Sustainability and
Speaker 1: Government Affairs at Out of America. He's with us via
Speaker 1: zoom from Sacramento, California. So, um, when there's good journalism
Speaker 1: out there, we're just gonna steal it, basically and credited credited.
Speaker 1: Fast Company did a story why this climate scientist now
Speaker 1: works for a car company? Spencer. It's a great question.
Speaker 1: Why is it and why did you you were that
Speaker 1: climate scientist by the way, exactly, so help us make
Speaker 1: the connection and why you wanted to be there and
Speaker 1: why it works. Sure, well listen, I mean it's a
Speaker 1: you know, it's a multifaceted sort of story. But the
Speaker 1: upshot is this, in the US, the top source of
Speaker 1: greenhouse gas emissions of carbon dioxide specifically come from the
Speaker 1: transportation sector. I've been studying various elements of the climate problem,
Speaker 1: whether it be the impacts affecting our coastlines and how
Speaker 1: you reduce those impacts. But at the end of the day,
Speaker 1: it's about, you know, action that we need to take
Speaker 1: as a country and within the private sector, there is
Speaker 1: this sort of confluence of factors that are pushing us
Speaker 1: towards a really unprecedented transformation, and AUDI was positioned when
Speaker 1: I was evaluating sort of the options in the industry,
Speaker 1: they really appeared position to take a very bold step forward. Uh,
Speaker 1: And that's why I joined AUDI to help them really
Speaker 1: push pushed through you know, some of the internal resistance,
Speaker 1: Like you know, there's there's a transit risks right back
Speaker 1: in there. It wasn't evident clearly that this was going
Speaker 1: to be a full transformation. Now I think there's a
Speaker 1: lot more evidence that we're heading, as you noted at
Speaker 1: the top of the program, we're hitting some tipping points
Speaker 1: that was not the case in when I joined Spencer.
Speaker 1: Is there is there any part of the supply chain
Speaker 1: of or the construction of an electric vehicle, namely the
Speaker 1: battery and the components that go into a battery that
Speaker 1: give you pause from a sustainability perspective, since you are
Speaker 1: still relying on so many raw materials. There is, but
Speaker 1: I don't think it's really unique to an electric vehicle.
Speaker 1: I mean, all the things that we consume in society
Speaker 1: have impacts on the environment in terms of raw materials,
Speaker 1: and I think there's been some hyperbole injected into the
Speaker 1: conversation around electric vehicles that they are somehow unique in
Speaker 1: this regard. We use a lot of raw materials to
Speaker 1: build all the things that we use and consume day
Speaker 1: to day. Um, you know so, yeah, lithium, cobalt, those
Speaker 1: are issues that the industry is hyper focused on with
Speaker 1: the broader ecosystem of suppliers. The nice thing about this
Speaker 1: situation is once we get sort of a critical mass
Speaker 1: of e vs in the market, the materials and those
Speaker 1: batteries are fully recoverable. There is a closed loop recycling
Speaker 1: opportunity that companies like Redwood, which OUTI is partnering with
Speaker 1: now they're based on Nevada, that they have this this developed.
Speaker 1: In terms of this vision, they will take nothing to landfill.
Speaker 1: The raw materials that need to be extracted from the
Speaker 1: Earth will dwindle over time and they can just create
Speaker 1: this closed loop system. So to me, this is a
Speaker 1: such a lovely story in terms of where we're heading.
Speaker 1: In the meantime, Certainly attention is warranted on how we
Speaker 1: procure those raw materials, is it done and the right way?
Speaker 1: And I think the world's attention on those is justified.
Speaker 1: But again I would say that the uniqueness of this
Speaker 1: situation for EVS is something that is not really warranted.
Speaker 1: It's a it's a situation that applies to everything that
Speaker 1: we use and consume. Hey, but you said that why
Speaker 1: you chose Audie and when you were evaluating kind of
Speaker 1: what you wanted to do or who you wanted to
Speaker 1: maybe go work with, and you talked about the bold
Speaker 1: moves at Audie. Do you feel like governments globally are
Speaker 1: taking bold enough moves for us to you know, fully
Speaker 1: embrace EVS Because I still think about the lack of infrastructure,
Speaker 1: uh that we see throughout the country to support EVS.
Speaker 1: There was a great store I can't remember who wrote it,
Speaker 1: um some other media source of somebody who took a
Speaker 1: ride like across the country or and how tricky it
Speaker 1: was to keep charging and finding places to charge. So
Speaker 1: are we not being bold enough as a government? I
Speaker 1: think I think that's correct. Listen, if you just get
Speaker 1: our investment out these investment a loan in electrification over
Speaker 1: the next four plus years, we're investing nineteen billion with
Speaker 1: the b The big investment that everyone's touting in terms
Speaker 1: of the federal government here in the US and infrastructure
Speaker 1: is seven point five billion. I mean, that's an order
Speaker 1: of magnitude lower than what we're is one company putting
Speaker 1: into this space. So I think unequivocally there needs to
Speaker 1: be more resources put into this. Now, you've got states
Speaker 1: like California that have that have put historically a lot
Speaker 1: of money into this. But but there is no question
Speaker 1: that you know, I'm talking about the US here, that
Speaker 1: we need uh multiples of what's being discussed right now
Speaker 1: to really pull off the full transformation that people really
Speaker 1: at least those you know who want this are touting.
Speaker 1: What specifically do we need on the federal level. Give
Speaker 1: us an idea of the conversations that you're having not
Speaker 1: just in the state of California, but but also what's
Speaker 1: happening on the federal level. Like if you had a
Speaker 1: magic wand that you could wave, what would you want
Speaker 1: to say? Well, listen, let's just stick with the with
Speaker 1: the theme that we've talked about, you know, the set
Speaker 1: the point five billion. There are analyzes that have been
Speaker 1: conducted one by the Public Policies too that suggests eighty
Speaker 1: billions what's needed to meet just the current sort of
Speaker 1: projections for demand over the next few years. So again
Speaker 1: it's in order of magnitude difference. Uh, that's the biggest, right,
Speaker 1: It is the infrastructure piece. I mean, we we can
Speaker 1: build the vehicles, we can bring them to market, but
Speaker 1: if there isn't the infrastructure and the incentives for not
Speaker 1: just the public charging but those that we need at
Speaker 1: residences and multi family homes, high speed charging for certain
Speaker 1: situations where you've got you right, hail companies that need
Speaker 1: to charge those vehicles, the various kinds of commercial vehicles.
Speaker 1: It's a whole sort of ecosystem of infrastructure investments that
Speaker 1: need to be made in partnership with electric utilities and
Speaker 1: every other sort of stakeholder that has an interest in that. Hey, spencer,
Speaker 1: is the trend to that you know, they become greener
Speaker 1: and greener because you know, as you guys were talking
Speaker 1: about lithium, I mean it doesn't just flow out of
Speaker 1: the ground and into battery plants. Electricity, right, you know,
Speaker 1: isn't captured without a great deal of capital and carbon expense.
Speaker 1: There's really no zero emission vehicle. Right, We're not quite
Speaker 1: there yet, but do we move closer there? I mean,
Speaker 1: what is the R and D Now that we see
Speaker 1: a lot more evs coming out of global automakers, well,
Speaker 1: you know, listen on the youth side once the vehicles
Speaker 1: in the customer's hands. I mean, there are places like
Speaker 1: the city of Seattle, for example, that has essentially a
Speaker 1: zero carbon electricity grid because of investments they've made over
Speaker 1: a long period time. California's conversion on a zero missions
Speaker 1: grid as well in the next few years. So I
Speaker 1: think from the use phase that sort of zero tailed
Speaker 1: type emissions, even if you go upstream, that we're close
Speaker 1: to being that already in many parts of the country.
Speaker 1: You look at the vehicle from you know, the full
Speaker 1: life cycle. That material is the extract from the ground
Speaker 1: that manufacturing processes. We in terms of what we control,
Speaker 1: we're working on that every day to reduce the carbon
Speaker 1: intensity of all of those steps. Um, you know, we're
Speaker 1: a ways away from that. As an industry and certainly
Speaker 1: as a society. We've got to decarbonize in all of
Speaker 1: the colmy and then we get in the conversations during
Speaker 1: carbon pricing, which politically is sort of a third rail
Speaker 1: right now. But I think we're heading a good direction.
Speaker 1: We have a lot more work to do, but I
Speaker 1: think we're farther along than some people might suggest. Listen,
Speaker 1: this was so much fun. Please come back because we'd
Speaker 1: love to continue this. Uh, your perspective and especially working
Speaker 1: for a major global auto manufacturer, really gives us something
Speaker 1: to think about. Spencer Reader, director of Government Affairs and
Speaker 1: Sustainability at out of America, joining up Zoom from Sacramento, California.
Speaker 1: We got to get him back. Maybe during the winter.
Speaker 1: We can talk about telemark skiing too. Yeah, he's really
Speaker 1: into that. If you check out his page on Twitter. Um,
Speaker 1: that's it. That's a wrap a lot of big macro stories.
Speaker 1: We've got some big earnings. IBM still down about three
Speaker 1: point six percently after ours for Tim Stanavk and the
Speaker 1: Hohl Bloomberg Business Week team on Carol Masser, this is
Speaker 1: Bloomberg