WEBVTT - US Retail Sales Rise, EV Latest 0:00:02.440 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.240 --> 0:00:12.120 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:12.200 --> 0:00:15.720 weekdays at ten am Eastern on focarplaying Enroud Auto with 0:00:15.760 --> 0:00:18.800 the Bloomberg Business App. Listen on demand wherever you get 0:00:18.840 --> 0:00:22.320 your podcasts, or watch us live on YouTube. 0:00:22.880 --> 0:00:24.880 Let's get over to Dave Peacock. He's the CEO of 0:00:24.880 --> 0:00:28.920 Advantage Solutions. He joins us live from Saint Louis, Missouri, 0:00:29.080 --> 0:00:30.840 and we want to talk a little bit about retail 0:00:30.920 --> 0:00:35.680 sales and the economic data that we got in this morning. Dave, 0:00:35.960 --> 0:00:41.280 I see retail sales coming in stronger than anticipated on 0:00:41.400 --> 0:00:43.240 the headline, but if you take out. 0:00:43.120 --> 0:00:46.360 Cars, they're weaker. Cars and gas they're weaker. 0:00:46.400 --> 0:00:47.520 What's your view. 0:00:48.800 --> 0:00:51.960 Yeah, we're seeing i'd say resilient consumer, but at the 0:00:52.000 --> 0:00:54.280 same time a little bit sluggish, especially in the space 0:00:54.320 --> 0:00:56.760 where we work, which is food and personal care, primarily 0:00:57.280 --> 0:01:00.160 the retail sector. And some of that is because of 0:01:00.240 --> 0:01:04.080 the twenty two percent higher prices for groceries that you've 0:01:04.080 --> 0:01:06.839 seen kind of coming out of the pandemic. Well, wages 0:01:06.880 --> 0:01:09.720 are catching up with that. I think for certain consumers 0:01:09.800 --> 0:01:11.640 it's forced them to go value seeking. 0:01:12.240 --> 0:01:15.240 Are we still way above pre pandemic levels. As far 0:01:15.280 --> 0:01:17.480 as things like that, the stuff that I actually. 0:01:17.200 --> 0:01:20.600 Use and eat, we are so depending on the category, 0:01:20.600 --> 0:01:23.800 but overall groceries are around twenty two percent higher than 0:01:23.800 --> 0:01:25.360 they were pre pandemic. 0:01:27.360 --> 0:01:30.400 As far as promotions, I want to set the table 0:01:30.480 --> 0:01:33.319 for Thanksgiving, so to just stick to promotions, the thing 0:01:33.400 --> 0:01:35.959 that the things that are discounting. 0:01:37.920 --> 0:01:41.080 You know, our proprietary research, the advantage we've got says 0:01:41.080 --> 0:01:45.320 that forty percent of shoppers are going to either pull 0:01:45.400 --> 0:01:48.440 back or trade down as a shop for the holidays. 0:01:48.520 --> 0:01:53.560 So when you have to trade down from a turkey, though, well. 0:01:53.440 --> 0:01:55.720 Side be honest because it's ull per pounds, so you 0:01:55.800 --> 0:01:57.800 might actually see people buy a smaller turkey. 0:01:58.600 --> 0:01:59.200 You also have. 0:01:59.200 --> 0:02:02.000 Different price points if it's frozen or fresh. And then 0:02:02.040 --> 0:02:03.560 if you look at the other items in the store, 0:02:03.560 --> 0:02:07.640 you're seeing private label products growing in the retail sector 0:02:07.680 --> 0:02:10.959 while national brands are flattish to declining of it. 0:02:11.240 --> 0:02:13.160 So rather than go with the butterball, you look at 0:02:13.200 --> 0:02:20.320 the Kirkland turkey. Are consumers trading down still from you 0:02:21.480 --> 0:02:23.919 name brand stores. I'm not going to go to Chico's, 0:02:24.000 --> 0:02:25.440 I'm more likely to go to Costco. 0:02:25.639 --> 0:02:27.360 Is that the case with everybody else. 0:02:28.200 --> 0:02:31.040 You're continuing to see channel shift into the value segment, 0:02:31.120 --> 0:02:34.320 into the club stores, into mass merge, and so yeah, 0:02:34.360 --> 0:02:36.920 you are seeing that channel shift with with some consumers. 0:02:37.080 --> 0:02:39.400 Are you seeing the discounting? I mean John mentions it, 0:02:39.480 --> 0:02:41.360 he's always on the lookout. 0:02:41.000 --> 0:02:41.560 For a sale. 0:02:41.600 --> 0:02:46.760 But are producers offering discounts more than they normally would 0:02:46.760 --> 0:02:47.440 around the season? 0:02:48.639 --> 0:02:51.519 You know you're seeing continue discounting, But if you look 0:02:51.560 --> 0:02:54.520 at percent of volume within the grocery store more broadly 0:02:54.600 --> 0:02:58.160 sold on deal or sold on promotion, we're still actually 0:02:58.160 --> 0:03:01.160 a little bit below pandemic levels. What consumers are doing 0:03:01.639 --> 0:03:05.080 to value seek is some are looking for promotions, but 0:03:05.120 --> 0:03:08.200 at a lower rate overall than pre pandemic. But they 0:03:08.240 --> 0:03:10.880 are looking at private label and they are looking at 0:03:10.880 --> 0:03:12.680 different channels where prices can be lower. 0:03:13.000 --> 0:03:16.640 If retail sales are up in this period, does that 0:03:16.840 --> 0:03:20.720 mean debt is also? Are they putting it on credit cards? 0:03:20.720 --> 0:03:23.800 Do you measure that you are seeing credit card balances 0:03:23.880 --> 0:03:27.720 increase and an increase somewhat dramatically. When you look at 0:03:27.760 --> 0:03:30.200 items like food and personal care, they tend to be 0:03:30.720 --> 0:03:33.240 within the normal budget on a month to month basis 0:03:33.240 --> 0:03:36.360 for most consumers, and so where you're seeing debt creep 0:03:36.480 --> 0:03:39.800 up potentially is things like higher value durable goods. 0:03:40.440 --> 0:03:42.520 This is a question for both of you, who can 0:03:42.560 --> 0:03:46.360 afford a new car of these days? Well, I mean, it's. 0:03:46.240 --> 0:03:48.880 Not average, it's not the average, Jill right. I'll just 0:03:48.920 --> 0:03:49.800 step in John and say. 0:03:49.800 --> 0:03:53.400 Bloomberg News did a great story last week pointing out 0:03:53.400 --> 0:03:57.080 that even you know, the top quintile is finding it 0:03:57.160 --> 0:04:00.520 difficult to afford a new car, and therefore look at 0:04:00.720 --> 0:04:01.520 used cars. 0:04:01.840 --> 0:04:02.560 That's why you. 0:04:02.480 --> 0:04:06.240 Know, you see the retail number, retail sales advancing month 0:04:06.240 --> 0:04:08.360 over month zero point four percent. We were only looking 0:04:08.360 --> 0:04:10.880 for zero point three percent. So it's doing well. Then 0:04:10.920 --> 0:04:14.120 you look at the x auto number and it's doing poorly, 0:04:14.160 --> 0:04:17.120 and I guess that's because the price of new cars 0:04:17.200 --> 0:04:18.039 is just so high. 0:04:18.200 --> 0:04:19.360 Is that is that the case, Dave? 0:04:20.160 --> 0:04:22.000 I think that's the case. And you know you're looking 0:04:22.040 --> 0:04:25.280 at dollar increases and so the pricing plays a factor. 0:04:25.400 --> 0:04:27.360 So one thing that we look at, because we operate 0:04:27.400 --> 0:04:30.599 in the retail space of grocery stores, convenience stores mass merged. 0:04:30.920 --> 0:04:32.599 But if you look at restaurants, you saw I think 0:04:32.720 --> 0:04:35.839 zero point seven percent in the service sector growth but 0:04:36.120 --> 0:04:39.560 pricing overall in food away from home has been growing 0:04:39.600 --> 0:04:43.279 at three plus times the rate of food at home recently, 0:04:43.440 --> 0:04:46.080 so food at home is prices have been going up 0:04:46.080 --> 0:04:48.840 around one one and a half percent in the last year, 0:04:49.360 --> 0:04:52.000 and food away from home and restaurants has been closer 0:04:52.000 --> 0:04:52.880 to three and a half to four. 0:04:53.080 --> 0:04:53.520 But on the. 0:04:53.520 --> 0:04:57.080 Durable goods, do you see prices of other you know, 0:04:58.320 --> 0:05:03.120 big ticket items like appliance is as high as they 0:05:03.160 --> 0:05:05.200 are with automobiles. 0:05:05.400 --> 0:05:08.800 Yeah, you're seeing pretty inflated pricing. And what's you know, 0:05:08.920 --> 0:05:11.240 I don't know because we don't work in the automobile space, 0:05:11.279 --> 0:05:14.160 But the question would be how much inventory or dealers 0:05:14.200 --> 0:05:16.279 holding and how what kind of deals are being offered 0:05:16.320 --> 0:05:19.320 by both dealers and manufacturers to get product off. 0:05:19.640 --> 0:05:23.400 These lots going forward. Are retailer's confident that they can 0:05:23.760 --> 0:05:26.040 still pass costs along to consumers? 0:05:27.839 --> 0:05:30.800 Yeah, I think it's to some degree, And it's really 0:05:30.839 --> 0:05:33.680 a question of manufacturers more than retailers, because retailers are 0:05:33.680 --> 0:05:36.520 often the one receiving runs, receiving the pricing. There are 0:05:36.600 --> 0:05:40.039 commodities depending on what you're making, what food you're providing, 0:05:40.080 --> 0:05:43.360 what personal care item for instance, that are still increasing 0:05:43.480 --> 0:05:47.200 or still at elevated levels, and so you know, cocoa 0:05:47.279 --> 0:05:49.040 and chocolate is a good example of that, and we 0:05:49.080 --> 0:05:52.080 saw that during Halloween and it certainly suppressed some of 0:05:52.120 --> 0:05:56.000 the volume during the Halloween windows. So people are going 0:05:56.080 --> 0:05:57.800 to pass it on when they have to, but I 0:05:57.800 --> 0:05:59.960 think they're more reticent given the economic reality. 0:06:01.000 --> 0:06:03.560 What does all this mean for the holiday shopping season. 0:06:04.480 --> 0:06:06.720 It's a short season, right, so we have a late 0:06:06.800 --> 0:06:09.479 Black Friday, we have a late Thanksgiving, and so you 0:06:09.520 --> 0:06:12.240 know the season will spread over twenty two or so 0:06:12.320 --> 0:06:15.360 days versus thirty four. And I think it'll be interesting 0:06:15.360 --> 0:06:17.479 to see how supply chains hold up relative to a 0:06:17.520 --> 0:06:21.120 more compressed demand. Sixty three percent of shoppers, based on 0:06:21.160 --> 0:06:24.000 our research, indicate they're going to shop a little earlier, 0:06:24.040 --> 0:06:26.640 so we may be seeing some of that creeping in 0:06:27.160 --> 0:06:29.280 earlier in November. So it'll be interesting to see where 0:06:29.279 --> 0:06:31.120 the retail sales come out for the next month. 0:06:31.160 --> 0:06:34.479 Hey, can you address for us the divide between the 0:06:34.520 --> 0:06:38.080 haves and have nots and what the overall retail picture 0:06:38.120 --> 0:06:39.080 looks like right now? 0:06:40.320 --> 0:06:42.000 When you say have and have nots, do you mean 0:06:42.000 --> 0:06:43.400 by retailer or by consumer? 0:06:43.640 --> 0:06:44.960 Well, we'll do both. 0:06:45.080 --> 0:06:48.240 I suppose yeah, I mean what we're seeing, let's look 0:06:48.240 --> 0:06:50.800 at the consumer, because I think everything starts there. What 0:06:50.839 --> 0:06:55.159 we see is, you know, lower income consumers are really 0:06:55.440 --> 0:06:57.640 kind of strained in this economy, especially with the elevated 0:06:57.680 --> 0:06:59.520 grocery prices we talked about, which are a day to 0:06:59.560 --> 0:07:02.839 day item, and so they're the ones that are going 0:07:02.839 --> 0:07:04.920 to different channels. They may be pulling back a bit 0:07:04.960 --> 0:07:07.480 on their purchases, which is why you're seeing slower volume, 0:07:08.040 --> 0:07:10.760 and they are looking at private label products on the 0:07:10.840 --> 0:07:13.640 upper end. One thing, at least in the food space 0:07:13.640 --> 0:07:17.000 where we operate, you are seeing for some is golp 0:07:17.080 --> 0:07:20.360 one drugs. You know, is as much as fifteen percent 0:07:20.440 --> 0:07:24.800 of a company's pharmaceutical expenses within their benefits plans. Kimmy 0:07:24.880 --> 0:07:27.600 going now to golp one drugs. Depending on the company, 0:07:27.640 --> 0:07:31.040 it's not saying it's everywhere, but there is a belief 0:07:31.080 --> 0:07:33.880 that it is having an impact on demand, especially for 0:07:33.920 --> 0:07:37.240 that higher lend consumer. They can afford those medications. 0:07:37.720 --> 0:07:40.080 Yeah I can't afford them, but I can't wait to 0:07:40.120 --> 0:07:42.240 get my hands on some weig of eurozempic. 0:07:42.720 --> 0:07:44.480 Doesn't your healthcare plan pay for that? 0:07:44.680 --> 0:07:46.920 They won't? They say, I'm not fat enough yet. 0:07:47.000 --> 0:07:48.000 But what about me? 0:07:48.120 --> 0:07:49.440 I'm doing my best. 0:07:49.720 --> 0:07:52.040 John Tucker, we can both try and find it from 0:07:52.360 --> 0:07:54.080 an unregistered pharmacy. 0:07:55.640 --> 0:07:59.520 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:00.200 --> 0:08:03.400 in ten am Eastern on applecar Play and Android Auto 0:08:03.560 --> 0:08:06.320 with the Bloomberg Business Act. You can also listen live 0:08:06.400 --> 0:08:09.600 on Amazon Alexa from our flagship New York station, Just 0:08:09.640 --> 0:08:12.280 Say Alexa Play Bloomberg eleven thirty. 0:08:13.320 --> 0:08:16.840 Let's shift gears a little bit to politics, or least 0:08:17.000 --> 0:08:21.600 large corporate involvement in politics. Brook Sutherland joins us Bloomberg's 0:08:21.600 --> 0:08:23.800 Boston bureau chief. She's also the writer of the Industrial 0:08:24.000 --> 0:08:27.080 Strength newsletter, and she has a story out on the 0:08:27.160 --> 0:08:31.760 terminal entitled Nobody Knows What's going to Happen CEO's Brace 0:08:31.840 --> 0:08:36.559 for More Trump Brooke, it's interesting you kick off the 0:08:36.600 --> 0:08:40.079 story talking about how corporate leaders just really didn't want 0:08:40.120 --> 0:08:42.680 the same thing that the American public wanted, and that 0:08:42.800 --> 0:08:44.600 is Donald Trump in a second term. 0:08:46.160 --> 0:08:47.880 Yes, I mean, I think you know, if you look 0:08:47.880 --> 0:08:50.480 at a lot of the post is that he has proposed, 0:08:50.520 --> 0:08:53.680 they're not necessarily pro business. You know, of course you 0:08:53.720 --> 0:08:56.480 have the prospect of lower regulation, lower taxes. Those are 0:08:56.520 --> 0:08:58.800 the types of things that businesses love to hear. But 0:08:59.160 --> 0:09:02.280 you also have the disability of a trade war, and 0:09:02.320 --> 0:09:05.520 you know, a reignition of inflation, which is not helpful 0:09:06.000 --> 0:09:08.160 for business leaders. And then you know there's also just 0:09:08.240 --> 0:09:12.839 the chaos factor, you know, the possibility of governance by 0:09:12.880 --> 0:09:16.560 tweet returning and becoming sort of a commonplace thing. I 0:09:16.559 --> 0:09:18.839 think we all all forget a little bit about what 0:09:18.920 --> 0:09:21.599 exactly it was like during Trump's first term, but he 0:09:21.640 --> 0:09:26.679 would rather frequently target specific companies who he was frustrated 0:09:26.720 --> 0:09:29.800 for for whatever different reason, and that creates a lot 0:09:29.840 --> 0:09:32.480 of volatility, a lot of instability for these companies that 0:09:32.559 --> 0:09:36.120 really crave predictability and like to make their decisions on 0:09:36.520 --> 0:09:39.719 a playing field that they understand and can anticipate. 0:09:40.080 --> 0:09:43.000 On the other hand, did you hear Jamie Diamond talking 0:09:43.000 --> 0:09:47.480 to Lisa Bromwitz yesterday from the APEC summit in Peru. 0:09:47.840 --> 0:09:49.520 He said, bank. 0:09:49.360 --> 0:09:53.880 Leaders, whether they voted for Trump or Kamala Harris, were 0:09:54.000 --> 0:09:55.800 dancing in the streets. 0:09:56.480 --> 0:09:57.559 He was pretty upbeat. 0:09:57.600 --> 0:10:01.240 Brooke, Well, I think it might on one industry you're in. 0:10:01.520 --> 0:10:04.280 I mean, I think banking is certainly one that expects 0:10:04.320 --> 0:10:06.920 to see a lot of relief on the regulatory front 0:10:07.240 --> 0:10:10.000 and probably would be less likely to be directly affected 0:10:10.000 --> 0:10:14.160 by anything like tariffs. Whereas manufacturers, even those with substantially 0:10:14.280 --> 0:10:19.440 US manufacturing operations, it's extremely rare for those companies to 0:10:19.440 --> 0:10:22.240 have entirely domestic supply chains. They like to talk a 0:10:22.240 --> 0:10:25.040 lot about local for local manufacturing, but what that means 0:10:25.120 --> 0:10:29.800 is North America in terms of supplying their US operations. 0:10:29.800 --> 0:10:33.240 It's not necessarily just America. And so a lot of 0:10:33.240 --> 0:10:37.200 these companies rely on raw material or component imports to 0:10:37.200 --> 0:10:40.400 some extent, and all of that could potentially be vulnerable 0:10:40.440 --> 0:10:42.920 under the tariffs that Trump has proposed. Now there is 0:10:42.960 --> 0:10:45.640 a sense that, you know, some of this is perhaps bluster, 0:10:45.800 --> 0:10:48.560 it's a negotiating tactic that you know, the policies that 0:10:48.600 --> 0:10:50.840 he's put out there, whether it's sixty percent tariffs on 0:10:50.920 --> 0:10:54.080 China goods, you know, up to one hundred percent tariffs 0:10:54.120 --> 0:10:56.880 on goods from Mexico, ten to twenty percent on everybody else, 0:10:56.920 --> 0:11:00.440 that these are not necessarily the final destination. It's you know, 0:11:00.480 --> 0:11:04.160 meant to be more sort of a negotiating tactic. And 0:11:04.240 --> 0:11:06.000 if that is the case, then you know, I think 0:11:06.040 --> 0:11:08.320 a lot of these companies have shown an ability to 0:11:08.480 --> 0:11:10.920 be adept and pivot their supply chains. But I think 0:11:10.920 --> 0:11:13.480 it's very unpredictable right now and it's not entirely clear 0:11:14.040 --> 0:11:16.839 what his goals are. And he has focused a lot 0:11:16.840 --> 0:11:19.319 on Mexico. And if you look at Mexico, that really 0:11:19.440 --> 0:11:22.320 was one of the biggest beneficiaries of the tariffs from 0:11:22.320 --> 0:11:24.800 his last term, you know, because a lot of companies 0:11:24.800 --> 0:11:27.760 who had supply chains in China decided to bring those 0:11:27.800 --> 0:11:29.760 back to North America. But they didn't put them in 0:11:29.800 --> 0:11:31.800 the US. They put them in Mexico, which has seen 0:11:31.880 --> 0:11:35.520 you know, a really big boom and spending, specifically by manufacturing. 0:11:35.640 --> 0:11:38.000 Yeah, is there really a cost effective way for companies 0:11:38.040 --> 0:11:40.760 to bring their stuff back to the United States. 0:11:41.840 --> 0:11:44.520 Well, to do it effectively, you have to have robots 0:11:45.080 --> 0:11:48.520 or automation. And you know, there are some industries for 0:11:48.559 --> 0:11:50.480 which that works better, for which it you know, makes 0:11:50.520 --> 0:11:53.360 more sense to invest in automation, and there are others 0:11:53.360 --> 0:11:56.000 for which it is much trickier. And you know, some 0:11:56.040 --> 0:11:59.400 of the companies that have been investing in Mexico are 0:11:59.480 --> 0:12:01.760 doing so part because they really struggle to find the 0:12:01.840 --> 0:12:04.559 labor that they need in the US. And so you know, 0:12:04.600 --> 0:12:06.640 whether or not you have automation, just getting that the 0:12:06.640 --> 0:12:09.800 people that you need can be very challenging. And even now, 0:12:10.160 --> 0:12:11.520 you know, as we've seen sort of some of these 0:12:11.600 --> 0:12:14.440 labor shortages ease, you still hear manufacturers talking all the 0:12:14.480 --> 0:12:17.840 time about how difficult it is to get a quality workforce. 0:12:18.000 --> 0:12:19.880 And it's important to remember that this was a challenge 0:12:19.920 --> 0:12:23.679 for the industry even before the pandemic, which certainly exacerbated things. 0:12:23.679 --> 0:12:25.959 But this has been sort of a long standing issue 0:12:26.200 --> 0:12:29.600 in the US. Factory jobs tend to be very rigid. 0:12:29.840 --> 0:12:31.960 There's no work from Hull. They tend to operate on 0:12:32.040 --> 0:12:34.920 like a very set schedule, and that is not appealing 0:12:35.400 --> 0:12:37.080 to a lot of the American population. 0:12:38.120 --> 0:12:41.760 Yeah, it's I think a fascinating story and a fascinating topic. 0:12:41.800 --> 0:12:44.000 I just spoke with Peter Rollinson, the CEO of Lucid, 0:12:44.600 --> 0:12:47.280 and we were asking him if he was bummed about 0:12:47.320 --> 0:12:51.600 maybe losing the tax credit or the fact that his 0:12:52.200 --> 0:12:55.000 chief rival, Elon Musk is like best friends with Donald 0:12:55.040 --> 0:12:58.040 Trump now, and he pointed out, Hey, you know, we 0:12:58.440 --> 0:13:01.160 build and produce our pus here in the United States 0:13:01.160 --> 0:13:02.880 of America, and I think Donald Trump wants to keep 0:13:02.920 --> 0:13:03.800 manufacturing here. 0:13:04.280 --> 0:13:06.640 One of the things that CEOs and investors always want 0:13:06.840 --> 0:13:07.880 is certainty. 0:13:08.080 --> 0:13:09.959 It doesn't sound like from that that's true, and that's. 0:13:09.800 --> 0:13:11.680 Reporting that they're getting much of it right now. 0:13:11.840 --> 0:13:13.680 I think Brook's main point. Brook, thanks so much for 0:13:13.760 --> 0:13:17.120 joining us. Definitely recommend you read the story. Nobody knows 0:13:17.160 --> 0:13:20.200 what's going to happen. CEOs brace for more Trump. 0:13:21.679 --> 0:13:25.520 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:13:25.600 --> 0:13:28.679 weekdays at ten am Eastern on Apple Car playing Android 0:13:28.720 --> 0:13:31.840 Outo with the Bloomberg Business app. Listen on demand wherever 0:13:31.880 --> 0:13:37.120 you get your podcasts, or watch us live on YouTube now. 0:13:37.200 --> 0:13:42.240 We had seen shares of Tesla and Rivian sliding yesterday 0:13:42.240 --> 0:13:45.040 on a report that Trump plans to acts the seventy 0:13:45.040 --> 0:13:48.520 five hundred dollars EV tax credit put in place unto 0:13:48.559 --> 0:13:52.440 the Biden administration. You do see Tesla shares bouncing back 0:13:52.480 --> 0:13:54.560 a bit today. They're up three and a half percent 0:13:54.880 --> 0:13:59.360 after falling five point eight percent yesterday. Rivian, though still down, 0:13:59.400 --> 0:14:03.640 and I spoke earlier this morning with the CEO of Lucid, 0:14:03.840 --> 0:14:08.040 Peter Rollinson. His shares are off another four percent a 0:14:08.080 --> 0:14:10.520 day after falling five percent yesterday and have hit an 0:14:10.559 --> 0:14:14.400 all time low at less than two dollars Rivian or sorry, 0:14:14.440 --> 0:14:17.200 Lucid trading for a dollar ninety nine a share. I 0:14:17.200 --> 0:14:20.240 want to bring in Steve Man, Bloomberg Intelligence, Global autos 0:14:20.280 --> 0:14:25.320 and Industrial Research Manager, and Steve, I guess the main question, 0:14:25.600 --> 0:14:29.960 how will the EV industry be affected by the Trump administration? 0:14:31.080 --> 0:14:34.520 Yeah, if Trump decides to kind of remove or cut 0:14:34.560 --> 0:14:37.440 the seventy five hundred tax credit or EV tax credit, 0:14:38.040 --> 0:14:42.560 I think most people believe that the EV penetration will stall. 0:14:43.000 --> 0:14:47.400 If not stall, it will probably fall because a lot 0:14:47.480 --> 0:14:51.960 of the consumers are relying on that that's seventy five 0:14:52.040 --> 0:14:54.680 hundred dollars to make sure, you know, to bring down 0:14:54.680 --> 0:14:58.960 the price, the effective price of the vehicle. Most evs 0:14:59.040 --> 0:15:02.280 sold in America are still very expensive. There's only a 0:15:02.360 --> 0:15:05.360 limited number of them that are under fifty thousand dollars. 0:15:06.080 --> 0:15:09.680 So the fear is, uh, you know, it's going to 0:15:09.720 --> 0:15:13.800 stall EV penetration. The automaker is going to have a 0:15:13.800 --> 0:15:17.680 hard time because they's already invested. They've already committed investing 0:15:17.840 --> 0:15:22.080 a lot of money under the Inflation Reduction Act, about 0:15:22.080 --> 0:15:24.640 one hundred and over one hundred and fifty billion dollars 0:15:24.920 --> 0:15:27.440 to onshore a lot of supply chains. So it's going 0:15:27.520 --> 0:15:30.320 to cost a lot of chaos within the industry. 0:15:30.480 --> 0:15:34.520 So they'll be under no pressure whatsoever moving forward, possibly 0:15:34.640 --> 0:15:36.320 to increase sales of evs. 0:15:38.160 --> 0:15:41.360 Yeah, I think the automakers are going to have to 0:15:41.440 --> 0:15:45.840 increase incentives. I think what could happen if the EV 0:15:45.960 --> 0:15:51.080 penetration rate does decrease from about eight percent currently in 0:15:51.120 --> 0:15:53.760 the US. You know you're gonna lead. 0:15:53.920 --> 0:15:54.440 He's gonna be. 0:15:54.480 --> 0:15:57.080 Left with the strongest players, And that to me, that 0:15:57.200 --> 0:16:00.520 looks like it's Tesla, because Tesla does have the lowest 0:16:00.560 --> 0:16:06.680 costs structure amongst all the EV makers in the US, 0:16:06.720 --> 0:16:11.600 and if the market shrinks, the weaker ones will probably 0:16:11.640 --> 0:16:12.680 fall on the wayside. 0:16:12.760 --> 0:16:15.280 And oddly enough, First Bro or what do we call him, 0:16:15.280 --> 0:16:18.360 first friend, Elon Musk, he's not necessarily in favor of 0:16:18.400 --> 0:16:21.920 these these tax subsidies for evs. 0:16:22.920 --> 0:16:26.640 Yeah, I think, you know, to him, I don't. He 0:16:26.720 --> 0:16:30.040 thinks Tesla doesn't need them, And you know, it's it's 0:16:30.080 --> 0:16:34.960 partly true if you look at the amount of cars 0:16:35.000 --> 0:16:40.320 that are least and eligible for the seventy five hundred. 0:16:40.360 --> 0:16:42.920 Actually a lot of the seventy five hundred tax credit 0:16:43.400 --> 0:16:46.720 as actually from leased vehicles If you look at the 0:16:46.760 --> 0:16:50.200 amount of leased vehicles that Tesla have sold in the 0:16:50.240 --> 0:16:53.640 past twelve months, it's about twenty percent, so you know 0:16:53.680 --> 0:16:56.400 they'll get impacted. But if you compare it to Rivian, 0:16:57.000 --> 0:17:00.200 you know, Rivian has about fifty percent of their vehicles 0:17:00.840 --> 0:17:04.520 and those and eligible for the seventy five hundred, so 0:17:05.040 --> 0:17:07.240 it could be a bigger impact in Rivian. Then that's 0:17:07.240 --> 0:17:10.840 probably why you're seeing their stop falling much more. 0:17:11.160 --> 0:17:13.520 Yeah, there's a limit on you don't get the tax 0:17:13.560 --> 0:17:16.639 credit if you're buying a vehicle that costs more than 0:17:16.680 --> 0:17:19.439 eighty thousand dollars. And I believe there's a household income 0:17:20.640 --> 0:17:23.119 requirement as well, you have to be below a certain level. 0:17:23.280 --> 0:17:25.840 But if you lease it, you can get around at 0:17:25.960 --> 0:17:27.200 least one part of that tax credit. 0:17:27.240 --> 0:17:29.160 Isn't that right, Steve? That's right. 0:17:29.200 --> 0:17:31.560 That's actually what I'm referring to. So when we look 0:17:31.600 --> 0:17:34.200 at the companies who's going to get impacted, we really 0:17:34.240 --> 0:17:37.959 look at, you know, how many of those vehicles are leased. 0:17:38.280 --> 0:17:40.720 If you look at EV's in general in the US, 0:17:40.840 --> 0:17:44.560 the you know, the leasing penetration is actually upwards of 0:17:44.600 --> 0:17:47.320 seventy five eighty ninety percent, so a lot of people 0:17:47.359 --> 0:17:50.399 that actually buy evs are leasing it to get that 0:17:50.440 --> 0:17:51.680 seventy five hundred dollars. 0:17:51.760 --> 0:17:54.400 What does the EV market look like right now? I mean, 0:17:54.520 --> 0:17:58.680 I know, if you read the headlines, you would think 0:17:58.720 --> 0:18:01.880 that no one has bought an this year. Like you know, 0:18:02.240 --> 0:18:06.639 the industry is in trouble because they're so unpopular, not 0:18:06.720 --> 0:18:09.440 just politically, but you know, since there's difficult to charge 0:18:09.440 --> 0:18:11.960 for a lot of people, it's just not an option. However, 0:18:12.240 --> 0:18:15.600 don't we still see EV sales actually growing? 0:18:16.760 --> 0:18:16.920 Oh? 0:18:16.960 --> 0:18:17.560 We are. 0:18:17.760 --> 0:18:20.320 We are seeing EV sales growing, especially in the second 0:18:20.320 --> 0:18:22.840 half of this year, because there's been a lot of 0:18:22.880 --> 0:18:26.280 price cuts right over the past eighteen twenty four months 0:18:26.640 --> 0:18:28.600 in the industry and a lot of these vehicles have 0:18:28.760 --> 0:18:33.800 become more affordable, and even especially in the used EV market, 0:18:34.160 --> 0:18:38.800 those vehicles are very competitive to gasoline cars. What the 0:18:38.880 --> 0:18:44.360 industry is really facing is really it's affordability, and it's exaggerating. 0:18:44.760 --> 0:18:49.040 It's getting more impacted by the fact that interest rates 0:18:49.040 --> 0:18:52.240 are high. A lot of people cannot afford expensive cars 0:18:52.280 --> 0:18:54.840 these days, and EV's are a little bit more expensive 0:18:54.880 --> 0:18:57.920 than ice at the moment. So what the industry was 0:18:57.920 --> 0:18:59.639 trying to do, and I think what the IRA was 0:18:59.640 --> 0:19:01.840 trying to dude. We're trying to onshore a lot of 0:19:01.880 --> 0:19:04.399 the production well on shore, a lot of the supply 0:19:04.520 --> 0:19:07.720 chain in the US in hopes of braining costs down 0:19:08.320 --> 0:19:13.359 so automakers can offer more affordable evs. And that's what 0:19:13.440 --> 0:19:18.240 we were expecting. We were actually expecting the EV penetration 0:19:18.400 --> 0:19:21.960 rate to rise, especially into twenty twenty six and twenty 0:19:22.000 --> 0:19:22.520 twenty seven. 0:19:23.920 --> 0:19:25.320 I got to break in here because I feel like, 0:19:25.640 --> 0:19:29.040 you know, Americans have shown a propensity for taking one 0:19:29.080 --> 0:19:31.879 thousand dollars plus monthly payments. I don't think it's about 0:19:31.880 --> 0:19:36.200 the price. Frankly, what do you are that's the big problem. 0:19:36.280 --> 0:19:39.679 I'm test driving right now at GMC Sierra EV. It 0:19:39.760 --> 0:19:43.399 is a fantastic vehicle. It's expensive, but I think a 0:19:43.400 --> 0:19:45.560 lot of people are willing to take on debt to 0:19:45.560 --> 0:19:46.320 own a car like that. 0:19:46.400 --> 0:19:48.399 The problem is there's nowhere to charge it. 0:19:48.440 --> 0:19:50.959 I park in a garage across the street in Manhattan, 0:19:51.000 --> 0:19:53.919 you know, capital of the world, and the only option 0:19:54.000 --> 0:19:57.080 they offer is the slowest potential charge for twenty dollars 0:19:57.160 --> 0:19:57.480 a day. 0:19:57.520 --> 0:19:58.680 So it's just not worth it. 0:19:59.400 --> 0:20:02.320 Yeah, think that's a very good point. Affordabuild. It is 0:20:02.359 --> 0:20:05.639 not the only hurdle. It's the charging and the range, 0:20:06.000 --> 0:20:08.960 and you know, depending on the use, I think a 0:20:08.960 --> 0:20:11.119 lot of people with the second vehicle may may get 0:20:11.200 --> 0:20:15.480 an EV. Uh, someone who's using it for daily commutes 0:20:15.640 --> 0:20:18.360 make an EV. But you know, America is a big 0:20:18.400 --> 0:20:21.640 country and people love to drive cars, and there are 0:20:22.920 --> 0:20:27.399 a big majority of car buyers that are you know, 0:20:27.640 --> 0:20:30.399 are you know, probably staying away from EV. 0:20:30.560 --> 0:20:31.240 Because of that? 0:20:31.440 --> 0:20:34.800 All right, Steve, great update, We got to hang out man. 0:20:35.040 --> 0:20:36.400 I need to talk to you a little bit more. 0:20:36.440 --> 0:20:39.720 Steve Man there Bloomberg Intelligence, Global Autos and Industrial. 0:20:39.280 --> 0:20:40.920