1
00:00:00,520 --> 00:00:03,880
Speaker 1: This is Dana Perkins and you're listening to Switched on

2
00:00:04,240 --> 00:00:07,480
Speaker 1: the BNAF podcast, and today we're going to talk about

3
00:00:07,520 --> 00:00:11,360
Speaker 1: electric vehicles in all their shapes and sizes and focus

4
00:00:11,400 --> 00:00:15,200
Speaker 1: on one of our flagship reports, the Electric Vehicle Outlook.

5
00:00:15,480 --> 00:00:17,480
Speaker 1: We do this one every year, and in true ben

6
00:00:17,600 --> 00:00:20,040
Speaker 1: f fashion, we add a few new things to consider

7
00:00:20,079 --> 00:00:23,040
Speaker 1: each time we approach the topic, and we revisit some

8
00:00:23,239 --> 00:00:26,560
Speaker 1: lingering questions in the industry, so hopefully we'll be able

9
00:00:26,600 --> 00:00:28,800
Speaker 1: to clear up a few things for you today. The

10
00:00:28,880 --> 00:00:31,640
Speaker 1: team in the report look out to twenty thirty, in

11
00:00:31,680 --> 00:00:34,440
Speaker 1: some cases twenty forty or all the way out to

12
00:00:34,479 --> 00:00:37,959
Speaker 1: twenty fifty, depending upon the topic. In regions like the US,

13
00:00:38,080 --> 00:00:40,960
Speaker 1: this last year brought a cooling in demand for electric

14
00:00:41,000 --> 00:00:45,760
Speaker 1: passenger vehicles, but overall globally adoption is rising. And then

15
00:00:45,840 --> 00:00:49,320
Speaker 1: there are commercial vehicles which had another record breaking year,

16
00:00:49,400 --> 00:00:52,640
Speaker 1: and don't forget about buses and three wheelers, which seem

17
00:00:52,760 --> 00:00:56,440
Speaker 1: particularly well suited to electrification when we look at adoption

18
00:00:56,640 --> 00:00:59,400
Speaker 1: around the world. In the report, they get into the

19
00:00:59,440 --> 00:01:03,200
Speaker 1: electricicak of transport, but the conversation is not limited to

20
00:01:03,480 --> 00:01:07,160
Speaker 1: just evs. What does this mean for fuel cells and hybrids?

21
00:01:07,200 --> 00:01:09,920
Speaker 1: And then of course there are the fuel sources. They

22
00:01:09,959 --> 00:01:12,880
Speaker 1: look at things like electricity and oil demand and how

23
00:01:12,880 --> 00:01:16,119
Speaker 1: these could be impacted, along with battery metals which are

24
00:01:16,160 --> 00:01:19,560
Speaker 1: required to make the battery packs for the electric vehicles.

25
00:01:19,880 --> 00:01:22,880
Speaker 1: And overall, what's the point if we don't also look

26
00:01:22,880 --> 00:01:25,880
Speaker 1: at this in terms of the impact on CO two emissions.

27
00:01:26,319 --> 00:01:29,760
Speaker 1: Today we'll hear from Colin Mcerricer, head of Advanced Transport

28
00:01:29,840 --> 00:01:32,960
Speaker 1: and Energy Storage at BNF, and he's joined by Head

29
00:01:32,959 --> 00:01:37,240
Speaker 1: of Electric Vehicles, Alexandra O'Donovan. The Electric Vehicle Outlook or

30
00:01:37,520 --> 00:01:40,800
Speaker 1: EVO report for short, can be found at BNF on

31
00:01:40,800 --> 00:01:44,160
Speaker 1: the Bloomberg terminal, or at BNF dot com for our clients.

32
00:01:44,440 --> 00:01:46,240
Speaker 1: If you're not yet a client, you can see the

33
00:01:46,280 --> 00:01:49,640
Speaker 1: executive summary and some great bits of data at about

34
00:01:49,720 --> 00:01:55,840
Speaker 1: dot BNF dot com forward slash Electric Dash Vehicle Dash Outlook.

35
00:01:56,240 --> 00:01:58,800
Speaker 1: You can also find it in the show notes. Right now, though,

36
00:01:58,880 --> 00:02:02,680
Speaker 1: let's jump into our conversation with Colin and Alex about

37
00:02:02,720 --> 00:02:04,800
Speaker 1: some of the things that stood out to them in

38
00:02:04,840 --> 00:02:17,080
Speaker 1: this year's Electric Vehicle Outlook. Alex, welcome to switched on,

39
00:02:17,680 --> 00:02:20,960
Speaker 1: Welcome to I Know, and Colin, thank you for coming back.

40
00:02:21,240 --> 00:02:22,880
Speaker 2: Great to be back on the program, We're going.

41
00:02:22,880 --> 00:02:25,880
Speaker 1: To talk about the long term electric Vehicle Outlook from

42
00:02:25,880 --> 00:02:28,640
Speaker 1: your teams today, and there's no way we're going to

43
00:02:28,639 --> 00:02:31,400
Speaker 1: be able to get through absolutely everything. It's such a

44
00:02:31,720 --> 00:02:34,720
Speaker 1: comprehensive report. When we think about the future of the

45
00:02:34,880 --> 00:02:39,120
Speaker 1: electric vehicle space, I mean and everything from passenger to commercial,

46
00:02:39,160 --> 00:02:41,640
Speaker 1: to three wheelers, to batteries to oil demand. There's so

47
00:02:41,639 --> 00:02:43,560
Speaker 1: many different things we can go into. So as we

48
00:02:43,720 --> 00:02:46,839
Speaker 1: think about the different highlights that we want to touch upon,

49
00:02:46,919 --> 00:02:49,200
Speaker 1: and probably the questions I should be asking in the

50
00:02:49,240 --> 00:02:52,840
Speaker 1: next couple of minutes, can we start with this outlook?

51
00:02:52,960 --> 00:02:55,160
Speaker 1: And really, you know, why do we do it? And

52
00:02:55,200 --> 00:02:56,840
Speaker 1: how far in the future are we looking.

53
00:02:57,200 --> 00:02:59,480
Speaker 2: So we've been doing this for a decade now and

54
00:02:59,639 --> 00:03:01,800
Speaker 2: the idea idea is to pull together all of the

55
00:03:01,880 --> 00:03:04,040
Speaker 2: threads of different bits of research that we do. So

56
00:03:04,080 --> 00:03:06,239
Speaker 2: our team at Bloomberg ENIF publishes a huge amount of

57
00:03:06,280 --> 00:03:09,120
Speaker 2: data sets and research reports about what's going on in

58
00:03:09,200 --> 00:03:12,880
Speaker 2: road transport and particularly around the decarbonization of road transport,

59
00:03:12,880 --> 00:03:15,160
Speaker 2: and we have various teams covering that. What we try

60
00:03:15,160 --> 00:03:16,880
Speaker 2: and do with the Electric Vehicle Outlook is take all

61
00:03:16,880 --> 00:03:20,000
Speaker 2: those different threads and pull it together. And even despite

62
00:03:20,040 --> 00:03:22,000
Speaker 2: the name being the Electric Vehicle out Look, it's actually

63
00:03:22,000 --> 00:03:24,160
Speaker 2: an outlook for all of road transport. So we're looking

64
00:03:24,160 --> 00:03:26,760
Speaker 2: at trends around electrification. Certainly that's one of the big

65
00:03:26,880 --> 00:03:30,760
Speaker 2: vectors of change in the passenger vehicle market, and commercial

66
00:03:30,840 --> 00:03:32,760
Speaker 2: vehicles and two and three wheelers as well, but we're

67
00:03:32,760 --> 00:03:36,840
Speaker 2: also looking at shared mobility and autonomous driving or urbanization

68
00:03:36,960 --> 00:03:39,680
Speaker 2: and changing driving patterns, all these sorts of things that

69
00:03:39,720 --> 00:03:42,440
Speaker 2: come together to shape the way people and goods move.

70
00:03:42,680 --> 00:03:44,560
Speaker 2: So in doing it for a decade, we've refined it

71
00:03:44,600 --> 00:03:47,480
Speaker 2: a lot. We've added more segments, we've added more countries.

72
00:03:47,560 --> 00:03:49,920
Speaker 2: Each year we try and add more detail into the outlook.

73
00:03:50,080 --> 00:03:53,320
Speaker 2: The timeframe goes out to twenty forty for most of it,

74
00:03:53,360 --> 00:03:55,720
Speaker 2: but for some of the climate scenario stuff where we're

75
00:03:55,720 --> 00:03:58,240
Speaker 2: trying to look at net zero and these broader climate

76
00:03:58,280 --> 00:04:01,440
Speaker 2: targets that countries and companies have put in place, that

77
00:04:01,480 --> 00:04:03,520
Speaker 2: goes out to twenty fifty. Though there's a lot of

78
00:04:03,560 --> 00:04:05,960
Speaker 2: analysis about the near term too. The twenty twenties are

79
00:04:06,000 --> 00:04:08,000
Speaker 2: going to be critical for keeping any of this stuff

80
00:04:08,040 --> 00:04:10,520
Speaker 2: on track, and there's really interesting things things happening in

81
00:04:10,520 --> 00:04:14,320
Speaker 2: the near term. So while it does have a longer timeframe.

82
00:04:14,400 --> 00:04:16,560
Speaker 2: It also has a lot of near term detail as well.

83
00:04:17,000 --> 00:04:18,919
Speaker 1: Now you reference it every year, we look to improve

84
00:04:18,960 --> 00:04:21,360
Speaker 1: it a little bit more invariably that people who are

85
00:04:21,360 --> 00:04:24,440
Speaker 1: actually writing this report are really intellectually engaged with the

86
00:04:24,440 --> 00:04:26,920
Speaker 1: subject matter. But for this year, what's new? What were

87
00:04:26,960 --> 00:04:28,760
Speaker 1: the things that your team came up with that they

88
00:04:28,760 --> 00:04:30,280
Speaker 1: wanted to explore in more detail.

89
00:04:30,480 --> 00:04:32,440
Speaker 2: Yeah. The first one is I mentioned we add some

90
00:04:32,520 --> 00:04:34,560
Speaker 2: new countries. So the big one that we added this

91
00:04:34,640 --> 00:04:36,920
Speaker 2: year was Brazil. So we're seeing a lot of interesting

92
00:04:36,960 --> 00:04:40,880
Speaker 2: activity in Brazil. There's not only is there interest in

93
00:04:41,000 --> 00:04:44,120
Speaker 2: electric vehicles and some Chinese manufacturers setting up in Brazil,

94
00:04:44,120 --> 00:04:46,960
Speaker 2: but there's also this really interesting dynamic there with ethanol too.

95
00:04:47,040 --> 00:04:49,440
Speaker 2: So a big part of the transport mix includes ethanol,

96
00:04:49,520 --> 00:04:51,240
Speaker 2: and so the dynamics of that market are a little

97
00:04:51,279 --> 00:04:53,520
Speaker 2: bit different. It's a big emerging economy. We wanted to

98
00:04:53,560 --> 00:04:55,720
Speaker 2: try and cover that and see sort of how that's going.

99
00:04:55,760 --> 00:04:57,479
Speaker 2: So we added Brazil to the mix this year of

100
00:04:57,520 --> 00:05:00,240
Speaker 2: core countries, so we now cover the fourteenth biggest auto

101
00:05:00,240 --> 00:05:02,360
Speaker 2: markets in the world really, and then also we added

102
00:05:02,360 --> 00:05:04,640
Speaker 2: a new Tier two country approach, so we said, look,

103
00:05:04,680 --> 00:05:06,680
Speaker 2: there's the core markets we model, what about all the

104
00:05:06,680 --> 00:05:09,400
Speaker 2: other smaller markets, can we do a more generic modeling

105
00:05:09,440 --> 00:05:11,919
Speaker 2: exercise for them, So we did that as well, and

106
00:05:11,960 --> 00:05:14,440
Speaker 2: that covers all of the EU and the FTA countries.

107
00:05:14,600 --> 00:05:16,440
Speaker 2: So then we've also added a lot more detail on

108
00:05:16,480 --> 00:05:19,120
Speaker 2: some of the other vehicle types, so things like hybrids

109
00:05:19,160 --> 00:05:22,440
Speaker 2: and compressed natural gas vehicles. Those compress natural gas vehicles

110
00:05:22,440 --> 00:05:24,240
Speaker 2: are taken off actually in India, which is quite an

111
00:05:24,240 --> 00:05:26,599
Speaker 2: interesting market, about half a million of them sold last year.

112
00:05:26,760 --> 00:05:30,599
Speaker 2: More details on China on the heavy truck side, so

113
00:05:30,640 --> 00:05:33,920
Speaker 2: we're seeing some really interesting activity going on on electric

114
00:05:33,960 --> 00:05:36,919
Speaker 2: heavy trucks and fuel cell trucks in China, and not

115
00:05:37,120 --> 00:05:40,559
Speaker 2: just regular plug in trucks, but also battery swappable heavy trucks,

116
00:05:40,560 --> 00:05:42,040
Speaker 2: so we wanted to add some more detail on that.

117
00:05:42,279 --> 00:05:45,000
Speaker 2: And then we updated and sort of refined all of

118
00:05:45,040 --> 00:05:49,240
Speaker 2: our battery chemistry forecasts going into different vehicle segments, and

119
00:05:49,320 --> 00:05:52,080
Speaker 2: in particular, there's one chemistry that's really winning. We can

120
00:05:52,120 --> 00:05:54,200
Speaker 2: talk about that a bit later, but that's changing the

121
00:05:54,240 --> 00:05:56,600
Speaker 2: demand outlook for some of the raw materials that are

122
00:05:56,600 --> 00:05:59,559
Speaker 2: going into batteries as well. And then lastly we've also

123
00:06:00,120 --> 00:06:03,760
Speaker 2: updated our investment needs to deliver all of this, so

124
00:06:03,839 --> 00:06:06,560
Speaker 2: looking at how much investment needs to flow into the

125
00:06:06,600 --> 00:06:09,960
Speaker 2: battery materials and refining side as well as the battery

126
00:06:10,000 --> 00:06:13,360
Speaker 2: manufacturing side too, and then we've done some more granular

127
00:06:13,400 --> 00:06:16,400
Speaker 2: work on electricity demand and charging infrastructure needs in each

128
00:06:16,440 --> 00:06:17,479
Speaker 2: one of the regions that we cover.

129
00:06:17,800 --> 00:06:20,039
Speaker 1: Now we talk about the energy transition on this show

130
00:06:20,279 --> 00:06:24,360
Speaker 1: all the time, every week, and oftentimes the industries that

131
00:06:24,480 --> 00:06:27,680
Speaker 1: we're talking about are things that actually feel really far

132
00:06:27,839 --> 00:06:31,279
Speaker 1: away from your everyday person. And my theory is that

133
00:06:31,320 --> 00:06:33,560
Speaker 1: when I talk to people who are actually not working

134
00:06:33,600 --> 00:06:36,040
Speaker 1: in this space and are not at our company as well,

135
00:06:36,320 --> 00:06:40,279
Speaker 1: they're really interested in the electric vehicle space almost immediately.

136
00:06:40,320 --> 00:06:42,039
Speaker 1: And I think that's because all of us have this

137
00:06:42,160 --> 00:06:45,840
Speaker 1: experience of getting in a car and moving ourselves around,

138
00:06:45,960 --> 00:06:48,279
Speaker 1: and it's the fact that it falls into the well

139
00:06:48,400 --> 00:06:51,599
Speaker 1: least the passenger vehicles fall into the consumer discretionary bucket

140
00:06:51,600 --> 00:06:54,080
Speaker 1: that makes it so tangible for so many people. So

141
00:06:54,160 --> 00:06:56,600
Speaker 1: let's start there. Let's start with this tangible part of

142
00:06:56,680 --> 00:06:59,560
Speaker 1: the market, which is passenger vehicles. Can you just give

143
00:06:59,560 --> 00:07:04,479
Speaker 1: me the headline on what last year held in terms

144
00:07:04,520 --> 00:07:08,000
Speaker 1: of progress, and you know, what's the benchmark that we

145
00:07:08,279 --> 00:07:10,480
Speaker 1: essentially are comparing next year to you know, how many

146
00:07:10,560 --> 00:07:11,440
Speaker 1: vehicles were sold.

147
00:07:11,960 --> 00:07:14,840
Speaker 3: I think to get a really good understanding of what

148
00:07:14,920 --> 00:07:17,520
Speaker 3: happened last year, we have to really go back to

149
00:07:17,560 --> 00:07:20,960
Speaker 3: twenty twenty one twenty twenty two, when passenger EV sales

150
00:07:21,000 --> 00:07:23,400
Speaker 3: were growing at an average one hundred percent or sixty

151
00:07:23,440 --> 00:07:27,240
Speaker 3: percent annually. So from that perspective, the thirty three percent

152
00:07:27,280 --> 00:07:30,400
Speaker 3: growth rate recorded in twenty twenty three really doesn't sound

153
00:07:30,440 --> 00:07:33,480
Speaker 3: like a record high year, which actually was so a

154
00:07:33,480 --> 00:07:35,800
Speaker 3: lot of the growth in the past years came on

155
00:07:35,800 --> 00:07:39,360
Speaker 3: the back of the virus COVID stimulus packages, fuel economy targets,

156
00:07:39,400 --> 00:07:42,840
Speaker 3: and the sort of associated era of new battery electric

157
00:07:42,880 --> 00:07:45,760
Speaker 3: vehicle models entering the market, and also in China, consumer

158
00:07:45,800 --> 00:07:49,880
Speaker 3: adoption taking over that policy driven demand. But that means

159
00:07:49,920 --> 00:07:53,280
Speaker 3: that some of the automakers like GM or Ford, counting

160
00:07:53,320 --> 00:07:57,000
Speaker 3: on that boom to continue uninterrupted, were likely overly ambitious

161
00:07:57,000 --> 00:07:59,120
Speaker 3: about their sales targets. So that's why towards the end

162
00:07:59,160 --> 00:08:01,760
Speaker 3: of twenty twenty three early twenty twenty four, the TV

163
00:08:01,840 --> 00:08:05,880
Speaker 3: market was dominated by those quite dramatic headlines about global

164
00:08:05,880 --> 00:08:09,280
Speaker 3: decline in EV sales below expectations. TV sales in reality

165
00:08:09,560 --> 00:08:12,400
Speaker 3: the twenty twenty three growth rate was in line with

166
00:08:12,440 --> 00:08:15,880
Speaker 3: what we expected, so in our previous long term Electric

167
00:08:16,000 --> 00:08:18,840
Speaker 3: Vehicle outlook, we called global annual growth rate to reach

168
00:08:18,920 --> 00:08:21,360
Speaker 3: roughly thirty four percent. It was thirty three percents, But

169
00:08:21,680 --> 00:08:23,760
Speaker 3: only because we called it doesn't mean that there isn't

170
00:08:23,760 --> 00:08:27,280
Speaker 3: a slowdown. The slowdwan is real in EV sales, but

171
00:08:27,320 --> 00:08:29,480
Speaker 3: it's just not the same everywhere in the world. So

172
00:08:29,560 --> 00:08:33,160
Speaker 3: countries like China, India, France, they are still showing healthy growth,

173
00:08:33,240 --> 00:08:35,480
Speaker 3: but the latest data from Germany or the US are

174
00:08:35,559 --> 00:08:38,320
Speaker 3: much more concerning. So in Germany the market is still

175
00:08:38,320 --> 00:08:41,040
Speaker 3: getting to grips with the abrupt end of EV subsidies

176
00:08:41,080 --> 00:08:44,720
Speaker 3: and late in December last year. In the US, lackluster

177
00:08:44,800 --> 00:08:48,800
Speaker 3: performance from Port and GM and aging EV lineup from Tesla,

178
00:08:48,920 --> 00:08:53,199
Speaker 3: and also the uncertainity around the outcome of the upcoming

179
00:08:53,240 --> 00:08:57,040
Speaker 3: presidential elections are keeping the marketmuted. So in our outlook

180
00:08:57,120 --> 00:08:59,320
Speaker 3: in the new term, EV sales continue to grow, but

181
00:08:59,360 --> 00:09:01,800
Speaker 3: that growth is much slower than what we've been used

182
00:09:01,840 --> 00:09:04,040
Speaker 3: to in previous years. So EV sales are set to

183
00:09:04,120 --> 00:09:06,480
Speaker 3: rise from the thirteen point nine million in twenty twenty

184
00:09:06,480 --> 00:09:09,560
Speaker 3: three to over thirty million by twenty twenty seven in

185
00:09:09,600 --> 00:09:12,320
Speaker 3: our base case scenario, and that means that in the

186
00:09:12,320 --> 00:09:14,559
Speaker 3: next four years the growth rate is an average twenty

187
00:09:14,600 --> 00:09:17,120
Speaker 3: one percent per year, and not sixty one percent that

188
00:09:17,440 --> 00:09:19,679
Speaker 3: was between twenty twenty and twenty twenty three. At the

189
00:09:19,720 --> 00:09:22,720
Speaker 3: same time, the TV share of global new passenger vehicle

190
00:09:22,760 --> 00:09:25,959
Speaker 3: sales jumps to thirty three percent by twenty twenty seven,

191
00:09:26,120 --> 00:09:29,480
Speaker 3: and only China and Europe really are above that global

192
00:09:29,559 --> 00:09:32,920
Speaker 3: average line by then. But just as with the slowdown,

193
00:09:32,960 --> 00:09:36,000
Speaker 3: which isn't uniform for all the countries, some countries are

194
00:09:36,000 --> 00:09:38,520
Speaker 3: growing much faster than that global average. So with many

195
00:09:38,600 --> 00:09:40,840
Speaker 3: new low cost EV models set for launch in the

196
00:09:40,880 --> 00:09:43,640
Speaker 3: next few years, some of the fastest growth rates that

197
00:09:44,240 --> 00:09:46,760
Speaker 3: we are recording right now in our outlook are actually

198
00:09:46,760 --> 00:09:49,199
Speaker 3: in those emerging economies. So EV sales are set to

199
00:09:49,280 --> 00:09:52,000
Speaker 3: quintupol in Brazil by twenty twenty seven and triple in

200
00:09:52,080 --> 00:09:54,600
Speaker 3: India by then. So, just to summarize, I think I

201
00:09:54,720 --> 00:09:57,240
Speaker 3: sort of disagree with some of the statements that the

202
00:09:57,280 --> 00:10:00,679
Speaker 3: demand for evs isn't there. Electric cars are still more

203
00:10:00,720 --> 00:10:04,160
Speaker 3: expensive to buy than combustion vehicles, and this is quite

204
00:10:04,160 --> 00:10:07,040
Speaker 3: an effective to terrent right now, especially in the environment

205
00:10:07,080 --> 00:10:09,880
Speaker 3: of high interest rates. But as consumers have proven time

206
00:10:09,920 --> 00:10:12,440
Speaker 3: and time again, I think when the price is right,

207
00:10:12,559 --> 00:10:15,880
Speaker 3: the demand is there. And what really is blocking evsls

208
00:10:15,880 --> 00:10:18,640
Speaker 3: at the moment is the lack of those affordable evs

209
00:10:18,679 --> 00:10:22,720
Speaker 3: across mass market segments. And another proof of consumers actual

210
00:10:22,800 --> 00:10:25,880
Speaker 3: real interest in evs. We're highlighting that in EVO this

211
00:10:26,000 --> 00:10:29,080
Speaker 3: year is actually comes out and in tracking the actual

212
00:10:29,120 --> 00:10:32,199
Speaker 3: bad vues. So in markets where evs are quite developed

213
00:10:32,600 --> 00:10:35,080
Speaker 3: have a strong foothold, there's a growing evidence that they

214
00:10:35,080 --> 00:10:38,400
Speaker 3: are winning over those most active drivers, so professional drivers.

215
00:10:38,440 --> 00:10:40,840
Speaker 3: And actually it looks that in some of those countries

216
00:10:40,960 --> 00:10:44,680
Speaker 3: matter election, vehicles are driving way more than combustion vehicles

217
00:10:44,760 --> 00:10:46,920
Speaker 3: in China, in Netherlands that can be up to sixty

218
00:10:46,960 --> 00:10:49,920
Speaker 3: percent more than combustion vehicles. So I think the overall

219
00:10:49,960 --> 00:10:53,120
Speaker 3: message here is that high usage of evs among working

220
00:10:53,200 --> 00:10:55,680
Speaker 3: drivers is really a strong signal to us that these

221
00:10:55,760 --> 00:10:57,120
Speaker 3: vehicles are in demand.

222
00:10:57,640 --> 00:11:00,440
Speaker 2: So this year, as I said, roughly twenty percent of

223
00:11:00,440 --> 00:11:02,599
Speaker 2: global car sales will be plug in. So that's a

224
00:11:02,640 --> 00:11:04,640
Speaker 2: pretty remarkable jump from just a few years ago. So

225
00:11:04,679 --> 00:11:06,800
Speaker 2: one in five cars sold this year will be will

226
00:11:06,840 --> 00:11:09,000
Speaker 2: be a plug in, And there's some countries further ahead

227
00:11:09,000 --> 00:11:11,040
Speaker 2: and further behind, and about four percent of all the

228
00:11:11,040 --> 00:11:13,080
Speaker 2: cars on the road in the world will be electric

229
00:11:13,120 --> 00:11:15,040
Speaker 2: vehicles this year, so one in twenty five cars in

230
00:11:15,080 --> 00:11:17,720
Speaker 2: the world. That fleet turnover takes time, but it is

231
00:11:17,800 --> 00:11:20,760
Speaker 2: it is happening, and so I think our view is

232
00:11:20,760 --> 00:11:22,760
Speaker 2: one of sort of cautious optimism that, yeah, there have

233
00:11:22,840 --> 00:11:24,960
Speaker 2: been some headwinds, the growth rate is slowing, but the

234
00:11:25,000 --> 00:11:28,080
Speaker 2: product is still getting better and consumers who use them

235
00:11:28,120 --> 00:11:30,640
Speaker 2: are still generally happy with them. So I think that

236
00:11:30,720 --> 00:11:33,240
Speaker 2: kind of underpins if there's a bit of a tension

237
00:11:33,240 --> 00:11:35,800
Speaker 2: between the near term slow down and the long term

238
00:11:35,840 --> 00:11:38,200
Speaker 2: writer outlook that Alex was sort of talking about there.

239
00:11:38,240 --> 00:11:41,360
Speaker 2: That's kind of what's driving our optimism that that is

240
00:11:41,520 --> 00:11:43,320
Speaker 2: that the trend isn't being derailed by some of this

241
00:11:43,400 --> 00:11:45,560
Speaker 2: near term stuff. It's more just this is naturally what

242
00:11:45,600 --> 00:11:47,680
Speaker 2: happens as industry is mature and get larger, the growth

243
00:11:47,760 --> 00:11:48,959
Speaker 2: rate tends to slow down a little.

244
00:11:49,200 --> 00:11:51,800
Speaker 1: So at one point it seemed like every car company

245
00:11:52,200 --> 00:11:56,680
Speaker 1: was making a battery electric vehicle, and you know, this

246
00:11:56,840 --> 00:11:59,160
Speaker 1: was becoming a very crowded space. But actually there have

247
00:11:59,200 --> 00:12:02,319
Speaker 1: only been a few companies that have been really truly

248
00:12:02,440 --> 00:12:05,559
Speaker 1: successful and in many respects are dominating the market. Can

249
00:12:05,600 --> 00:12:07,760
Speaker 1: you talk a little bit about who you would see

250
00:12:07,760 --> 00:12:10,960
Speaker 1: those companies to be and also kind of what it

251
00:12:11,080 --> 00:12:16,280
Speaker 1: takes to be kind of synonymous with electric vehicle companies

252
00:12:16,640 --> 00:12:18,520
Speaker 1: in various parts of the world.

253
00:12:18,800 --> 00:12:22,880
Speaker 2: There's definitely sort of two tiers of automakers emerging. There's

254
00:12:22,880 --> 00:12:25,560
Speaker 2: some of them that have winning models that are selling

255
00:12:25,600 --> 00:12:28,400
Speaker 2: in real volume, and there's others that have launched evs

256
00:12:28,440 --> 00:12:30,800
Speaker 2: but they're just not really at the right price point,

257
00:12:30,840 --> 00:12:32,800
Speaker 2: the right range, or the right feature set to be

258
00:12:32,840 --> 00:12:35,080
Speaker 2: able to sell in volume, and volume is really critical

259
00:12:35,080 --> 00:12:36,960
Speaker 2: of course for getting costs down. You need to be

260
00:12:37,040 --> 00:12:39,400
Speaker 2: sort of in one hundred thousand vehicles a year and

261
00:12:39,520 --> 00:12:41,520
Speaker 2: up to sort of get that economies of scale that

262
00:12:41,559 --> 00:12:44,000
Speaker 2: you need to make the economics of making vehicles really work.

263
00:12:44,040 --> 00:12:46,560
Speaker 2: And not all automakers across that there's generally a bit

264
00:12:46,559 --> 00:12:49,640
Speaker 2: of a divide between those who have built dedicated EV

265
00:12:49,880 --> 00:12:53,160
Speaker 2: architectures that they're building their models on rather than those

266
00:12:53,160 --> 00:12:56,600
Speaker 2: who are using modified architectures. Most of the automakers now

267
00:12:56,600 --> 00:12:59,400
Speaker 2: have a dedicated BEEV architecture, though they're at different stages

268
00:12:59,400 --> 00:13:01,120
Speaker 2: of scaling it up, and some of the models are

269
00:13:01,160 --> 00:13:04,200
Speaker 2: still on older architecture, so for example, forwards F one fifty,

270
00:13:04,400 --> 00:13:06,160
Speaker 2: there's been a lot of publicity about how bad the

271
00:13:06,160 --> 00:13:08,839
Speaker 2: economics of Fords EV division are that is still on

272
00:13:09,640 --> 00:13:12,240
Speaker 2: the traditional F one fifty platform, and they're not going

273
00:13:12,240 --> 00:13:14,520
Speaker 2: to have a dedicated EV platform out until next year

274
00:13:14,600 --> 00:13:17,959
Speaker 2: for larger trucks or twenty twenty six. So what we've

275
00:13:18,000 --> 00:13:20,240
Speaker 2: seen is that the companies that are pushing hard on

276
00:13:20,280 --> 00:13:22,959
Speaker 2: EV still are doing well. Byd is growing really quickly.

277
00:13:23,120 --> 00:13:25,600
Speaker 2: Tesla's growth has slowed down, which is notable, but it's

278
00:13:25,600 --> 00:13:29,439
Speaker 2: still a significant force and still the largest b EV seller,

279
00:13:29,559 --> 00:13:32,360
Speaker 2: just barely ahead of BID. Some of the other Chinese

280
00:13:32,360 --> 00:13:36,719
Speaker 2: manufacturers are doing well. Volvo is doing well, Hyundaikia are

281
00:13:36,720 --> 00:13:39,120
Speaker 2: doing well again. The groups that have jumped in with

282
00:13:39,160 --> 00:13:41,680
Speaker 2: both feet rather than sort of putting one toe into

283
00:13:41,679 --> 00:13:44,719
Speaker 2: it are generally still selling pretty well, though again it

284
00:13:44,800 --> 00:13:46,839
Speaker 2: varies by region and by brand.

285
00:13:47,160 --> 00:13:49,040
Speaker 3: I think one thing to add here as well is

286
00:13:49,240 --> 00:13:53,000
Speaker 3: that really those doing okay right now is automakers releasing

287
00:13:53,200 --> 00:13:56,080
Speaker 3: more affordable EV models to the market. So those that

288
00:13:56,280 --> 00:13:59,560
Speaker 3: really have the dedicated platforms have some economies of scale

289
00:14:00,080 --> 00:14:04,040
Speaker 3: can actually tempt consumers with affordable attractive ypiece.

290
00:14:04,240 --> 00:14:07,160
Speaker 1: Yeah, because you've mentioned this twice now, Alex, that electric

291
00:14:07,240 --> 00:14:11,560
Speaker 1: vehicles remain more expensive than internal combustion engine vehicles, and

292
00:14:12,000 --> 00:14:15,520
Speaker 1: that you know, potentially the early adopters who are willing

293
00:14:15,520 --> 00:14:19,240
Speaker 1: to pay that premium for the electric vehicle, they have

294
00:14:19,880 --> 00:14:22,040
Speaker 1: done it, and we might be reaching a saturation point

295
00:14:22,040 --> 00:14:24,760
Speaker 1: on those early adopters, and the cost competitiveness is going

296
00:14:24,840 --> 00:14:27,400
Speaker 1: to be the key to unlocking that next big jump

297
00:14:27,760 --> 00:14:31,400
Speaker 1: in adoption. So how close are we to getting electric

298
00:14:31,480 --> 00:14:36,160
Speaker 1: vehicles largely at parity or maybe someday less expensive than

299
00:14:36,200 --> 00:14:39,520
Speaker 1: internal combustion engines from a total cost of ownership standpoint?

300
00:14:40,400 --> 00:14:43,960
Speaker 3: Absolutely, So the biggest driver here is are obviously falling

301
00:14:44,000 --> 00:14:47,480
Speaker 3: battery prices, and we can chat about it in detail

302
00:14:47,600 --> 00:14:50,640
Speaker 3: in the moment, But when that up from price parity

303
00:14:50,720 --> 00:14:54,680
Speaker 3: will be reached really depends on how fast battery prices

304
00:14:54,680 --> 00:14:57,080
Speaker 3: will be falling, and it will also depend by the country,

305
00:14:57,120 --> 00:15:00,200
Speaker 3: the econtoms of scale of each of the automakers the

306
00:15:00,320 --> 00:15:05,000
Speaker 3: segment about which we're talking. But overall, with current battery

307
00:15:05,040 --> 00:15:08,240
Speaker 3: buck prices the clients that we're observing, we see that

308
00:15:08,600 --> 00:15:12,600
Speaker 3: up from price parity reached for most countries and most

309
00:15:12,680 --> 00:15:16,200
Speaker 3: vehicle segments in sort of flight twenty twenties, early twenty

310
00:15:16,280 --> 00:15:18,680
Speaker 3: thirties for most cars and segments.

311
00:15:19,000 --> 00:15:21,240
Speaker 1: Well, let's talk about batteries then, because there's a lot

312
00:15:21,320 --> 00:15:23,600
Speaker 1: going on in that space. So part of it has

313
00:15:23,640 --> 00:15:25,560
Speaker 1: to do with battery chemistries, and then part of it

314
00:15:25,600 --> 00:15:28,080
Speaker 1: has to do with where in the world they're manufactured

315
00:15:28,120 --> 00:15:30,120
Speaker 1: and the price is associated with that. But let's start

316
00:15:30,120 --> 00:15:32,280
Speaker 1: on the chemistry side of things. You know, what have

317
00:15:32,360 --> 00:15:34,880
Speaker 1: been the changes in battery chemistries because we know for

318
00:15:34,920 --> 00:15:38,640
Speaker 1: a long time different companies that were developing these batteries

319
00:15:38,640 --> 00:15:42,880
Speaker 1: were looking to increase range or reduce the dependence on

320
00:15:43,120 --> 00:15:46,560
Speaker 1: specific rare earth metals that had a specific cost or

321
00:15:46,600 --> 00:15:49,960
Speaker 1: refluctuating too much. What is happening to battery chemistries and

322
00:15:50,120 --> 00:15:54,560
Speaker 1: is it still actively changing? Are there developments there that

323
00:15:54,600 --> 00:15:56,520
Speaker 1: have the potential to really disrupt the market.

324
00:15:56,720 --> 00:15:59,160
Speaker 2: Yeah, there's definitely very interesting changes going on in this

325
00:15:59,240 --> 00:16:02,120
Speaker 2: market right now. So what you're seeing is that lithium

326
00:16:02,120 --> 00:16:05,320
Speaker 2: iron phosphate batteries, which contain no nickel or cobalt or manganese,

327
00:16:05,360 --> 00:16:07,960
Speaker 2: are taking over a larger and larger share of both

328
00:16:08,000 --> 00:16:10,240
Speaker 2: the EV market and the stationary storage market. They've already

329
00:16:10,240 --> 00:16:12,760
Speaker 2: got a very highest share in stationary storage also in

330
00:16:12,800 --> 00:16:14,920
Speaker 2: the bus market. What you're seeing now is they're taking

331
00:16:14,960 --> 00:16:18,200
Speaker 2: over the passenger vehicle market. Most of the Chinese manufacturers

332
00:16:18,400 --> 00:16:23,560
Speaker 2: prefer and use lithium iron phosphate batteries. They are generally cheaper,

333
00:16:23,840 --> 00:16:26,400
Speaker 2: they're very stable. The main thing is their energy density

334
00:16:26,480 --> 00:16:29,000
Speaker 2: is not as good as the NMC family nickel manganese

335
00:16:29,000 --> 00:16:31,560
Speaker 2: cobalt family of battery chemistries. So what you've seen over

336
00:16:31,560 --> 00:16:34,200
Speaker 2: the last couple of years is that LFP is gaining

337
00:16:34,240 --> 00:16:36,880
Speaker 2: a larger and larger share of that battery market, and

338
00:16:36,880 --> 00:16:39,440
Speaker 2: it's getting quite close to fifty percent of the global market,

339
00:16:39,480 --> 00:16:41,120
Speaker 2: and we think it's going to cross over that sometime

340
00:16:41,160 --> 00:16:43,640
Speaker 2: in the next eighteen months or so. And that's because

341
00:16:43,640 --> 00:16:45,760
Speaker 2: everyone's looking at trying to cut costs, and this is

342
00:16:45,800 --> 00:16:48,840
Speaker 2: the chemistry where we've seen the biggest, most significant cost declients.

343
00:16:49,000 --> 00:16:51,960
Speaker 2: So that's kind of what's happening in the passenger vehicle market.

344
00:16:52,000 --> 00:16:54,520
Speaker 2: The commercial vehicle market it's also happening as well, so

345
00:16:54,760 --> 00:16:56,320
Speaker 2: you see more and more of a shift to LFP,

346
00:16:56,640 --> 00:16:59,240
Speaker 2: again mostly for cost reasons, but also it's very stable

347
00:16:59,240 --> 00:17:03,120
Speaker 2: and the performances quite reliable, so that's really changing the

348
00:17:03,200 --> 00:17:05,800
Speaker 2: demand outlook for some of these raw materials that go

349
00:17:05,880 --> 00:17:09,000
Speaker 2: into the batteries. So we have steadily reduced the forecast

350
00:17:09,200 --> 00:17:12,080
Speaker 2: for the share or the amount of cobalt, nickel, and

351
00:17:12,119 --> 00:17:14,440
Speaker 2: manganese that you're going to need to deliver all these batteries.

352
00:17:14,480 --> 00:17:16,440
Speaker 2: That's been a steady thing that we've reduced over the

353
00:17:16,520 --> 00:17:18,840
Speaker 2: last few years. As this share has risen, we may

354
00:17:18,880 --> 00:17:20,679
Speaker 2: have to reduce it further in the future. But I

355
00:17:20,720 --> 00:17:24,120
Speaker 2: think what's important here is is that there are all

356
00:17:24,119 --> 00:17:27,440
Speaker 2: these different chemistries that you can make batteries with different

357
00:17:27,440 --> 00:17:30,200
Speaker 2: cathode chemistries, and you now have sort of a stable

358
00:17:30,280 --> 00:17:33,280
Speaker 2: of them out there, and if raw material prices for

359
00:17:33,320 --> 00:17:35,240
Speaker 2: one thing or another go way up or way down,

360
00:17:35,400 --> 00:17:37,560
Speaker 2: then you see some substitution effect. And part of what

361
00:17:37,600 --> 00:17:39,520
Speaker 2: you're seeing with this rise of LFP is because a

362
00:17:39,560 --> 00:17:41,159
Speaker 2: few years ago there was a spike in nickel and

363
00:17:41,200 --> 00:17:43,280
Speaker 2: cobalt prices and people were all of a sudden very

364
00:17:43,280 --> 00:17:45,400
Speaker 2: worried that that was going to derail the cost declines

365
00:17:45,400 --> 00:17:47,399
Speaker 2: and evs in batteries. And what you saw as the

366
00:17:47,400 --> 00:17:50,280
Speaker 2: market just responded and shifted more towards the lower cost chemistry.

367
00:17:50,359 --> 00:17:52,080
Speaker 2: You may get a similar effect in the future with

368
00:17:52,119 --> 00:17:54,280
Speaker 2: sodium ion batteries. We're starting to see the first of

369
00:17:54,320 --> 00:17:57,159
Speaker 2: those being produced. It's pretty small scale for now, so

370
00:17:57,240 --> 00:17:59,639
Speaker 2: the market is still very exposed to lithium. All the

371
00:17:59,680 --> 00:18:02,560
Speaker 2: battery chemistries that we have at scale now still depend

372
00:18:02,600 --> 00:18:04,639
Speaker 2: on lithium. But again, I think it just sort of

373
00:18:04,680 --> 00:18:07,080
Speaker 2: highlights how markets respond to things. You get a spike,

374
00:18:07,200 --> 00:18:09,720
Speaker 2: people don't just reduce in price. They don't just reduce

375
00:18:09,720 --> 00:18:12,119
Speaker 2: demand and bring on more supply. They look at substitution,

376
00:18:12,359 --> 00:18:14,520
Speaker 2: and substitution is something that you can now do to

377
00:18:14,680 --> 00:18:17,119
Speaker 2: some degree within the battery market. So that's something we've

378
00:18:17,160 --> 00:18:18,800
Speaker 2: been watching for a while and it's kind of picking

379
00:18:18,840 --> 00:18:19,600
Speaker 2: up speed right now.

380
00:18:19,920 --> 00:18:22,480
Speaker 1: So since you had brought up China, their role in

381
00:18:22,480 --> 00:18:26,240
Speaker 1: the battery space is really important. They are definitely a

382
00:18:26,359 --> 00:18:29,960
Speaker 1: dominant producer from the manufacturing end of batteries used both

383
00:18:29,960 --> 00:18:34,000
Speaker 1: for vehicles and for stationary storage and other applications. So

384
00:18:34,040 --> 00:18:37,720
Speaker 1: on the battery side, battery prices in China have really fallen.

385
00:18:37,840 --> 00:18:40,480
Speaker 1: We discussed this in an earlier episode of this show,

386
00:18:40,720 --> 00:18:45,560
Speaker 1: and there is some concern around overcapacity ultimately leading to

387
00:18:45,880 --> 00:18:49,359
Speaker 1: dumping like we've seen solar industry. So what's happening with

388
00:18:49,400 --> 00:18:52,719
Speaker 1: battery prices, specifically as it relates to Chinese production.

389
00:18:53,040 --> 00:18:56,119
Speaker 2: Yeah, so battery prices in China are really plummeting. So

390
00:18:56,200 --> 00:18:58,720
Speaker 2: just to kind of give an idea, when we did

391
00:18:58,720 --> 00:19:02,160
Speaker 2: our battery price serve last year, globally, the average price

392
00:19:02,160 --> 00:19:05,120
Speaker 2: of a lithium iron phosphate battery cell was in the nineties.

393
00:19:05,280 --> 00:19:09,440
Speaker 2: So far January to May, in China, the average cell

394
00:19:09,480 --> 00:19:12,160
Speaker 2: price is fifty four dollars per kill one hour. We've

395
00:19:12,200 --> 00:19:14,479
Speaker 2: seen it even dip below fifty in some months. So

396
00:19:14,520 --> 00:19:17,600
Speaker 2: that's a huge, huge drop. And so what's driving that.

397
00:19:17,720 --> 00:19:20,000
Speaker 2: One of them is lower raw material prices than in

398
00:19:20,040 --> 00:19:23,240
Speaker 2: previous years. Another one is over capacity. So we have

399
00:19:23,320 --> 00:19:26,080
Speaker 2: seen significantly more capacity being built than there is demand

400
00:19:26,160 --> 00:19:30,600
Speaker 2: for total Chinese battery production last year was more than

401
00:19:30,640 --> 00:19:32,800
Speaker 2: global demand. So that's just to give an idea of

402
00:19:32,800 --> 00:19:35,440
Speaker 2: the scale of overcapacity, and there's a lot more capacity

403
00:19:35,480 --> 00:19:38,720
Speaker 2: coming online in the next few years. Sometimes see this

404
00:19:38,760 --> 00:19:41,880
Speaker 2: oversimplified as this is all just over capacity and everyone's dumping.

405
00:19:42,160 --> 00:19:44,280
Speaker 2: If you look at the margins of the battery makers,

406
00:19:44,280 --> 00:19:46,560
Speaker 2: they're still making money. There has been a bit of

407
00:19:46,600 --> 00:19:49,280
Speaker 2: margin compression there, but if you sort of break out

408
00:19:49,320 --> 00:19:51,720
Speaker 2: all these different effects. What you kind of conclude is that, yes,

409
00:19:51,920 --> 00:19:54,720
Speaker 2: low material prices are playing a role, Yes over capacity

410
00:19:54,760 --> 00:19:57,200
Speaker 2: and cutthroat competition are playing a role, but there's also

411
00:19:57,240 --> 00:20:00,000
Speaker 2: still technology and process improvements going on in the manufactur

412
00:20:00,240 --> 00:20:02,200
Speaker 2: side that are helped driving down price. So it's kind

413
00:20:02,200 --> 00:20:04,560
Speaker 2: of all of these three factors that are playing a

414
00:20:04,640 --> 00:20:08,280
Speaker 2: role in China pushing down battery prices. One big sort

415
00:20:08,280 --> 00:20:11,200
Speaker 2: of open question we have is can anyone else really

416
00:20:11,200 --> 00:20:14,200
Speaker 2: compete with that? And one of the things that we've

417
00:20:14,320 --> 00:20:16,600
Speaker 2: were finding is that even when you factor in some

418
00:20:16,680 --> 00:20:19,080
Speaker 2: of the incentives that are in place in other countries

419
00:20:19,160 --> 00:20:22,080
Speaker 2: to try and encourage domestic production of batteries, it's not

420
00:20:22,480 --> 00:20:25,600
Speaker 2: entirely clear that an automaker in those countries wouldn't prefer

421
00:20:25,680 --> 00:20:28,440
Speaker 2: to just go with a Chinese battery anyway, because it's

422
00:20:28,600 --> 00:20:32,199
Speaker 2: so much cheaper, and because the manufacturers there are, to

423
00:20:32,240 --> 00:20:35,200
Speaker 2: put it lightly, they're really really good at it. They're

424
00:20:35,200 --> 00:20:37,920
Speaker 2: making high quality batteries at low cost in large volumes

425
00:20:37,960 --> 00:20:39,800
Speaker 2: day and day out, whereas some of the newer groups

426
00:20:39,840 --> 00:20:41,639
Speaker 2: that are trying to produce them in North America or

427
00:20:41,680 --> 00:20:44,400
Speaker 2: Europe are a little bit less tested. So that's something

428
00:20:44,400 --> 00:20:47,320
Speaker 2: we're watching very closely, is do the tariffs and incentives,

429
00:20:47,359 --> 00:20:49,440
Speaker 2: Do the protectionist measures that you're seeing in some of

430
00:20:49,480 --> 00:20:52,399
Speaker 2: these other countries offset the fact that China is doing really,

431
00:20:52,440 --> 00:20:55,200
Speaker 2: really well at hammering costs out of the battery supply chain.

432
00:20:55,359 --> 00:20:57,280
Speaker 2: So that's still an open question. It's going to play

433
00:20:57,280 --> 00:20:59,920
Speaker 2: out over the next few years. But certainly we are

434
00:21:00,080 --> 00:21:03,840
Speaker 2: seeing remarkably low battery prices in China, and it isn't

435
00:21:03,880 --> 00:21:07,360
Speaker 2: just from overcapacity, it isn't just from ow material price changes.

436
00:21:07,440 --> 00:21:10,359
Speaker 2: It is also showing that these companies are still pushing

437
00:21:10,359 --> 00:21:12,639
Speaker 2: hard to make the technology better and to improve the

438
00:21:12,680 --> 00:21:14,960
Speaker 2: process of manufacturing these I would say, I would just

439
00:21:14,960 --> 00:21:18,560
Speaker 2: summarize it as we're nowhere near the end of how

440
00:21:18,800 --> 00:21:21,879
Speaker 2: good battery technology can get. We're still in the early

441
00:21:21,920 --> 00:21:23,800
Speaker 2: going of this, and you are going to continue to

442
00:21:23,800 --> 00:21:25,960
Speaker 2: see improvements, not all of them in the same direction.

443
00:21:26,040 --> 00:21:28,200
Speaker 2: Some of them might be around cycle life, or some

444
00:21:28,240 --> 00:21:30,719
Speaker 2: of them might be around cost or energy density, but

445
00:21:31,000 --> 00:21:33,560
Speaker 2: a lot of these things are moving forward and there's

446
00:21:33,560 --> 00:21:35,000
Speaker 2: still a lot of room to run on how good

447
00:21:35,000 --> 00:21:36,040
Speaker 2: this technology can get.

448
00:21:36,200 --> 00:21:36,280
Speaker 3: Well.

449
00:21:36,320 --> 00:21:38,679
Speaker 1: And as we're talking about some of the policies that

450
00:21:38,760 --> 00:21:42,280
Speaker 1: actually play into the supply chains that are associated with

451
00:21:42,359 --> 00:21:44,600
Speaker 1: the batteries and where they're able to sell to. You

452
00:21:44,680 --> 00:21:47,399
Speaker 1: end up seeing in the US these tariffs that have

453
00:21:47,480 --> 00:21:50,960
Speaker 1: really restricted Chinese electric vehicle imports, and the EU is

454
00:21:51,040 --> 00:21:54,280
Speaker 1: making motions to do something similar. So are you expecting

455
00:21:54,320 --> 00:21:56,800
Speaker 1: to then see Well, you had already mentioned that it's

456
00:21:57,080 --> 00:22:00,440
Speaker 1: possible that the batteries may become much cheaper in China,

457
00:22:00,440 --> 00:22:02,600
Speaker 1: and therefore this may end up being a moot point,

458
00:22:02,600 --> 00:22:05,160
Speaker 1: but you can raise tariffs as far as you want

459
00:22:05,200 --> 00:22:09,280
Speaker 1: to go. So you then expecting to see more manufacturing

460
00:22:09,480 --> 00:22:12,600
Speaker 1: of batteries all around the world as a result of

461
00:22:12,640 --> 00:22:17,119
Speaker 1: policy intervention, And as an additional kind of question alongside that,

462
00:22:17,560 --> 00:22:19,879
Speaker 1: do we expect to see the same technologies or is

463
00:22:19,960 --> 00:22:24,560
Speaker 1: technology going to keep moving forward in China? And will

464
00:22:24,840 --> 00:22:28,200
Speaker 1: countries that have essentially established domestic manufacturing have to keep

465
00:22:28,240 --> 00:22:31,240
Speaker 1: pace with that level of technology innovation in order to

466
00:22:31,240 --> 00:22:33,080
Speaker 1: stay competitive the market.

467
00:22:33,160 --> 00:22:36,200
Speaker 2: The global auto market is becoming more fragmented. Right. It's

468
00:22:36,240 --> 00:22:39,280
Speaker 2: been a relatively free trade in auto products with some

469
00:22:39,359 --> 00:22:41,879
Speaker 2: exceptions over the last twenty years. Now you're starting to

470
00:22:41,920 --> 00:22:45,280
Speaker 2: see more tariffs and more protectionism, particularly around dvs and batteries.

471
00:22:45,280 --> 00:22:47,159
Speaker 2: Because this is you as the next generation for the

472
00:22:47,200 --> 00:22:49,440
Speaker 2: auto industry, and groups want to protect jobs and create

473
00:22:49,560 --> 00:22:52,480
Speaker 2: high value industries locally. That is going to have to

474
00:22:52,560 --> 00:22:56,400
Speaker 2: lead to more local manufacturing in many cases, because I mean,

475
00:22:56,560 --> 00:22:59,359
Speaker 2: if the tariffs are high enough, no one can can

476
00:22:59,480 --> 00:23:02,480
Speaker 2: import vehicles and sell them cost competitively. But I would

477
00:23:02,480 --> 00:23:05,320
Speaker 2: just say, the tariffs only protect things for so long.

478
00:23:05,440 --> 00:23:07,960
Speaker 2: So if you take the European example, Europe has just

479
00:23:08,320 --> 00:23:12,240
Speaker 2: implemented tariffs on Chinese made EV's, not just Chinese EV's

480
00:23:12,280 --> 00:23:15,119
Speaker 2: from Chinese brands, but Chinese made EV's also from Western

481
00:23:15,200 --> 00:23:17,679
Speaker 2: brands are hit by this as well. Those brands are

482
00:23:18,080 --> 00:23:20,200
Speaker 2: going to be pushed in some cases, not in all cases,

483
00:23:20,200 --> 00:23:22,240
Speaker 2: but to set up local manufacturing. And I think that's

484
00:23:22,400 --> 00:23:24,720
Speaker 2: what you will see. If the automakers that you're trying

485
00:23:24,760 --> 00:23:28,480
Speaker 2: to protect domestically don't use that window of opportunity wisely

486
00:23:28,600 --> 00:23:31,600
Speaker 2: to as Alex has said, launch cost competitive EV models,

487
00:23:31,640 --> 00:23:35,199
Speaker 2: then the tariffs won't protect them forever. They for one,

488
00:23:35,240 --> 00:23:37,480
Speaker 2: they don't apply in other markets that those countries that

489
00:23:37,560 --> 00:23:40,640
Speaker 2: those companies sell to, and they'll face very heavy competitive

490
00:23:40,640 --> 00:23:43,480
Speaker 2: pressure there. And for another, even in the domestic market

491
00:23:43,520 --> 00:23:46,400
Speaker 2: where they're being protected, it won't last forever. Because those

492
00:23:46,440 --> 00:23:48,719
Speaker 2: groups will set up there. And I think what you

493
00:23:48,760 --> 00:23:50,960
Speaker 2: are seeing right now is a shift towards much more

494
00:23:51,000 --> 00:23:53,720
Speaker 2: local supply chains. But I still think you have to

495
00:23:53,760 --> 00:23:56,960
Speaker 2: be competitive if you're going to appeal to consumers, right

496
00:23:57,160 --> 00:23:59,080
Speaker 2: you can't hide behind tariffs forever.

497
00:24:00,000 --> 00:24:02,400
Speaker 3: I think it's worth sort of thinking about our long

498
00:24:02,440 --> 00:24:05,320
Speaker 3: term outlook really, because you know, our long term outlook

499
00:24:05,400 --> 00:24:08,560
Speaker 3: is is bright. It's driven by those improving economics of

500
00:24:08,640 --> 00:24:12,320
Speaker 3: electric cars compared to combustion vehicles. And you know, by

501
00:24:12,440 --> 00:24:15,600
Speaker 3: by twenty thirty, evs rich reached forty five percent of

502
00:24:15,720 --> 00:24:18,400
Speaker 3: global pascenter vehicle sales in our outlook and seventy three

503
00:24:18,440 --> 00:24:21,520
Speaker 3: percent by twenty forty in our basic case scenarios. So

504
00:24:21,600 --> 00:24:25,760
Speaker 3: now China and Europe still continue to lead globally on

505
00:24:26,080 --> 00:24:30,000
Speaker 3: IV adoption, but in our scenarios by twenty forty, by

506
00:24:30,040 --> 00:24:33,600
Speaker 3: twenty fifty, Europe never really catches up with China in

507
00:24:33,640 --> 00:24:36,879
Speaker 3: EV adoption, in absolute in absolute sales. So that I

508
00:24:36,880 --> 00:24:39,560
Speaker 3: think should be really concerning because it really does look

509
00:24:39,560 --> 00:24:43,080
Speaker 3: as China is way ahead of Europe in technology development,

510
00:24:43,200 --> 00:24:46,639
Speaker 3: achieving economies of scale, and that is also such a

511
00:24:46,640 --> 00:24:48,960
Speaker 3: different picture than it was just a few years ago

512
00:24:49,240 --> 00:24:52,320
Speaker 3: in twenty twenty IV adoption in new car sales in

513
00:24:52,359 --> 00:24:55,920
Speaker 3: Europe was actually twice that of China. By twenty twenty one,

514
00:24:55,960 --> 00:25:00,199
Speaker 3: Europe still head around four percent points advantage over China,

515
00:25:00,240 --> 00:25:02,320
Speaker 3: but it lost it in twenty twenty two, and really,

516
00:25:02,320 --> 00:25:06,040
Speaker 3: in our outlook, never gets it back. So I think

517
00:25:06,240 --> 00:25:10,760
Speaker 3: introducing those punitive import tariffs on electric vehicles manufactured in

518
00:25:10,880 --> 00:25:13,800
Speaker 3: China could really impact adoption in Europe in the short

519
00:25:13,880 --> 00:25:16,920
Speaker 3: term by sort of limiting access to afford the bolivies.

520
00:25:17,200 --> 00:25:21,280
Speaker 3: And also while considering such tariffs, European automakers should also

521
00:25:21,320 --> 00:25:25,240
Speaker 3: consider that they do risk shielding domestic automakers from competition, right,

522
00:25:25,280 --> 00:25:28,240
Speaker 3: so they will not have that competitive pressure on them

523
00:25:28,280 --> 00:25:30,320
Speaker 3: to put to keep getting better.

524
00:25:30,600 --> 00:25:33,720
Speaker 1: So this adoption that we're seeing flattening off, you know,

525
00:25:33,800 --> 00:25:36,720
Speaker 1: still breaking records year after year, but not as great

526
00:25:36,760 --> 00:25:40,560
Speaker 1: as the year before, could increase if the companies themselves

527
00:25:40,560 --> 00:25:43,520
Speaker 1: are not maintaining competitiveness across the batteries, which are the

528
00:25:43,520 --> 00:25:45,439
Speaker 1: most expensive part of the electric vehicle.

529
00:25:45,760 --> 00:25:47,560
Speaker 3: Yeah, I think so. And then I think, you know,

530
00:25:47,640 --> 00:25:51,840
Speaker 3: like China really could be two evs to transition to

531
00:25:51,960 --> 00:25:55,960
Speaker 3: reaching climate goals. What Tesla was to kick starting that

532
00:25:56,080 --> 00:25:59,280
Speaker 3: EVA transition. So I really think that I would want

533
00:25:59,440 --> 00:26:03,840
Speaker 3: all the goal romants actually carefully consider how to benefit

534
00:26:04,000 --> 00:26:07,600
Speaker 3: from what China has to offer today to resual climate goals,

535
00:26:07,640 --> 00:26:11,399
Speaker 3: to accelerate transition, to stay competitive, rather than focusing on

536
00:26:11,480 --> 00:26:14,360
Speaker 3: sort of short term panealizing that progress.

537
00:26:14,960 --> 00:26:17,080
Speaker 2: The market that I'm actually a bit more concerned about

538
00:26:17,080 --> 00:26:18,600
Speaker 2: in the nerd term is probably the US. I think

539
00:26:18,600 --> 00:26:20,520
Speaker 2: things in Europe will be okay, where we still have

540
00:26:20,600 --> 00:26:23,760
Speaker 2: tightening fuel economy regulations and a number of other things

541
00:26:23,800 --> 00:26:26,479
Speaker 2: that Analyx has pointed out. It's the adoption is already

542
00:26:26,800 --> 00:26:29,840
Speaker 2: at a reasonable level across some markets in Europe. I

543
00:26:29,840 --> 00:26:31,800
Speaker 2: think the US is a bit more worrying. So you

544
00:26:31,880 --> 00:26:35,120
Speaker 2: have seen adoptions slowing down, growth rates slowing down. I'm

545
00:26:35,160 --> 00:26:37,160
Speaker 2: still going to be a record year for sales there

546
00:26:37,160 --> 00:26:39,680
Speaker 2: this year, but the growth rate really slowing there. And

547
00:26:39,760 --> 00:26:41,560
Speaker 2: of course there's an election this year in the US,

548
00:26:41,760 --> 00:26:45,120
Speaker 2: and if you listen to many of Donald Trump's current speeches,

549
00:26:45,160 --> 00:26:48,159
Speaker 2: often he talks very negatively, speaks very negatively about evs,

550
00:26:48,200 --> 00:26:51,119
Speaker 2: and he's there's a growing sort of polarization there, and

551
00:26:51,160 --> 00:26:53,040
Speaker 2: I think you would see a lot of the supportive

552
00:26:53,040 --> 00:26:55,960
Speaker 2: policies that have come under the Biden administration removed or

553
00:26:56,000 --> 00:26:59,119
Speaker 2: at least targeted by a Trump administration. Whether they're successful

554
00:26:59,119 --> 00:27:01,040
Speaker 2: and repealing all of those would probably end up in

555
00:27:01,080 --> 00:27:04,320
Speaker 2: the courts, but it is something we're watching quite carefully.

556
00:27:04,560 --> 00:27:08,040
Speaker 2: I think as well, the US market is looking more

557
00:27:08,200 --> 00:27:10,320
Speaker 2: protectionist as well in this so that the tariffs in

558
00:27:10,359 --> 00:27:12,760
Speaker 2: Europe that we're introduced are trying to thread this needle

559
00:27:12,800 --> 00:27:16,000
Speaker 2: between having still some competition from China with not making

560
00:27:16,080 --> 00:27:19,119
Speaker 2: it too difficult for domestic manufacturers. The tariffs that are

561
00:27:19,160 --> 00:27:20,640
Speaker 2: in place in the US are just saying we don't

562
00:27:20,680 --> 00:27:23,159
Speaker 2: want any competition from China in our domestic market's one

563
00:27:23,200 --> 00:27:25,520
Speaker 2: hundred percent tariff. Nobody can really sell at that rate

564
00:27:25,760 --> 00:27:28,639
Speaker 2: and make any money. So I think that's actually the

565
00:27:28,680 --> 00:27:30,960
Speaker 2: market that I'm a little more worried about. The domestic

566
00:27:31,000 --> 00:27:34,320
Speaker 2: automakers in North America have, particularly Ford and GM, have

567
00:27:34,400 --> 00:27:37,600
Speaker 2: retreated more and more from the world stage. They're not

568
00:27:37,880 --> 00:27:41,320
Speaker 2: really competitive with exception of a few segments outside of

569
00:27:41,359 --> 00:27:45,040
Speaker 2: the North American market, and they are not facing the

570
00:27:45,040 --> 00:27:49,080
Speaker 2: same competitive pressure on evs that other automakers are facing internationally.

571
00:27:49,119 --> 00:27:51,000
Speaker 2: So I think that's the one that I'm a little

572
00:27:51,000 --> 00:27:53,240
Speaker 2: more concerned about. In the near term is the US.

573
00:27:53,960 --> 00:27:57,840
Speaker 1: So due to the politicization of this industry and other

574
00:27:57,880 --> 00:27:59,959
Speaker 1: industries that we actually end up covered in the US,

575
00:28:00,160 --> 00:28:03,320
Speaker 1: US specifically, the outcome of this next election will have

576
00:28:03,760 --> 00:28:06,879
Speaker 1: potentially a very meaningful impact on adoption. I want to

577
00:28:06,880 --> 00:28:09,680
Speaker 1: pivot now though for a second, because we started today's

578
00:28:09,720 --> 00:28:12,960
Speaker 1: show talking about passenger vehicles, but one of the interesting

579
00:28:13,000 --> 00:28:14,960
Speaker 1: things in this year's report really had to do with

580
00:28:15,000 --> 00:28:17,359
Speaker 1: the commercial fleet. So can we talk a little bit

581
00:28:17,400 --> 00:28:21,680
Speaker 1: about this commercial fleet, which, even if people don't immediately

582
00:28:21,720 --> 00:28:24,199
Speaker 1: think about it, is actually very much in all of

583
00:28:24,240 --> 00:28:26,840
Speaker 1: our lives because all of the things that we consume

584
00:28:27,119 --> 00:28:29,600
Speaker 1: have gotten to us somehow and increasingly are coming to

585
00:28:29,680 --> 00:28:32,439
Speaker 1: us on vans and trucks straight to our home. So

586
00:28:32,560 --> 00:28:34,680
Speaker 1: how about this commercial fleet of electric vehicles who we're

587
00:28:34,720 --> 00:28:36,560
Speaker 1: increasingly seeing on the roads.

588
00:28:36,960 --> 00:28:40,120
Speaker 2: Yeah, So the commercial vehicle segment is really interesting and

589
00:28:40,160 --> 00:28:42,760
Speaker 2: it's very varied. So there are some things that we

590
00:28:42,760 --> 00:28:45,760
Speaker 2: would call commercial vehicles, like buses, municipal buses that are

591
00:28:45,760 --> 00:28:49,480
Speaker 2: already achieving very high rates of electrification led out of Asia,

592
00:28:49,520 --> 00:28:51,840
Speaker 2: but happening in other places too. But when we think

593
00:28:51,880 --> 00:28:55,160
Speaker 2: of vans and trucks and medium and heavy duty it's

594
00:28:55,240 --> 00:28:58,320
Speaker 2: quite varied there too. What you're seeing is that this

595
00:28:58,400 --> 00:29:00,520
Speaker 2: is probably going to be a real breakout year for

596
00:29:00,680 --> 00:29:03,440
Speaker 2: commercial electric vehicle sales, and that's led by a couple

597
00:29:03,440 --> 00:29:05,640
Speaker 2: of things. Just some contexts. Last year, a little over

598
00:29:05,680 --> 00:29:09,240
Speaker 2: five hundred thousand commercial electric vehicles were sold. This year,

599
00:29:09,240 --> 00:29:11,880
Speaker 2: we're forecasting just under a million, or about a million

600
00:29:11,920 --> 00:29:14,680
Speaker 2: in total. Now. That skews more towards the lighter vehicles,

601
00:29:14,760 --> 00:29:17,280
Speaker 2: but there's also activity happening in the medium and heavy

602
00:29:17,320 --> 00:29:19,480
Speaker 2: duty vehicle sales, and if we look out a few years,

603
00:29:19,560 --> 00:29:21,040
Speaker 2: we think the light vehicles get it to get to

604
00:29:21,040 --> 00:29:23,320
Speaker 2: about twenty percent of sales by twenty twenty seven, and

605
00:29:23,440 --> 00:29:25,640
Speaker 2: medium and heavy duty between nine and ten percent. So

606
00:29:25,760 --> 00:29:28,480
Speaker 2: it's definitely further behind what's going on in the passenger

607
00:29:28,560 --> 00:29:31,200
Speaker 2: vehicle side, but it's actually one of the fastest growing

608
00:29:31,240 --> 00:29:34,120
Speaker 2: parts of what we're observing right now, and that's primarily

609
00:29:34,120 --> 00:29:37,720
Speaker 2: because these groups are driven by economics alone. There isn't

610
00:29:37,720 --> 00:29:41,160
Speaker 2: a lot of brand considerations or behavioral considerations. It is

611
00:29:41,280 --> 00:29:44,880
Speaker 2: much more around economics for commercial vehicle drivers, and the

612
00:29:44,920 --> 00:29:48,000
Speaker 2: economics are starting to get good, particularly again in China,

613
00:29:48,640 --> 00:29:50,960
Speaker 2: where there's the lowest battery costs you're starting to see

614
00:29:50,960 --> 00:29:54,720
Speaker 2: things like vans and lights of medium duty trucks already

615
00:29:54,720 --> 00:29:57,080
Speaker 2: getting cost competitive. The heavy duty long haul ones are

616
00:29:57,120 --> 00:29:59,080
Speaker 2: going to take a bit longer. That's more the latter

617
00:29:59,120 --> 00:30:01,760
Speaker 2: half of this decade. But we are still seeing sales

618
00:30:01,760 --> 00:30:04,760
Speaker 2: in those heavy segments, again lead out of China and

619
00:30:05,000 --> 00:30:08,000
Speaker 2: a few other markets picking up. So you're starting to

620
00:30:08,000 --> 00:30:10,520
Speaker 2: see a few percent of sales in a heavy segment

621
00:30:10,640 --> 00:30:13,200
Speaker 2: being already electric or fuel cell. And what's really interesting

622
00:30:13,240 --> 00:30:16,280
Speaker 2: there is there's actually a variety of solutions being applied

623
00:30:16,440 --> 00:30:19,200
Speaker 2: to tackle that probably the most difficult segment to electrify,

624
00:30:19,240 --> 00:30:21,640
Speaker 2: which is those heavy trucks, and so what you're seeing

625
00:30:21,720 --> 00:30:25,400
Speaker 2: is a mix of regular battery electric plug in charging,

626
00:30:25,560 --> 00:30:28,560
Speaker 2: some battery swapping ones, so heavy trucks with swappable batteries,

627
00:30:28,600 --> 00:30:31,640
Speaker 2: and then some hydrogen fuel cell vehicles. So again lead

628
00:30:31,640 --> 00:30:33,880
Speaker 2: in China, but happening a little bit elsewhere too. We're

629
00:30:33,920 --> 00:30:36,400
Speaker 2: starting to see hydrogen fuel cell vehicle sales pick up

630
00:30:36,400 --> 00:30:38,840
Speaker 2: a little bit in that heaviest vehicle segment. There's still

631
00:30:38,840 --> 00:30:42,080
Speaker 2: a long way to go there, but there's encouraging signs

632
00:30:42,120 --> 00:30:45,000
Speaker 2: of progress, not just in China, but places like California

633
00:30:45,040 --> 00:30:47,080
Speaker 2: where sales are picking up quickly, and in Europe with

634
00:30:47,160 --> 00:30:49,920
Speaker 2: new trucks CO two regulations that have been finalized now

635
00:30:49,960 --> 00:30:52,760
Speaker 2: we're seeing more activity there as well. The truck makers

636
00:30:52,960 --> 00:30:56,240
Speaker 2: are now also starting to benefit from those cheaper batteries

637
00:30:56,280 --> 00:30:58,040
Speaker 2: we talked about. There's a bit of convergence there. A

638
00:30:58,080 --> 00:31:00,280
Speaker 2: few years ago, there used to be huge gap between

639
00:31:00,280 --> 00:31:02,960
Speaker 2: what commercial manufacturers we're paying for batteries and what large

640
00:31:03,040 --> 00:31:06,080
Speaker 2: volume passenger vehicle manufacturers we're playing for batteries. That gap

641
00:31:06,120 --> 00:31:08,160
Speaker 2: is starting to close as the battery market gets more

642
00:31:08,160 --> 00:31:10,320
Speaker 2: and more competitive, as it turns to a buyer's market,

643
00:31:10,360 --> 00:31:12,680
Speaker 2: and that's going to start to flow into vehicle economics

644
00:31:12,680 --> 00:31:14,800
Speaker 2: and the trucking segment kind of in the next few years.

645
00:31:15,000 --> 00:31:18,520
Speaker 2: So that's one we're optimistic about. It's still not on

646
00:31:18,680 --> 00:31:22,600
Speaker 2: track for our climate targets, if that's something that's important

647
00:31:22,600 --> 00:31:25,640
Speaker 2: to you, but certainly it's something where we think it's

648
00:31:25,680 --> 00:31:27,280
Speaker 2: going to be really interesting market to watch in the

649
00:31:27,280 --> 00:31:29,560
Speaker 2: next few years. And we do have a fairly optimistic

650
00:31:29,880 --> 00:31:31,960
Speaker 2: or at least what we think of a fairly optimistic

651
00:31:32,040 --> 00:31:33,720
Speaker 2: view on what can get done this decade.

652
00:31:33,840 --> 00:31:36,800
Speaker 1: Well, and since you brought up hydrogen fuel cells and

653
00:31:36,840 --> 00:31:39,320
Speaker 1: I know, in this circumstance we were talking about the

654
00:31:39,880 --> 00:31:43,320
Speaker 1: fleets of things that were being delivered in the commercial

655
00:31:43,400 --> 00:31:45,360
Speaker 1: end of things, where it may have a space. People

656
00:31:45,400 --> 00:31:48,840
Speaker 1: still keep bringing it up, though, regarding passenger vehicles, and

657
00:31:48,920 --> 00:31:51,600
Speaker 1: actually the pop culture reference here that I keep thinking

658
00:31:51,640 --> 00:31:55,120
Speaker 1: about when you bring up hydrogen fuel cell cars as

659
00:31:55,200 --> 00:31:57,840
Speaker 1: do with the movie Mean Girls came out a long

660
00:31:57,840 --> 00:32:00,800
Speaker 1: time ago. They did a reboot recently basically the same

661
00:32:00,840 --> 00:32:03,960
Speaker 1: plot line, except different actors, and in both of them

662
00:32:04,000 --> 00:32:05,960
Speaker 1: it was stopped trying to make fetch a thing. Is

663
00:32:06,040 --> 00:32:07,960
Speaker 1: hydrogen a thing? Or should we just stop trying to

664
00:32:07,960 --> 00:32:08,520
Speaker 1: make it a thing?

665
00:32:09,000 --> 00:32:11,560
Speaker 2: I confessed to not having seen either of the Mean

666
00:32:11,600 --> 00:32:14,640
Speaker 2: Girls movies, the original or the remake, but I think

667
00:32:14,720 --> 00:32:17,280
Speaker 2: when it comes to this topic, I do feel like

668
00:32:17,320 --> 00:32:19,120
Speaker 2: there is an effort to make this a thing, and

669
00:32:19,360 --> 00:32:23,479
Speaker 2: consumers really do not seem interested. So the just for

670
00:32:23,520 --> 00:32:26,640
Speaker 2: a point of reference, there were more Ferraris sold than

671
00:32:26,800 --> 00:32:29,760
Speaker 2: hydrogen fuel cell vehicles globally last year, and it wasn't

672
00:32:29,760 --> 00:32:32,160
Speaker 2: even close. Ferrari was way way ahead. You'd have to

673
00:32:32,160 --> 00:32:35,400
Speaker 2: get down into the really niche manufacturers like Lamborghini before

674
00:32:35,440 --> 00:32:38,000
Speaker 2: you'd find comparable numbers of fuel cell vehicle sales. The

675
00:32:38,080 --> 00:32:41,200
Speaker 2: proponents of this technology are ever optimistic that it is

676
00:32:41,280 --> 00:32:43,560
Speaker 2: going to take over the market, or at least be

677
00:32:43,640 --> 00:32:45,680
Speaker 2: a meaningful part of it, But the reality is sales

678
00:32:45,680 --> 00:32:47,560
Speaker 2: have fallen the last couple of years. So they peaked

679
00:32:47,560 --> 00:32:50,360
Speaker 2: in twenty twenty one at around seventeen thousand passenger fuel

680
00:32:50,400 --> 00:32:52,800
Speaker 2: cell vehicle sales. Last year they were down to around

681
00:32:52,960 --> 00:32:56,120
Speaker 2: nine thousand, so a very significant drop. Almost all of

682
00:32:56,120 --> 00:32:59,000
Speaker 2: the sales are now concentrated in South Korea because there's

683
00:32:59,080 --> 00:33:02,479
Speaker 2: very generous incentive there. If you look at California, sales

684
00:33:02,480 --> 00:33:05,080
Speaker 2: have dropped pretty dramatically. They were covered a little bit

685
00:33:05,200 --> 00:33:07,560
Speaker 2: because Toyota is trying to clear out inventory of the

686
00:33:07,640 --> 00:33:09,600
Speaker 2: maris that they have. If you go to some of

687
00:33:09,640 --> 00:33:12,200
Speaker 2: the dealers and look at the pages, they're offering incentives

688
00:33:12,200 --> 00:33:15,520
Speaker 2: of twenty to thirty thousand dollars plus a fuel card

689
00:33:15,560 --> 00:33:18,760
Speaker 2: worth fifteen thousand dollars, and still they're really struggling to

690
00:33:18,760 --> 00:33:21,840
Speaker 2: move them. If you look at the reviews of these vehicles,

691
00:33:21,880 --> 00:33:24,960
Speaker 2: people are generally okay with the vehicle, but the refueling infrastructure,

692
00:33:25,040 --> 00:33:29,000
Speaker 2: the refueling experience is terrible. It's both expensive, sparse, and

693
00:33:29,040 --> 00:33:31,120
Speaker 2: it breaks down a lot, and some of those can

694
00:33:31,160 --> 00:33:33,719
Speaker 2: be fixed. You can probably fix the sparse part if

695
00:33:33,720 --> 00:33:35,800
Speaker 2: you throw enough money at it. But it will always

696
00:33:35,840 --> 00:33:38,800
Speaker 2: be expensive. It will always be significantly more expensive than

697
00:33:38,840 --> 00:33:41,960
Speaker 2: refueling with electricity if we're talking about green hydrogen. So anyway,

698
00:33:41,960 --> 00:33:44,360
Speaker 2: there's all these different things that we could talk about

699
00:33:44,400 --> 00:33:46,239
Speaker 2: back and forth. There's lots of debates that have been

700
00:33:46,240 --> 00:33:49,720
Speaker 2: had about this, but the bottom line is consumers don't

701
00:33:49,720 --> 00:33:52,520
Speaker 2: seem interested. They're only buying them in places where the

702
00:33:52,560 --> 00:33:55,240
Speaker 2: incentives are huge. They're buying fewer and fewer of them

703
00:33:55,280 --> 00:33:58,200
Speaker 2: the last few years, and we're just not seeing any momentum.

704
00:33:58,320 --> 00:34:01,480
Speaker 2: So last year actually we stop including a passenger fuel

705
00:34:01,480 --> 00:34:03,800
Speaker 2: cell vehicle forecast in the U Outlook, and we said

706
00:34:03,840 --> 00:34:06,400
Speaker 2: we will return to it if and when fuel cells

707
00:34:06,720 --> 00:34:11,120
Speaker 2: reach zero point one percent of global auto sales. So

708
00:34:11,480 --> 00:34:14,359
Speaker 2: not a high bar, but they are way a way

709
00:34:14,440 --> 00:34:16,880
Speaker 2: off that you would need to see eighty thousand sales

710
00:34:16,880 --> 00:34:20,359
Speaker 2: a year, and you're essentially seeing a fraction of that.

711
00:34:20,640 --> 00:34:22,719
Speaker 2: So we're a long way from where you need to

712
00:34:22,719 --> 00:34:25,120
Speaker 2: be to have any sort of optimism that hydrogen is

713
00:34:25,120 --> 00:34:27,000
Speaker 2: going to play a role in passenger vehicle sales.

714
00:34:27,640 --> 00:34:31,160
Speaker 1: So then last question to you, alex are plug in

715
00:34:31,320 --> 00:34:34,239
Speaker 1: hybrids should we be still trying to make them a

716
00:34:34,320 --> 00:34:37,359
Speaker 1: thing for those people who are unwilling to commit to

717
00:34:37,719 --> 00:34:40,640
Speaker 1: a full electric vehicle but are taking a step away

718
00:34:40,640 --> 00:34:42,719
Speaker 1: from a full internal combustion engine.

719
00:34:43,040 --> 00:34:46,480
Speaker 3: Yeah, thanks Lena. That's a good question because we sort

720
00:34:46,520 --> 00:34:49,440
Speaker 3: of stopped including FCVs, but we kind of pay a

721
00:34:49,480 --> 00:34:51,880
Speaker 3: little bit more attention this year to plug in hybrids

722
00:34:51,880 --> 00:34:54,200
Speaker 3: because it does look like they do make a comeback

723
00:34:54,560 --> 00:34:57,120
Speaker 3: this year. But the biggest change this year on PBS

724
00:34:57,160 --> 00:35:00,080
Speaker 3: really is coming up of China. This is where we

725
00:35:00,200 --> 00:35:04,200
Speaker 3: seeing the resurgence of PF sales. So while our forecasts

726
00:35:04,239 --> 00:35:06,719
Speaker 3: for EV sales in China really hasn't changed that much,

727
00:35:06,760 --> 00:35:09,520
Speaker 3: if anything, it has increased. P haves now form a

728
00:35:09,600 --> 00:35:12,440
Speaker 3: larger share of overall EV sales in the country, So

729
00:35:12,719 --> 00:35:14,719
Speaker 3: you have to keep in mind though that these are

730
00:35:14,760 --> 00:35:17,719
Speaker 3: not ps that we're used to in Europe. The batteries

731
00:35:18,200 --> 00:35:21,680
Speaker 3: of plug in hybrids deployed in China sold in China

732
00:35:21,719 --> 00:35:24,840
Speaker 3: are almost twice the size of those in Europe or

733
00:35:24,880 --> 00:35:27,879
Speaker 3: in the US. The ranges are quite significant, so those

734
00:35:27,920 --> 00:35:30,160
Speaker 3: plug in hybrids can go for good over one hundred

735
00:35:30,239 --> 00:35:34,200
Speaker 3: kilometers on one charge, so while in Europe we've been

736
00:35:34,280 --> 00:35:37,320
Speaker 3: used to plug in hybrids being used as a really

737
00:35:37,360 --> 00:35:40,560
Speaker 3: compliance tool with fuel economy targets, in China, it does

738
00:35:40,600 --> 00:35:43,919
Speaker 3: seem that automakers there are kind of skillfully using plug

739
00:35:43,960 --> 00:35:47,359
Speaker 3: in hybrids to reach more of those more resistant TV

740
00:35:47,520 --> 00:35:50,520
Speaker 3: consumers outside of the major cities, those consumers that are

741
00:35:50,560 --> 00:35:54,440
Speaker 3: still more concerned about range and charging availability. What I

742
00:35:54,520 --> 00:35:58,120
Speaker 3: can't tell you really in any sort of certainty is

743
00:35:58,400 --> 00:36:01,839
Speaker 3: really what is it a short term trend or OURP

744
00:36:01,960 --> 00:36:05,320
Speaker 3: haves here to stay. It's much more difficult to forecast

745
00:36:05,520 --> 00:36:08,040
Speaker 3: P have adoption than it is for best because in

746
00:36:08,080 --> 00:36:10,160
Speaker 3: the new term, like plug in hybrids can be quite

747
00:36:10,160 --> 00:36:13,120
Speaker 3: easily added to automaker's lineup. You don't need much of

748
00:36:13,120 --> 00:36:16,040
Speaker 3: a fan fire around it, you don't need dedicated platforms,

749
00:36:16,040 --> 00:36:18,160
Speaker 3: et cetera. So it is just much easier. So it's

750
00:36:18,200 --> 00:36:21,919
Speaker 3: really difficult to pinpoint that exact number. But I think

751
00:36:21,920 --> 00:36:24,439
Speaker 3: there's one thing to keep in mind when we there's

752
00:36:24,440 --> 00:36:26,680
Speaker 3: cussing plug in hybrids and whether they should or should

753
00:36:26,800 --> 00:36:30,439
Speaker 3: not be a long term trend. So putting too much

754
00:36:30,440 --> 00:36:34,120
Speaker 3: faith and plug in hybrids really comes with some risk attached.

755
00:36:34,320 --> 00:36:38,120
Speaker 3: So our analysis shows that the share of kilometers driven

756
00:36:38,400 --> 00:36:41,000
Speaker 3: in the electric mode by plug in hybrids, it's really

757
00:36:41,080 --> 00:36:44,279
Speaker 3: quite low, roughly eleven to fifty four percent depending on

758
00:36:44,280 --> 00:36:46,680
Speaker 3: the country and the ouder type. So if p haves

759
00:36:46,719 --> 00:36:50,719
Speaker 3: are displacing battery electric vehicle sales and are not utilizing

760
00:36:50,760 --> 00:36:54,799
Speaker 3: that full electric driving capacity that they do have, they

761
00:36:54,880 --> 00:36:58,399
Speaker 3: actually do add to oil demand. In our analysis, and

762
00:36:58,800 --> 00:37:01,399
Speaker 3: you know, we build several scenarios of what like what

763
00:37:01,480 --> 00:37:06,000
Speaker 3: that oil demand addition could be from not using those phfs. Well,

764
00:37:06,080 --> 00:37:08,120
Speaker 3: but in that worst case scenario, if you want to know,

765
00:37:08,200 --> 00:37:10,680
Speaker 3: we can add up up to twenty percent more to

766
00:37:10,760 --> 00:37:12,960
Speaker 3: oil demand than in our base case scenario. And that

767
00:37:13,040 --> 00:37:15,600
Speaker 3: warfs case scenario is like, you know, much more pfs

768
00:37:15,640 --> 00:37:19,000
Speaker 3: on the road and much less electric driving utilization by

769
00:37:19,080 --> 00:37:19,600
Speaker 3: those pehos.

770
00:37:19,960 --> 00:37:23,200
Speaker 2: Just to clarify, that's twenty percent more than passenger vehicle

771
00:37:23,400 --> 00:37:26,000
Speaker 2: oil demand use would be not adding twenty percent to

772
00:37:26,000 --> 00:37:28,399
Speaker 2: global oil demand use. And I think this is one

773
00:37:28,400 --> 00:37:30,600
Speaker 2: of these tricky topics for us where we've gone through

774
00:37:30,640 --> 00:37:32,920
Speaker 2: and looked at all the literature and looked at everything

775
00:37:32,960 --> 00:37:34,960
Speaker 2: about how these are driven, and you kind of you

776
00:37:34,960 --> 00:37:37,799
Speaker 2: can look at the different different ways and there's two

777
00:37:37,920 --> 00:37:40,440
Speaker 2: you can kind of come to two opposite conclusions depending

778
00:37:40,440 --> 00:37:43,040
Speaker 2: on what you think it is. You could say, look,

779
00:37:43,080 --> 00:37:45,920
Speaker 2: plug in hybrids are reaching buyers who were never going

780
00:37:45,960 --> 00:37:48,680
Speaker 2: to go fully electric, and therefore it's always a net

781
00:37:48,719 --> 00:37:50,799
Speaker 2: positive from a climate point of view, because they are

782
00:37:50,840 --> 00:37:52,920
Speaker 2: doing some of the kilometers in electric mode and that's

783
00:37:52,960 --> 00:37:55,160
Speaker 2: better than doing none of your kilometers in electric mode.

784
00:37:55,320 --> 00:37:57,879
Speaker 2: Or you could conclude the exact opposite that say, these

785
00:37:57,920 --> 00:38:00,680
Speaker 2: are pulling buyers away from battery electric vias, and less

786
00:38:00,680 --> 00:38:02,919
Speaker 2: of their kilometers are being done in electric mode, and

787
00:38:02,960 --> 00:38:06,200
Speaker 2: therefore there's more internal combustion engine kilometers driven in the world.

788
00:38:06,360 --> 00:38:10,440
Speaker 2: And actually teasing out exactly which way that consumer was

789
00:38:10,480 --> 00:38:13,840
Speaker 2: going to go is a very difficult task. So I

790
00:38:13,880 --> 00:38:16,000
Speaker 2: think we're sort of saying, look, this is a thing

791
00:38:16,080 --> 00:38:18,719
Speaker 2: right now. Plug and hybrids are going faster than better electrics,

792
00:38:18,800 --> 00:38:21,960
Speaker 2: regular hybrids, and pure internal combustion engine vehicles. But we

793
00:38:22,600 --> 00:38:25,280
Speaker 2: need a few more years of data to see exactly

794
00:38:25,280 --> 00:38:27,399
Speaker 2: what that's coming at the expense of Is it coming

795
00:38:27,440 --> 00:38:29,680
Speaker 2: at the expense of pure combustion vehicles? Is it coming

796
00:38:29,760 --> 00:38:32,440
Speaker 2: at the expense of better electric vehicles? And the conclusion

797
00:38:32,680 --> 00:38:35,160
Speaker 2: is kind of opposite depending on which one of those

798
00:38:35,200 --> 00:38:36,640
Speaker 2: it is, at least from a climate point of view.

799
00:38:36,719 --> 00:38:38,719
Speaker 2: The one thing is it does seem to be. As

800
00:38:38,760 --> 00:38:41,160
Speaker 2: Alex pointed out, the newest ones that are launching are

801
00:38:41,239 --> 00:38:44,239
Speaker 2: less aimed at compliance with fuel economy regulations and more

802
00:38:44,280 --> 00:38:46,640
Speaker 2: aimed at trying to make a product that consumers actually want,

803
00:38:46,680 --> 00:38:48,239
Speaker 2: and that is a notable shift from where we were

804
00:38:48,239 --> 00:38:48,839
Speaker 2: a few years ago.

805
00:38:49,239 --> 00:38:51,799
Speaker 1: Well, we could be here all day, but unfortunately our

806
00:38:51,840 --> 00:38:54,240
Speaker 1: time is up. So it has been really great talking

807
00:38:54,280 --> 00:38:56,200
Speaker 1: to you Alex and Colin, and thank you for coming

808
00:38:56,239 --> 00:38:56,640
Speaker 1: on the show.

809
00:38:57,040 --> 00:38:59,200
Speaker 2: Thanks Dana, Thank you for having us Dana.

810
00:39:08,040 --> 00:39:11,160
Speaker 1: Today's episode of Switched On was produced by Cam Gray

811
00:39:11,360 --> 00:39:15,040
Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a

812
00:39:15,080 --> 00:39:18,200
Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This

813
00:39:18,280 --> 00:39:20,960
Speaker 1: recording does not constitute, nor should it be construed, as

814
00:39:21,000 --> 00:39:24,759
Speaker 1: investment in vice, investment recommendations, or a recommendation as to

815
00:39:24,800 --> 00:39:27,680
Speaker 1: an investment or other strategy. Bloomberg ANIFF should not be

816
00:39:27,719 --> 00:39:31,480
Speaker 1: considered as information sufficient upon which to base an investment decision.

817
00:39:31,600 --> 00:39:34,560
Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes

818
00:39:34,600 --> 00:39:38,319
Speaker 1: any representation or warranty as to the accuracy or completeness

819
00:39:38,320 --> 00:39:41,360
Speaker 1: of the information contained in this recording, and any liability

820
00:39:41,360 --> 00:39:44,080
Speaker 1: as a result of this recording is expressly disclaimed.