WEBVTT - EV Sales Growth Cools But Some Markets Still Run Hot 0:00:00.520 --> 0:00:03.880 This is Dana Perkins and you're listening to Switched on 0:00:04.240 --> 0:00:07.480 the BNAF podcast, and today we're going to talk about 0:00:07.520 --> 0:00:11.360 electric vehicles in all their shapes and sizes and focus 0:00:11.400 --> 0:00:15.200 on one of our flagship reports, the Electric Vehicle Outlook. 0:00:15.480 --> 0:00:17.480 We do this one every year, and in true ben 0:00:17.600 --> 0:00:20.040 f fashion, we add a few new things to consider 0:00:20.079 --> 0:00:23.040 each time we approach the topic, and we revisit some 0:00:23.239 --> 0:00:26.560 lingering questions in the industry, so hopefully we'll be able 0:00:26.600 --> 0:00:28.800 to clear up a few things for you today. The 0:00:28.880 --> 0:00:31.640 team in the report look out to twenty thirty, in 0:00:31.680 --> 0:00:34.440 some cases twenty forty or all the way out to 0:00:34.479 --> 0:00:37.959 twenty fifty, depending upon the topic. In regions like the US, 0:00:38.080 --> 0:00:40.960 this last year brought a cooling in demand for electric 0:00:41.000 --> 0:00:45.760 passenger vehicles, but overall globally adoption is rising. And then 0:00:45.840 --> 0:00:49.320 there are commercial vehicles which had another record breaking year, 0:00:49.400 --> 0:00:52.640 and don't forget about buses and three wheelers, which seem 0:00:52.760 --> 0:00:56.440 particularly well suited to electrification when we look at adoption 0:00:56.640 --> 0:00:59.400 around the world. In the report, they get into the 0:00:59.440 --> 0:01:03.200 electricicak of transport, but the conversation is not limited to 0:01:03.480 --> 0:01:07.160 just evs. What does this mean for fuel cells and hybrids? 0:01:07.200 --> 0:01:09.920 And then of course there are the fuel sources. They 0:01:09.959 --> 0:01:12.880 look at things like electricity and oil demand and how 0:01:12.880 --> 0:01:16.119 these could be impacted, along with battery metals which are 0:01:16.160 --> 0:01:19.560 required to make the battery packs for the electric vehicles. 0:01:19.880 --> 0:01:22.880 And overall, what's the point if we don't also look 0:01:22.880 --> 0:01:25.880 at this in terms of the impact on CO two emissions. 0:01:26.319 --> 0:01:29.760 Today we'll hear from Colin Mcerricer, head of Advanced Transport 0:01:29.840 --> 0:01:32.960 and Energy Storage at BNF, and he's joined by Head 0:01:32.959 --> 0:01:37.240 of Electric Vehicles, Alexandra O'Donovan. The Electric Vehicle Outlook or 0:01:37.520 --> 0:01:40.800 EVO report for short, can be found at BNF on 0:01:40.800 --> 0:01:44.160 the Bloomberg terminal, or at BNF dot com for our clients. 0:01:44.440 --> 0:01:46.240 If you're not yet a client, you can see the 0:01:46.280 --> 0:01:49.640 executive summary and some great bits of data at about 0:01:49.720 --> 0:01:55.840 dot BNF dot com forward slash Electric Dash Vehicle Dash Outlook. 0:01:56.240 --> 0:01:58.800 You can also find it in the show notes. Right now, though, 0:01:58.880 --> 0:02:02.680 let's jump into our conversation with Colin and Alex about 0:02:02.720 --> 0:02:04.800 some of the things that stood out to them in 0:02:04.840 --> 0:02:17.080 this year's Electric Vehicle Outlook. Alex, welcome to switched on, 0:02:17.680 --> 0:02:20.960 Welcome to I Know, and Colin, thank you for coming back. 0:02:21.240 --> 0:02:22.880 Great to be back on the program, We're going. 0:02:22.880 --> 0:02:25.880 To talk about the long term electric Vehicle Outlook from 0:02:25.880 --> 0:02:28.640 your teams today, and there's no way we're going to 0:02:28.639 --> 0:02:31.400 be able to get through absolutely everything. It's such a 0:02:31.720 --> 0:02:34.720 comprehensive report. When we think about the future of the 0:02:34.880 --> 0:02:39.120 electric vehicle space, I mean and everything from passenger to commercial, 0:02:39.160 --> 0:02:41.640 to three wheelers, to batteries to oil demand. There's so 0:02:41.639 --> 0:02:43.560 many different things we can go into. So as we 0:02:43.720 --> 0:02:46.839 think about the different highlights that we want to touch upon, 0:02:46.919 --> 0:02:49.200 and probably the questions I should be asking in the 0:02:49.240 --> 0:02:52.840 next couple of minutes, can we start with this outlook? 0:02:52.960 --> 0:02:55.160 And really, you know, why do we do it? And 0:02:55.200 --> 0:02:56.840 how far in the future are we looking. 0:02:57.200 --> 0:02:59.480 So we've been doing this for a decade now and 0:02:59.639 --> 0:03:01.800 the idea idea is to pull together all of the 0:03:01.880 --> 0:03:04.040 threads of different bits of research that we do. So 0:03:04.080 --> 0:03:06.239 our team at Bloomberg ENIF publishes a huge amount of 0:03:06.280 --> 0:03:09.120 data sets and research reports about what's going on in 0:03:09.200 --> 0:03:12.880 road transport and particularly around the decarbonization of road transport, 0:03:12.880 --> 0:03:15.160 and we have various teams covering that. What we try 0:03:15.160 --> 0:03:16.880 and do with the Electric Vehicle Outlook is take all 0:03:16.880 --> 0:03:20.000 those different threads and pull it together. And even despite 0:03:20.040 --> 0:03:22.000 the name being the Electric Vehicle out Look, it's actually 0:03:22.000 --> 0:03:24.160 an outlook for all of road transport. So we're looking 0:03:24.160 --> 0:03:26.760 at trends around electrification. Certainly that's one of the big 0:03:26.880 --> 0:03:30.760 vectors of change in the passenger vehicle market, and commercial 0:03:30.840 --> 0:03:32.760 vehicles and two and three wheelers as well, but we're 0:03:32.760 --> 0:03:36.840 also looking at shared mobility and autonomous driving or urbanization 0:03:36.960 --> 0:03:39.680 and changing driving patterns, all these sorts of things that 0:03:39.720 --> 0:03:42.440 come together to shape the way people and goods move. 0:03:42.680 --> 0:03:44.560 So in doing it for a decade, we've refined it 0:03:44.600 --> 0:03:47.480 a lot. We've added more segments, we've added more countries. 0:03:47.560 --> 0:03:49.920 Each year we try and add more detail into the outlook. 0:03:50.080 --> 0:03:53.320 The timeframe goes out to twenty forty for most of it, 0:03:53.360 --> 0:03:55.720 but for some of the climate scenario stuff where we're 0:03:55.720 --> 0:03:58.240 trying to look at net zero and these broader climate 0:03:58.280 --> 0:04:01.440 targets that countries and companies have put in place, that 0:04:01.480 --> 0:04:03.520 goes out to twenty fifty. Though there's a lot of 0:04:03.560 --> 0:04:05.960 analysis about the near term too. The twenty twenties are 0:04:06.000 --> 0:04:08.000 going to be critical for keeping any of this stuff 0:04:08.040 --> 0:04:10.520 on track, and there's really interesting things things happening in 0:04:10.520 --> 0:04:14.320 the near term. So while it does have a longer timeframe. 0:04:14.400 --> 0:04:16.560 It also has a lot of near term detail as well. 0:04:17.000 --> 0:04:18.919 Now you reference it every year, we look to improve 0:04:18.960 --> 0:04:21.360 it a little bit more invariably that people who are 0:04:21.360 --> 0:04:24.440 actually writing this report are really intellectually engaged with the 0:04:24.440 --> 0:04:26.920 subject matter. But for this year, what's new? What were 0:04:26.960 --> 0:04:28.760 the things that your team came up with that they 0:04:28.760 --> 0:04:30.280 wanted to explore in more detail. 0:04:30.480 --> 0:04:32.440 Yeah. The first one is I mentioned we add some 0:04:32.520 --> 0:04:34.560 new countries. So the big one that we added this 0:04:34.640 --> 0:04:36.920 year was Brazil. So we're seeing a lot of interesting 0:04:36.960 --> 0:04:40.880 activity in Brazil. There's not only is there interest in 0:04:41.000 --> 0:04:44.120 electric vehicles and some Chinese manufacturers setting up in Brazil, 0:04:44.120 --> 0:04:46.960 but there's also this really interesting dynamic there with ethanol too. 0:04:47.040 --> 0:04:49.440 So a big part of the transport mix includes ethanol, 0:04:49.520 --> 0:04:51.240 and so the dynamics of that market are a little 0:04:51.279 --> 0:04:53.520 bit different. It's a big emerging economy. We wanted to 0:04:53.560 --> 0:04:55.720 try and cover that and see sort of how that's going. 0:04:55.760 --> 0:04:57.479 So we added Brazil to the mix this year of 0:04:57.520 --> 0:05:00.240 core countries, so we now cover the fourteenth biggest auto 0:05:00.240 --> 0:05:02.360 markets in the world really, and then also we added 0:05:02.360 --> 0:05:04.640 a new Tier two country approach, so we said, look, 0:05:04.680 --> 0:05:06.680 there's the core markets we model, what about all the 0:05:06.680 --> 0:05:09.400 other smaller markets, can we do a more generic modeling 0:05:09.440 --> 0:05:11.919 exercise for them, So we did that as well, and 0:05:11.960 --> 0:05:14.440 that covers all of the EU and the FTA countries. 0:05:14.600 --> 0:05:16.440 So then we've also added a lot more detail on 0:05:16.480 --> 0:05:19.120 some of the other vehicle types, so things like hybrids 0:05:19.160 --> 0:05:22.440 and compressed natural gas vehicles. Those compress natural gas vehicles 0:05:22.440 --> 0:05:24.240 are taken off actually in India, which is quite an 0:05:24.240 --> 0:05:26.599 interesting market, about half a million of them sold last year. 0:05:26.760 --> 0:05:30.599 More details on China on the heavy truck side, so 0:05:30.640 --> 0:05:33.920 we're seeing some really interesting activity going on on electric 0:05:33.960 --> 0:05:36.919 heavy trucks and fuel cell trucks in China, and not 0:05:37.120 --> 0:05:40.559 just regular plug in trucks, but also battery swappable heavy trucks, 0:05:40.560 --> 0:05:42.040 so we wanted to add some more detail on that. 0:05:42.279 --> 0:05:45.000 And then we updated and sort of refined all of 0:05:45.040 --> 0:05:49.240 our battery chemistry forecasts going into different vehicle segments, and 0:05:49.320 --> 0:05:52.080 in particular, there's one chemistry that's really winning. We can 0:05:52.120 --> 0:05:54.200 talk about that a bit later, but that's changing the 0:05:54.240 --> 0:05:56.600 demand outlook for some of the raw materials that are 0:05:56.600 --> 0:05:59.559 going into batteries as well. And then lastly we've also 0:06:00.120 --> 0:06:03.760 updated our investment needs to deliver all of this, so 0:06:03.839 --> 0:06:06.560 looking at how much investment needs to flow into the 0:06:06.600 --> 0:06:09.960 battery materials and refining side as well as the battery 0:06:10.000 --> 0:06:13.360 manufacturing side too, and then we've done some more granular 0:06:13.400 --> 0:06:16.400 work on electricity demand and charging infrastructure needs in each 0:06:16.440 --> 0:06:17.479 one of the regions that we cover. 0:06:17.800 --> 0:06:20.039 Now we talk about the energy transition on this show 0:06:20.279 --> 0:06:24.360 all the time, every week, and oftentimes the industries that 0:06:24.480 --> 0:06:27.680 we're talking about are things that actually feel really far 0:06:27.839 --> 0:06:31.279 away from your everyday person. And my theory is that 0:06:31.320 --> 0:06:33.560 when I talk to people who are actually not working 0:06:33.600 --> 0:06:36.040 in this space and are not at our company as well, 0:06:36.320 --> 0:06:40.279 they're really interested in the electric vehicle space almost immediately. 0:06:40.320 --> 0:06:42.039 And I think that's because all of us have this 0:06:42.160 --> 0:06:45.840 experience of getting in a car and moving ourselves around, 0:06:45.960 --> 0:06:48.279 and it's the fact that it falls into the well 0:06:48.400 --> 0:06:51.599 least the passenger vehicles fall into the consumer discretionary bucket 0:06:51.600 --> 0:06:54.080 that makes it so tangible for so many people. So 0:06:54.160 --> 0:06:56.600 let's start there. Let's start with this tangible part of 0:06:56.680 --> 0:06:59.560 the market, which is passenger vehicles. Can you just give 0:06:59.560 --> 0:07:04.479 me the headline on what last year held in terms 0:07:04.520 --> 0:07:08.000 of progress, and you know, what's the benchmark that we 0:07:08.279 --> 0:07:10.480 essentially are comparing next year to you know, how many 0:07:10.560 --> 0:07:11.440 vehicles were sold. 0:07:11.960 --> 0:07:14.840 I think to get a really good understanding of what 0:07:14.920 --> 0:07:17.520 happened last year, we have to really go back to 0:07:17.560 --> 0:07:20.960 twenty twenty one twenty twenty two, when passenger EV sales 0:07:21.000 --> 0:07:23.400 were growing at an average one hundred percent or sixty 0:07:23.440 --> 0:07:27.240 percent annually. So from that perspective, the thirty three percent 0:07:27.280 --> 0:07:30.400 growth rate recorded in twenty twenty three really doesn't sound 0:07:30.440 --> 0:07:33.480 like a record high year, which actually was so a 0:07:33.480 --> 0:07:35.800 lot of the growth in the past years came on 0:07:35.800 --> 0:07:39.360 the back of the virus COVID stimulus packages, fuel economy targets, 0:07:39.400 --> 0:07:42.840 and the sort of associated era of new battery electric 0:07:42.880 --> 0:07:45.760 vehicle models entering the market, and also in China, consumer 0:07:45.800 --> 0:07:49.880 adoption taking over that policy driven demand. But that means 0:07:49.920 --> 0:07:53.280 that some of the automakers like GM or Ford, counting 0:07:53.320 --> 0:07:57.000 on that boom to continue uninterrupted, were likely overly ambitious 0:07:57.000 --> 0:07:59.120 about their sales targets. So that's why towards the end 0:07:59.160 --> 0:08:01.760 of twenty twenty three early twenty twenty four, the TV 0:08:01.840 --> 0:08:05.880 market was dominated by those quite dramatic headlines about global 0:08:05.880 --> 0:08:09.280 decline in EV sales below expectations. TV sales in reality 0:08:09.560 --> 0:08:12.400 the twenty twenty three growth rate was in line with 0:08:12.440 --> 0:08:15.880 what we expected, so in our previous long term Electric 0:08:16.000 --> 0:08:18.840 Vehicle outlook, we called global annual growth rate to reach 0:08:18.920 --> 0:08:21.360 roughly thirty four percent. It was thirty three percents, But 0:08:21.680 --> 0:08:23.760 only because we called it doesn't mean that there isn't 0:08:23.760 --> 0:08:27.280 a slowdown. The slowdwan is real in EV sales, but 0:08:27.320 --> 0:08:29.480 it's just not the same everywhere in the world. So 0:08:29.560 --> 0:08:33.160 countries like China, India, France, they are still showing healthy growth, 0:08:33.240 --> 0:08:35.480 but the latest data from Germany or the US are 0:08:35.559 --> 0:08:38.320 much more concerning. So in Germany the market is still 0:08:38.320 --> 0:08:41.040 getting to grips with the abrupt end of EV subsidies 0:08:41.080 --> 0:08:44.720 and late in December last year. In the US, lackluster 0:08:44.800 --> 0:08:48.800 performance from Port and GM and aging EV lineup from Tesla, 0:08:48.920 --> 0:08:53.199 and also the uncertainity around the outcome of the upcoming 0:08:53.240 --> 0:08:57.040 presidential elections are keeping the marketmuted. So in our outlook 0:08:57.120 --> 0:08:59.320 in the new term, EV sales continue to grow, but 0:08:59.360 --> 0:09:01.800 that growth is much slower than what we've been used 0:09:01.840 --> 0:09:04.040 to in previous years. So EV sales are set to 0:09:04.120 --> 0:09:06.480 rise from the thirteen point nine million in twenty twenty 0:09:06.480 --> 0:09:09.560 three to over thirty million by twenty twenty seven in 0:09:09.600 --> 0:09:12.320 our base case scenario, and that means that in the 0:09:12.320 --> 0:09:14.559 next four years the growth rate is an average twenty 0:09:14.600 --> 0:09:17.120 one percent per year, and not sixty one percent that 0:09:17.440 --> 0:09:19.679 was between twenty twenty and twenty twenty three. At the 0:09:19.720 --> 0:09:22.720 same time, the TV share of global new passenger vehicle 0:09:22.760 --> 0:09:25.959 sales jumps to thirty three percent by twenty twenty seven, 0:09:26.120 --> 0:09:29.480 and only China and Europe really are above that global 0:09:29.559 --> 0:09:32.920 average line by then. But just as with the slowdown, 0:09:32.960 --> 0:09:36.000 which isn't uniform for all the countries, some countries are 0:09:36.000 --> 0:09:38.520 growing much faster than that global average. So with many 0:09:38.600 --> 0:09:40.840 new low cost EV models set for launch in the 0:09:40.880 --> 0:09:43.640 next few years, some of the fastest growth rates that 0:09:44.240 --> 0:09:46.760 we are recording right now in our outlook are actually 0:09:46.760 --> 0:09:49.199 in those emerging economies. So EV sales are set to 0:09:49.280 --> 0:09:52.000 quintupol in Brazil by twenty twenty seven and triple in 0:09:52.080 --> 0:09:54.600 India by then. So, just to summarize, I think I 0:09:54.720 --> 0:09:57.240 sort of disagree with some of the statements that the 0:09:57.280 --> 0:10:00.679 demand for evs isn't there. Electric cars are still more 0:10:00.720 --> 0:10:04.160 expensive to buy than combustion vehicles, and this is quite 0:10:04.160 --> 0:10:07.040 an effective to terrent right now, especially in the environment 0:10:07.080 --> 0:10:09.880 of high interest rates. But as consumers have proven time 0:10:09.920 --> 0:10:12.440 and time again, I think when the price is right, 0:10:12.559 --> 0:10:15.880 the demand is there. And what really is blocking evsls 0:10:15.880 --> 0:10:18.640 at the moment is the lack of those affordable evs 0:10:18.679 --> 0:10:22.720 across mass market segments. And another proof of consumers actual 0:10:22.800 --> 0:10:25.880 real interest in evs. We're highlighting that in EVO this 0:10:26.000 --> 0:10:29.080 year is actually comes out and in tracking the actual 0:10:29.120 --> 0:10:32.199 bad vues. So in markets where evs are quite developed 0:10:32.600 --> 0:10:35.080 have a strong foothold, there's a growing evidence that they 0:10:35.080 --> 0:10:38.400 are winning over those most active drivers, so professional drivers. 0:10:38.440 --> 0:10:40.840 And actually it looks that in some of those countries 0:10:40.960 --> 0:10:44.680 matter election, vehicles are driving way more than combustion vehicles 0:10:44.760 --> 0:10:46.920 in China, in Netherlands that can be up to sixty 0:10:46.960 --> 0:10:49.920 percent more than combustion vehicles. So I think the overall 0:10:49.960 --> 0:10:53.120 message here is that high usage of evs among working 0:10:53.200 --> 0:10:55.680 drivers is really a strong signal to us that these 0:10:55.760 --> 0:10:57.120 vehicles are in demand. 0:10:57.640 --> 0:11:00.440 So this year, as I said, roughly twenty percent of 0:11:00.440 --> 0:11:02.599 global car sales will be plug in. So that's a 0:11:02.640 --> 0:11:04.640 pretty remarkable jump from just a few years ago. So 0:11:04.679 --> 0:11:06.800 one in five cars sold this year will be will 0:11:06.840 --> 0:11:09.000 be a plug in, And there's some countries further ahead 0:11:09.000 --> 0:11:11.040 and further behind, and about four percent of all the 0:11:11.040 --> 0:11:13.080 cars on the road in the world will be electric 0:11:13.120 --> 0:11:15.040 vehicles this year, so one in twenty five cars in 0:11:15.080 --> 0:11:17.720 the world. That fleet turnover takes time, but it is 0:11:17.800 --> 0:11:20.760 it is happening, and so I think our view is 0:11:20.760 --> 0:11:22.760 one of sort of cautious optimism that, yeah, there have 0:11:22.840 --> 0:11:24.960 been some headwinds, the growth rate is slowing, but the 0:11:25.000 --> 0:11:28.080 product is still getting better and consumers who use them 0:11:28.120 --> 0:11:30.640 are still generally happy with them. So I think that 0:11:30.720 --> 0:11:33.240 kind of underpins if there's a bit of a tension 0:11:33.240 --> 0:11:35.800 between the near term slow down and the long term 0:11:35.840 --> 0:11:38.200 writer outlook that Alex was sort of talking about there. 0:11:38.240 --> 0:11:41.360 That's kind of what's driving our optimism that that is 0:11:41.520 --> 0:11:43.320 that the trend isn't being derailed by some of this 0:11:43.400 --> 0:11:45.560 near term stuff. It's more just this is naturally what 0:11:45.600 --> 0:11:47.680 happens as industry is mature and get larger, the growth 0:11:47.760 --> 0:11:48.959 rate tends to slow down a little. 0:11:49.200 --> 0:11:51.800 So at one point it seemed like every car company 0:11:52.200 --> 0:11:56.680 was making a battery electric vehicle, and you know, this 0:11:56.840 --> 0:11:59.160 was becoming a very crowded space. But actually there have 0:11:59.200 --> 0:12:02.319 only been a few companies that have been really truly 0:12:02.440 --> 0:12:05.559 successful and in many respects are dominating the market. Can 0:12:05.600 --> 0:12:07.760 you talk a little bit about who you would see 0:12:07.760 --> 0:12:10.960 those companies to be and also kind of what it 0:12:11.080 --> 0:12:16.280 takes to be kind of synonymous with electric vehicle companies 0:12:16.640 --> 0:12:18.520 in various parts of the world. 0:12:18.800 --> 0:12:22.880 There's definitely sort of two tiers of automakers emerging. There's 0:12:22.880 --> 0:12:25.560 some of them that have winning models that are selling 0:12:25.600 --> 0:12:28.400 in real volume, and there's others that have launched evs 0:12:28.440 --> 0:12:30.800 but they're just not really at the right price point, 0:12:30.840 --> 0:12:32.800 the right range, or the right feature set to be 0:12:32.840 --> 0:12:35.080 able to sell in volume, and volume is really critical 0:12:35.080 --> 0:12:36.960 of course for getting costs down. You need to be 0:12:37.040 --> 0:12:39.400 sort of in one hundred thousand vehicles a year and 0:12:39.520 --> 0:12:41.520 up to sort of get that economies of scale that 0:12:41.559 --> 0:12:44.000 you need to make the economics of making vehicles really work. 0:12:44.040 --> 0:12:46.560 And not all automakers across that there's generally a bit 0:12:46.559 --> 0:12:49.640 of a divide between those who have built dedicated EV 0:12:49.880 --> 0:12:53.160 architectures that they're building their models on rather than those 0:12:53.160 --> 0:12:56.600 who are using modified architectures. Most of the automakers now 0:12:56.600 --> 0:12:59.400 have a dedicated BEEV architecture, though they're at different stages 0:12:59.400 --> 0:13:01.120 of scaling it up, and some of the models are 0:13:01.160 --> 0:13:04.200 still on older architecture, so for example, forwards F one fifty, 0:13:04.400 --> 0:13:06.160 there's been a lot of publicity about how bad the 0:13:06.160 --> 0:13:08.839 economics of Fords EV division are that is still on 0:13:09.640 --> 0:13:12.240 the traditional F one fifty platform, and they're not going 0:13:12.240 --> 0:13:14.520 to have a dedicated EV platform out until next year 0:13:14.600 --> 0:13:17.959 for larger trucks or twenty twenty six. So what we've 0:13:18.000 --> 0:13:20.240 seen is that the companies that are pushing hard on 0:13:20.280 --> 0:13:22.959 EV still are doing well. Byd is growing really quickly. 0:13:23.120 --> 0:13:25.600 Tesla's growth has slowed down, which is notable, but it's 0:13:25.600 --> 0:13:29.439 still a significant force and still the largest b EV seller, 0:13:29.559 --> 0:13:32.360 just barely ahead of BID. Some of the other Chinese 0:13:32.360 --> 0:13:36.719 manufacturers are doing well. Volvo is doing well, Hyundaikia are 0:13:36.720 --> 0:13:39.120 doing well again. The groups that have jumped in with 0:13:39.160 --> 0:13:41.680 both feet rather than sort of putting one toe into 0:13:41.679 --> 0:13:44.719 it are generally still selling pretty well, though again it 0:13:44.800 --> 0:13:46.839 varies by region and by brand. 0:13:47.160 --> 0:13:49.040 I think one thing to add here as well is 0:13:49.240 --> 0:13:53.000 that really those doing okay right now is automakers releasing 0:13:53.200 --> 0:13:56.080 more affordable EV models to the market. So those that 0:13:56.280 --> 0:13:59.560 really have the dedicated platforms have some economies of scale 0:14:00.080 --> 0:14:04.040 can actually tempt consumers with affordable attractive ypiece. 0:14:04.240 --> 0:14:07.160 Yeah, because you've mentioned this twice now, Alex, that electric 0:14:07.240 --> 0:14:11.560 vehicles remain more expensive than internal combustion engine vehicles, and 0:14:12.000 --> 0:14:15.520 that you know, potentially the early adopters who are willing 0:14:15.520 --> 0:14:19.240 to pay that premium for the electric vehicle, they have 0:14:19.880 --> 0:14:22.040 done it, and we might be reaching a saturation point 0:14:22.040 --> 0:14:24.760 on those early adopters, and the cost competitiveness is going 0:14:24.840 --> 0:14:27.400 to be the key to unlocking that next big jump 0:14:27.760 --> 0:14:31.400 in adoption. So how close are we to getting electric 0:14:31.480 --> 0:14:36.160 vehicles largely at parity or maybe someday less expensive than 0:14:36.200 --> 0:14:39.520 internal combustion engines from a total cost of ownership standpoint? 0:14:40.400 --> 0:14:43.960 Absolutely, So the biggest driver here is are obviously falling 0:14:44.000 --> 0:14:47.480 battery prices, and we can chat about it in detail 0:14:47.600 --> 0:14:50.640 in the moment, But when that up from price parity 0:14:50.720 --> 0:14:54.680 will be reached really depends on how fast battery prices 0:14:54.680 --> 0:14:57.080 will be falling, and it will also depend by the country, 0:14:57.120 --> 0:15:00.200 the econtoms of scale of each of the automakers the 0:15:00.320 --> 0:15:05.000 segment about which we're talking. But overall, with current battery 0:15:05.040 --> 0:15:08.240 buck prices the clients that we're observing, we see that 0:15:08.600 --> 0:15:12.600 up from price parity reached for most countries and most 0:15:12.680 --> 0:15:16.200 vehicle segments in sort of flight twenty twenties, early twenty 0:15:16.280 --> 0:15:18.680 thirties for most cars and segments. 0:15:19.000 --> 0:15:21.240 Well, let's talk about batteries then, because there's a lot 0:15:21.320 --> 0:15:23.600 going on in that space. So part of it has 0:15:23.640 --> 0:15:25.560 to do with battery chemistries, and then part of it 0:15:25.600 --> 0:15:28.080 has to do with where in the world they're manufactured 0:15:28.120 --> 0:15:30.120 and the price is associated with that. But let's start 0:15:30.120 --> 0:15:32.280 on the chemistry side of things. You know, what have 0:15:32.360 --> 0:15:34.880 been the changes in battery chemistries because we know for 0:15:34.920 --> 0:15:38.640 a long time different companies that were developing these batteries 0:15:38.640 --> 0:15:42.880 were looking to increase range or reduce the dependence on 0:15:43.120 --> 0:15:46.560 specific rare earth metals that had a specific cost or 0:15:46.600 --> 0:15:49.960 refluctuating too much. What is happening to battery chemistries and 0:15:50.120 --> 0:15:54.560 is it still actively changing? Are there developments there that 0:15:54.600 --> 0:15:56.520 have the potential to really disrupt the market. 0:15:56.720 --> 0:15:59.160 Yeah, there's definitely very interesting changes going on in this 0:15:59.240 --> 0:16:02.120 market right now. So what you're seeing is that lithium 0:16:02.120 --> 0:16:05.320 iron phosphate batteries, which contain no nickel or cobalt or manganese, 0:16:05.360 --> 0:16:07.960 are taking over a larger and larger share of both 0:16:08.000 --> 0:16:10.240 the EV market and the stationary storage market. They've already 0:16:10.240 --> 0:16:12.760 got a very highest share in stationary storage also in 0:16:12.800 --> 0:16:14.920 the bus market. What you're seeing now is they're taking 0:16:14.960 --> 0:16:18.200 over the passenger vehicle market. Most of the Chinese manufacturers 0:16:18.400 --> 0:16:23.560 prefer and use lithium iron phosphate batteries. They are generally cheaper, 0:16:23.840 --> 0:16:26.400 they're very stable. The main thing is their energy density 0:16:26.480 --> 0:16:29.000 is not as good as the NMC family nickel manganese 0:16:29.000 --> 0:16:31.560 cobalt family of battery chemistries. So what you've seen over 0:16:31.560 --> 0:16:34.200 the last couple of years is that LFP is gaining 0:16:34.240 --> 0:16:36.880 a larger and larger share of that battery market, and 0:16:36.880 --> 0:16:39.440 it's getting quite close to fifty percent of the global market, 0:16:39.480 --> 0:16:41.120 and we think it's going to cross over that sometime 0:16:41.160 --> 0:16:43.640 in the next eighteen months or so. And that's because 0:16:43.640 --> 0:16:45.760 everyone's looking at trying to cut costs, and this is 0:16:45.800 --> 0:16:48.840 the chemistry where we've seen the biggest, most significant cost declients. 0:16:49.000 --> 0:16:51.960 So that's kind of what's happening in the passenger vehicle market. 0:16:52.000 --> 0:16:54.520 The commercial vehicle market it's also happening as well, so 0:16:54.760 --> 0:16:56.320 you see more and more of a shift to LFP, 0:16:56.640 --> 0:16:59.240 again mostly for cost reasons, but also it's very stable 0:16:59.240 --> 0:17:03.120 and the performances quite reliable, so that's really changing the 0:17:03.200 --> 0:17:05.800 demand outlook for some of these raw materials that go 0:17:05.880 --> 0:17:09.000 into the batteries. So we have steadily reduced the forecast 0:17:09.200 --> 0:17:12.080 for the share or the amount of cobalt, nickel, and 0:17:12.119 --> 0:17:14.440 manganese that you're going to need to deliver all these batteries. 0:17:14.480 --> 0:17:16.440 That's been a steady thing that we've reduced over the 0:17:16.520 --> 0:17:18.840 last few years. As this share has risen, we may 0:17:18.880 --> 0:17:20.679 have to reduce it further in the future. But I 0:17:20.720 --> 0:17:24.120 think what's important here is is that there are all 0:17:24.119 --> 0:17:27.440 these different chemistries that you can make batteries with different 0:17:27.440 --> 0:17:30.200 cathode chemistries, and you now have sort of a stable 0:17:30.280 --> 0:17:33.280 of them out there, and if raw material prices for 0:17:33.320 --> 0:17:35.240 one thing or another go way up or way down, 0:17:35.400 --> 0:17:37.560 then you see some substitution effect. And part of what 0:17:37.600 --> 0:17:39.520 you're seeing with this rise of LFP is because a 0:17:39.560 --> 0:17:41.159 few years ago there was a spike in nickel and 0:17:41.200 --> 0:17:43.280 cobalt prices and people were all of a sudden very 0:17:43.280 --> 0:17:45.400 worried that that was going to derail the cost declines 0:17:45.400 --> 0:17:47.399 and evs in batteries. And what you saw as the 0:17:47.400 --> 0:17:50.280 market just responded and shifted more towards the lower cost chemistry. 0:17:50.359 --> 0:17:52.080 You may get a similar effect in the future with 0:17:52.119 --> 0:17:54.280 sodium ion batteries. We're starting to see the first of 0:17:54.320 --> 0:17:57.159 those being produced. It's pretty small scale for now, so 0:17:57.240 --> 0:17:59.639 the market is still very exposed to lithium. All the 0:17:59.680 --> 0:18:02.560 battery chemistries that we have at scale now still depend 0:18:02.600 --> 0:18:04.639 on lithium. But again, I think it just sort of 0:18:04.680 --> 0:18:07.080 highlights how markets respond to things. You get a spike, 0:18:07.200 --> 0:18:09.720 people don't just reduce in price. They don't just reduce 0:18:09.720 --> 0:18:12.119 demand and bring on more supply. They look at substitution, 0:18:12.359 --> 0:18:14.520 and substitution is something that you can now do to 0:18:14.680 --> 0:18:17.119 some degree within the battery market. So that's something we've 0:18:17.160 --> 0:18:18.800 been watching for a while and it's kind of picking 0:18:18.840 --> 0:18:19.600 up speed right now. 0:18:19.920 --> 0:18:22.480 So since you had brought up China, their role in 0:18:22.480 --> 0:18:26.240 the battery space is really important. They are definitely a 0:18:26.359 --> 0:18:29.960 dominant producer from the manufacturing end of batteries used both 0:18:29.960 --> 0:18:34.000 for vehicles and for stationary storage and other applications. So 0:18:34.040 --> 0:18:37.720 on the battery side, battery prices in China have really fallen. 0:18:37.840 --> 0:18:40.480 We discussed this in an earlier episode of this show, 0:18:40.720 --> 0:18:45.560 and there is some concern around overcapacity ultimately leading to 0:18:45.880 --> 0:18:49.359 dumping like we've seen solar industry. So what's happening with 0:18:49.400 --> 0:18:52.719 battery prices, specifically as it relates to Chinese production. 0:18:53.040 --> 0:18:56.119 Yeah, so battery prices in China are really plummeting. So 0:18:56.200 --> 0:18:58.720 just to kind of give an idea, when we did 0:18:58.720 --> 0:19:02.160 our battery price serve last year, globally, the average price 0:19:02.160 --> 0:19:05.120 of a lithium iron phosphate battery cell was in the nineties. 0:19:05.280 --> 0:19:09.440 So far January to May, in China, the average cell 0:19:09.480 --> 0:19:12.160 price is fifty four dollars per kill one hour. We've 0:19:12.200 --> 0:19:14.479 seen it even dip below fifty in some months. So 0:19:14.520 --> 0:19:17.600 that's a huge, huge drop. And so what's driving that. 0:19:17.720 --> 0:19:20.000 One of them is lower raw material prices than in 0:19:20.040 --> 0:19:23.240 previous years. Another one is over capacity. So we have 0:19:23.320 --> 0:19:26.080 seen significantly more capacity being built than there is demand 0:19:26.160 --> 0:19:30.600 for total Chinese battery production last year was more than 0:19:30.640 --> 0:19:32.800