Speaker 1: All toll. Since I saw the Inflection Reduction Act and
Speaker 1: the Chips and Science Act and the law, companies have
Speaker 1: announced eleven billion dollars in manufacturing and clean energy investments
Speaker 1: just in South Carolina, eleven billion dollars. Instead of exporting
Speaker 1: jobs like we did for decades, we're now creating jobs
Speaker 1: an exporting product.
Speaker 2: We've talked a few times on this show about how
Speaker 2: Washington is spending billions of dollars to lure battery factories,
Speaker 2: chip making plans, and other future tech manufacturing to the US.
Speaker 2: But there's a less visible side to this story. Smaller
Speaker 2: countries are losing out. They can't compete with the massive
Speaker 2: subsidies the US and other rich nations can offer companies
Speaker 2: to build on their shores. Bloomberg reporters Gabrielle Coppola and
Speaker 2: a Current and Brian Platt report that this competition is
Speaker 2: causing a lot of tension even among close allies like
Speaker 2: the US and Canada, and it raises all kinds of
Speaker 2: questions about winners and losers in an increasingly competitive global economy.
Speaker 3: I think the US is trying to almost build a
Speaker 3: new global supply chain that does not rely on China.
Speaker 4: So governments are willing to dig in and say that
Speaker 4: they've got to do this now to try and stay
Speaker 4: in the game.
Speaker 5: These companies now walk into the room saying pay up,
Speaker 5: or we're building it somewhere else.
Speaker 2: I'm West Kasova today on the big take. I'll see
Speaker 2: your billion dollars and raise you fifteen, Brian. The story
Speaker 2: starts with a factory in Windsor, Canada that gets caught
Speaker 2: up in this global competition. Can you paint a picture
Speaker 2: of what happened.
Speaker 5: Yeah, So this is a really huge battery factory being
Speaker 5: built in the city of Windsor, which is just across
Speaker 5: the US Canada border from Detroit. It's really in the
Speaker 5: heart of Canada's auto manufacturing area of southern Ontario. In
Speaker 5: March twenty twenty two, there was this big splashy announcement
Speaker 5: where Stilantis, which is one of the world's biggest automakers.
Speaker 5: It was number five in global sales last year. It
Speaker 5: produces cheap Chrysler Ram That's what people would best know,
Speaker 5: it asked, So, you know this major global auto company
Speaker 5: was building a battery factory in Canada for its electric vehicles,
Speaker 5: which was a huge deal for Canada to land one
Speaker 5: of these big battery factories. It's the next generation of
Speaker 5: auto manufacturing. Canada refers to these as anchor facilities, so
Speaker 5: you know, to spin off a whole bunch of parts
Speaker 5: suppliers around it. And so they announced it in March
Speaker 5: twenty twenty two. It came with a subsidy package of
Speaker 5: about a billion dollars and shovels hit the ground. They
Speaker 5: started building it, and then a few months later the
Speaker 5: US passed the inflation reduction at the IRA completely changed
Speaker 5: the incentives, I mean, completely upended the whole regime. And
Speaker 5: so when Canada had first announced this factory, it came
Speaker 5: with about a billion dollars in Canadian capital incentives capital
Speaker 5: grants for the factory, which was pretty typical for the
Speaker 5: amount of subsidies that Canada would usually give a factory
Speaker 5: like this. I mean it was maybe on the high end,
Speaker 5: but it was a pretty typical grant really. And then
Speaker 5: the IRA came along and suddenly this factory was if
Speaker 5: it was built in the US instead, it could have
Speaker 5: qualified for but one analyst told us is up to
Speaker 5: nineteen billion in production subsidies, and so it kicked off
Speaker 5: this huge problem for Canada of either it had to
Speaker 5: match what the US was offering or it was going
Speaker 5: to lose this factory that it had been so excited
Speaker 5: about landing in the first place.
Speaker 2: And Gabrielle, that's really what this story is about, is
Speaker 2: this race among countries to secure these factories by providing
Speaker 2: huge amounts of money in incentives. And the US is
Speaker 2: the biggest by far.
Speaker 3: Yes, I think you know, this is the biggest sort
Speaker 3: of industrial policy push, the biggest amount of money spent
Speaker 3: the US has really ventured into since the World War
Speaker 3: two era, and it has sort of just completely shaken
Speaker 3: up the way CEOs of car companies and I think
Speaker 3: chip companies and everyone is thinking about how they want
Speaker 3: to allocate capital around the world, where they want to
Speaker 3: put their investments.
Speaker 2: And like Brian said, you know, billion dollars for the
Speaker 2: government of Canada to build a new battery plan. A
Speaker 2: couple of years ago, that would have been like a jackpot,
Speaker 2: but now it's almost just like, yeah, talk to me later,
Speaker 2: I can get more money from the US.
Speaker 4: Yeah. The concern is there's now a race to the
Speaker 4: bottom and it's been unleashed by the US government. Remember,
Speaker 4: it's complete opposite to what the US would have preached
Speaker 4: in the decades postwar, like guy, we were saying there
Speaker 4: it was all about the market. We'll find the solution,
Speaker 4: companies will invest and get our ound two feet. Well,
Speaker 4: what happened in the intervening decades is China took off,
Speaker 4: especially in the EV space, and of course and of
Speaker 4: course the chip production story slid away from the US.
Speaker 4: And that's why the US is now putting this money
Speaker 4: on the table to bring this production home and try
Speaker 4: and get back in the race. It's doing two things.
Speaker 4: Like you say, it's a rewiring of economic philosophy around
Speaker 4: the world. It's aliening about US allies and of course
Speaker 4: foes alike. And of course the concern is now set
Speaker 4: office race whereby all the other countries have to come
Speaker 4: to the table and put money on the table, and
Speaker 4: the companies can choose. You can pick and choose where
Speaker 4: they want to go, depending on what grants are enough for.
Speaker 2: And that's just what happened, Brian, with this battery plan
Speaker 2: in Canada. All of a sudden it stopped the workers out.
Speaker 2: They were going to lose their jobs. But then what
Speaker 2: happened for Canada.
Speaker 5: It can't do what the US did right, which was
Speaker 5: to say, anybody who builds a plant in the US
Speaker 5: can get a subsidy for Canada. This is just an
Speaker 5: enormous amount of money. It does not have the fiscal
Speaker 5: firepower of the US, and so it's negotiating with each
Speaker 5: one of these companies for each plant. It eventually got
Speaker 5: resolved in July. They finally signed a subsidy deal worth
Speaker 5: about fifteen billion Canadian dollars. And so it's just in
Speaker 5: a whole other stratosphere now, and that's the game that
Speaker 5: Canada has to play now if it wants to attract
Speaker 5: these factories and Gabriell.
Speaker 2: It's not just Canada. But this has caused tensions among
Speaker 2: the US and a lot of its allies, just because
Speaker 2: the hundreds and hundreds of billions of dollars in the
Speaker 2: US has to spend is way more than other countries
Speaker 2: can spend. And if they do spend it, they're leveraging
Speaker 2: themselves pretty deeply.
Speaker 3: Yeah, I think the US is trying to almost build
Speaker 3: a new global supply chain that does not rely on China,
Speaker 3: and so it's trying to build these supply chains with
Speaker 3: its allies in EU, with Canada, Australia too. There already
Speaker 3: was this sort of bidding war for ev plants at
Speaker 3: the state level in the United States.
Speaker 2: Yeah, you hear about governors fighting with each other or
Speaker 2: trying to steal companies from one state to another.
Speaker 3: Right, I mean, that is sadly a decade's old phenomenon
Speaker 3: that's been going on a long time, but it's been
Speaker 3: super charged by all this investment. I really think actually
Speaker 3: that this started with the Trump administration when President Trump
Speaker 3: started talking about bringing back manufacturing jobs and really taking
Speaker 3: a sort of more hawkish stance against China. But so
Speaker 3: now that we have a Democrat in the White House,
Speaker 3: it's sort of that plus we're going to have a
Speaker 3: lot of bigger government intervention and like, and I said,
Speaker 3: that's really upending like almost half a century of like
Speaker 3: economic thought in the United States, where we just let
Speaker 3: the market solve everything. And you know, if you look
Speaker 3: at the auto industry, it's a perfect example to kind
Speaker 3: of question whether or not that really is always the
Speaker 3: best philosophy, because it's fine, except that when you have
Speaker 3: a global superpower like China with the biggest car market
Speaker 3: in the world, is not playing by the same rules
Speaker 3: as you. You know, how can you make sure that
Speaker 3: you can compete if your companies are not subsidized by
Speaker 3: the government, And we are of a decade behind China
Speaker 3: now when it comes to electric vehicle technology. The Biden
Speaker 3: administration believes that we did nothing for the last ten years,
Speaker 3: and we saw China get a leg up on electric vehicles,
Speaker 3: and now you see auto companies in Europe in the
Speaker 3: US at risk because they have to compete with cheaper
Speaker 3: Chinese evs. So really, all these investments are the Biding
Speaker 3: administration trying to make sure that you know, obviously they're
Speaker 3: very concerned about climate change, so they're comfortable picking battery
Speaker 3: technology and using that as a way to reduce emissions
Speaker 3: and electric vehicles. But yeah, they think that you need
Speaker 3: the government involved to kind of get us where we
Speaker 3: need to be.
Speaker 2: And this is a really interesting point, is that there
Speaker 2: seems to be two kind of competing tensions. On the
Speaker 2: one hand, the government has not always been very successful
Speaker 2: at picking winners and losers in the economy, and yet
Speaker 2: on the other hand, you write that the free market
Speaker 2: itself hasn't been up to the job of figuring this out.
Speaker 4: Yeah, as Gabrella says, there is a case for the
Speaker 4: defense in all of this when you speak to people,
Speaker 4: the headline reaction will be, oh, my goodness, you know
Speaker 4: there is a lot of money, there's a risk of
Speaker 4: waste here. But they will also say to you, well,
Speaker 4: China has stole in the march here, China, how do
Speaker 4: you state aid in the way that the US has not.
Speaker 4: There is a case now for government intervention with public money,
Speaker 4: especially in the area of climate change. So for green energy,
Speaker 4: for example, the market clearly is going to be sufficient
Speaker 4: on its own to get to do what's needed there.
Speaker 4: And then of course there's evs and the batteries and
Speaker 4: everything else that Gabrielle was talking about, So there is
Speaker 4: a case for the defense. However, I think what's unsettling
Speaker 4: people is the manner of execution and this scale of it,
Speaker 4: and its perception that the US has gone out on
Speaker 4: its own a head of we'll say, key allies in that,
Speaker 4: for example, with Canada, could there be a closer ally,
Speaker 4: where about the US and Canada are competing over companies
Speaker 4: for example. That's not a great look. And of course
Speaker 4: there's also concerned that ultimately there will be waste, there
Speaker 4: will be white elephants. You cannot throw public money at
Speaker 4: something on this scale and there will not be waste.
Speaker 4: And by the way, just to say, even the experts
Speaker 4: are struggling to tally the numbers. And this because you
Speaker 4: talk about it could be direct financial aid, could be
Speaker 4: a cheap loan, it could be a grant, it could
Speaker 4: be a tax break, it could be a tariff. Industrial
Speaker 4: subsidy takes so many different shapes and forms that the
Speaker 4: full tally of this might not be known for some time.
Speaker 2: Can you talk to us about how far ahead Chinese
Speaker 2: has been what that means for the US to keep up.
Speaker 4: In broad terms, their industrial policy, which was once a
Speaker 4: source of mockery for we'll say the broad West, has
Speaker 4: now been saying, oh, hang on a second, this is
Speaker 4: actually pretty good. But Jean is not alone. By the way,
Speaker 4: the whole East Asian model was all about state sponsorship,
Speaker 4: massive government intervention. It was the South Korea model, it
Speaker 4: was Japan's model, Taiwan as well, don't forget. And by
Speaker 4: the way, South Korea, for example, it's still very heavily
Speaker 4: involved in that space. They are also sponsoring the chip
Speaker 4: industry there in a significant way. But the no doubt,
Speaker 4: the net result of China is far ahead of the
Speaker 4: US when it comes to evs and batteries.
Speaker 3: I think people when they think about the United States,
Speaker 3: they think about, you know, how robust our economy is
Speaker 3: in you know, Silicon Valley and these cradles of innovation.
Speaker 3: And it's true that we are really good at inventing
Speaker 3: new technology. I think the challenge is that for the
Speaker 3: last fifty years, we've been outsourcing the manufacturing of technology
Speaker 3: and scaling it. And because we didn't, we thought that
Speaker 3: was just commodity stuff and didn't matter. But what happened
Speaker 3: is China started making all these goods and suddenly, you know,
Speaker 3: days at oh, well, now we've been making this for
Speaker 3: so long, we know how to make it better. Suddenly
Speaker 3: we're innovating, we're improving. And meanwhile, the West was still
Speaker 3: pretty married to combustion engine vehicles, and China knew they
Speaker 3: could never leapfrog the West on the combustion engine because
Speaker 3: we've been doing that for one hundred years. So they said, okay,
Speaker 3: you know, we don't care if you won't tell us
Speaker 3: your secrets on engines because we're going to build electric cars.
Speaker 3: And so it's really the expertise they've gained in manufacturing,
Speaker 3: which America thought was a commodity we didn't need to
Speaker 3: worry about. That is what makes them so far ahead
Speaker 3: of us. It's that they've got this massive scale and
Speaker 3: the key to manufacturing and being profitable is you make
Speaker 3: huge upfront investments billions of dollars, and then the way
Speaker 3: that you make a profit off of that is you
Speaker 3: make a lot of widgets or a lot of cars,
Speaker 3: and so China has been doing that for longer. And
Speaker 3: on top of that, they're subsidized by the government, these companies,
Speaker 3: and they have sort of a command economy where the
Speaker 3: government is basically saying, okay, you can only buy an
Speaker 3: EV in this place, or you know, these buses are
Speaker 3: all going to be electric now. So they've got this
Speaker 3: perfect little snowball globe to make it all happen in
Speaker 3: their economy. And that's why I think Biden and number
Speaker 3: one is they're not worrying about upsetting their allies. They're
Speaker 3: just going for speed. Because Biden's got four years at least,
Speaker 3: he doesn't know if he's going to get re elected,
Speaker 3: so he's trying to move the ball as far ahead
Speaker 3: as he possibly can. But that's the thinking is, we've
Speaker 3: got to build this in the United States. And we've
Speaker 3: got to move fast.
Speaker 2: After the break. This competition isn't just impacting neighbors close
Speaker 2: to home. So, Brian, we started out talking about Canada
Speaker 2: in the US. What are some of the other countries
Speaker 2: that have felt the same sort of sting when the
Speaker 2: US came in and bigfooted them on a manufacturing project.
Speaker 5: Pretty much every country in Europe and some of the
Speaker 5: key allies in Asia, South Korea and Japan, they're all
Speaker 5: going through the same thing that Canada's going through right now,
Speaker 5: which is they know that this is primarily a US
Speaker 5: and China dynamic. Here, the US trying to protect its
Speaker 5: own manufacturing base. There's a national security element of this
Speaker 5: to bringing this manufacturing back into the US. That is
Speaker 5: the primary dynamic. But it has this followut effect on
Speaker 5: all of these US trade allies. Companies looking at investment
Speaker 5: decisions in their countries suddenly look at the incentives on
Speaker 5: offer in the US and decide to leave there. They
Speaker 5: see this as generational decisions. Right, if you lose one
Speaker 5: of these battery factories, for example, to the US, you're
Speaker 5: not getting it back. That battery factory is gone.
Speaker 4: If you do look around the world, governments are responding
Speaker 4: especially US allies, they are responding with packages on their own,
Speaker 4: like in Germany, in normally in South Korea, the President
Speaker 4: of South Korea explicitly called out the industrial subsidy rate
Speaker 4: and they are backing a package there of tens of
Speaker 4: billions of US dollars into chip space. All of these
Speaker 4: key US allies are responding now. Of course, there are
Speaker 4: some concessions also being meeted out of the US government
Speaker 4: is coming to the table of these governments to try
Speaker 4: and to lay some of their concerns. But I think,
Speaker 4: as Gabriela was just mentioned there a few moments ago.
Speaker 4: You know, as I say, I mentioned earlier the case
Speaker 4: for the defense, there is a national security aspect to this.
Speaker 4: So governments are willing to dig in and say that
Speaker 4: they've got to do this now to try and stay
Speaker 4: in the game on evs, on batteries, on climate change. So,
Speaker 4: you know, I think we've gone past the point of
Speaker 4: no return on this.
Speaker 3: I spoke with Carlos Tavares, who's the CEO of Stilantis,
Speaker 3: and even he accepts the fact that there are certain
Speaker 3: strategic areas where it even is in you know, the
Speaker 3: national security interest to make sure we can make it ourselves.
Speaker 3: I mean during the pandemic when you had all the
Speaker 3: COVID shutdowns of plants around the world and nobody could
Speaker 3: get any semiconductor chips out of Asia, that helped spark
Speaker 3: terrible inflation in the United States. And it totally I mean,
Speaker 3: the car companies were their hands were just tied. They
Speaker 3: were helpless. So I think that was a really important
Speaker 3: lesson that was not lost on them. And so even
Speaker 3: though I think there's concern among the private sector about well,
Speaker 3: where is this going to end, and are we going
Speaker 3: to you know, demand that we make everything in our
Speaker 3: home country, because there's something to be said for you know,
Speaker 3: cheaper goods from lower cost countries. That's sort of been
Speaker 3: the you know, mantra of the auto industry since the
Speaker 3: seventies now, But even they acknowledge that there is this
Speaker 3: point about strategic value and making things for the sake
Speaker 3: of national security. I think that is accepted by a
Speaker 3: lot of leaders in the auto industry. I think the
Speaker 3: debate is like what is the right balance? And I
Speaker 3: think that is a very tough question to answer with
Speaker 3: a lot of people have long entrenched either political or
Speaker 3: ideological or economic beliefs about how they think things should work,
Speaker 3: and that is all being challenged by the rise of China.
Speaker 4: I think the Gabrielle's point, this is not about manufacturing
Speaker 4: rich large right. The items that we buy in our
Speaker 4: kitchen every day of the week, our TV sets, the
Speaker 4: clothes we wear, the computers we have, all of that stuff.
Speaker 4: That wholesale production is not going to be pulled out
Speaker 4: of China anytimes. You an order rest of Asia and
Speaker 4: come back to the so called Western world. Right, this
Speaker 4: is about very specific areas. This industrial subsidy rates, that's
Speaker 4: a whole other story. We will still be buying made
Speaker 4: in China or made in East Asia for a long
Speaker 4: time to come and.
Speaker 2: End in the story, there's this one very vivid example
Speaker 2: of how it's the rich countries that can afford to
Speaker 2: spend this kind of money.
Speaker 4: Oh yes, Germany, there is this very vivid example whereas
Speaker 4: they came up a ten billion euro for Intel to
Speaker 4: set up a battery plant there. That works out at
Speaker 4: roughly one million euro for each of the ten thousand
Speaker 4: jobs that they envisaged the plant will create. So that
Speaker 4: tells you the extent that governments are willing to go
Speaker 4: to this And by the way, This goes to another
Speaker 4: part of this story that people that institutions like the
Speaker 4: IMF and others are warning about. They're warning about something
Speaker 4: called economic fragmentation, whereby the poorer countries you're going to
Speaker 4: lose out. And remember, the poor countries, their whole elevator
Speaker 4: pitches is cheap manufacturing. Come to us, we can do
Speaker 4: this for you. Well, if the rich countries are now
Speaker 4: in the game in such a significant way saying bring
Speaker 4: these plants back to us, the concern is it will
Speaker 4: have an impact on investment that would have gone to
Speaker 4: those poor countries. Yes, they will always hold on to
Speaker 4: the cheaper, lower value added manufacturing as I mentioned earlier,
Speaker 4: but they certainly won't be in the game to get
Speaker 4: some of this big, high tech, high value added stuff.
Speaker 2: When we come back. Why exactly does it matter where
Speaker 2: these factories end up? And ultimately, why does it matter
Speaker 2: that there are these huge subsidies in some countries and
Speaker 2: not others. Are there big global knock on effects to
Speaker 2: having this kind of imbalanced.
Speaker 4: Yeah, Well, for all the criticism and concerned about this
Speaker 4: industrial subsidy race, there are no shortage of academics who
Speaker 4: argue that every economy needs manufacturing at its core. A
Speaker 4: manufacturing economy drives innovation, it leads to dynamism. It's all
Speaker 4: about ensuring your economy remains at the cutting edge of
Speaker 4: world class research and development. And if you want to
Speaker 4: be a big industrial power, you have to have this
Speaker 4: core manufacturing base. And that's part of the story in
Speaker 4: the US where there was a concerns being hollered at
Speaker 4: and losing out to big rivals, obviously China, and now
Speaker 4: there are plenty who will say to US had to
Speaker 4: make this intervention, not just the US, but Europe and others.
Speaker 5: Also there's a political element to these manufacturing jobs as well.
Speaker 5: That Prime Minister Justin Trudeau and Canadian Finance Minister Christia
Speaker 5: Freeland have both talked about this in their speeches.
Speaker 6: Because if we want small communities to be thriving, vibrant
Speaker 6: places where people can be proud of their work, where
Speaker 6: young families get to stay and grow, we need good
Speaker 6: jobs and great careers.
Speaker 5: You need these manufacturing jobs. They're so important because they
Speaker 5: provide well paid, stable work for thousands and thousands of people,
Speaker 5: and when you don't have that in your country, you
Speaker 5: start to get a voter base that becomes anti establishment
Speaker 5: that feels detached from the economy that they're living in.
Speaker 5: They don't have stable jobs, they're reliant on gig economy
Speaker 5: and precarious labor. Even from a political perspective, the sheer
Speaker 5: political perspective of just people feeling like they live in
Speaker 5: a country that supports them and has a strong economy
Speaker 5: and that they have stability in their own lives. These
Speaker 5: manufacturing jobs are hugely important for that.
Speaker 2: And ender with so much at stake other backchannel communications
Speaker 2: among leaders, those are all allies to kind of smooth
Speaker 2: over anger resentment at the US and other big economies
Speaker 2: essentially stealing factories away.
Speaker 4: They're clearly our communications going. You can already see that
Speaker 4: the European Union have toned down our criticism from ready
Speaker 4: ward start of the year because datamselves and are just
Speaker 4: figuring out we'll wait a minute, how do we get
Speaker 4: in the game and how do we respond? As I
Speaker 4: mentioned earlier, there has been some meeting of ways with
Speaker 4: South Korea and some of their concerns and where to
Speaker 4: could be carve outs. Indonesia has also win talk, So
Speaker 4: the US is certainly trying to placate some of these
Speaker 4: concerns and as I say to you, there is a
Speaker 4: kind of feeling with this debate that on a headline level,
Speaker 4: there is like you first, you know you're breaking the
Speaker 4: rules of the game, but honor the bonnet. You know,
Speaker 4: in the same conversation, a lot of experts will say
Speaker 4: to you, there's a case for doing this. Lots of
Speaker 4: Gorbman's feel that they also need to do this. So
Speaker 4: it's a reckoning moment for the world of manufacturing.
Speaker 2: Gabrielle, is it working? We talked about how China's march
Speaker 2: ahead was one of the things that spurred these subsidies.
Speaker 2: Is the US is the West closing that gap?
Speaker 3: I think it's going to be hard to really fully
Speaker 3: close the gap, but I think if we can at
Speaker 3: least satisfy some of our own demand, then that'll be
Speaker 3: a big achievement. And to some degree, this was already happening.
Speaker 3: I mean, the automakers were already investing in battery plants
Speaker 3: in the United States before the IRA was passed, because
Speaker 3: everyone can see the writing on the wall that we're
Speaker 3: moving towards electrification, and auto companies in general they want
Speaker 3: to localize, you know, they want to build where they sell.
Speaker 3: So you have that the real key is are we
Speaker 3: bringing in things like the other parts of the supply
Speaker 3: chain to supply those batteries, because that's really where the
Speaker 3: choke points are, where you know, China really has control
Speaker 3: they process something like you're around ninety percent of these
Speaker 3: critical minerals that go into batteries. And on that front,
Speaker 3: that still remains to be seen because I think you know,
Speaker 3: you see the Department of Energy here in the United
Speaker 3: States giving out loans and grants to kind of jumpstart
Speaker 3: some of this stuff, but we still need to see
Speaker 3: the private sector kind of participate in that that. I
Speaker 3: don't think the government can do that all by themselves.
Speaker 3: And we're in a very high interest rate environment right now.
Speaker 3: It's not the greatest time to invest. The impetus is there.
Speaker 3: The incentives are certainly working. I mean in terms of
Speaker 3: people are building battery plans, and the automakers and the
Speaker 3: battery makers Tesla, gm Ford, whoever, Hundai, they're all very
Speaker 3: excited about those subsidies because at another important point is
Speaker 3: it's going to help them bring down the cost of
Speaker 3: electric vehicles. You know, if evs are so much more
Speaker 3: expensive than a gas car, nobody's going to buy them, and.
Speaker 2: Is all this sustainable. The Inflation Reduction Act was obviously
Speaker 2: a giant amount of money, but it won't last forever,
Speaker 2: creating expectations that can't be met in the future.
Speaker 4: Already happening at a time when government debt loads are
Speaker 4: at records are close to records after what happened due
Speaker 4: to the pandemic. Interest rates after high some decades, which
Speaker 4: means to paying back all of that money is very expensive.
Speaker 4: There's no doubt that this big shift if it happens, say,
Speaker 4: fifteen years ago, when money was at rock bottom interest rates,
Speaker 4: it might have been a smarter move, but it is
Speaker 4: a more expensive time to make adjustment, no doubt about it.
Speaker 4: But the defenders will tell you it's an economic multiplier.
Speaker 4: It generates jobs under ground. These jobs generate activity in
Speaker 4: their neighborhood, they spend money, they create other jobs along
Speaker 4: the supply chain. So there's also an economic dividend that
Speaker 4: goes with it, or at least that's the great hope
Speaker 4: with industrial policy.
Speaker 5: Anyway, if we're.
Speaker 3: Forward looking, you think about how much is this going
Speaker 3: to cost and whatnot? The diary does expire these battery provisions?
Speaker 3: Do it start to run out? Around twenty twenty six,
Speaker 3: twenty twenty seven, and they are dependent on how many
Speaker 3: batteries these carmakers and battery producers make. So if evs
Speaker 3: aren't selling and they're not going to make as much,
Speaker 3: then it's not going to cost the governments as much money.
Speaker 3: So there's a bit of sort of uncertainty there as
Speaker 3: to what the final price tag will be. It's kind
Speaker 3: of going to depend on the market. And another thing,
Speaker 3: of course, is that in the United States, even though
Speaker 3: there is a lot of bipartisanship around, you know, being
Speaker 3: more hawkish on China, the Republican Party is not super
Speaker 3: jazzed about this massive outlay of government spending in the market.
Speaker 3: So if we have a Republican president, you know, after
Speaker 3: twenty twenty four, they might not want to fund all
Speaker 3: the provisions in the IRA or things could change. So
Speaker 3: that's just as we look ahead, those are some sort
Speaker 3: of you know, caveats to the picture of how it
Speaker 3: might change.
Speaker 4: I bet we will all be driving electronic vehicles, say
Speaker 4: five years from there.
Speaker 3: At least a hybrid. Well, we'll see.
Speaker 2: And Gabrielle Brian, thanks so much for coming on the show.
Speaker 2: Thank you, thanks for listening to us here at The
Speaker 2: Big Take. It's a daily podcast from Bloomberg and iHeartRadio.
Speaker 2: For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts,
Speaker 2: or wherever you listen, and we'd love to hear from you.
Speaker 2: Email us questions or comments to Big Take at Bloomberg
Speaker 2: dot net. The supervising producer of The Big Take is
Speaker 2: Vicki Burgolina. Our senior producer is Catherine Fink. Rebecca Shasson
Speaker 2: is our producer. Our associate producer is Sam Gobauer. Raphael
Speaker 2: mcili is our engineer. Our original music was composed by
Speaker 2: Leo Sidrin. I'm West Kasova. We'll be back tomorrow with
Speaker 2: another Big Take.