# Electric Vehicle Outlook 2023: On the Road to Net Zero

An episode of [Switched On](https://invisiblenetwork.ai/podcast/1469286286), 12 Jul 2023, 34 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/01a10738-3608-4dec-883c-ae3c00026b36/7e381383-6d04-41d3-9579-b0310103652d/audio.mp3?utm_source=Podcast&in_playlist=6d114f63-833d-4b78-bbf5-ae3c00026b44

Electric vehicle sales are gaining momentum around the world, ushering in the end of the internal combustion era. On today’s episode, Dana speaks with Colin McKerracher, BNEF’s Head of Advanced Transport, about his team’s newest Electric Vehicle Outlook. Delving into electrification, shared mobility and autonomous driving (among other factors), the annual report considers how road transport will evolve in the coming decades – and what these changes could mean for the automotive, energy, infrastructure and battery-materials markets. Together, Dana and Colin dive into this flagship publication, considering policy changes and the pace of global EV adoption, the speed bumps that still face e-trucking and the advances in tech that could pave the road to net zero. BNEF's Long-Term Electric Vehicle Outlook 2023 can be found at BNEF<GO> on the Bloomberg Terminal, on bnef.com or on the BNEF mobile app. A publicly available executive summary can also be found here: https://www.bnef.com/flagships/ev-outlook See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: This is Dana Perkins and you're listening to Switch on
[0:02] Speaker 1: the BNF podcast. Earlier in June, BNAF released the twenty
[0:06] Speaker 1: twenty three edition of the Electric Vehicle Outlook, or EVO
[0:10] Speaker 1: for short. It's one of our flagship publications where we
[0:13] Speaker 1: take a detailed look at how electrification, shared mobility, autonomous driving,
[0:18] Speaker 1: and other factors are going to impact road transport in
[0:21] Speaker 1: the coming decades. The report is written by our extensive
[0:25] Speaker 1: team of specialists from around the world. They can look
[0:28] Speaker 1: at scenarios for how these trends are going to impact
[0:31] Speaker 1: the automotive, energy, infrastructure, and battery materials markets. So we
[0:35] Speaker 1: want to know what's changed since twenty twenty two and
[0:38] Speaker 1: set it against net zero targets and also talk about
[0:41] Speaker 1: which areas of the electric vehicle fleet are succeeding and
[0:44] Speaker 1: which might be lagging. In today's episode, I get to
[0:47] Speaker 1: speak with benef's head of Advanced Transport, Colin Mcharricer, and
[0:50] Speaker 1: together we go through consumer demand for electric vehicles across
[0:53] Speaker 1: different global regions, along with the current mid and long
[0:57] Speaker 1: term sales forecasts. We also discussed the chin challenge is
[1:00] Speaker 1: facing medium to heavy commercial fleets and the evolution of
[1:04] Speaker 1: battery chemistries and the new battery tech that is now
[1:07] Speaker 1: starting to reach the commercial market. Now, of course this
[1:10] Speaker 1: is just a snapshot into what is an extensive report,
[1:13] Speaker 1: but we've pulled out a few nuggets for you and
[1:14] Speaker 1: hopefully you enjoy. And if you do like it and
[1:17] Speaker 1: you want to hear more podcasts from us, make sure
[1:19] Speaker 1: to subscribe to receive updates on future episodes. And also
[1:23] Speaker 1: if you want to share it with others, the best
[1:24] Speaker 1: way to do that is to give us a rating
[1:26] Speaker 1: on Apple Podcasts or Spotify. Now my conversation with Colin
[1:30] Speaker 1: about the twenty twenty three Electric Vehicle Outlook from vna Hi, Colin,
[1:44] Speaker 1: thank you for joining us again today.
[1:47] Speaker 2: Hid integrate to be on the program again.
[1:48] Speaker 1: So we're here to talk about this year's edition. So
[1:51] Speaker 1: the twenty twenty three Electric Vehicle Outlook. So we do
[1:54] Speaker 1: one of these every year, which is a herculean effort.
[1:57] Speaker 1: And I know there are numerous members both in your
[2:00] Speaker 1: team and in other parts of VNF that all contribute
[2:03] Speaker 1: to making this report happen. And so for those who
[2:06] Speaker 1: maybe are not familiar with the report, or maybe didn't
[2:08] Speaker 1: listen to our show last year where we went over
[2:10] Speaker 1: some of the findings, which a few things have changed
[2:13] Speaker 1: between then and now. Can you just give a very
[2:15] Speaker 1: quick overview of what this is and perhaps isn't.
[2:18] Speaker 2: Yeah, definitely. So the Electric Vehicle Outlook is our outlook
[2:21] Speaker 2: at BNF for all of road transport. So despite the name,
[2:25] Speaker 2: it's not only about electric vehicles, it's about everything that's
[2:28] Speaker 2: going on with the vehicles on the road in the world.
[2:31] Speaker 2: And it also bears mentioning that that isn't just passenger cars.
[2:35] Speaker 2: So we immediately think of cars, but of course there's
[2:39] Speaker 2: vans and trucks that are moving around all the goods
[2:40] Speaker 2: around the world. In some markets, two and three wheelers
[2:43] Speaker 2: are a big part of the mobility mix. There's municipal
[2:45] Speaker 2: buses as well. And what you find as you dig
[2:47] Speaker 2: into these is that not only is each country different,
[2:50] Speaker 2: but each segment is on its own sort of different trajectory.
[2:54] Speaker 2: So when we do this exercise, what we're trying to
[2:56] Speaker 2: figure out is what's happening, and again not just with
[2:59] Speaker 2: electric vehicles, with combustion vehicles and with other aspects of
[3:02] Speaker 2: the road transport mix around the world and across all
[3:05] Speaker 2: these different segments. So we sort of start with what
[3:07] Speaker 2: does the world look like today, and that is saying
[3:10] Speaker 2: literally how much do people move around in each country
[3:14] Speaker 2: and how much do goods move around? So in people
[3:16] Speaker 2: you're talking about something like a passenger kilometer, or in
[3:18] Speaker 2: freight you're talking a freight ton kilometer, and then we
[3:21] Speaker 2: look at how those might change over time. So that's
[3:24] Speaker 2: where the things around, Okay, the adoption of electric vehicles
[3:26] Speaker 2: comes in. That's where things like shared mobility. That's where
[3:29] Speaker 2: things like autonomous driving, changes in consumer behavior, demographic changes,
[3:33] Speaker 2: urbanization changes, and all of these things come together to
[3:36] Speaker 2: form our outlook for what happens for road transport. And
[3:39] Speaker 2: then once we've got that outlook together about where we
[3:42] Speaker 2: think each segment and country is going, we then map
[3:45] Speaker 2: that onto on all these other areas, and those are
[3:47] Speaker 2: things like electricity demand, battery metals and materials, CO two emissions,
[3:52] Speaker 2: oil demand, infrastructure needs, and of course vehicle sales as well.
[3:56] Speaker 1: So that was for the people who are not necessarily
[4:00] Speaker 1: avid followers of this one year to the next, but
[4:02] Speaker 1: for those who are, there were some new sections this year,
[4:05] Speaker 1: and within that we added a section on Nordic's in California.
[4:09] Speaker 1: Can you explain why those sections were added and then
[4:12] Speaker 1: let's come to some of the other things that maybe
[4:14] Speaker 1: are newer updates for your loyal followers who have been
[4:17] Speaker 1: waiting for this year's installment of the electric vehicle outlook.
[4:20] Speaker 2: Yeah, so the Nordics in California. Every year we get
[4:22] Speaker 2: asked for by quite a few of our clients to
[4:24] Speaker 2: add different countries. And each time you add a country,
[4:26] Speaker 2: it's quite a bit of work because you have to
[4:27] Speaker 2: go and dig up all of the data about the
[4:29] Speaker 2: mobility mix in that country and all the other factors
[4:32] Speaker 2: that I mentioned about what might change that in the future.
[4:34] Speaker 2: So we try and limit it to adding kind of
[4:36] Speaker 2: one or two each year. And what we wanted to
[4:38] Speaker 2: do this year is to show what does the transition
[4:41] Speaker 2: look like in some leading areas. So California is of
[4:43] Speaker 2: course leading the US, but as also a leader globally,
[4:47] Speaker 2: the Nordics is probably the furthest along this transition of
[4:49] Speaker 2: any group of countries or states. I'm sitting in Oslo
[4:52] Speaker 2: and Norway right now. Over eighty percent of vehicle sales
[4:55] Speaker 2: are fully electric. Markets like Sweden, Finland others are not
[4:58] Speaker 2: too far behind. So what we I wanted to do
[5:00] Speaker 2: was play out some of the emissions and energy market
[5:04] Speaker 2: impacts and fleet turnover impacts in countries and regions where
[5:07] Speaker 2: electricic flood option is going quite quickly, So that was
[5:10] Speaker 2: the logic behind adding those. Last year we added a
[5:12] Speaker 2: lot of detail on Southeast Asia because we were seeing
[5:14] Speaker 2: really interesting things happening there. Next year we'll probably add
[5:17] Speaker 2: another big emerging economy, so somewhere potentially like Brazil or Mexico,
[5:21] Speaker 2: where again the mix some mobilities different and the timelines
[5:24] Speaker 2: are different for all of the things that we're seeing
[5:26] Speaker 2: happen around the world.
[5:27] Speaker 1: So a bit of a case study and something that
[5:29] Speaker 1: you could in theory extrapolate out.
[5:30] Speaker 2: Yeah, exactly what we want to have is indicative countries
[5:33] Speaker 2: or regions that people can understand. So we now cover
[5:36] Speaker 2: fourteen major auto markets around the world.
[5:38] Speaker 1: So there are a lot of different sections in our
[5:41] Speaker 1: research on the vehicle outlook. Which section matters the most?
[5:44] Speaker 1: Obviously they all matter, and it's hard to pick your
[5:47] Speaker 1: favorite child, but in this you know what is weighted
[5:49] Speaker 1: most heavily. When you think about things like batteries, battery chemistry,
[5:53] Speaker 1: or supply chains or charging networks or consumer trends, which
[5:57] Speaker 1: one would you say is probably the most influential part
[6:01] Speaker 1: of actually determining what these long term forecasts really look like.
[6:05] Speaker 2: Yeah, I mean the starting point for BNF has been
[6:08] Speaker 2: for a long time that batteries are really what's enabling
[6:12] Speaker 2: this change. And you can take the view that well,
[6:15] Speaker 2: governments could just force the issue and push every all
[6:18] Speaker 2: the markets over into electric with enough taxation or subsidies,
[6:21] Speaker 2: but that gets politically difficult in a lot of countries
[6:24] Speaker 2: if the underlying technology isn't continuing to get cheaper and better. Fortunately,
[6:28] Speaker 2: the technology is continuing to get better. It actually got
[6:31] Speaker 2: more expensive last year due to spike and raw material prices,
[6:33] Speaker 2: So we go into that a lot and look at
[6:35] Speaker 2: what's happening there. But I would say the starting point
[6:37] Speaker 2: is still really in terms of what's going to change
[6:40] Speaker 2: when we talk about electric vehicles anyway, is certainly the
[6:43] Speaker 2: battery side. So one of the things we did this year,
[6:45] Speaker 2: for example, is say, look, battery prices went out slightly
[6:48] Speaker 2: last year, what do we think happens and what's some
[6:51] Speaker 2: scenario analysis for when you get to in the passenger
[6:54] Speaker 2: vehicle segment price parity with combustion vehicles based on different
[6:57] Speaker 2: battery experienced curves or learning rates that we saw them
[7:00] Speaker 2: go up for the first time last year. So again
[7:02] Speaker 2: looking at the underlying technology, battery chemistry mix, and price outlook,
[7:06] Speaker 2: it still forms the basis for us being able to
[7:09] Speaker 2: say with some confidence that things are going to continue
[7:11] Speaker 2: to accelerate quickly on ev adoption. And so again you
[7:15] Speaker 2: said it, Yeah, I don't want to pick a favorite child,
[7:18] Speaker 2: but I would say that's probably the most foundational part
[7:21] Speaker 2: of the work that we're doing. Now. We also do
[7:23] Speaker 2: this net zero scenario. So the base scenario in the
[7:26] Speaker 2: report is this economic transition scenario, which says, look, this
[7:29] Speaker 2: is led by techno economic forces and that's the primary
[7:33] Speaker 2: thing that drives changes in the vehicle markets around the world.
[7:35] Speaker 2: And we assume that no new policies are in place,
[7:38] Speaker 2: and again that's where the battery cost stuff really becomes critical.
[7:41] Speaker 2: But we also run a net zero scenario, which is
[7:43] Speaker 2: more of a backcasting exercise that says, if we want
[7:46] Speaker 2: to get to a net zero capable fleet by twenty fifty,
[7:48] Speaker 2: what has to happen. That's less reliant on the battery
[7:51] Speaker 2: price part, because you're sort of saying, well, if you
[7:54] Speaker 2: believe we can get on track, here's where it would
[7:56] Speaker 2: have to go, and here's the policy recommendations to keep
[7:59] Speaker 2: it on track. Obviously, that's a bit of a different
[8:01] Speaker 2: exercise than sort of what's the trajectory we're on today.
[8:03] Speaker 1: But the punchline ultimately being that it is possible. A
[8:06] Speaker 1: net zero future is possible with enough will.
[8:10] Speaker 2: Yeah, definitely. And I mean one of the things we
[8:12] Speaker 2: sort of show is that some countries are actually getting
[8:14] Speaker 2: kind of close, and some segments are getting kind of
[8:16] Speaker 2: close to the net zero scenario. So when we break
[8:19] Speaker 2: out two wheelers, three wheelers, buses, those segments are actually
[8:23] Speaker 2: pretty close. Three wheelers is pretty much on track, two
[8:26] Speaker 2: wheelers and buses are pretty close, and then you get
[8:29] Speaker 2: into light duty vans and commercial vehicles and passenger vehicles,
[8:33] Speaker 2: and there's a lot of variation by country, but again
[8:36] Speaker 2: you're starting to get some countries that are looking like
[8:38] Speaker 2: they're going to be able to phase out combustion vehicle
[8:40] Speaker 2: sales at least very close to by the early to
[8:44] Speaker 2: mid twenty thirties. And that's roughly what you need to
[8:47] Speaker 2: stay on track for a carbon neutral capable fleet by
[8:49] Speaker 2: twenty fifty. Now, it's worth noting that twenty fifty carbon
[8:53] Speaker 2: neutral capable fleet you also have to have a lot
[8:55] Speaker 2: of stuff going on in the power system to decarbonize
[8:58] Speaker 2: the power system to enable that fleet to actually operate
[9:00] Speaker 2: in a zero emissions way. And so that's a separate
[9:03] Speaker 2: part of bnef's work, the New Energy Outlook. But what
[9:05] Speaker 2: we're doing here is looking at can the fleet of
[9:07] Speaker 2: vehicles on the road operate without producing CO two emissions.
[9:11] Speaker 1: So there's a lot of money at stake. This is
[9:14] Speaker 1: definitely a big industry and when we look at consumer demand,
[9:17] Speaker 1: electric vehicle sales are increasing. Where are they I guess
[9:22] Speaker 1: now in terms of sales and where do we expect
[9:26] Speaker 1: them to be in the future, you know, twenty thirty
[9:28] Speaker 1: all the way out to twenty fifty, both in terms
[9:31] Speaker 1: of percentage of total vehicles sold, but also in terms
[9:34] Speaker 1: of how much money is there actually flooding into this
[9:36] Speaker 1: specific part of the market.
[9:38] Speaker 2: Yeah, let's start with the near term picture. So last
[9:41] Speaker 2: year there was about ten point five million plug in
[9:44] Speaker 2: vehicle sold, so that's battery electrics and plug in hybrids.
[9:47] Speaker 2: This year, we think there's going to be about fourteen
[9:49] Speaker 2: million sold a little higher than that. Actually, we're trending
[9:51] Speaker 2: a little bit above that, and by twenty twenty six,
[9:54] Speaker 2: we're forecasting about twenty seven million sales, and just to
[9:57] Speaker 2: translate that into percentage terms, that's about thirty percent, so
[10:01] Speaker 2: just under a third of the global vehicle market we're
[10:03] Speaker 2: saying as plug in vehicles by twenty twenty six, and
[10:06] Speaker 2: that's really not very far away, and that's that's coming
[10:08] Speaker 2: at us quite quickly. What's important again there is that
[10:12] Speaker 2: there's quite a lot of regional variations. So countries like
[10:15] Speaker 2: China are probably going to be above fifty percent by then,
[10:17] Speaker 2: regions like Europe above forty percent, and then there's kind
[10:20] Speaker 2: of everybody else, and there's quite a big spread between
[10:23] Speaker 2: the some of the other markets. So the near term
[10:25] Speaker 2: picture is one of continued pretty rapid acceleration, but then
[10:30] Speaker 2: a lot of variety between the different countries. And we
[10:33] Speaker 2: think the fleet of passenger vehicles we're talking about here
[10:35] Speaker 2: crosses one hundred million evs by twenty twenty six. Now,
[10:40] Speaker 2: one of the things that kind of falls out of
[10:41] Speaker 2: that is that combustion vehicle sales have already peaked. So
[10:45] Speaker 2: they actually peaked in twenty seventeen, they declined in twenty
[10:48] Speaker 2: eighteen and twenty nineteen, then really dropped in twenty twenty
[10:51] Speaker 2: because of COVID, recovered a bit in twenty twenty one
[10:53] Speaker 2: and recovering again in twenty twenty two, but all of
[10:56] Speaker 2: that recovery is essentially on the electric side, and we
[10:59] Speaker 2: don't really see them ever getting back to those twenty
[11:02] Speaker 2: seventeen highs. You just look at what's going on in China,
[11:05] Speaker 2: where the most recent month sales are, you're already at
[11:07] Speaker 2: a third of sales. In Europe, you're running around twenty percent.
[11:10] Speaker 2: It's just really hard to offset that anywhere else in
[11:13] Speaker 2: the world to get up to the levels of combustion
[11:15] Speaker 2: vehicle sales we saw in twenty seventeen. So that's kind
[11:17] Speaker 2: of a near term implication is that they're already combustion
[11:20] Speaker 2: vehicle sales are already twenty percent off their peak of
[11:22] Speaker 2: twenty seventeen, and they're probably going to be more like
[11:24] Speaker 2: forty percent off their peak by the time you get
[11:26] Speaker 2: to twenty twenty six, and they're now in terminal decline.
[11:29] Speaker 2: When we look at it further out, a couple of
[11:31] Speaker 2: things happen. One this gap between the countries, it sticks
[11:35] Speaker 2: around for a while, but then it starts to even
[11:38] Speaker 2: out a little bit. It starts to get smaller as
[11:41] Speaker 2: things take off in the countries that have been slower
[11:43] Speaker 2: to start with. So a good example of that is
[11:45] Speaker 2: somewhere like Australia. It's been quite slow so far in
[11:48] Speaker 2: evy adoption, but it's now picking up quite quickly. And
[11:51] Speaker 2: we've seen this in a few cases, the countries that
[11:53] Speaker 2: go slower at the beginning oft and then pick up faster.
[11:55] Speaker 2: And some of that is just built up demand. There's
[11:58] Speaker 2: also an economic effect going on when we look at
[12:01] Speaker 2: emerging economies. So the way we model this is around
[12:04] Speaker 2: the price competitiveness of evs in different segments and in
[12:07] Speaker 2: different countries, and one of the things you find is
[12:10] Speaker 2: that emerging economies are quite price sensitive, right There's not
[12:13] Speaker 2: a lot of spare money people have to spend on vehicles.
[12:16] Speaker 2: I mean there is at the premium end, but in
[12:17] Speaker 2: the bulk of the vehicle market in emerging economy there's
[12:19] Speaker 2: not a huge amount of extra money available. That price
[12:22] Speaker 2: sensitivity works against EV adoption before the point of price parity,
[12:26] Speaker 2: but then it accelerates it afterwards. Once EV's become the
[12:29] Speaker 2: cheaper option, then things start to go quite quickly, whereas
[12:32] Speaker 2: before they were the cheapest option, things go quite slowly.
[12:34] Speaker 2: So that's why you get these different curves where it's
[12:37] Speaker 2: kind of slow and then really accelerating in the countries
[12:39] Speaker 2: that are going slowly now and in the emerging economies
[12:41] Speaker 2: and it's actually fast, and then starting to tail off
[12:43] Speaker 2: in some of the wealthier countries that are in China
[12:45] Speaker 2: that are going quicker right now. And the reason for
[12:48] Speaker 2: that tailoff is actually just you start to saturate the market.
[12:51] Speaker 2: Around the twenty thirty five period, we have markets like
[12:54] Speaker 2: Europe and China really starting to slow down because you
[12:56] Speaker 2: start to get to sort of seventy eighty even ninety
[12:59] Speaker 2: percent of sales being electric, and that just means that
[13:02] Speaker 2: we think the last sort of ten percent is going
[13:03] Speaker 2: to be a bit hard to address, and so the
[13:06] Speaker 2: S curve flows down there. On a global basis, again,
[13:08] Speaker 2: talking about the passenger vehicle segment. Evs get to about
[13:11] Speaker 2: seventy five percent of sales in twenty forty globally, and
[13:14] Speaker 2: that's pure electrics. At that point we see plug in
[13:16] Speaker 2: hybrids kind of disappearing. By then there are scenarios where
[13:18] Speaker 2: that goes faster. Of course, the net zero scenario it's
[13:21] Speaker 2: much faster. It has to be one hundred percent or
[13:22] Speaker 2: almost one hundred percent by twenty thirty five of new
[13:24] Speaker 2: vehicle sales to standtrack for the net zero scenario. But
[13:27] Speaker 2: that's our economic transition scenario, which says no new policies.
[13:30] Speaker 2: It's about seventy five percent by twenty forty.
[13:32] Speaker 1: So we've talked a bit about where adoption is going
[13:35] Speaker 1: really well in what's working well. But let's talk a
[13:37] Speaker 1: little bit about the medium in heavy commercial vehicle space,
[13:41] Speaker 1: which is lagging behind some of the other success stories
[13:44] Speaker 1: like three wheelers. So what is it that's keeping medium
[13:48] Speaker 1: and heavy commercial vehicles from really having the same adoption
[13:52] Speaker 1: as you're seeing in other areas.
[13:54] Speaker 2: Yeah, so the commercial vehicle segment is significantly behind the
[13:57] Speaker 2: other vehicle segments, and there's a couple couple of reasons
[14:01] Speaker 2: for that. One of them so far has really just
[14:04] Speaker 2: been around available models right now, there just aren't many
[14:08] Speaker 2: that you can go out and buy, and there's sort
[14:10] Speaker 2: of technological reasons for that. Batteries needed to get better.
[14:13] Speaker 2: We're starting to see that log jam ease a little bit,
[14:16] Speaker 2: and that's we're starting to see a lot more models,
[14:19] Speaker 2: particularly launching in the big markets, so China, North America, Europe,
[14:23] Speaker 2: and actually so far China is leading this, but it's
[14:25] Speaker 2: interesting to note that trucking might be one of the
[14:28] Speaker 2: areas where the US is really going to jump forward on.
[14:30] Speaker 2: It's been a bit behind those other two regions on
[14:32] Speaker 2: passenger cars. But I actually think there's some really interesting
[14:35] Speaker 2: stuff happening on heavy and medium trucks in the US
[14:37] Speaker 2: and a lot of very interested, large corporate buyers who
[14:40] Speaker 2: are going to push that forward, and some interesting starting
[14:42] Speaker 2: points places like ports using these big vehicles for dray Edge,
[14:45] Speaker 2: and you're seeing some really fascinating activity happening there in California.
[14:48] Speaker 2: But so there's that model availability question, which is sort
[14:51] Speaker 2: of being easy now you're seeing more things launch. Then
[14:53] Speaker 2: there's the price part of it. These vehicles are still
[14:56] Speaker 2: significantly more expensive, but we see that coming down the
[14:59] Speaker 2: same way we see it coming down on the passenger
[15:01] Speaker 2: vehicle side. In general. We've seen the prices of batteries
[15:03] Speaker 2: going into trucks lag a couple of years what you
[15:05] Speaker 2: see in passenger cars, and that's just because passenger cars
[15:08] Speaker 2: are a bigger segment, the buyers have more power, and
[15:10] Speaker 2: there's just lower prices negotiated there. But again that's starting
[15:13] Speaker 2: to close a little bit too. The last thing that
[15:15] Speaker 2: is really still there is charging heavy trucks at the
[15:19] Speaker 2: highway is tough. It's a lot of power. It's a
[15:22] Speaker 2: huge demand on the grid in many cases in places
[15:25] Speaker 2: where there isn't a very thick grid connection, if you will,
[15:28] Speaker 2: and that's a challenge. Now, it's not a challenge for everybody.
[15:32] Speaker 2: There is a fair amount of depot charging that can
[15:34] Speaker 2: go on and predictable routes and relatively slow charging overnight
[15:38] Speaker 2: because most of those vehicles stop overnight, but that really
[15:41] Speaker 2: heavy duty, long haul trucking, there is a big charging
[15:44] Speaker 2: infrastructure need there now. The good thing is we're also
[15:47] Speaker 2: seeing a lot of money starting to flow towards that
[15:50] Speaker 2: and a lot more truck focused charging stations start to
[15:54] Speaker 2: be built. But it's kind of early days, and so
[15:56] Speaker 2: the EV share of the medium and heavy commercial vehicle
[15:59] Speaker 2: fleet last year was only zero point one percent, so
[16:02] Speaker 2: we're at the very very beginning of that. So for
[16:04] Speaker 2: passenger vehicles it's about two percent of the fleet last year,
[16:07] Speaker 2: for some of the other ones it's much higher. Commercial
[16:09] Speaker 2: and heavy vehicles about zero point one percent of the fleet.
[16:12] Speaker 2: But we saw again just kind of when you're looking
[16:14] Speaker 2: at these segments where it's early, you're trying to scan
[16:17] Speaker 2: the horizon of it and see what's happening, and you
[16:18] Speaker 2: start to see some interesting success stories. So China is
[16:22] Speaker 2: doing a lot on this. You're in Towards the end
[16:24] Speaker 2: of last year, there were a few months where medium
[16:26] Speaker 2: and heavy zero missions vehicles so that includes some fuel
[16:30] Speaker 2: cell vehicles hit around five percent of medium and heavy
[16:32] Speaker 2: truck sales in China. On the light commercial vehicle front
[16:35] Speaker 2: South Korea, about twenty five percent of light commercial vehicle
[16:38] Speaker 2: sales in South Korea are already electric, so you're starting
[16:40] Speaker 2: to see more of that stuff happen, but it is
[16:43] Speaker 2: early days. And I think that charging infrastructure part is
[16:46] Speaker 2: both a real opportunity and a real challenge.
[16:48] Speaker 1: And can we describe what a day in life really
[16:51] Speaker 1: looks like for someone who is driving one of those
[16:53] Speaker 1: commercial vehicles, because my understanding is that they're driving long
[16:56] Speaker 1: distances and have really long hours. And to your point
[16:59] Speaker 1: regarding charging overnight, that makes sense when you're on the road,
[17:02] Speaker 1: but can you even make it to overnight? Do you
[17:05] Speaker 1: have the range and the power? And if not, how
[17:07] Speaker 1: long is your lunch break essentially that you will need
[17:10] Speaker 1: to take in order to recharge in order to be
[17:12] Speaker 1: able to make that route. And I guess if I
[17:14] Speaker 1: really had to boil it down, what's the range and
[17:18] Speaker 1: what's the recharge time for a let's say heavy duty
[17:22] Speaker 1: semi style vehicle or a lory as they would call
[17:25] Speaker 1: the mayor in the UK.
[17:26] Speaker 2: Yeah, this is another one that varies a fair bit
[17:28] Speaker 2: because there's actually different regulations in different countries on how
[17:31] Speaker 2: long drivers have to stop for. So we did some
[17:33] Speaker 2: work looking at root patterns within Europe and actually what
[17:35] Speaker 2: you discover is that there's quite a lot of most
[17:37] Speaker 2: of the freight moved is actually moved on routes less
[17:40] Speaker 2: than four or five hundred kilometers in Europe, but you
[17:43] Speaker 2: do still have a fair bit of really long haul
[17:46] Speaker 2: stuff and in that case then you are going to
[17:48] Speaker 2: be dependent on the charging infrastructure on route. And so
[17:52] Speaker 2: what we did find is that if you say, look
[17:54] Speaker 2: at Europe, the average time or the amount of time
[17:56] Speaker 2: that a driver is required to stop for every four
[17:59] Speaker 2: hours of driving sufficient to recharge to add significant enough
[18:03] Speaker 2: range to continue on the trip. So I actually don't
[18:05] Speaker 2: think the downtime is going to be the limitter. Here.
[18:08] Speaker 2: You're starting to see the truck ranges creep up. A
[18:10] Speaker 2: lot of them are still in regional and urban duty
[18:12] Speaker 2: cycles right now, so they do maybe two three hundred,
[18:15] Speaker 2: four hundred kilometers. Even we're probably going to see the
[18:18] Speaker 2: next ones that reach five hundred kilometers in large scale
[18:21] Speaker 2: production in the next little while. Tesla Semi of course
[18:23] Speaker 2: claiming they're going to be able to do much more
[18:25] Speaker 2: than that, but we haven't actually seen that in fully
[18:28] Speaker 2: loaded delivering that capability, which is important to note, but
[18:31] Speaker 2: I don't think it's going to be the dwell time.
[18:32] Speaker 2: I think there is more activity around megawatt scale charging,
[18:35] Speaker 2: so being able to deliver a full megawatt of power
[18:37] Speaker 2: to the truck. Once you do that, you can cut
[18:40] Speaker 2: the charging time down into what I think will fit
[18:42] Speaker 2: into a normal rest period that a driver needs to take. Anyway,
[18:44] Speaker 2: based on the calculations we've done, the bigger challenge is
[18:47] Speaker 2: going to be getting all that power down to where
[18:49] Speaker 2: you need it, and so there you might see a
[18:51] Speaker 2: quite interesting set of solutions come in. You're seeing in
[18:54] Speaker 2: China they're experimenting with some battery swapping. You're probably going
[18:58] Speaker 2: to see a lot of battery storage at the sites
[19:00] Speaker 2: so that you're charging those batteries at a slower rate
[19:03] Speaker 2: and then charging battery to battery to cut some of
[19:05] Speaker 2: the grid strain that you're seeing there. And then you're
[19:07] Speaker 2: probably also going to see a bit of a land
[19:09] Speaker 2: grab for where you have places where there is sufficient
[19:12] Speaker 2: charging or power capacity coming down to the site that
[19:16] Speaker 2: are going to be suitable as larger scale truck stops.
[19:19] Speaker 1: Now let's switch over to innovation a little bit, and
[19:22] Speaker 1: on the technology side, there have been some experiments of
[19:26] Speaker 1: sorts going on when it comes to battery technology and
[19:29] Speaker 1: battery chemistries. Can you share a little bit around what's
[19:32] Speaker 1: happening when it comes to battery chemistries at the moment,
[19:35] Speaker 1: maybe what are the more exciting innovations?
[19:37] Speaker 2: Yeah, this year we highlighted three. So each year we
[19:40] Speaker 2: try and do these thematic highlights where we look at
[19:42] Speaker 2: things that are we think kind of interesting questions. And
[19:45] Speaker 2: one of the ones that are beyond the sort of
[19:47] Speaker 2: big picture modeling stuff and country level modeling, and one
[19:50] Speaker 2: of the ones we came up with this year was
[19:52] Speaker 2: noting how there are all these battery innovations that have
[19:55] Speaker 2: been considered pre commercial for quite a while but are
[19:58] Speaker 2: now entering the commerci realization phase. And so what we
[20:02] Speaker 2: did is we identified three of them, and there are more,
[20:04] Speaker 2: but I think three of the most interesting ones are
[20:08] Speaker 2: one sodium ion batteries on next generation anautes and solid
[20:12] Speaker 2: state batteries. And our battery team is all over this
[20:16] Speaker 2: and they've been publishing a lot on tracking these developments
[20:19] Speaker 2: over the years and how they've gotten to this point.
[20:21] Speaker 2: But I think the important thing to note is that
[20:23] Speaker 2: one innovation in the battery industry is not slowing down
[20:26] Speaker 2: at all. If anything, it's speeding up as the industry grows,
[20:28] Speaker 2: which is what we've expected, but it's still sometimes hard
[20:30] Speaker 2: to predict exactly what shape that takes. On sodium ion batteries,
[20:34] Speaker 2: this is a technology that is in theory been around
[20:36] Speaker 2: for quite a while, but there was challenges. You've got
[20:39] Speaker 2: this balancing act anytime with a new battery around things
[20:42] Speaker 2: like cycle life and capacity and density and all these
[20:45] Speaker 2: sorts of things, and some of those it looks like
[20:47] Speaker 2: some of the leading battery manufacturers have significantly improved on
[20:51] Speaker 2: the technology enough to be confident that they can put
[20:54] Speaker 2: it into passenger cars. So you've seen the very first
[20:56] Speaker 2: set of announcements from some smaller players and some big
[20:59] Speaker 2: ones on building significant amounts of sodium ion battery capacity
[21:03] Speaker 2: and commercializing that into vehicles late this year or more
[21:06] Speaker 2: likely in the next few years, but that's a big
[21:09] Speaker 2: that's a potential game changer. Now, the energy density isn't
[21:12] Speaker 2: as good as traditional lithium ion batteries, but they're very
[21:16] Speaker 2: stable and the materials for them are very cheap, and
[21:18] Speaker 2: we've done some work looking at how low those prices
[21:21] Speaker 2: could go, and we think there's a route to getting
[21:23] Speaker 2: fifty dollars a kilo what hour sodium I own batteries,
[21:25] Speaker 2: which would be a game changer for very affordable electric vehicles. Now,
[21:29] Speaker 2: that won't happen overnight. What we've seen is that things
[21:31] Speaker 2: take time to scale up in the battery industry. But
[21:33] Speaker 2: that is a chemistry and a technological advancement that we
[21:37] Speaker 2: think can play a significant role in alleviating some of
[21:40] Speaker 2: the pinch points we've seen on the battery supply chain
[21:42] Speaker 2: for some of the materials, So things like lithium or
[21:44] Speaker 2: cobalt or nickel that spiked last year and I have
[21:47] Speaker 2: since come down quite significantly, So it's not to say
[21:49] Speaker 2: they all remain high, but there will be future spikes
[21:52] Speaker 2: of all of these things and having a diversified portfolio
[21:55] Speaker 2: of battery options that you can go to if that
[21:58] Speaker 2: happens for a prolonged period of time, is very, very
[22:00] Speaker 2: good for the industry. So we think sodium ion is
[22:03] Speaker 2: going to start at the lower end of the vehicle market,
[22:06] Speaker 2: similar to the way lithium iron phosphate batteries did a
[22:08] Speaker 2: few years ago, but we think it has potential to
[22:11] Speaker 2: change the dynamics significantly sort of in twenty thirty and
[22:14] Speaker 2: beyond in terms of total amount of lithium demand needed
[22:16] Speaker 2: for vehicles.
[22:17] Speaker 1: So really at a point when we talked so much
[22:20] Speaker 1: about range anxiety and wanting to increase range for drivers
[22:24] Speaker 1: over and over again, and how that instinctively seems like
[22:27] Speaker 1: the way of the future. The way of the future
[22:29] Speaker 1: also increasingly looks like you're going to have different types
[22:31] Speaker 1: of vehicles for different economic price ranges and also use cases,
[22:35] Speaker 1: and that perhaps maybe a much lower range but also
[22:39] Speaker 1: much lower cost for a specific use case. Perhaps urban
[22:42] Speaker 1: pinging around seems like it's more of a potential than
[22:45] Speaker 1: it was in the past.
[22:46] Speaker 2: Yeah, definitely, And this is an important thing, is that
[22:49] Speaker 2: you're going to see more separation in the overall vehicle
[22:51] Speaker 2: market in terms of all of it, really the battery
[22:54] Speaker 2: chemistry they use, the range that people require. As you
[22:56] Speaker 2: get to more and more scale and get into more
[22:59] Speaker 2: and more segments, As I said earlier, some segments are
[23:01] Speaker 2: more price sensitive than others, so you really need to
[23:03] Speaker 2: have affordable options there. And I think you are going
[23:06] Speaker 2: to see more diversification of the technology going into different vehicles,
[23:10] Speaker 2: and even now you're starting to see that. So you're
[23:12] Speaker 2: starting to see say a Volkswagen or a Ford saying actually,
[23:17] Speaker 2: our entry level vehicles and even Tesla, Tesla push pioneering
[23:20] Speaker 2: this approach among Western automakers. Our entry level vehicles are
[23:23] Speaker 2: going to use a lithium iron phosphate battery. Our higher
[23:26] Speaker 2: end ones are going to use an NMC or an
[23:28] Speaker 2: NCAA battery with higher density and higher associated cost as well.
[23:33] Speaker 2: I think it won't end there. I think you will
[23:34] Speaker 2: have some who say, no, we're just focusing on urban
[23:36] Speaker 2: vehicles and those are going to be using a sodium
[23:38] Speaker 2: ion battery and it's going to be ultra cheap and
[23:40] Speaker 2: ultra affordable, but still very safe. And I think that
[23:43] Speaker 2: is a significant difference from where we were a few
[23:45] Speaker 2: years ago and is a big.
[23:46] Speaker 1: Change now we can't seem to make it through an
[23:48] Speaker 1: episode here these days without talking about supply chains. So
[23:51] Speaker 1: let's go there. Because supply chains globally are shifting, certainly
[23:54] Speaker 1: within the battery space, but how about within the auto
[23:58] Speaker 1: manufacturing space. I know, for electric vehicles, a big part
[24:01] Speaker 1: of the kit is the battery, so we can't touch
[24:03] Speaker 1: upon that. But when it comes to making that complete
[24:06] Speaker 1: vehicle that rolls off the line, whether it's for commercial
[24:10] Speaker 1: or direct individual use to get around town, are those
[24:13] Speaker 1: supply chains also dramatically changing?
[24:16] Speaker 2: Yeah, definitely. One of the consistent things in the auto
[24:20] Speaker 2: industry is that it's always changing and evolving, and you
[24:24] Speaker 2: can see that over the decades. I think automotive is
[24:27] Speaker 2: a fascinating lens to view the world through. Generally, you
[24:30] Speaker 2: have these waves of different companies and countries coming in,
[24:34] Speaker 2: so the Japanese automakers in the seventies and eighties, and
[24:37] Speaker 2: then the Koreans and the nineties and two thousands, and
[24:39] Speaker 2: now the Chinese coming in the twenty twenties. Here that
[24:43] Speaker 2: will continue to happen. Automotive supply chains are long, so
[24:47] Speaker 2: they reach a long way up. There's even in an
[24:49] Speaker 2: ev where there's less parts there's still a lot of parts,
[24:51] Speaker 2: there's a lot of material, a lot of physical material
[24:53] Speaker 2: that goes into making a car, and so they are
[24:55] Speaker 2: also subject to trade challenges. Right, generally they've been able
[24:59] Speaker 2: to operate without too many restrictions and a lot of
[25:02] Speaker 2: countries have benefited from relatively free trade on automotive but
[25:06] Speaker 2: that period may be ending a little bit. We start
[25:08] Speaker 2: to see more and more tensions around this topic. Other
[25:11] Speaker 2: policies that are aimed at really explicitly supporting domestic manufacturing.
[25:15] Speaker 2: So the Inflation Reduction Act in the US China have
[25:18] Speaker 2: of course been supporting domestic manufacturing of vehicles and batteries
[25:21] Speaker 2: for quite a long time. Europe now responding to Inflation
[25:24] Speaker 2: Reduction Act. So this play by play of where are
[25:27] Speaker 2: the job's going to be and where are the vehicle's
[25:28] Speaker 2: going to be made and where the battery is going
[25:30] Speaker 2: to make it's going to continue. We're not at anything
[25:32] Speaker 2: resembling a steady state on that yet. One thing I
[25:35] Speaker 2: will say though, is that in the long term, you
[25:37] Speaker 2: do want to generally make vehicles near the market where
[25:40] Speaker 2: they're being consumed or used, I should say, and similar
[25:43] Speaker 2: for batteries. Now right now you're seeing some interesting dynamics
[25:46] Speaker 2: where a lot of companies are making evs in China
[25:49] Speaker 2: and shipping them to Europe. I think that holds at
[25:52] Speaker 2: some reasonable volume and for a little while, but I
[25:54] Speaker 2: think in the long term it is more desirable to
[25:56] Speaker 2: have the vehicles made relatively near where they're being consumed. Now,
[26:00] Speaker 2: there's always going to be exceptions to that, but if
[26:02] Speaker 2: you look at the orientation of vehicle markets over the
[26:04] Speaker 2: last twenty years, that is still the case. So, Yes,
[26:07] Speaker 2: there are lots of Japanese vehicles sold in the US,
[26:09] Speaker 2: but most of them are made in US plants. Yes,
[26:12] Speaker 2: there are some vehicles shipped from Germany to China or
[26:14] Speaker 2: the US, but there's also a lot of those made
[26:16] Speaker 2: domestically in those countries as well. So it's going to
[26:19] Speaker 2: continue to be a dance. There is going to be
[26:21] Speaker 2: a fair bit of localization. I think it is going
[26:23] Speaker 2: to continue to be a bit of a political hot
[26:25] Speaker 2: potato around how you incentivize domestic jobs and domestic manufacturing.
[26:30] Speaker 2: I think this year it caught us by surprise a bit,
[26:33] Speaker 2: the Inflation Reduction Act, and I think it caught a
[26:34] Speaker 2: lot of people by surprise, even within the industry, just
[26:37] Speaker 2: how big a push that was going to be on
[26:40] Speaker 2: shore the US vehicle and battery manufacturing supply chain, and
[26:43] Speaker 2: that is happening. It's happening really quickly. There are tens
[26:46] Speaker 2: of billions of dollars announced since Iro's announced in North
[26:49] Speaker 2: American battery and component manufacturing, and so I sometimes hear
[26:53] Speaker 2: this view that like, oh, this has done, China won
[26:56] Speaker 2: this race. I think we're still in the early going
[26:59] Speaker 2: of this. I said only the end of the last year,
[27:01] Speaker 2: only two percent of all the vehicles on the road
[27:02] Speaker 2: we're electric. There's a lot of rooms still for countries
[27:05] Speaker 2: to carve out new industrial policy clusters and build new
[27:09] Speaker 2: base of jobs and innovation. So I think we're going
[27:11] Speaker 2: to continue to see a fair bit of maneuvering there.
[27:13] Speaker 2: I hope it doesn't end up too fragmented, because I
[27:16] Speaker 2: think that will slow down the transition at a time
[27:18] Speaker 2: when we want to be speeding it up. But I
[27:20] Speaker 2: think that's a very real possibility.
[27:21] Speaker 1: So now it's going to be impossible to go through
[27:23] Speaker 1: everything in this report, and I feel like we pulled
[27:26] Speaker 1: out some interesting themes, and certainly there is also the
[27:29] Speaker 1: meat of these forecasts. But I want to pivot now
[27:31] Speaker 1: to something that I've started doing at the end of
[27:34] Speaker 1: most of the shows now, which is trying to find
[27:35] Speaker 1: out what our lead analysts are looking at, what they're watching,
[27:38] Speaker 1: and what they're ignoring. Maybe in the category broadly of
[27:42] Speaker 1: weird and wonderful tech, so not covered in this report,
[27:46] Speaker 1: but in Collins list of things to watch and ignore.
[27:49] Speaker 1: I'm wondering about hydrogen vehicles.
[27:52] Speaker 2: Yeah, and that's a good question. I get asked this
[27:54] Speaker 2: question a lot. I'm still not really clear always why
[27:57] Speaker 2: I get asked it a lot, because the picture hasn't
[27:59] Speaker 2: actually changed very much. So this year we actually took
[28:01] Speaker 2: hydrogen vehicles out of the passenger vehicle forecast. And I'll
[28:04] Speaker 2: give you a bit of background of why hydroden vehicles
[28:07] Speaker 2: sales vehicles. Hydroden fuel cell vehicles, I should say, have
[28:10] Speaker 2: been around for quite a long time. The first discussions
[28:12] Speaker 2: of them go back decades, and really they have not
[28:16] Speaker 2: delivered on any of the promise that has been discussed
[28:19] Speaker 2: over the years. And last year sales of them fell
[28:22] Speaker 2: from twenty twenty one, so they were down. And not
[28:24] Speaker 2: only were they down, we saw a few automakers sort
[28:27] Speaker 2: of reduced their commitment, and we also saw more and
[28:30] Speaker 2: more of the sales concentrated in the passenger vehicle segment
[28:32] Speaker 2: in South Korea, So it's about seventy percent of passenger
[28:35] Speaker 2: fuel cell vehicles were in South Korea. About fifteen thousandth
[28:38] Speaker 2: sold last year. It's not very many. It's a very
[28:40] Speaker 2: very small market. It's concentrated in a few models, a
[28:43] Speaker 2: few automakers, and a very small number of geographies. The
[28:46] Speaker 2: few refueling infrastructure part is still a major major challenge.
[28:49] Speaker 2: We've seen supply issues at the hydrogen fueling stations that
[28:52] Speaker 2: are there a lot of them offline at any given time,
[28:55] Speaker 2: and some of them just plane removed. For example, in
[28:57] Speaker 2: the UK, Shell pulled a few out because they weren't
[28:59] Speaker 2: being used enough. So it's expensive and it's just not
[29:02] Speaker 2: really what consumers seem to want. In the places even
[29:05] Speaker 2: that built a fair amount refeeling infrastructure, like California, sales
[29:08] Speaker 2: are way way down. Sales have plummeted in Japan, which
[29:11] Speaker 2: has been the biggest backer of the technology. So at
[29:13] Speaker 2: some point, as forecasters, we just start to get really
[29:16] Speaker 2: uncomfortable saying I don't feel comfortable making a twenty year
[29:19] Speaker 2: forecast for something that is so concentrated and falling last year,
[29:23] Speaker 2: so we just sort of said, look, we're taking it out.
[29:25] Speaker 2: We'll revisit it when field sell vehicles reach zero point
[29:29] Speaker 2: one percent of global vehicle sales. So that's not very much.
[29:32] Speaker 2: That's not a high bar. Zero point one percent is
[29:34] Speaker 2: pretty low. That would be around eighty thousand vehicles a year.
[29:37] Speaker 2: Maybe they get there. Will happily revisit it when they do,
[29:39] Speaker 2: but they're not there now, and it's very uncomfortable for
[29:42] Speaker 2: people who rely on data to try and make a
[29:43] Speaker 2: long term forecast. Trucking. They still play a role in
[29:46] Speaker 2: our zero scenario, but they're sort of backfilling where batteries
[29:50] Speaker 2: don't work rather than the main solution. So I think
[29:53] Speaker 2: another way to think about hydrogen fuel cell vehicles if
[29:56] Speaker 2: you're thinking about energy and emissions from the passenger vehicle segment,
[30:00] Speaker 2: if you were to double the size of the passenger
[30:02] Speaker 2: fuel cell vehicle fleet, So you take all the number
[30:04] Speaker 2: that have been on the road sold over the last
[30:06] Speaker 2: twenty years, and you double it every three years, so
[30:09] Speaker 2: all the way out to twenty forty. Every three years
[30:10] Speaker 2: you double the size of the fleet. That's a pretty
[30:12] Speaker 2: aggressive rate of growth considering how long it's taken to
[30:15] Speaker 2: get to where we are. If you do that, then
[30:17] Speaker 2: they will be about zero point two percent of the
[30:19] Speaker 2: vehicle fleet in twenty forty, so have no meaningful impact
[30:23] Speaker 2: on emissions or energy consumption in passenger transport. So again
[30:26] Speaker 2: you sort of look at that. If that's the upper
[30:28] Speaker 2: bound snario, that's the optimistic scenario for growth, and it
[30:31] Speaker 2: has zero impact on global CEOTO emissions in twenty forty,
[30:34] Speaker 2: then you have to sort of say, well, why are
[30:36] Speaker 2: we spending so much time talking about this? So I
[30:38] Speaker 2: think there's still a potential role to play as backfill
[30:41] Speaker 2: in the trucking segment, in heavy duty long haul in
[30:44] Speaker 2: parts that are hard to electrify. I think it's significantly
[30:46] Speaker 2: smaller than batteries and smaller than a lot of the
[30:49] Speaker 2: proponents suggest. But I really don't see, at least in
[30:51] Speaker 2: the data right now, much of an interest from consumers
[30:54] Speaker 2: in the passenger vehicle segment.
[30:55] Speaker 1: So maybe more in the weird and wonderful category. Are
[30:58] Speaker 1: you closely watching or ignoring solar cars?
[31:02] Speaker 2: Ignoring? That's for me, the ignoring camp.
[31:05] Speaker 1: So last one, you can't look at the news these
[31:07] Speaker 1: days without looking at something that has to do with AI,
[31:11] Speaker 1: and I want to know, are you closely watching or
[31:13] Speaker 1: are you sort of ignoring self driving vehicles because the
[31:16] Speaker 1: self driving space has come in and out of fashion
[31:19] Speaker 1: a few times.
[31:19] Speaker 2: Yeah, we're not ignoring it. And I would say if
[31:22] Speaker 2: you read media coverage only, you would think that self
[31:25] Speaker 2: driving cars are completely failing. And our view has always
[31:29] Speaker 2: been that it will take time. Once we're talking about
[31:32] Speaker 2: big impact. Societal impacts are more of a twenty thirties
[31:35] Speaker 2: and twenty forty story, but there is real progress being made.
[31:38] Speaker 2: There are commercial self driving car services you can take
[31:41] Speaker 2: now in San Francisco, in Beijing, and they're expanding. Yes
[31:46] Speaker 2: they're geofenced, and yes, there's all sorts of caveats to it.
[31:49] Speaker 2: But you should probably be more optimistic on the technology
[31:52] Speaker 2: now than in the past because it exists now and
[31:55] Speaker 2: it didn't when the sort of hype cycle was that
[31:57] Speaker 2: its peak. You couldn't commercially go and get in a
[31:58] Speaker 2: self driving car. You can do that now and they're
[32:00] Speaker 2: really racking up the kilometers and the China market is
[32:03] Speaker 2: moving really quickly. So I think all this stuff around
[32:06] Speaker 2: stelf driving cars gets caught up in these all or
[32:08] Speaker 2: nothing it's going to go take over one hundred percent immediately,
[32:11] Speaker 2: or it's all smoking mirrors and nothing's going to happen.
[32:14] Speaker 2: I think you're going to see this stuff slowly and
[32:16] Speaker 2: steadily expand more geofenced areas. But it is real, and
[32:21] Speaker 2: so one of the things we did this year is
[32:23] Speaker 2: run two scenarios to say, look, what does happen if
[32:27] Speaker 2: this stuff really takes off? And it does potentially dramatically
[32:30] Speaker 2: cut down the size of the global vehicle fleet, and
[32:33] Speaker 2: it also can push you towards electrification sooner. And that's
[32:36] Speaker 2: because more of the autonomous vehicles that are being used
[32:40] Speaker 2: for testing right now are electric, and there's a lot
[32:41] Speaker 2: of reasons to think because of economics and regulation that
[32:44] Speaker 2: future ones are going to be electric as well. That
[32:46] Speaker 2: means that the kilometers can go electric faster than the
[32:49] Speaker 2: fleet can if we take how much people move around
[32:51] Speaker 2: and assign it to different drive trains, so it can
[32:53] Speaker 2: both lower the size of the vehicle fleet and push
[32:55] Speaker 2: it towards electric faster. Of course, there's still the nightmare
[32:58] Speaker 2: scenario where there's a big bound in the amount of
[33:00] Speaker 2: vehicle use because of the self driving cars. We didn't
[33:03] Speaker 2: really dive into that in this time, but in general,
[33:05] Speaker 2: I think it's not something you should ignore. I think
[33:07] Speaker 2: it's something you should recognize that we don't know and
[33:09] Speaker 2: do sensitivity on scenario analysis accordingly. So I think it's
[33:13] Speaker 2: definitely still something to watch, and I actually think you're
[33:15] Speaker 2: going to hear quite a bit more about it in
[33:16] Speaker 2: twenty twenty four and twenty twenty five, as some of
[33:18] Speaker 2: these services start to scale up further.
[33:30] Speaker 1: Bloomberg NF is a service provided by Bloomberg Finance LP
[33:33] Speaker 1: and its affiliates. This recording does not constitute, nor should
[33:37] Speaker 1: it be construed as investment advice, investment recommendations, or a
[33:41] Speaker 1: recommendation as to an investment or other strategy. Bloomberg an
[33:44] Speaker 1: EF should not be considered as information sufficient upon which
[33:48] Speaker 1: to base an investment decision. Neither Bloomberg Finance LP nor
[33:52] Speaker 1: any of its affiliates makes any representation or warranty as
[33:55] Speaker 1: to the accuracy or completeness of the information contained in
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[34:01] Speaker 1: recording is expressly disclaimed.

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