18. Energizing the EV Market: Shifting Gears in the US

Dive into the electrifying landscape of the electric vehicle (EV) market in the United States with this insightful episode of the Insider's Guide to Energy EV Series. Hosts Chris Sass and Niall Riddell, along with their guest, EV analyst Corey Cantor, discuss the evolving dynamics of the US EV market. They delve into the influence of political and economic factors, the challenges faced by automakers, and how consumer attitudes are shaping the future of EVs. The episode also explores the impact of state-specific policies, the role of charging infrastructure, and the competitive landscape among traditional and emerging automakers. Packed with expert analysis and forward-looking insights, this episode is a must-listen for anyone interested in the direction of the EV industry and its implications for the future of transportation.

In this episode, listeners will be engrossed in a detailed exploration of the burgeoning growth and potential challenges in the US EV sector. Corey Cantor, an analyst from Bloomberg NEF, provides an in-depth analysis of the market, highlighting the significant increase in EV sales and the shifting trends among consumers and manufacturers. The discussion encompasses a range of topics, from the latest EV models and advancements in battery technology to the critical role of public charging infrastructure. The conversation also sheds light on the varied landscape of EV adoption across different states, revealing how local policies and incentives are uniquely influencing market growth. This comprehensive overview is essential for understanding the complexities and opportunities within the American EV market.

Furthermore, the episode addresses the political ramifications of the EV market, particularly in the context of the upcoming 2024 presidential election, and explores how these developments could shape the industry's future. Listeners will gain valuable insights into how the economic climate, including inflation and cost-of-living concerns, is impacting EV sales. The podcast skillfully navigates through the nuances of dealership models and direct sales, discussing their impact on the EV market's expansion. This episode of the Insider's Guide to Energy EV Series is an invaluable resource, offering a deep dive into the current state and future prospects of the EV industry, making it a must-listen for industry professionals, enthusiasts, and anyone interested in the transformative power of electric vehicles.

https://www.linkedin.com/in/corey-cantor/ 

Transcript

Transcript 

00:00:02 Speaker 1 

Broadcasting from Washington, DC, This is insider's guide to energy. 

00:00:12 Speaker 2 

This episode of Insiders Guide to Energy EV Miniseries is powered by Paua. Paua helps your business transition to electric vehicles by simplifying charging, managing payments, and optimizing your charging data. 

00:00:25 Speaker 2 

Welcome to insiders guide to Energy EV series. I'm your host Chris Sass and with the as I co-host Niall Riddell Niall, what an exciting episode we've got planned today. 

00:00:33 Speaker 3 

Yeah, this is 1, which I think everyone's going to be listening carefully to because this is the one that I kind of grew up on as I was learning the world of. 

00:00:40 Speaker 3 

Renewables, which is what? 

00:00:42 Speaker 3 

Are people saying about the growth in this market? What are people advising us to do? What are the analysts looking at and what can we expect in the future? 

00:00:51 Speaker 2 

Well, I I'd like to know answers to all those questions. I can pontificate as I like to say or you might bring our guest on and we could just kick this off and dive right in. 

00:01:01 Speaker 3 

Yes. So today we're speaking to Cory Cantor and we're going to dive into the world of where the electric vehicle transition is happening in the US and for me, this is super interesting because the US is a bellwether for many markets. So I'm excited to hear how things are going over there. On the other side of the channel, on our rainy little island, the UK, we look across there. So, Corey, can you tell us a bit about how the transitions going and who are you and what are you do? 

00:01:24 Speaker 4 

Yeah. Thanks, Dale, and thanks Chris. Really great to have to be on here today talking about one of my favorite topics, which is the EV industry and also in the US so maybe first a little bit about what I do, I work at a research firm called Bloomberg Nef and we are a kind of clean energy market transition research division within the broader Bloomberg. Nef was originally a kind of clean energy. 

00:01:45 Speaker 4 

Research firm over 10 years ago that. 

00:01:47 Speaker 4 

Was acquired by. 

00:01:48 Speaker 4 

Summer. And so there are a bunch of teams that cover aspects of the energy transition, everything from solar, wind and electric vehicles. And so we write research reports. We talked to folks in the industry and we cover very specific super deep niche topics. And so I have been working on the advanced transport team for over 4 years now and really focusing on global electric vehicle. 

00:02:09 Speaker 4 

Policy as well as the North American EV. 

00:02:11 Speaker 4 

Market and in terms of where the US that it's kind of like if you look at a glass either half full or half empty depending on who you talk to. If you're looking in the news anytime over the past month or so, you'll see things like the EV growth is slowing, what is going on with the industry? Is this the end of V and I'm of course I'm maybe paraphrasing a bit. 

00:02:31 Speaker 4 

But there's been a lot of kind of discussion around where this basis we have. Bnef have data on a monthly basis and a quarterly basis. And So what we found is through the 1st 3/4 of this year. 

00:02:41 Speaker 4 

The EV sales were about up 54% year on year for both DEV and P have combined and for fully electric vehicles about 55%. But of course we have to see how the end of the year goes. And so we're always pretty data-driven to see how things are changing. So we're not following too much of the noise. But I think as we'll talk about, it's really on an automaker by automaker. 

00:03:01 Speaker 4 

Basis to kind of answer that question. 

00:03:04 Speaker 3 

So that that was a cool intro. Thank you very much. I mean the bit that that strikes me is when when I started looking the world of renewables, yeah, it was slightly niche niche. It was the beginning. It was early, it was small. Is that where electric vehicles really are? Is it still a very nice topic or is there something in here that's actually really growing at quite a rate? 

00:03:21 Speaker 4 

Oh yeah, it it's no longer a niche. I think we're. We're leaving early adopter phase and getting into the beginning of the kind of mass market consumer product. So it you know we had about 10 and a half million passenger EV sales last year and you know folks on the pod will hear me saying EV's, I mean both battery electrics or your Tesla model threes. 

00:03:42 Speaker 4 

And plug in hybrid electric vehicles, which is your Toyota Prius. 

00:03:45 Speaker 4 

Prime, for example. So yeah, we're in every market just a little bit different, but we're no longer just a couple of, you know, GMV ones or you know, Tesla Model S or roadsters on the road. But I think that's different than being, you know, like things are in Norway where it's a mass market product, 90% DV share of sales on a quarterly basis. I think we're in the transition. 

00:04:06 Speaker 4 

And we're in it at different points depending on if we're in the US or the UK. The UK is a little further along. Even U.S. states are a little different. 

00:04:15 Speaker 2 

To help me understand the the size of the US auto market. So you you gave some numbers, but that's really not relevant to me cause I don't know if that's out of 10 million in one car sold or out of you know 100 million cars annually sold. What what what number of vehicles are sold new each year? 

00:04:30 Speaker 4 

Yeah. So when I was saying 10 million, that was a global number for all the EV sold in the US What we're going to see this year for the first time as of September, the US market hit about 1,000,000 passenger EV sold. 

00:04:44 Speaker 4 

Each year in the US market, there's about 14 to 16,000,000 passenger car sales for new vehicles. So US EV share of sale last year was about 7 1/2%. This year through the 1st 3/4, we've been at about 9.3%. So again, continuing to grow we, you know. 

00:05:04 Speaker 4 

Expect by the end of the year it could be anywhere between 9 1/2 to about 11%. We'll see how it kind of ends up fourth quarter is usually pretty big, but it's been so reliant on Tesla, for example, that it's a bit more challenging to say how is every automaker going to do and really it's will Tesla hit its targets or not. 

00:05:22 Speaker 4 

And of course, they're doing everything to make sure that they do. 

00:05:25 Speaker 3 

So those those numbers are really interesting because actually they're not too far behind where the UK has been recently. We've seen a bit of a slowdown in the market due to global recession buyer behaviours, you know, cost of living etcetera. Are you seeing the same impacts in the US with the with you know the the economic climate impacting the purchase of new vehicle? 

00:05:46 Speaker 4 

I think the difference between so for the UK we have EV share of sale closer to 22% as opposed to that kind of 9.3%, I believe 22% in the first half of the year or might be the full year 2022 numbers either way. 

00:06:00 Speaker 4 

How you slice? 

00:06:01 Speaker 4 

It it in the US, I think you don't have as affordable models as you see from some of the European automakers. 

00:06:07 Speaker 4 

Yeah, really. The Tesla Model 3 is your kind of or the Chevrolet Bolt by GM are your biggest mass. 

00:06:13 Speaker 4 

Model evo's. 

00:06:15 Speaker 4 

So in general, the biggest concerns for the US has been public charging infrastructure and upfront cost a little bit different than the UK. I think you guys are further along on the transition and then running more into you know maybe the the cost of living concerns. I don't think that's been as big of an issue in the US inflation was high, but I think all vehicle prices have gone up by quite a bit. 

00:06:35 Speaker 4 

So we're we're we're a bit earlier. I think if we were at closer to 25% or 30% and and we stagnated at that point, then maybe you could say that there's more play, but really the model availability only started improving over the past two years and most of the premium EV models on sale here are still above forty $45,000 before a tax credit. 

00:06:55 Speaker 2 

So what does this mean then? I guess in terms in the US, it seems like they're kind of a political hot potato sometimes. EV. Some people see that as a a political statement as opposed to a method of transportation are are you seeing that in the the media and in, in in the take of what's going on is the down take just simply a reflection of interest rates? 

00:07:17 Speaker 4 

Well, you might be aware, Chris, we we have a presidential election in 2024. So I think there is an element of this that will be increasingly political. We or I let our research note that we put out in September looking at US State V markets and as a part of that we did a kind of correlation test between EV fleet share. So not the share of sales, but the overall EV. 

00:07:37 Speaker 4 

Of the car population and the Biden vote share in 2020, and there was a positive correlation with that. It wasn't the kind of 1 to 1 correlation, but it was a stronger correlation than median household income in the state. So states like California, obviously high high vote by the vote share or blue states did quite well, but it wasn't. 

00:07:57 Speaker 4 

A binary. There were states like Florida and Utah that are fairly Republican states that are also fairly wealthy states that did have higher levels of EV adoption compared to their red state. 

00:08:08 Speaker 4 

Years. So the answer is yes, but with the caveat of there's a lot of EV growing to do across the board. California in the first half of this year saw one in four cars as electric. So there, there still is plenty of the market to go at before you even start running into that political problem. That again is something that we're seeing in the data, but the market can also change the EV. 

00:08:29 Speaker 4 

They become cheaper. I think in the next year though, you'll see a lot of politicization of B's. Given who the likely candidates are for the Democrat and Republican parties. 

00:08:37 Speaker 2 

And then is it a political statement or not? I know in the media you mentioned it in your intro and I I see it here living in DC in the paper. 

00:08:47 Speaker 2 

That the auto manufacturers you know, be them GM or, you know, traditional auto manufacturers seem to be a little displeased with the take rate they. So they tooled out for 2023 to produce some number of EV's and at least if I'm to believe the mainstream press 2024, they're they're reevaluating their EV strategies. 

00:09:06 Speaker 2 

Or at least near term E strategies. So is this a reality? 

00:09:10 Speaker 4 

Yeah, I think when you look at Jim and Ford, they both pull back, right. And I think when you look at the data, the reasons that they have pulled back might be different. I think for GM, the struggle has been around the LTM, battery buildup in their facilities. If you look at models like the Cadillac lyric, where they've had a high number of pre-orders and consumer interest, they just haven't been able to pump out. 

00:09:30 Speaker 4 

Batteries at a volume to get to the customers who they. 

00:09:33 Speaker 4 

We have and then when you look at other vehicles that GM buyers may want, like the Chevrolet Silverado EV or the Chevy Blazer EV or the Chevy Equinox, they've either delayed them or released higher cost trims. So you look at the blazer that they have originally when they were, you know, advertising it or talking about it. They said Ohh the first trim is going to be about. 

00:09:54 Speaker 4 

$35,000. 

00:09:56 Speaker 4 

Then when it comes to actually putting out the Blazer EV, you're now looking at 56, you know, $1000. And that's before you even get to before you even really see, you know, the dealer markups and that kind of impact that we can talk about with Ford. I think they have the machine out and they have the lightning. And I do think that some of the lightning numbers. 

00:10:17 Speaker 4 

Have been, you know, not at the level that you would want to see if you're forward. I think that's probably my biggest concern looking at their market strategy, Amaki has had some pretty good months. So we'll see how the last quarter goes, but you can see that's why they're making these decisions. I don't think it's like they have a bunch of models out at high volumes that they're struggling to sell. It's either a higher upfront cost than they have promised. 

00:10:37 Speaker 4 

Or not being able to meet the volume that they claim that they were going to be able to less on the consumer. More on. 

00:10:44 Speaker 3 

So Cory, can I take you back to the question you made about affordable models in the US? Why do you think that US car manufacturers haven't produced more affordable models? What's going on? 

00:10:53 Speaker 4 

Yeah. So, Neil, one thing that we do at BNF is we really look at the kind of price volume of everything across the kind of, I'd say, auto sector. And really once you get below $40,000, you really do unlock about half of the annual sales market. So about 7 million of that 14,000,000 units. 

00:11:11 Speaker 4 

So again, automakers are trying to follow that Tesla strategy of start towards the more expensive models and over time lower it as you rail up kind of economies of scales. And so you know to date no one is fully emulated even if you look at Rivia for example, if you just look at another startup, they started with vehicles at that 70 to $80,000 price range and they're hoping to kind of move. 

00:11:33 Speaker 4 

Down that kind of EV price range over time. So essentially, you know, we'll see, but really only GM with the Chevy Volt is being able to get there at this point. 

00:11:43 Speaker 2 

Do you see the change in the? 

00:11:43 Speaker 4 

And they're taking major. 

00:11:46 Speaker 2 

Has there been a change then in like the share economy or or whatever, so you know, with Ubers and folks like that, I mean, when I go to cities now, I I do get picked up in electric transport. So is that helping drive this transition or not because I mean are people using these, I mean definitely in New York I've been. 

00:12:03 Speaker 2 

Picked up in plenty of electric ubers. 

00:12:05 Speaker 4 

Yeah. And you have a revel whole company dedicated towards electric vehicles in New York. You have Lyft and Uber with pretty aggressive 2030 targets, and it's interesting. Every time I get into an Uber, there's less BNF day than where anecdotal. I always ask people what they think, and sometimes it's a can of worms you don't necessarily want to open because some of them love it and love the kind of. 

00:12:23 Speaker 4 

I think people who are doing more of that inner city, driving the people who do have a lot of airport trips I think are more frustrated sometimes with just to say that public charging and I think that's a common theme you hear not just in the kind of intelligent mobility space, but really in the US at large that there's not enough fast charging, not enough public charging. And for these guys, you know every. 

00:12:42 Speaker 4 

Trip is actual income, so if they have to wait around, even if they get the benefit of charging versus gasoline cost, you still lose the a couple of trips. If you're at a slower charger. 

00:12:54 Speaker 3 

So so that becomes quite interesting because it then opens up this idea of, you know, business versus personal purchase. Who is it that's buying these electric cars at the moment? Do you see a lot of companies adopting them or is it all being driven by individuals? 

00:13:07 Speaker 4 

Yeah, this is 1 big difference. When you work at a global company, you learn about a really specific wonky policy called benefit and kind taxation, which is big in the UK, which is not as big here in the US, it's been more of a private consumer story to date. Now, it doesn't mean that state governments, the federal U.S. government are trying to get more of those electric vehicles, but we haven't seen. 

00:13:27 Speaker 4 

They kind of one production at a high enough level where you need these people to pick things up. 

00:13:33 Speaker 4 

So it's still been a consumer story, which I guess might be good for the industry, right? It hasn't, despite I think some of the claims that like ohh government is just forcing this to happen. I think it's been more in the early stages at least based on Tesla's prominence and consumer adoption as we head into the new phase, you know moving away from early adoption. 

00:13:54 Speaker 4 

That's where policy will make more of a difference. But up until 2023, there really hasn't been a ton of policy at the federal level. It doesn't mean that California hasn't been doing what it could, but that will change. You know, again, as we talked about earlier, with politics dependent on in some respects what happens next year. But even beyond that, I think at the state level. 

00:14:13 Speaker 2 

So you know if it's, if it's not policy, it may be the OEMs and the offering. So maybe it makes sense to spend a little time talking through the perspective of the different OEM's and where they're at, right? I mean, recently, once again, these pesky news news outlets say things and I I listen and watch, for example, Toyota, the former CEO, made some interesting comments. And so let's start with Toyota and and tell me. 

00:14:35 Speaker 2 

What are they doing? What's going on in the US market with Toyota and are they really in the EV game or is their former CEO saying that maybe they should be betting elsewhere? 

00:14:43 Speaker 4 

Yeah, Toyota has, like, dipped a toe in TV game in the US market. So I think they're very much at the beginning of this overall process. 

00:14:53 Speaker 4 

They sell a couple of models, the aptly named BZ 4X beyond zero 4X. They have a Lexus model as well. I think that is done pretty solidly, and then they have the Prius prime and the Rav 4. 

00:15:05 Speaker 4 

Prime well I. 

00:15:06 Speaker 4 

Like to say about Toyota is they've talked about a kind of multiple drivetrain strategy, conventional hybrids. 

00:15:13 Speaker 4 

Plug in hybrids, EV's and fuel cell. And it's not like they've been firing on any cylinders in any of those particular categories, except for maybe your conventional hybrids. 

00:15:23 Speaker 4 

So they made a big announcement that they're only going to be having the Camry as fully hybrid from here on out, no base ice model, which I think is pretty exciting. But yeah, they're a laggard and they've been saying things like, oh, we're gonna go into solid-state. We're gonna have this great range of great batteries. But I think as you can see from all of the automakers. 

00:15:42 Speaker 4 

Struggling and by the way, it's not just a pick on GM and Ford, but you look at Volkswagen, for example, it's real. 

00:15:48 Speaker 4 

Many hard to make electric cars and to switch 100 years of knowledge for newer technology. So anytime someone says we're gonna leapfrog without having the proof that they've been building it for a while, I think it it warrants skepticism. So yeah, they're they're minimal in the US market. I know I gave a long answer on their overall thing, but they they're non factored to date. 

00:16:10 Speaker 3 

So so if you go from the, you know, the skeptical on the existing incumbents and then look at the guys who've come into the ring and are really punching above their weight at the moment. What's going on over at Tesla? 

00:16:21 Speaker 4 

So Tesla, well, yeah, they are releasing the long-awaited controversial cyber truck in two days to at least 10 consumers. I actually went and saw the cyber truck in person. 

00:16:33 Speaker 4 

If you're in New York City, it's down at the store in the meatpacking district, and it's always interesting to go to either these auto shows and talk to people who aren't like us in the clean energy space, who read about EV's and the impact on climate all the time and just see what people think. One, I will say look better in person than a lot of the pictures I've seen. There weren't the missing gaps that you had. 

00:16:54 Speaker 4 

Being reported about, it's really, really big and I think part of that could be the structure of the design. 

00:17:01 Speaker 4 

They wouldn't let you touch it. They wouldn't let you go inside of it. And the people who I was speaking to were. 

00:17:05 Speaker 4 

Really nervous about. 

00:17:07 Speaker 4 

What happens if you crash it? What happens if you have to fix it? There weren't really good answers on that, but there were a lot of truck enthusiasts who had never had an EV before who were just going there to check it out. In terms of Tesla overall they have about a 1.8 million. 

00:17:21 Speaker 4 

Guidance for EV sales this year globally, and we're gonna see if they're able to hit it. I think they need a pretty normal fourth quarter to be able to do so. But if you look at Tesla's models right now, really only the three and the why are sold at high volumes, the X and the. 

00:17:35 Speaker 4 

Have been reduced to kind of, I wouldn't say low low volume car, but relatively low volume models. It may kind of range of 20,000 or so 20 thousand, 30,000 units a year. But in the US market they still make up about 50 to 60% of the market on the each quarter. Sometimes they dip into the 40s. 

00:17:56 Speaker 4 

But from their perspective, things are still going pretty well. So why change? 

00:17:59 Speaker 2 

But Tesla seems to have had some price reductions in the last year, and I mean at the same time, we were getting some, you know, 5 or $7000 tax incentives to to get a get an EV. And depending on what state you're in, you had state incentives. 

00:18:11 Speaker 2 

So so why are the prices dropping? If if life is going so well? 

00:18:17 Speaker 4 

Yeah. I mean, if you look at it, Elon has said in in various investor calls that the demand for Tesla is our Infinity and it's just a pricing problem. I think that some analysts may suggest that maybe there's a demand issue. If you have to continue to lower. 

00:18:32 Speaker 4 

This is back to the point I made earlier that there is this kind of marketplace out there for these 25 to $40,000 cars that really isn't being tapped. And I think the Model 3 now fits nicely into that space. So what Tesla is doing is logical and what they can do that other automakers can't is they have this ability to, you know, reduce prices. 

00:18:52 Speaker 4 

To increase demand to some extent. 

00:18:55 Speaker 4 

Because they've built up economies of scale, if you look at other automakers, the reason why GM is is ending the bolt for a period of time is that basically they don't want to lose that amount of money on every vehicle. If you look at other automakers like lucid or rivian even, they're still losing money on all their vehicles. So you have to kind of reach. I've used this line. 

00:19:15 Speaker 4 

For this idea of a kind of valley of. 

00:19:18 Speaker 4 

4 electric vehicles, just like you see for kind of clean energy startups, you gotta kind of make it to a place, a place where you're making profit on each model, where you have enough factories and workers who are skilled, who can kind of output EV's at a high rate, and then you can kind of begin to control what the prices are. Tesla made a killing during the pandemic by increasing the price of the Model 3 and the model Y. 

00:19:38 Speaker 4 

At one point the model Y was about $65,000 in. 

00:19:41 Speaker 4 

The US for not a very premium car. Now it's back in the kind of high $40,000 range, but it just shows what Tesla is able to do to adapt. Now it doesn't mean they don't have any issues. It doesn't mean that the cyber truck is going to be a success. They put a lot of money and time. 

00:19:56 Speaker 4 

To it, and if the cyber truck doesn't go well, then you might, you know, be on in six months saying, wow, it's been four years since Tesla launched the model that people actually want to buy at high volume. But for now, we're gonna see how things play out. And of course, they've been teasing their cheaper Tesla for a couple of years now, and that's something I think that would be welcome in the marketplace. 

00:20:16 Speaker 3 

And the cyber truck and the cheaper Tesla, both nice things to get. But one of the things that we've been watching obviously is these big HDTVS rolling off the front of the Tesla factory. You know, trucks seems to be something that's really moving in the US how much has Tesla influenced? 

00:20:32 Speaker 4 

Trucks in terms of, you mean your medium and heavy duty trucks or your? Yeah, I mean, that's another interesting point in terms of the the semi, which again to Tesla both in some ways, it's almost like the things that Tesla does really well doesn't get enough attention. And the things that they bring a lot of attention on aren't doing as well as maybe I would hope so. 

00:20:52 Speaker 4 

Semi was launched about a year ago and we really don't have a ton of data on how many they've actually sold. Pepsi has been their early partner and obviously taking away a internal combustion engine truck and switching over to electric has major climate benefits. So it's something the industry need. 

00:21:06 Speaker 4 

In terms of actual success, we've seen more on the kind of band side today. So if you look at ravians bands, the EV that they've made for Amazon no longer just for Amazon as well As for the E transit, it's been doing pretty well in the early stages. We see more commercial EV activity in China and a little bit in Europe to date. So in the US, the market is actually quite nice. 

00:21:27 Speaker 2 

But you you mentioned policy isn't maybe all there yet, but if I think of the semi in the electric vehicle, I think of California's regulations and the need, right, so so they may not be terribly worried yet because the the nation may not have the infrastructure to have electric trucks everywhere. But California is certainly running headlong into that, right? 

00:21:47 Speaker 4 

Yeah. And Chris, I, I can't believe that kind of just rang a bell. We've gone you know, a good amount of time talking on the US market. And I haven't mentioned the Inflation Reduction Act, which was the climate law passed last year by Congress and signed by President Biden. 

00:22:00 Speaker 4 

And really, on top of the $7500 tax incentive that everyone is kind of familiar with because it impacts your own EV purchase, what people actually know less about is something called the commercial EV tax credit. And So what that is is it is $7500 if you're buying a kind of passenger car. But for certain vehicles, particularly those kind of long haul trucking, it could actually be up to $40,000. 

00:22:21 Speaker 4 

For 30% of the cost of the vehicle, again, there aren't a ton of long haul trucking EV's that are being built, but again, it's really to incentivize the market over a 10 year period to you know, create companies that go after that. 

00:22:34 Speaker 4 

Segment and and really begin to address that kind of commercial vehicle space also applies to those Amazon rivian bands too. Again, every vehicle is gonna get a different amount of the credit, but that's where policy does make an impact. And that's on top of what California and New York State do, which are vouchers for those longer haul trucking EV's. But again we we are so so at the beginning of that that there is a. 

00:22:56 Speaker 4 

A couple companies with targets and not even enough to where we can say we have definitive findings beyond they need more charging infrastructure, which again, if I can't make this clear enough, it's like the US charging network has a long, long way to go, whether you're talking on the truck side or the passenger side and that's why you're seeing billions of dollars in investments and now. 

00:23:15 Speaker 4 

But of course you want to see the actual charger build out and what we found at BNEF is that even of all the NEVY funding, the national EV infrastructure funding, which the folks who follow the space, that's the $7.5 billion package Congress passed now two years ago, and of that 7.5 billion, five billion are in the Navy program. 

00:23:33 Speaker 4 

Only 3%. 

00:23:35 Speaker 4 

Of the 5 billion have actually been awarded to charging infrastructure. 

00:23:39 Speaker 4 

Operators and some of that is because you roll it out over multiple fiscal years, but other reasons for that is basically the states have moved quite slowly. So if only 3% has been awarded, I'd be surprised if there are very many charges that have been built at this point. When I've spoken to reporters on that particular funding pot, they think that the beginning of next year is when you'll start to see an actual difference. 

00:23:59 Speaker 4 

Of chargers. 

00:24:00 Speaker 4 

Out it's slow, so you don't have, you know, mistakes made or, you know, maybe duplication and maybe to some extent it could be a good thing because you didn't have, there's been a debate around Tesla's charging type versus CCS to combine charging standard. So maybe you won't duplicate as much effort. But on the other hand, charging installations have been quite slow in the US. 

00:24:20 Speaker 4 

Compared to the Netherlands or or China, other kind of major EV markets? 

00:24:25 Speaker 3 

Yeah, I'm. I'm a total charging geek, so it's an absolutely crucial pillar in that ecosystem of helping people get confidence to buy EV. What do you think slowing people down? Is it, you know, is it that other companies there that can deploy this capital, is it the regulations at a state level? Is it availability of hardware or availability of grid connections? We spend all our time complaining about. 

00:24:43 Speaker 4 

Oh my God. 

00:24:45 Speaker 3 

The connections here in the UK. 

00:24:47 Speaker 4 

You know, do I have, like, an all of the the above option? Because I think that is a the the the actual answer to that. Yeah, it's permitting it. It's the grid interconnection. 

00:24:56 Speaker 4 

It's the fact that outside of Tesla, which again we just spent a little bit talking about, Tesla in the passenger space, I think they're charging success has been undercovered in terms of the amount of fast charger build up they have here. If other charging companies don't kind of step up, they could have. And I again, I I definitely said this before. So I'm not get too much trouble. Exxon Mobil potential of being. 

00:25:16 Speaker 4 

Known as a even more so than an EV company as an EV fueling company now you've had other firms here like Electrify America or EV go. 

00:25:26 Speaker 4 

Charge point have some success but also a lot of issues and really a lot of those issues have been around uptime, so less about the charges that they've built out with the speed. And then just like we were saying about the articles in the press around you know, automaker movements, there's also been a lot of criticism of ohh I went to go visit a charge. 

00:25:46 Speaker 4 

Point or an electrify America charger and it's not up or what are of time metrics now for the federal funding? They're gonna be really stringent uptime metrics. But for your general charger, there isn't. So consumers have been frustrated by that as well. 

00:26:00 Speaker 4 

It's messy, I think. Yeah. One take away here from the overall U.S. TV industry is it it's messy, but there's a lot of potential there, four different OEM's and for different charging network operators. If they're able to kind of gain that advantage. I think today it only Tesla here really has on both the charging side and the EV side, although there's a few other EV companies on the OEM side that. 

00:26:20 Speaker 4 

Have done better. 

00:26:22 Speaker 4 

In the. 

00:26:23 Speaker 2 

So get the charging infrastructure, the policy we we've touched a little bit on the IRA. You know, IRA also has a good bit about bringing onshore a number of things. Maybe you want to touch on that and how that impacts this conversation. 

00:26:38 Speaker 4 

Yeah, Chris, honestly, a great question because we have put out research on that and what we found is between, let's say that the date that the IRA was signed, which was mid August 2022 and really just about at the beginning of this month, there have been over $100 billion in investments in the North American EV supply chain. So that's US, Canada. 

00:26:58 Speaker 4 

Chico and that's from everyone from your Toyotas to your hyundais to your. 

00:27:04 Speaker 4 

Still, Antis GM you even have Tesla with this Mexico facility, but not just the automakers, but battery manufacturers like SK on LG, You've got. 

00:27:18 Speaker 4 

Goodness, Samsung really. Everyone kind of chipping in to kind of take a piece of that growing EV pie here in terms of the actual market impact and This is why I always tell people to to kind of look big picture and not focus too much on this is what the article said about last week or this month. 

00:27:34 Speaker 4 

Or next or even the past quarter. 

00:27:36 Speaker 4 

It is. You won't see the impact of these investments until the earliest the second-half of next year. That's when factories like Hyundai's factory in Georgia is slanted to come online. And once they're building here, it's a bit easier to ship here. You don't have to send it from overseas, you get some savings that way. Now labour cost might be higher here. So there is a bit. 

00:27:53 Speaker 4 

Of a give and take. 

00:27:57 Speaker 4 

All of the investments announced, you know, we started kind of modeling them as having an impact in 2025. So even in a year from now, if we were to all like have a conversation, again, the marketplace could look a lot different given, you know Hyundai coming over here, you've seen other folks you know say. 

00:28:14 Speaker 4 

They're gonna take the US market more seriously starting next year and again, as we've seen with the Big Three, just because you put money in doesn't mean the execution will be where it needs to be. 

00:28:24 Speaker 4 

But with all these actors saying, we think the US is a viable market, some of them are going to win out and take advantage of the opportunity here and the IRA. 

00:28:33 Speaker 4 

Given not only the EV tax credit, but something called the battery production tax credit, which is I think heavily under discussed has been a heavy incentive to move your battery production here. And in fact most of the $100 billion that I just cited before is in battery manufacturing. 

00:28:50 Speaker 3 

So one of the things that I watched recently was a short video from Roger Atkins who was a previous guest on this show and he was reviewing Chinese models coming into Europe in the Amsterdam fully charged show. Are you guys seeing Chinese models arriving in the US? 

00:29:08 Speaker 4 

Not in the in the same way I think in Europe, we've seen BYOD, for example, doing quite well and some of the Chinese startups looking to get into Europe and you've seen the European Union in fact kind of push back saying these are heavily subsidized vehicles. We're gonna look into it in the US because of things like particular tariffs that make it harder for China to sell vehicles. 

00:29:27 Speaker 4 

Here, it's not as attractive as am I. 

00:29:29 Speaker 4 

Hit there is a big provision in the IRA that has yet to be defined, called the foreign entities of concern provision that actually invalidates the $7500 EV tax credit. If there is a certain level of material from what is deemed a foreign entity of concern. Most people think that there will be, you know, China or Chinese linked companies. 

00:29:49 Speaker 4 

Within that term, but it's hard to talk about until they actually. 

00:29:52 Speaker 4 

Get it out. 

00:29:54 Speaker 4 

But the point is, is that it's not easy, and if you're a Chinese company and your vehicle may not get the credit, it's hard to strategize if you should onshore to the US, we have seen, for example, Ford, partner with ATL and lances. Their technology in a forthcoming battery plant for LFP, lithium iron phosphate batteries, which again, yeah, we could go on for like an hour talking about different chemistries and the impact there. 

00:30:17 Speaker 4 

But Neil, to your original question, where I do think Chinese automakers could make an impact on the US market is through Volvo. So Volvo, even though it's a Swedish company is owned by Shelly Group and Volvo has been doing well in their EV share of sales and. 

00:30:31 Speaker 4 

In the US don't have the metric in front of me. I wanna say it was somewhere in the 10 to 14% range in the last quarter and they have the EX30 model which is going to be launched at $37,000 coming next year. So again, we were talking about the sweet spot. They won't get the tax credit for that because I think it is built in China. But again, it just highlights that Chinese. 

00:30:51 Speaker 4 

Lawmakers may be coming to the US in a way that I think the news media is expecting. BYOD. BYOD may choose to come at some point, and NEO may choose to come at some point, and BYOD is. 

00:31:00 Speaker 4 

Actually here in terms of the electric buses. 

00:31:02 Speaker 4 

But if you're a Chinese OEM, you're gonna have to think about not getting any tax subsidies, and maybe even paying more in terms of a kind of premium. Again, open story. And I think we've seen PYD in Mexico. We've seen BYOD pretty much everywhere, but not to date being a factor here in the US passenger car market. 

00:31:20 Speaker 2 

Now let's change gears a little bit. You you mentioned earlier in this interview we talked about states. You know I I through California out there. I think Texas has got some stuff going on. I think in your intro you said things are vary by state to state. What do you mean by that? 

00:31:35 Speaker 4 

Yeah, so basically I I think the longest time in this analyst job and even though I've only been here, you know, close enough, 4 1/2 years, I feel like it's like it's almost been like a high school of education of like the world changing in a dramatic way. I'll. I'll kind of put it this way. When I first got to be in EF in 2019, the US EV share of sale was about 2%. 

00:31:55 Speaker 4 

And the first half of this year? 

00:31:56 Speaker 4 

Was 9%. 

00:31:59 Speaker 4 

So the market grew by about four times in about four. 

00:32:01 Speaker 4 

Yours and what you often hear is, well, isn't this just a California story? Isn't it California, like here being like Norway and everywhere else? Kind of just in the low percentage. And so in the research that I led, what we found is essentially a couple states have now kind of ascended to higher than the national average in the real way. So you look at. 

00:32:21 Speaker 4 

Colorado, you look at Washington, you look at Oregon and they're now approaching around one in five vehicles as electric. So anywhere between 16 to 20. 

00:32:30 Speaker 4 

Percent of you know quarterly sales. We're in the first half of the year were electric cars. I'm from New Jersey, NJ saw in the first half of this year about 13% TV share of sale. So the Massachusetts. And So what do those states have in common? Well, a lot of them follow California's fuel economy standards or California's 0 emission vehicle program. Some states like New Jersey. 

00:32:52 Speaker 4 

And Massachusetts are also kind of signed on to California's target for 2035 phase out of purely gasoline car sales. So what is called advanced clean cars too? 

00:33:01 Speaker 4 

Now, it's not just states that follow California. I think what was really surprising to me was the state of Nevada actually had 2020, 12% EV share of sale in Nevada and that's with no state subsidy. Now they do, you know, you know, have Tesla's factory there, but it it just goes to show. 

00:33:17 Speaker 4 

That it's not every state market has to almost be seen as maybe a country. 

00:33:22 Speaker 4 

Now you guys mentioned Texas, Texas is lagging that national average by a little bit, I think more in the six to 7% range. New York State we're on base now given the charging infrastructure challenges of New York City is below the national. 

00:33:34 Speaker 4 

Average Illinois also, you know, struggling with EV adoption even though you would say based on our earlier talk. Ohh Blue state must be good on EV's not quite. It also depends on how dense it is, how charging build out is. 

00:33:47 Speaker 4 

Illinois only had a subsidy for EV's at the state level, maybe a year ago. New York has had a $2000 subsidy for a while, but clearly that hasn't been enough to offset maybe some of the charging challenges and the parking challenges. So again, every market has to be treated differently, but I think the biggest misconception is that California is way out here kind of pie in the sky and everywhere. 

00:34:07 Speaker 4 

This is not interested in EV's, and really there is now states in kind of different tiers of EV interest. And then of course, you do have some red states that are more at about, you know, 2% or or less kind of EV share of sale and and maybe that changes maybe not. But those markets are quite small. 

00:34:25 Speaker 3 

One of the things that I don't know a huge amount about sat here in the UK is this dealers question, you know direct sales and non direct sales. You seem to have some peculiar approaches. What are they and how is that impacting the sale of EVs? 

00:34:39 Speaker 4 

Yeah. And honestly, you know, to make it even more complicated, different states have different dealer laws. So in some states, for example, Tesla can sell directly to consumers in other states, they're really restricted. And some states, Tesla even has a carve out where they can sell directly to consumers. But Rivian and Lucid can't basically dealership laws. 

00:35:00 Speaker 4 

Encourage people to go in. 

00:35:01 Speaker 4 

To a specific franchise, meet with people forward. Kind of, you know, gives their vehicles, for example, two dealers. Then dealers can sell those cars, or EV's. They also can do your maintenance. So in the kind of platonic ideal of a dealership. The nice thing about it is, you know, who can repair your car? You know who you can go to in the kind of, I'd say. 

00:35:22 Speaker 4 

More challenging part for not only the EV transition, but use of dealers is that they can mark up the prices. They can be quite opaque when you're buying a Tesla online. 

00:35:31 Speaker 4 

You see $45,000, you know? Yeah, you'll have taxes and but you you kind of know what you're getting yourself into with the dealer. You can go to one dealership. It can be a completely different experience than another dealer. And so with the V transition, a lot of people's first kind of, I'd say experience with any car purchase is going through a dealer. And if they're not educated. 

00:35:52 Speaker 4 

If they don't have EV's that they want to kind of sell, it can really hold up a consumer who otherwise may really want to go electric. Or is things like ohh. Like it can't charge in a certain way, or ohh not kind of explaining mileage. 

00:36:06 Speaker 4 

What Ford is trying to do is do more selling online moving forward for the certifying some dealers as kind of EV specialists and requiring them to install chargers. Of course, there was news out just over the past couple of weeks that Ford has rolled back some of those requirements, but you can see what the idea is here, which is to really make sure that dealers are invested in the CV. 

00:36:28 Speaker 4 

Transition. I think it just adds another hurdle for the US OEM's or OEM's trying to play here if they want to see EV adoption take off. We didn't even get into unions, which is a whole nother conversation given the UAW strike. But I I think in a big picture both. 

00:36:43 Speaker 4 

The US is kind of a weird market. You can see why Tesla has done fairly well here and I think dealers as an agent which is moving towards those more online sales and dealers playing still an intermediate role but intermediary role but in a different way. No one has shown the kind of success of doing it to date. So again it adds some additional cost. It doesn't mean it can't be done. 

00:37:04 Speaker 4 

But we already talking at the beginning of our conversation about the upfront cost of vehicles across the board and dealers, you know are increasing that on front cost. So yeah, you may see that Chevy Blazer EV with an MSRP of $55,000, but when you walk in, you don't know what you're necessarily paying for until you actually get the contract through a dealer. 

00:37:21 Speaker 2 

But I think that makes it more of an uphill battle for legacy US auto manufacturers, right? Because if you look at how strong the dealership networks have been in the way it's been created in state by state with some of legislation of using dealerships there, they can't just break those contracts and get out of them, right? They can't just decide tomorrow that they no longer want to have dealers, they're just going to open up a showroom in every mall and. 

00:37:43 Speaker 2 

Have it next to the. 

00:37:45 Speaker 2 

Not even dealership, because Tesla. Most states won't let you call it a dealership. It's a showroom, I guess or. 

00:37:49 Speaker 2 

Whatever they call it. 

00:37:52 Speaker 2 

Do you see legislation or are you seeing a change to to that infrastructure that to allow allow that break to take place to remain competitive or maybe it's forcing the other guys to have the same table stake? 

00:38:05 Speaker 4 

And and Chris, I I think you you know you're in DC you can say as well as me for my my recollection, I used to be a U.S. Senate staffer. The other dealers are pretty strong lobby organization. So it's not something that they necessarily would want to upend and change. And what I will say is it it'll be interesting to see moving forward with tact they take. 

00:38:25 Speaker 4 

The California new Car Dealers Association has a great publication. They put out every month on the changing California market and given how many Californians are interested in EV's, there's kind of an element of you have to find a way to play ball in the state. 

00:38:38 Speaker 4 

So I'm curious if more places will follow that kind of California model and have to change or if they're going to be a kind of roadblock. I think it's an open question. One of my colleagues on the EV team here at UNF has put out great reports highlighting the additional cost that dealers do put on EV adoption. And in my research note on states, you do see states with direct sales. 

00:38:58 Speaker 4 

As having higher EV adoption than those that have a band. 

00:39:00 Speaker 4 

On it. But again, we are in the early phase of transition. I think when you add everything up, Chris, you could see why the legacy automakers are struggling both on the build up of production side, all the way to actually selling it to consumers. And really we need to see moving forward how things change every quarter is different and to date really only Tesla has cracked the code. 

00:39:23 Speaker 4 

You know, you could see why if you're a GM4, then silentis that you really need to, I thought coming into the year the 2023 would be your progress. I think I walk out personally with more questions about those three than I came in. But you really need to see progress in 2024 and whether that's figuring out some of these dealer questions, lowering upfront cost or having more EV. 

00:39:44 Speaker 4 

Volume output. 

00:39:46 Speaker 4 

You know you have to kind of show that you're able to to bridge that gap. I'll kind of close and saying there aren't too many legacy OEM's who have fully transitioned to being electric. You now have a bunch of targets that are going to come into play starting in 25 to 2030 to 2035 and not targets that policymakers have made. 

00:40:04 Speaker 4 

These are often automaker targets. I mean, it's been a couple of years, but GM did say that they're in aspiration is to go all electric by 2035. Volvo, just this year recommitted to 2030, being fully electric. And Mercedes-Benz also has aggressive EV targets. So again, this isn't Corey Cantor, the analyst here say. 

00:40:21 Speaker 4 

Thing you know, automaker is you guys gotta do what's good for climate. It's they have said to their shareholders and stakeholders that this is their goal. So as we head into the back half of the decade, a lot of the work and success there is going to be built on the efforts and impacts that these automakers. 

00:40:37 Speaker 4 

Due through their decisions this year into next year into 2025. 

00:40:41 Speaker 3 

This has been a fabulous little journey through what's going on on the other side of the. 

00:40:46 Speaker 3 

And from where I'm sat, it sounds like you've got growth, you've got quite widespread growth. It's not, it's not there there in a particular state. There are some challenges, but there's also a policy and regulatory environment which seems to be generally quite supportive of this transition. So thank you hugely for the update on where you see this market going. 

00:41:07 Speaker 4 

Yeah, thanks. And I'll add that there's a big opportunity to. 

00:41:11 Speaker 4 

Because if the big three don't fill in the space, for example, it could be Hyundai, Kia. If Hyundai Kia doesn't fully fill the space, it could be Volvo. It could be rivian. I think Tesla's put enough pressure on this market where yeah, if Tesla didn't exist at the level that it does, you know, maybe you could say that the policy alone isn't enough. But now other people will eat the market. 

00:41:30 Speaker 4 

There. And so the question is and if there will be a USB transition, it's just how fast will it actually occur and who will benefit from it. 

00:41:39 Speaker 2 

Awesome. It's been an amazing episode. Thank you, Corey, thanks for your time. 

00:41:45 Speaker 2 

We, we we we look. 

00:41:46 Speaker 4 

Yeah. Thanks, Chris. 

00:41:48 Speaker 2 

For our audience, we hope you've enjoyed this content. We've tried to get a little bit of a balance. Next few shows, you're gonna see more of a US perspective on the EV market. We've done quite a bit about Europe and the UK. So as we keep producing this series, expect to see more. Don't forget to subscribe to our YouTube channel, follow us on YouTube, follow us on LinkedIn. 

00:42:06 Speaker 2 

And share us with your friends. We look forward to seeing you again next time on the insiders guide to Energy EV series. Bye bye for now.