Cleaning Up: Leadership in an Age of Climate Change

Is There Really an EV Slowdown? Ep182: Colin McKerracher

Episode Notes

Is the shift to electric vehicles really slowing down? Are people losing interest in EVs, or is there more to the story? How will changes in the global automotive industry impact the net-zero transition? And If no one wants EVs, why do we need tariffs?

This week on Cleaning Up, host Michael Liebreich sits down with Colin McKerracher, Head of Clean Transport at BloombergNEF, to unpack the latest trends and dynamics in the electric vehicle market from cars to trucks to two wheelers. They dive deep into the regional differences, the strategies of European automakers, the impact of tariffs, as well as the latest forecasts and predictions in BloombergNEF's Electric Vehicle Outlook.

Leadership Circle:

Cleaning Up is supported by the Leadership Circle, and its founding members: Actis, EcoPragma Capital, EDP of Portugal, Eurelectric, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live

Links:

BloombergNEF's Electric Vehicle Outlook: https://about.bnef.com/electric-vehicle-outlook/
The Debunker-in-Chief - Ep15: Auke Hoekstra
The Solar Revolution - Past, Present and Future - Ep 173: Jenny Chase
Slowdown, what Slowdown? The EV Revolution is Just Getting Started - Ep178: Dr Andy Palmer
Could Trump 2.0 Roll Back The IRA? Ep181: Ethan Zindler

Episode Transcription

Michael Liebreich

Do you think that there's a conscious effort to promote this narrative of a slowdown? That people really don't want these EVs?

Colin McKerrecher

Whenever you hear an automotive CEO talk, you need to separate whether what they're saying about the whole industry is true for the whole industry or whether it's true for them. Is it that people don't want EVs, or is it that people don't want the EVs that you are selling at the price point you are selling at. I think the US is absolutely in a manufacturing renaissance right now, and the Inflation Reduction Act has pumped a huge amount of money into it. And there is this sense of real rivalry, and that, I think, this competition, this sense of we really want to compete and win. We're not just here to show up.

Hello. I'm Michael Liebreich, and this is Cleaning Up. No other aspect of the net zero transition sparks as much debate as the shift to electric vehicles. No other area touches consumers as viscerally. No other area is as politically fraught as car manufacturing. No other area generates as much news, fake news, data and misinformation. My guest today is going to help us separate the trend from the tripe and identify the signal amongst the noise. Colin Mckerracher is a former colleague of mine from BloombergNEF where he serves as Head of Clean Transportation. Please welcome Colin to Cleaning Up.

Colin, thank you so much for joining us here today on Cleaning Up.

Great to be on the program. Michael, I've listened to many episodes, and I'm happy to speak to you today.

Well, let's get stuck in the normal way. If you could start by explaining who you are and what you do, but the short version.

Yeah, my name is Colin Mckerracher, and I run a group called the clean transport group at BloombergNEF. So that's an analyst team that's looking at how we clean up all the different parts of transport.

And you are a colleague of Jenny Chase, who was on a few episodes back, who talked about solar.

That's right. And so my team is where we're looking at everything around batteries, charging infrastructure, electric vehicles, trucks and increasingly now, as well shipping and aviation. So each one of those has a very different pathway to decarbonization, and we're trying to cover it all.

So we've got a packed agenda for the next hour or so. The first question I've just got to get out there is, what's this about an EV slow down? I mean, we read about it everywhere. It's very troubling. We are now learning that the shift to EVs is actually not happening, and that must be quite a worry for you.

It's not something that keeps me up at night, certainly. And that's because when you spend a lot of time in the data, you see that the growth rate is slowing down, but the unit sales are still going up. And actually that slow down in the growth rate is pretty much exactly where we expected it to be. So EV sales are going to grow about 20% this year. That's lower than the over 30% last year and the 60% the year before, but some of that was just a very strange post pandemic bump that we saw. And now what I would say is you're seeing the market kind of normalise, and in our outlook, certainly for the last few years, the next few years, we are expecting around 20% growth rate, which is where it's coming in this year. Now there are some pretty different regional dynamics at play. So some places like China are growing really quickly. China, EV sales are up 37% year to date. Europe is mostly flat, and North America is sort of 5-10% growth year to date. Now I think Europe is probably the one that's worth discussing most, because that's where all the headlines have been generated out of, and the US, but particularly you see these numbers about 'Oh, Germany, it was down 60 odd percent in August.' You dig into that a little bit more, and you find the reason it's down so much is because the previous August there was a big pull forward in demand, because there was a subsidy cut coming. But the bigger picture in Europe is that European CO2 regulations tighten every five years, right? So the target that automakers have to meet to avoid paying fines, tightened in 2020. It tightens again in 2025, what that means is that in the year before they tighten, there's very little reason for an automaker to sell a bunch of EVs. They're already compliant with the targets and automakers in Europe are. So what they should do is push orders into the next year and push their model launches into the year where they are going to have tighter targets to hit and would face compliance fines. And that's really what you're seeing. That's what you saw in 2019 before they tightened in 2020 and that's what you're seeing now in 2024 before they tighten in 2025. So I think you'll see the European market bounce back and the US is also still growing. It was a record quarter in the third quarter for EV sales in the US too.

So let me try and gloss that, make sure that I've followed all of that. So first of all, there is no slowdown. There's a slowdown in the growth rate. In other words, the second derivative, but not the actual growth. So first of all, no slowdown. And by the way, I did a best fit to the growth, and if you take out the collapse in car sales at the beginning of the lockdown, the Covid lockdown, and then the bounce back, and then you just take that out and smooth it, you see this really nice curve that goes from 80% per year growth, 60%, 40% and it ends up at 20% where we are today. And it's like, why are we even talking about a slowdown? So I think that's what you were saying there. And then Europe, a calculation I did is I took Germany out, and I found that the rest of Europe has not had a slowdown at all. So you'd said that it had gone flat because of this regulatory change, that they reached their compliance figures. But if you take out Germany, you actually find that even despite that regulatory change, Europe continued to grow, not very much, but it still grew.

Yeah, and this is also an interesting point where we get into Europe versus the EU. And so partially what's happening there is within the EU that is slowing down, where that flattening out was there, but the UK is actually quite a strong growth market this year, because there's a new zero emissions vehicle mandate that comes in this year that automakers have to hit. So a lot of them have increased sales in the UK. So I don't necessarily blame automakers for that. I think they're just playing with the regulations that they have and trying to do what they can. I do think European automakers could go a lot faster than they're going right now. And we've done some analysis looking at some of the pricing of the EVs they have on the market, where they're trying to charge a very significant premium. The Fiat 500 is probably the best example. It has a €12,000 price premium, and it has €3,000 worth of batteries in it. So that's a company trying to recoup costs over a very relatively low volume of vehicles that they're selling. But the competitors out there aren't doing that. The Chinese aren't doing that. Tesla's not doing that. They're already at scale. And so it's not to say that I think the European automakers are blameless in any of that, but just to say that they're playing the regulatory hand they have right now.

But do you think they're playing with fire as well?

I do.

Because meanwhile, they're leaving the door open for these much cheaper Chinese imports, and you leave that door open for a couple of years, and you're letting brands be established that normally people wouldn't have looked at. BYD, I tell you, three years ago, nobody in the retail commercial space had heard of them. And now they've got a showroom in Westfield in London.

Yeah, for sure. And I think one of the things that we've been watching closely is this tariff game, and seeing those tariffs put against Chinese imports, or, I should say, vehicles made in China rather than Chinese imports, because it affects Western brands who are producing in China and shipping into Europe. For one, I think it's a bad idea. I think it'll hurt European automakers more than it will help them, because the Chinese market is still very important to European automakers. They sell a lot of vehicles there. It kind of also just gives them a narrow window. If you think about it, that tariff applies to cars made in China and shipped to Europe. It's not going to be very long before BYD has a big production hub in Thailand that they could export vehicles from. Or maybe it's Turkey, or maybe it's Brazil, or maybe it's producing directly in Hungary. So the Western automakers, European automakers, have a bit of a window, but they need to use it very, very wisely. And the noises I hear right now from a lot of them indicate they're not really using it wisely. A lot of them are arguing to push back the CO2 targets for 2025 or to delay the 2035 target as well. And certainly, what we see is that things are not slowing down in China. Things are not slowing down in emerging markets as well, where a lot of those Chinese automakers are now selling more vehicles. So I think it is a risky manoeuvre that some of the automakers are doing as they try and phase down the internal combustion engine vehicle sales, where a lot of them are still making most of their profit, and increase the EV side. It's a lot easier to be a pure play, where you just say, 'we're going to make this work come hell or high water, or we're all going home.' And that's what you're seeing, is those groups have a better clarity of mission, and they're gaining share in the market. So we look at the percentage of total vehicle sales that come from pure play EV makers, we include BYD in that, even though they sell a bunch of plug in hybrids. Last year was about 8%, a few years before that it was 1%. This year, it'll be around 9% of all global auto sales coming from pure play automakers, and actually probably be closer to 10% this year, based on the numbers from BYD. So certainly that's a threat to the existing automakers.

Do you think that there's a conscious effort to promote this narrative of, there's a slowdown? That people really don't want these EVs? Is it just that's what a whole bunch of commentators and that's what kind of on social media that people like to get stuck in have a bit of fun poking fun at the... you know, owning the libtard sort of stuff. Or is it actually being promoted by a bunch of car companies that are explicitly trying to slow down, and maybe they're trying to push back these phase out mandates?You know no more internal combustion cars to be sold after 2030 or 2035. Are they promoting a narrative that says, people don't want EVs? Or is it just sort of out there in the ether?

I think it's probably a bit of both. I think people who had certain priors see some information suggesting a slowdown, grab onto that and say that, and then trump it up a fair bit more. I also think whenever you hear an automotive CEO talk, you need to separate whether what they're saying about the whole industry is true for the whole industry or whether it's true for them. And they have a strong interest in conflating what they say about what they're saying about themselves, applying to the whole industry. And so I think you have to look at that quite critically. Is it that people don't want EVs, or is it that people don't want the EVs that you are selling at the price point you are selling at? And certainly in cases where we've seen competitive pricing, we still see pretty strong demand. And again, that's where it gets important to do quite deep analysis and look at, well, what is the raw material cost, what is the battery pack cost going into one of these things? And why is it that some automaker is charging $10,000 more for an equivalent EV versus a comparable ICE when we know the battery pack costs in it are only a few $1,000. And again, that's where you go, 'well, do you guys really want to sell these, or do you just want to sell something else because it's more profitable?' And so I think looking at the data and seeing EV sales continue to go up gives you some confidence that it's certainly not all doom and gloom. I think the only hesitation I have in saying, 'No, it's all just made up on this talk of slowdown,' is that if we break out plug-in hybrids and battery electrics, and break that down a bit more, what you see is that a lot of the growth this year is actually driven by plug-in hybrids and not by pure battery electrics. Now, even within plug-in hybrids, a lot of those are what we call range extended EVs, sold out of China, where they have an onboard range extender, a very small gas engine running in a constant cycle, charging up the battery. The wheels are always being powered by the battery, similar to the old Chevy Volt or BMWi3 Rex, but still. So a lot of that growth is coming from that segment. But even when we look at just pure BEVs globally, that market is still growing. So that's the one kind of caveat or asterisk around this topic of slowdown, I would say.

Now it's been many years since I had any influence over the analysis done by yourself or your colleagues at BloombergNEF. But one thing that might be worth looking at in regard to that question about plug-in hybrids versus pure EVs is that I think the plug-in hybrid is almost like a gateway drug. There's a lot of people who want to go EV, but they don't trust it, and the range anxiety and the charging. So they feel more comfortable if the first EV is a plug-in hybrid. And because the uptake is now accelerating into the mainstream, the numbers of those sort of first EV being a plug-in hybrid could just be a lot higher as a ratio of total sales. So it could be a temporary mixed change as a lot of new entrants into the space buy their first car with a plug, the first electric car. My suspicion is a lot of them from the second one, they'll be like, 'It was fine. I charged it everywhere I needed. I don't need this hybrid stuff.'

Yeah and certainly, we track the average range of the plug in hybrids that are coming out, and what's happened is where the growth is in China, it's gone up really dramatically. So the average range of a plugin hybrid sold in China this year will be about 100 kilometres. And that's because the automakers there that are making them, are making them really with the intention of selling them, not with the intention of just complying with regulation.

And that's the electric range. Let me interrupt. That's the electric range, not the total range?

Yeah. Total range would be 800, 900, 1000 kilometres comfortably. But the pure electric range is about 100 kilometres and rising. And some of these range extended plugin hybrid models have 150 even 200 kilometres of range. And we did some regional analysis looking at it, and what we found is that actually those are selling quite well outside of the big tier one cities, in some of the more rural parts where the charging infrastructure isn't as developed, which gets to your point. Some first time buyers in a place where there isn't a lot of charging infrastructure might go with that, but to be honest, if you can get 150 kilometres of range out of it, you're going to cover the vast majority of your driving in electric mode.

Also, I've always maintained that there's no point having a range that is higher than your bladder's range.

Yes, definitely.

Once you've got charging that is fairly ubiquitous, then that seems to be a limit to the demand that you could put on a car, certainly.

And I don't think we need to keep going with more and more range. I have two small children too. When we do road trips every two, three hours, is all you can really manage with kids before somebody needs a stop.

So I am on the record as still driving for my trips to the Alps only, I still have a big petrol and very old Volvo XC 90, and it takes me 13 hours door to door. I don't mind if that becomes 14 hours, because I have to stop for an hour for charging, but I cannot have it go to 15 or 16 hours. So I still need better charging or a very, very big battery. So I'm still holding off on that purchase. There'll be people listening to this, who'll be immediately kind of getting in the comments and saying, 'oh, try the Kia or the Hyundai, or the this or the that.' But there's nothing out there that does what I need just yet.

I think the charging is probably where I would look, certainly what we've seen in markets where EV adoption gets past this first few percent of the fleet, then you start to get a more competitive charging market. I'm sitting in Norway right now, I'm based in Oslo, and what you see there is that it becomes a very competitive market. You get price competition, you get people competing for good sites, you get a lot of fast charging infrastructure, and then it really is the kind of 15-minute stop and you're on your way. So I think it's not to say that's easy. There's hurdles there. There's a lot of investment that has to flow into the right places. There's probably a lot of stranded assets. But I increasingly view this as something where vehicle sales pull in the investment in charging infrastructure. You get rising sales. People see that as a signal. They get comfortable with the investment thesis for the charging infrastructure. And certainly as you get that higher utilisation — 6, 7, 8, utilizations a day and up — then operators can start to make a return on that asset. And that's what you see in the markets where there's higher levels of EV adoption.

So I have this business idea. It's not for me, anybody out there that's listening. Make a really nice restaurant somewhere around Reims, like halfway between. So that you'd have all the people driving their EVs down from the UK, from Holland, from Denmark, and they're all trying to get to the Alps, or they're trying to get to the south of France or whatever. And then you do a really nice restaurant with somewhere to walk the dog and a soft play for the kids and rapid chargers that you could book in advance with high reliability. It would be a fantastic business. So if you're looking for an idea out there, anybody in the audience, I'll be your first customer.

But we actually track that, Michael, we track all the charging installations in the world. And one of the things we've noticed is a bigger presence of hubs. So basically, people get frustrated with something where there's two posts, because you go there and it's blocked, but if there's 10 or 12, then the odds of it being blocked for very long or at all are very low. And so we're actually seeing a steady increase in the number of plugs per site, and seeing some, a lot more of these sort of mega hubs being developed, because that's a huge part of the convenience factor for people.

100%. I think one of the things is there's this focus on how quickly you can charge, but there's not enough focus on the variability — where you get stuck behind somebody, or it's not working. And actually maybe charging a little slower, but being sure that you're done, that just means you can spend a bit more time over your lunch, your dinner, your dog walk, whatever. Let's move on to tariffs, because that's the other part of this. It's so bizarre, because in many cases, you have the same person spreading the idea that people don't want to buy these EVs, but we have to have tariffs. In the case of the US, 100% tariffs. In the EU, it's less and varies by manufacturer. But what's going on with these tariffs?

I think it's important just to start by going back a few years. Michael, you and I have been in this game for a while, roughly 20 years in clean tech. And certainly, I think we'd be very surprised a few years back, even if we said we're no longer worried about EVs being too expensive. We're now worried that they're too cheap and they're going to wipe out whole industries. And that's where we are. China can produce battery cells at $50 a kilowatt hour from high quality LFP cells. They can produce cars cost competitively — the average transaction price of a BEV in China is lower than an internal combustion engine car or a plug-in hybrid. It's the lowest drive train by transaction price. So we're at this very strange point where all of a sudden, in one part of the world, EVs are the cheapest option, and in the others, everyone's woken up to that and is very aware of it and certainly afraid of it. This is sort of basic industrial policy, right? People have realised that this is a big industry and is going to be the industry of tomorrow — batteries and electric vehicles — and are then trying to say, well, we need to capture and corner part of that, instead of relying on external providers of it and importing the technology. So it's quite a different scenario in the US versus in Europe. So let's start with the US. The US has a much stronger geopolitical rivalry with China, of course, than Europe does, and it has put in 100% tariff and is saying, Look, we don't want Chinese EVs coming in here. Nobody can compete with a 100% tariff that isn't based on any estimate of what their cost differences are or anything like that. It's just put in place primarily to show that the politicians in the country are being strong on China and to, in some cases, get votes from the auto lobby and industrial workers in Europe. It's a little more calculated, let's say. So they, in theory, have done this exercise to go and say how much state support are Chinese car makers getting? Let's put countervailing tariffs equivalent to that on it. I haven't seen the methodology on exactly how they came to that. I imagine any study, you could probably find a different way to come to the final number. And there's some very hard to quantify things in there in terms of state support. But I think what they've put the tariffs on is ... when we did the analysis, you can actually still, in some cases, import Chinese EVs into Europe and sell them and still make a profit even with the tariffs that have been put on, because the Chinese production costs are so much lower. And it seems quite strategic that there's just enough pressure, or just enough level tariff put on to increase the pressure, keep the pressure up on European automakers, but not so much that it shuts the whole thing off. So I think what you're starting to see as a result of that is everyone's reassessing their business models, including the Western automakers who are producing in China and importing into Europe. And we're in this state of flux right now where everyone's not quite sure what the right mix is going to be. I think in the longer term, or even in a few years, it is going to push more localization. You are going to see more of the European automakers re onshore production, bring it back. Say Volvo, producing no longer in China for its EX30 model, instead bringing it into Belgium. You're also going to see some of the Chinese automaker setup shop. So BYD, we talked about potentially Neo and others.

But we've got, in Europe, there's a range of different tariff levels, but they're, they're up to I think, 37%, and still Northvolt, the battery company that everybody was pinning all these hopes on for a resurgence or a big uptick in battery manufacturing in Europe, is in trouble. So does that argue that the tariffs are not high enough, or that we simply can't make things in Europe. What lessons do we take from that?

I think the lesson I would take from that particularly is that it's hard to stand up a new battery company from zero, from a standing start. Making batteries. Is really hard. It's a really highly precise, highly automated process. It's capital intensive. It's precision manufacturing, and the companies that are good at it, it's not like they just came out of nowhere and said, 'we're going to make EV batteries.' They all made consumer electronics batteries for 20 years before that, and then worked into these other applications. So what I would say is that my thesis for a long time has been batteries will be made in Europe, but they will be made by the groups that make batteries today, primarily the Asian companies, both Korean, Japanese and Chinese companies that are quite good at it today, and will set up factories in Europe. And certainly that's what I think is a more reliable way to get jobs and investment benefit from the move to batteries than necessarily trying To stand up entirely new companies. It's not saying they shouldn't try, and they absolutely should try. And I'm cheering for some of those groups too, because I think it's great to see innovation and competition and homegrown talent. But as far as the bulk of battery production that comes in Europe, I think certainly a lot of it is going to be from existing battery manufacturers setting up shop here.

But it's funny because you say that it's just too hard to start from scratch and make batteries, but some of these Chinese companies did exactly that. And so maybe it's just that it's either easier, or maybe easier in China to gather the skills or to get the money or to do something. But you know, some of these companies that are making batteries in China, five years ago were in completely different industries, or they were even municipalities, or, goodness knows what.

Some of them, but the biggest ones have been around for a while, producing other types of batteries. So BYD, CATL and others have been around producing consumer electronic batteries, and have some heritage in that. And there's a question of producing batteries, and then there's a question of talent pool for high precision manufacturing, and China does have a very good talent pool for that. There's a real ecosystem of all the logistics and all of the talent needed to scale that type of stuff up. Again, it's not to say no one can do it. There's no room for fatalism when we're trying to do stuff as fast as we're trying to do it around the energy transition. But we shouldn't ignore the advantages that existing incumbents have as well.

I think that's where I was going, that, you know, we have in Europe, we have ceded to China and to Asia the ability to do rapid, high volume manufacturing at high quality. And I think it's much beyond just batteries. I think the question we need to be asking ourselves is, 'why can't we make anything in competition with China and Asia competitively?' Is that changing in the US? Because we hear this, you know, the episode with Ethan Zindler, the half a trillion dollars of new manufacturing investment that went into the US as a result of the Inflation Reduction Act, has that changed the weather? Is that just people sucking up the subsidy, but then it'll go away again? Or do you think they're getting back into a competitive position in this space?

I think they are. I think the US is absolutely in a manufacturing renaissance right now, and the Inflation Reduction Act has pumped a huge amount of money into it. And there is this sense of real rivalry, and, I think, this competition, the sense of, we want to compete and win. We're not just here to show up. And you do have to admire that sense of American entrepreneurialism and sort of entrepreneurial zing to say, 'No, we're going to go and we're going to do this, and we're going to try and kick ass. We're not just here to be an also ran. And then a huge amount of government money has helped. The inflation Reduction Act is not matched equivalently in Europe, because of the way Europe is structured, certainly. And it is really leading to this big industrial renaissance, manufacturing renaissance that you're seeing, and that shows up in the numbers. We're tracking hundreds of billions of dollars of investment related to the energy transition as a result of the IRA, and you're really just starting to see a lot of that stuff come online over the next 12 and 18 months. So I think the easy part of it, in some ways, is done. Getting the money out the door. Well, I shouldn't say the easy part, getting the politics to that point, was quite hard. Then there's this phase of getting money out the door, and then we're going to find out, can you do it? Can you do it in the long term? Can you do it competitively, day in, day out? And that, I think probably is actually going to be the hardest part. I'd love to get your take on that, too, Michael, you've seen a few cycles of this.

I think you're absolutely right. And that's the question, will it stick? Because at the end of the day, if you throw money at something, you can build a factory. You know, even DeLorean managed in some way, to build. But the question is, can you make it stick? Can you create the industrial cluster? Can you create the skills? Can you form the capital, not just around one factory, but around the whole supply chain? And I don't know the answer to that, but you know, if anybody's going to do it... The other thing that the US has, which Europe doesn't have, is cheap energy. So this is something that also that very much concerns me. If China has got its, I mean, it still has cheap labour, but it also has cheap government money, and it has this kind of skill set around manufacturing. And then the US rebuilding that, but also has very cheap energy. And what does Europe have? It has these marvellous brands, but those brands, I believe, will only carry it so far. At some point, will you pay three times as much for a Mercedes or a BMW or a VW or whatever as an equivalent performing car?

Certainly, yeah, so coming back to that question on energy, I completely agree. So when I look at — and this gets a bit beyond the automotive and clean transport topic — but when I look at the divergence in GDP growth, or GDP per capita, between Europe and North America, I think a huge amount of it is explained by cheap energy. Cheap energy is what's enabling a lot of industries to maintain competitiveness in North America and struggle with competitiveness in Europe. So I completely agree. I think I'm not willing, I wouldn't write off European manufacturing yet. I think you'll see more and more urgent calls, whether those are from the head of Volkswagen or Mario Draghi or others, to say, 'look, we've got a window here. We have to take action, now.' There's still hope there. There's still room to do things, but it does require bold leadership as well.

And also, just very recently, we're seeing the launches of some quite cheap EVs. So I think the European manufacturers, they kind of chased people like me, trying to get longer and longer range and more and more luxurious vehicles. And maybe that was a mistake, because now we're seeing the little Citroens and so on coming through that are much cheaper, and maybe that's where the game is going to be in the next few years.

Yeah, I completely agree. And again, I would come back to this point about look at when they were timed to go out: right as the regulations tighten and automakers would otherwise face fines. So that's not by accident. I think it's also interesting too, over the last few years, you see a lot of automakers try and — the last decade, really, and even beyond — try and convince everyone that, 'Oh, nobody wants to buy small cars.' And actually what the statement there was, 'really, we don't want to. We make more money selling big cars. Particularly in the US. We make more money selling big cars, SUVs and trucks.' But there's actually quite a market for smaller cars still, and I think that's been vacated a little bit, but it doesn't mean that that demand doesn't exist. So I think we're going to see a bit of a resurgence in that. And it might surprise people that there is more demand there than people think.

I'm convinced it will. Because the other thing is that bigger cars tend to be owned by people with bigger houses who have driveways or garages. My main car is an electric car, and we charge it up at lamp posts, and it's very easy and incredibly convenient, much more convenient, by the way, than going to a gas station. So I think we are going to be surprised that the rollout of infrastructure is not that hard, and that people will buy these smaller cars if they're cheap enough. It really comes down to that.

Yeah, I agree. And I think what we've seen is that the behavioural part of it gets a little bit overblown in the commentary. What you see in places like Norway, again, not to use the Norwegian example too much, because it's a small market, but essentially, the government, 10 years ahead of schedule, made them cost competitive through taxation. Just slashed the taxes and the CO2 fees on EVs, and that once they were cost competitive, people bought a lot of them. And so the big question from a global perspective is, can learning rates and the battery cost curve and technology do what the Norwegian government did 10 years ahead of schedule. And you and I are both pretty optimistic on technology changes, and my view for a long time, for a decade now, has been yes, it can and it will take time. It'll happen in different parts of the world, but we're nowhere near the end of how good this technology can get.

I'm thinking of a slide that I was using back when you and I were still colleagues at BloombergNEF and I was still there saying, 'Look, Norway is a postcard from the future, not because everybody's going to subsidise EVs to the level of Norway, but that by the mid 2020s the EV becomes the cheapest solution.' And it's the economics. Norway was done through subsidies and giving people access to bus lanes and so on, but everywhere it's happening because of the economics. And I think, to be honest, we did pretty well on that one.

I think so too. And actually, one of the other things that... the exception that almost proves the rule a little bit, is that one of the places we have seen lower adoption is in the US truck segment. And that's really because trucks are really big and heavy, and to try and get enough range and enough performance, you got to add a lot of batteries, 150 kilowatt hours, in some cases, or 200 kilowatt hours. And some of these truck models that are coming out, even with very cheap batteries, that's a $20,000 cost on the vehicle. It's going to be a long time before that's fully cost competitive with an equivalent large truck on the internal combustion engine side. Now, there may be other ways to skin that cat. There may be range extended ones where you have a 50 kilowatt hour battery. There may be a traditional plug-in hybrid with a slightly smaller battery, but just to highlight that, the segments where we've seen the economics start to work — cars, you get pretty good adoption, and we're at 20% of global vehicle sales of all types now come with a plug.

Now, when you say trucks, I think you were referring to US trucks.

I mean US pickup trucks, yeah.

Please don't go anywhere. We'll be back right after this short break to continue the conversation with Colin Mckerracher.

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Each year you produce the BloombergNEF EV outlook. You've been doing it since, probably it's got to be a decade or more?

A decade, yup a decade.

And what does it now say? Because here we've got, you know, China at 52% EVs. Norway, of course, is already essentially only EVs. Europe at what is it? 20 something percent? US at 10%. Where does it go? What does this look like?

Yeah. So we see pretty steady growth this decade, around 20% per year for the rest of the 2020s that gets you to around 45% of global vehicle sales being electric in 2030, so a little over double where we are today. Obviously the rates change depending on where you are. But markets like China or certainly the Nordics and some parts of Europe much, much higher than that. But markets like North America or some emerging markets are significantly lower than that. And then basically, by the time you get to 2030, then you have fully cost competitive vehicles in every segment in every country. So while you get fully cost competitive vehicles without subsidies in quite a few of them, in the mid 2020s there are some segments that are quite cheap in some countries, and it's harder for EVs to compete. That takes a little bit longer, but within five years, you're fully cost competitive in every single country, in every single segment, and then you're just sort of playing out the S curve. And we derate that a little bit based on the building stock in some countries. So in places where there's a really high percentage of apartment dwellers, we say the adoption rate there is a little bit lower than, say, a place that has a lot of single family homes with a driveway, but overall, you're then getting to about 75% of global vehicle sales by 2040, 15 years from now being electric. And by about 2035, we're saying there's no more plug in hybrids in the mix. There's a few more, but they sort of die out. And then by 2040, that's full battery electric. That's the economic transition scenario that we produce. Of course, there's a much more aggressive scenario that says, 'What do you have to do to stay on track for net zero?' And that would be, you have to phase out combustion car sales around 2035, in about ten years, between 2035 and 2038. But that's kind of where it lands. There are many more aggressive groups out there who've made outlandish claims over the years about how we're going to get to 100% by 2025 or 2030. I like to say we've been a consistent voice in this industry.

Colin, I can't let that go without mentioning one particular forecaster, Tony Seba, who said that by 2030, 95% of all vehicle miles driven globally would be in an electric vehicle, self driving. And those are the sorts of outlandish and frankly, completely absurd forecasts I think you're referring to, right?

Yeah, and to not only pick on the outlandishly optimistic side, I should also say groups like OPEC put out extremely pessimistic EV adoption outlooks that said they'd only be a few percent in 2040, so I think you can safely throw out the top and the bottom as having some vested interest in the outcome. When you look at comparing all those different forecasts, and certainly it took a while, but we've seen that's what sort of played out. You can safely say those early OPEC outlooks were completely wrong. You can also say Tony Seba and others claiming that 100% of car sales will be electric by 2025 — that's a few months away — were also wrong, right?

And personally, you know, whilst I like the net-zero scenarios, I pay much more attention to your economic transition, or I think, you know, the IEAs current policy settings scenarios. Because at the end of the day, these mandates to ban people from buying internal combustion cars, I personally just think they're going to be politically too hard, and in a way, they're not necessary. The fact that they're even discussed sends the signals to industry, to home builders, to the power network people and so on. So you kind of get most of the way there anyway.

Yeah, there's a risk of us violently agreeing on too many things here, Michael, but I'll definitely say that's one of them. I think phase out targets are important. They send a signal. And I think the policymakers and the activists who've pushed for them have done a good service to create a policy framework that people then know where the direction of travel is. But I think as you get close, they get very hard to enforce. The political capital you have to expend to tell someone, 'you have this money, it's your money, and you cannot spend it on this thing,' is quite high. You have to spend a lot of political capital to do that. So I think what you end up hoping for is you get close enough that the supply side of the market does the rest for you. So once you get to 80-90% sales, then the people who are selling them start to say, 'well, this line is no longer worthwhile for us, and we're just going to drop it.' Because I think actually forcing that last little bit out feels like an infringement for a lot of people that they're not willing to stand for.

And I think we've seen that in all sorts of other sectors, you know, black and white televisions, you could still buy one, but why would you? And all those sorts of things. Let me come back to those numbers, if we just recap.So we are now at about 20% of all sales globally. What you're saying is 45% by 2030 so a doubling, or a little bit more than doubling, maybe, and then 75% by 2040, and then after that, the sand runs out. How does that translate into the fleet? Because there's a lot of confusion out there that people say, 'Well, you know, you can't ban my car in 2035,' coming back to this point about mandates, it's like, 'well, no, but you can ban selling.' Or even if people bought one in 2034, they're still going to be using it in 2050. So how do the numbers look in your outlook for the fleet?

Yeah, fleet turnover takes a long time. So just to give a sense of where we are today, it's about 4% of the global passenger vehicle fleet. So one in 25 cars is now electric. By 2030, that's around 15% and 2040 it's just under 50%. But the majority of cars on the road in 2040 are still internal combustion engine models in that economic transition scenario. Now you might see something in the 2030s where countries that get towards a high share of new vehicle sales, they get to 70-80% then start to focus more on the turnover of the fleet. Scrappage schemes, basically to try and speed up that turnover instead of just letting it happen naturally. But one question you have to ask when you look at that is what global impact does that have? Because it's fine one country just saying, 'well, we're turning it over, we're turning our fleet over quickly,' but if that car that we pushed off the road is just ending up somewhere else, then that sometimes doesn't reduce emissions or reduce the size of the global internal combustion engine vehicle fleet. So that's kind of the sticky question that we're still not sure about. But certainly in our outlook, about half the global cars on the road in 2040 are still internal combustion. So there are still going to be gas stations and workshops and all these sorts of things, though it's going to vary a lot depending on the region.

Yeah. So cars tend to have a lifetime of around 18 years plus or minus. So my rule of thumb is, if the market isn't growing, then the number of EVs that you will see is how many you sold nine years ago. But it's sort of easy to see on a spreadsheet, but a lot of people don't see the connections. Have you done any work recently on Life Cycle Assessments and also recycling of batteries, or what happens to these cars at the end of their lives? Because if we do life cycle assessments, first, there was this huge period where there was definitely misinformation being deliberately spread about how diesels had lower emissions than electric vehicles, which was a priori nonsense at the time. I'm talking 2, 3, 4, years ago. What is the best estimate now of the ratio between lifetime emissions of a diesel and an equivalent EV or petrol?

Yeah. And actually, just to come back to the other point you mentioned, the nine year lag. One of the most interesting things that comes out of that is that actually, when you look at new vehicle sales, internal combustion engine vehicle sales peaked in 2017 and they're down. They're now down 30% from that peak. So to get back to that peak that was seven years ago, you would have to add an entire new US market, all internal combustion engine vehicles to get back to that peak. So that's just not happening. We've passed the peak on sales, and in another couple of years, we'll pass the peak on fleet. That's just that lag effect. On the lifecycle emissions, anybody who's worked on this topic has some scars of having to spend a lot of time debunking spurious claims and things. I think there's a long laundry list of ways you can try and make a diesel or an internal combustion engine look better. In Particular, you can pretend that the gasoline comes from the sky instead of having to be produced, or that the car is only driven for 100,000 kilometres, or you can use outdated data on battery production. What we find, and again, it varies based on the grid mix, but it's generally about a third to two thirds lower for an EV versus an internal combustion engine vehicle today. So today, with today's grid mix. Then what we've started doing is we've started playing out that grid mix that we use in Bloomberg BNEF new energy outlook that says, 'look, the power grid is changing a lot, this car is going to be on the road for a long time. What do grid emissions intensity factors look like?' Again, not in a net zero scenario, but in an economic transition scenario, and how does that change? And then the reduction is significantly more for a car sold today. So this is another way it gets kind of poorly done — you take the grid mix today and you freeze it and say, from here on outwards for the next 18 years, we're stuck on the same grid mix. And nobody who works in the power sector has any doubt that the average grid emissions intensity factor is going to fall every year for the next few years, for the next decades. It may max out as solar starts to self cannibalise and all these things that you know very well, but certainly it's going to be lower than it is today. And when you do that, then some of them, you get an 80-90% reduction even.

If I'm asked the question, I say it is at least two thirds and could be much higher. It also offers a pathway to 100% better, right? Because you can mine electrically, refine electrically, manufacture electrically, and then plug your car into either your own solar or a grid which is going completely clean. So that's not that it's today that's where we are, but it offers the pathway. But we're definitely, I think, looking at that grid mix shift as well, we're definitely two thirds better or more. And that means that, after you've driven about 15 to 20,000 kilometres, you're basically better off with an electric vehicle. You've paid off the manufacturing debt.

Yeah, and that's generally sort of one to three years, depending on the market. With the grid mix today, you pay it off in generally, one to three years.

So that raises one question, which is the developing world, because some people also say, 'Well, this is fine, but it's a rich person's hobby, and we can all be virtuous, but all that's going to happen in the Global South, people are still going to have to use petrol and diesel, because that's the only thing that works.' And I think we're seeing signs that is absolutely not the case. What are you seeing?

I would tell the people who say that to go to the global south and see what's happening. Go to Southeast Asia, go to the Philippines or Vietnam or Thailand and see what's happening. You are seeing very quick adoption of electric vehicles. One of the things that we've often thought about, and we spend a lot of time thinking about is what is the price elasticity of demand for a car? How much do people buy or not buy based on a difference in price? And one of our thesis has been that look, the people in emerging markets have a higher price elasticity of demand for a vehicle. That means that while EVs are the more expensive option, they're going to buy a lot fewer than a wealthier country, but once they're the cheaper option, they're going to buy a lot more of them, because they have a higher price elasticity of demand. And so you'll have a shallower curve at the beginning and then a steeper one. And certainly in places like Thailand, you're getting quite high levels of EV adoption. In some of the two and three wheeler markets, you're getting really high adoption of electric scooters. About 40% of two wheelers sold globally are now electric. Again, a lot of people don't realise that that's gone significantly faster than the passenger car market has. That one, and the bus market, are the fastest moving parts. So what we're seeing is kind of this groundswell of activity, and it's kind of challenging, this idea that we live in a top down world where innovations start at the very top, and they come down, and if they actually read a lot of innovation theory and things, the most disruptive things come from the bottom up. And really, that's where we are now. The cheapest vehicles in China already went electric several years ago. City cars, they're under $5,000 or around $5,000. Those city cars went electric very, very quickly. Two and Three wheelers are now going electric very quickly in different countries. We live very much in a bottom up world, not a top down world.

Yeah, and that makes total sense, that in a price sensitive market, that as soon as you get cheaper, that the flip will be much, much, much cheaper indeed. And in the episode with Jenny Chase, she talked about how suddenly there's, I don't know, 11 gigawatts of solar going into Pakistan, and it's not grid connected. And so it's funny, we've been talking for decades about is there a spiral of doom for grid connections? And we kind of decided that there probably isn't, because it didn't really materialise. But if people are putting solar on their roofs cheaper than connecting to the grid, to drive their air conditioning and their appliances, and then they can buy a cheap solar two wheeler or three wheeler, or even a very cheap car, then you may never see this demand hitting the grid.

Yeah, I think we'll be... I think people are expecting higher levels of electricity demand. There's this big wild card about AI and data centres and things, but I think a lot of the nuts and bolts, things that have driven electricity demand, at least on the residential level, are going to disappoint for a long time. One of the things we're looking at right now is battery manufacturing capacity globally and in China. And just as a reference, last year, China produced more batteries than the entire world needed. So China's production was higher than global demand. And right now, the over capacity there is quite extreme. The average utilisation rate has fallen below 50% for a battery plant. What that means is it's turned into a buyer's market, a lot like solar, where the producers are going around trying to find any application they can to sell any volume they can. And that's led to this convergence, where you see some of the smaller battery segments start to get the prices that only the higher volume segments were getting before. So it used to be that, okay, you're Volkswagen, you go and get a certain price because you're buying real large volume, because you're producing passenger EVs. Now some of those prices you can get for smaller truck makers or for smaller residential energy storage providers. So those costs are not just coming down, but converging towards the bottom as it switches towards the buyers market. And I think you're going to see, alongside Jenny's boom in behind the metre solar, you're going to see a huge boom in behind the metre storage as well.

Indeed. And of course, that behind the metre storage could be used to smooth out some of the charging peaks. Which segues us very nicely onto a topic that I want to cover, which is big trucks — HGV trucks — because we're also seeing some very interesting movements. And I have to put up my hand and declare an interest, I've created a business called PragmaCharge, which is about HGV charging in ports and logistics hubs across Europe. And I can tell you, from the inside, the numbers are very interesting, and the interest in it is very interesting.

Yeah, and we just put out a big white paper on the state of zero emissions trucks, called The Time is Now, and basically saying that this is, this is happening. This has sort of been bubbling along for a while, but there are now a lot of models out there. We track 500 different commercial vehicle models, and they're moving up the weight classes. So you're starting to see these kind of 500 kilometre range ones launch. In theory, the Tesla semi does more than that, but most of them are up to 500 kilometres. We're starting to see pretty attractive economics in the urban and regional duty cycles. So yeah, as you say, some closed sites at ports or steel facilities or mines, or even within cities going around heavy duty long haul, the economics are still a bit more marginal. But I often think when people try and understand how technologies are going to diffuse, their mind often jumps to the hardest application. And no technology starts with the hardest application. It starts with the easiest one, and it matters a lot more that you have an easy one that then gets bigger, and then you jump to another easy one that gets bigger, and you have these sort of growing niches. And that's what you're starting to see on trucking right now, is growing niches that are then improving the technology and enabling bigger niches to be unlocked.

I couldn't agree more, the hardest is the stuff that will get left to last. And you know, the easy stuff, which is last mile and when you talk about your 500 models, a lot of those will be last mile delivery vans, the little ones. In fact, Andy Palmer talked about the Nissan, I think it's the 2000, that he was behind the development of. But you know, then it goes up to three and a half tons and so on. But when it gets to the very large ones, I can tell you what we discovered, and we did this based on getting thousands of lines of truck movements, the weight of the cargo that they were carrying, or the weight of the freight, the distance, the temperature, whether it's uphill and downhill, and the stuff that starts to make sense, now or now abouts is the middle range for those big trucks. They're too expensive to have them sitting around doing last mile or very short distances. If it's a very long distance, then the battery has to be too big and it's too expensive. But if you're doing, let's say, a 100 kilometre drop off and return, and you can do that twice in a day. And then you can do that with 10 or 12 trucks, so you can amortise the infrastructure over enough vehicles. I can tell you, the economics is starting to look very attractive right now. Very, very attractive.

Yeah, and that's certainly something we're seeing too. And we're seeing a real pickup in the sales as a result. So again, it starts in China, but about 6% of heavy and medium truck sales in China are now electric. That's pretty remarkable from near zero a few years ago. I think the other thing that I often think of with these is we tend to view the way these things are used now as fixed, but the way they are used now is a function of the engines that were in them and the fuel that was in them, that will change as well. Right now, we take all the routes and we say, 'Okay, where can we swap in?' But at some point, other groups will start to say, 'Well, look, this is the portfolio of really cheap per kilometre trucks we have. How do we change the routes to get the lowest fuel cost?' That takes time, but that will happen as well.

That's absolutely what we're contending with at PragmaCharge. Because what happens is, you have these trucks that are doing 100 kilometre routes regularly, and then every so often, the dispatcher will say, 'Oh, can you go up to wherever and grab the pallet of whatever, and then come back.' And it's suddenly a 600 mile journey, easy with a diesel, but impossible or very difficult with a battery. And so the gating item, in many cases, is actually segmenting their route. These are very big companies we're dealing with. They've got very dense and extensive route networks, but their software doesn't say, 'well, these trucks can only do this length, and those trucks can do whatever.' By the way, if anybody thinks it's not happening, they need to come and talk to me, particularly if they're a freight company, because we'd love to have that conversation.

Yeah, definitely. I'm pretty optimistic on that, too. I think the big thing when I look at the trucking side is, what's holding it back from going even faster is concern or uncertainty around the residual values. It's hard to separate actual residual value concerns with perceived concerns, right? What we know is that the batteries are working well, and they're lasting a very long time. But a lot of these fleets have to finance that fleet somehow. They have to borrow money to do that, and the certainty that they have around saying 'we know exactly what this performance is going to be in this amount of time, and therefore what the residual value is going to be,' particularly as the technology is still changing, that's what's holding it back from going faster. So I think more services around battery health, around assessing the state of a battery for commercial fleets will help bring down that uncertainty and will help significantly change the speed at which you can get external capital into commercial vehicles as an asset class, rather than just sort of waiting for everyone to do it on balance sheet.

I'm smiling because we're also developing software at PragmaCharge, and I'm not going to say what it does, but you're absolutely right when it comes to the longer distances. Because okay, in Europe, in a sense, there are no longer distances, because once you've driven four and a half hours, the driver has to stop for what turns out to be long enough to charge the vehicle for the next leg. But around the world, that's not always the case. And there are some very long distance routes and journeys. How did those get dealt with in your models, or in your opinion, when you really do try to do long distance heavy freight?

So yes, I agree. There's some that are really hard. You look at some of these freight trains out in the Outback in Australia or something like that, carrying mining loads.

Truck trains.

Yeah, exactly. So the short answer is, I don't know, and I'm not sure that when we look at the share of total emissions that come from those really long routes, it's not that high, though there is still a fair amount of it that comes from longer routes. But I think within the longer routes, the weight constrained part is only part of that load. There's also volume constrained loads which can probably go electric. So people think, 'okay, long haul,' but then within long haul is it weight constrained? or is it volume constrained? And the volume constrained load, that can probably still go electric. The really heavy weight constrained long haul, you do still probably need an improvement in battery technologies, but we are tracking a pretty steady improvement on the energy density of batteries that go out today. And so in my mental model, that last 10 or 20% of the trucking market, I just sort of say, 'well, it will have better batteries in the future.' When we try and force it according to a certain time frame, like when we look at that net-zero scenario, we do put some hydrogen fuel cell trucks in the mix, just because it says the brutal maths of getting to a zero emissions fleet by 2050 says, 'Okay, you've got to force everything new to be ready to go.' So we have some hydrogen in the mix for heavy duty weight-constrained long haul in a net zero scenario.

We did so brilliantly, Colin, we did so brilliantly. We got nearly an hour in and we haven't used the word hydrogen, which I was very proud of, but you did it. You broke our duck there. But I guess you know my line is not to say there will be no hydrogen in trucking. It's just to say that the use cases kind of get constrained. And they get harder and harder over time, because batteries get better, or people change their operations. And of course, at some point, if you really wanted to do either the Australian truck trains or, you know, in your own native country in Canada, if you really wanted to drive across Canada in the middle of winter with a huge, heavy load, that's going to be really hard with a battery. But why wouldn't you just use a biodiesel or biofuel, if it's really down to that small number of cases, why would you go to the brain ache of something really, really complicated, like hydrogen?

Yeah, I think cost is where I tend to agree. We try and look at the costs like, look 'what is it going to cost?' And the delivered cost of hydrogen at a pump is still going to be quite expensive. So then it has to be pushed forward by policy on both the supply and demand side. And it's not to say that we won't have any of that. I think we will have some of it, but just that it will be the backfill, and batteries will do the bulk of the heavy lifting. And that's what you see in China right now too, the one place where you're starting to get significant uptake of electric heavy trucks, 80% of them are electric, 90% of them are electric. And there is a small amount of hydrogen going in as well. Interestingly, there's also a small amount of battery swap going in, too, as a way of saying, 'Okay, well, sometimes you need to change quickly.' When you change quickly, do you want to build an entire new refuelling infrastructure for hydrogen down to that place? Or do you want to swap the battery? Now, I think fast charging batteries and a booked DC fast charger that can go up to a megawatt. You have a slot that you've booked at a site as you plan your route down a big Ten-T network or similar trucking lane. I think that's still going to win in the end, but in the near term, you see some diversity of approaches going on, and that's only a good thing, I think.

I would agree it is a good thing to see that battery swapping. You know, I was chair of the safety panel on Transport for London's board, and I get chills thinking about the safety implications of these robots moving tons and tons of batteries in and out of vehicles. You know, I can kind of see it in, I don't know, a Chinese port where maybe it's a controlled environment, and maybe people don't care that much about the odd accident. I would hate to see that. I just find it hard to believe that it can be done safely in service stations up and down the country.

Yeah, I tend to view it as a closed circuit solution. So when you're in an industrial site, everyone's got safety training, that sort of thing. And that is, again, on the heavy truck side, that's where we're seeing the uptake of swap in China is in those closed facilities.

And as for the sort of hydrogen trucking, Europe is having a very good crack at it, demanding that there be hydrogen truck stops every 200 kilometres. You know, the joke I make about that is these hydrogen trucks, they've got fantastic range, they run and run and run and run and run and run until the subsidies run out.

Yeah. And I think the other thing that I'm still trying to settle on, too is, what about a large battery pack, plug-in hybrid truck, where you go, okay, let's put a 500 kilowatt hour battery in it, and then have a little onboard range extender and say, every so often it's really cold and you're going through northern Sweden and that kicks in. Or every so often you're on one of these routes that deviates from the normal one, and you use that. I just think there's quite a few flavours within electrification that you would go to before you would go to hydrogen. And I think what's important to note is that it's not just that if pure battery electric fails, ergo, hydrogen succeeds. There's a lot of other things in there. There's a lot of other versions of direct electrification, and there's a lot of case to be made that, 'look, yeah, that might fail, but that doesn't mean that hydrogen will succeed.' And this is kind of a fundamental point to me, is that if one technology fails, it doesn't mean that its immediate competitor succeeds. It means people go back to the old incumbent, like if people can't get electric to work, it doesn't necessarily mean that hydrogen will work. It just means they might go back to something else.

Or they might do biofuels or CNG. When it comes to that range extender, I tend not to believe it. It may be that some trucks will carry them for emergencies, if you run out, that kind of thing. But the other one, just for completeness, is catenaries — en route charging. And if you look at the US, where they have these Express Lanes that go down the middle of highways. That strikes me as being a pretty interesting place to put a catenary charging system, not on the outside lane, which means that everybody coming on, merging on or off the motorway or the highway, would have to cross over these trucks thundering along, connected to wires. If you put it in the middle lane, then the driver can, with self driving technology, simply check out, do paperwork, watch a film, go to sleep, whilst their truck thunders 1,000s of kilometres, if necessary, along the middle lane and express lane. It's kind of... Is it fanciful, or is it obvious? You know, it's somewhere between those two bookends.

Yeah, we haven't done much work on overhead charging. It's something we should probably look at at some point. Or to be honest much work on plug-in hybrid, range-extended large battery trucks, either. But that's one of the things that keeps this job interesting. There's always a long laundry list of things we need to look into.

There is, and at the beginning you also said that you are working on shipping and aviation. Now, the problem is that we're out of time, and I think what we're going to have to do is call it a day there and maybe bring you back to talk about those two for a future episode. So if that's okay with you, we'll do that.

That sounds great, Michael, and that's an area we're just building up a lot of coverage in this year and into next year. So happy to return and compare notes on what we're seeing on that, on shipping and aviation as well.

Very good. I look forward to that. It's been absolutely fascinating for me. I mean, we have agreed a lot, but it's always good to do a kind of tour around these issues and see what the state of the art is on modelling, the uptake and so on. So it's been absolutely great and a pleasure as always to talk to you.

Yeah, you too, Michael, really nice to speak to you about all this.

So that was Colin Mckerracher , head of clean transportation at BloombergNEF. As always, we'll put links in the show notes to episodes that we mentioned during our conversation. So that's Jenny Chase, episode 173, The Solar Revolution, Past, Present and Future. Dr Andy Palmer, episode 178 Slowdown, What Slowdown? And last week's episode Ethan Zindler, episode 181, Can Half a Trillion Dollars Help the US Catch Up with China. As always, I'd like to thank the production team behind Cleaning Up and the members of our leadership circle. Please join us this time next week for another episode of Cleaning Up.