You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. It's happening globally. The US the latest country to cross the electric car tipping point for mass adoption for the past six months, the US joining Europe and China collectively the three largest car markets, and moving beyond the five percent tipping point.
If the US follows the overall trend established by eighteen countries that came before, a quarter of new car sales could be electric by the end of that would be a year or two ahead of most major forecasts. That's significant. That's just a few years away. Doesn't help that, you know, Mike doesn't hurt that gas prices are you know, more
than four fifty a gallon nationally. That'll chevy in a different direction, right, all right, So let's see how the folks are at out of you're tackling this dramatic shift in our world. We welcome Spencer Reader, director of sustainability and government affairs at out of America. He is with us via zoom from Sacramento, California. Spencer, nice to have
you here with Tim and myself How are you great? Yeah, thanks for having Well, tell us a little bit about different factors that are impacting the shift, the global shift to evs. If I think about you know, Tim just mentioned energy prices we look at, you know, how they have shot up because of the Russian War in Ukraine, the regulatory shift, climate change. What do you think is the biggest factor that's maybe making everybody shift to e
vs a lot faster than maybe was originally forecast. Well, listen, I think you nailed it with the energy crisis, right, I mean, just even anecdotally myself and I drive been driving a TV for a while, the amount of inquiries I get just from neighbors and others on the streets here in California. And you know, keep in mind, you guys know this, but the f fifty sort of four sixty dollars a gallon uh IS would be a bargain here in California, right, I mean, we're closer to six
six dollars a gallon depending on the day of the week. Um, it is the economics. It's the economics of of it for families, for individuals when they see what they're paying at the pump and so evs now become much more, uh in in view on the radar for consideration. Uh, And I think it's a you know, it's a fortunate
coincidence of events. There's a lot more product of products better. Um, there's more I think people intersecting others in their world, whether it's a family member or someone at work that's that's driving a TV. So it's in people's consciousness. And now you have the energy prices, which which are really
focusing the mind. But still hard to get a lot of these evs because the components that are involved in the manufacturing process, particularly the chips, and then of course just the raw materials that go into developing the battery spencer. Give us an update on how long someone has to wait if they order an EV from Autie oh it. You know, it depends on the model and what kind of options you want, if you want a specific color, of course, if you're willing to take any killer. So
all of those factor in to the times. And I'd be wrong if I gave you any particular number, but it's you know, it's more than a few days, unless you happen to get lucky and go into a dealership or something there you're willing to take. But but they're unquestionably the supply is constraint right for a whole host
of reasons, chips being prominent among those. As you listed, demand is that So it's it's all of the coincident events on the supply side and the demand side that have made it more difficult to get the car of your choice these days, for sure, Spenser. How much is demand up? I mean we've talked about, you know, how the car market has been hot certainly throughout the pandemic because people couldn't go anywhere, so they need a car so they could go somewhere locally. How much is the
demand in creature? How much has the demand increase when it comes to e V specifically? Well, I think I think it's unquestionably up. I'll just give you an example. It is more anecdotal than a sort of a global metric. Um. So we have two dealerships in California that in the
month of March of last year. So this is before even some of the most h you know, I guess forceful events occurred that War Ukraine and others that that put the constraint on But we had two dealerships the month of March last year that sold more all electric vehicles than internal combustion engine vehicles, the first time we ever experienced that at an Audi dealership anywhere in the US. So I think you already saw that latent demand increasing
and manifesting even as early as the last year. Spencer a few questions here. I mean, California has been a leader in the in the country when it comes to evs. I mean, it was weird to see Tesla's outside of California at certain points over the last ten years. But if you go to California, they're all over and they have been for years, um wearing California with these dealerships. And is this getting close anywhere outside of California? And finally,
is this because of tax credits at all? And I will say I see lots of Tesla's now in the East Coast. Oh yeah, now it is, Yeah for sure. You know, I don't we haven't like de constructed and created the full attribution of why this was the case. I mean, all of these things factor and the dealership locations. One was in the Bay Area, one was in near San Diego, interesting for example, so you know, pretty wide distance.
I think California has got a lot of programs, but there's just the in erecture in place for example, Uh, that makes I think people feel that it's it's a more realistic option. They can go wherever they need to and and like you said, in some places seven dollar gas at some points, that doesn't Again remember March where we saw this behavior. Um. I think you see in the Pacific Northwest and Clarry demands quite high. But even in places like Texas and Florida, we're selling a bunch
of our electric vehicles. I think it's it's a it's a great product. Um. You know, if the prices weren't so high, I think again you'd still see really higher demand outpacing lopally projections from even two years ago. And I think it is just the quality of the product. We we put a lot of thought in, we rolled
out and it's a great experience for our drivers. Spencer, hang on for a second, going to do a little bit of news, But we want to come back, and I do want to get into government policies globally and how that can kind of change even the metrics going forward. Spencer reader over at Out of America will come back in just a moment I want to get back to our guests. Spencer readers with US director of Sustainability and Government Affairs at Out of America. He's with us via
zoom from Sacramento, California. So, um, when there's good journalism out there, we're just gonna steal it, basically and credited credited. Fast Company did a story why this climate scientist now works for a car company? Spencer. It's a great question. Why is it and why did you you were that climate scientist by the way, exactly, so help us make the connection and why you wanted to be there and why it works. Sure, well listen, I mean it's a
you know, it's a multifaceted sort of story. But the upshot is this, in the US, the top source of greenhouse gas emissions of carbon dioxide specifically come from the transportation sector. I've been studying various elements of the climate problem, whether it be the impacts affecting our coastlines and how
you reduce those impacts. But at the end of the day, it's about, you know, action that we need to take as a country and within the private sector, there is this sort of confluence of factors that are pushing us towards a really unprecedented transformation, and AUDI was positioned when I was evaluating sort of the options in the industry,
they really appeared position to take a very bold step forward. Uh, And that's why I joined AUDI to help them really push pushed through you know, some of the internal resistance, Like you know, there's there's a transit risks right back in there. It wasn't evident clearly that this was going
to be a full transformation. Now I think there's a lot more evidence that we're heading, as you noted at the top of the program, we're hitting some tipping points that was not the case in when I joined Spencer. Is there is there any part of the supply chain of or the construction of an electric vehicle, namely the battery and the components that go into a battery that give you pause from a sustainability perspective, since you are
still relying on so many raw materials. There is, but I don't think it's really unique to an electric vehicle. I mean, all the things that we consume in society have impacts on the environment in terms of raw materials, and I think there's been some hyperbole injected into the conversation around electric vehicles that they are somehow unique in this regard. We use a lot of raw materials to build all the things that we use and consume day
to day. Um, you know so, yeah, lithium, cobalt, those are issues that the industry is hyper focused on with the broader ecosystem of suppliers. The nice thing about this situation is once we get sort of a critical mass of e vs in the market, the materials and those batteries are fully recoverable. There is a closed loop recycling opportunity that companies like Redwood, which OUTI is partnering with now they're based on Nevada, that they have this this developed.
In terms of this vision, they will take nothing to landfill. The raw materials that need to be extracted from the Earth will dwindle over time and they can just create this closed loop system. So to me, this is a such a lovely story in terms of where we're heading. In the meantime, Certainly attention is warranted on how we procure those raw materials, is it done and the right way? And I think the world's attention on those is justified.
But again I would say that the uniqueness of this situation for EVS is something that is not really warranted. It's a it's a situation that applies to everything that we use and consume. Hey, but you said that why you chose Audie and when you were evaluating kind of what you wanted to do or who you wanted to maybe go work with, and you talked about the bold
moves at Audie. Do you feel like governments globally are taking bold enough moves for us to you know, fully embrace EVS Because I still think about the lack of infrastructure, uh that we see throughout the country to support EVS. There was a great store I can't remember who wrote it, um some other media source of somebody who took a ride like across the country or and how tricky it was to keep charging and finding places to charge. So are we not being bold enough as a government? I
think I think that's correct. Listen, if you just get our investment out these investment a loan in electrification over the next four plus years, we're investing nineteen billion with the b The big investment that everyone's touting in terms of the federal government here in the US and infrastructure is seven point five billion. I mean, that's an order of magnitude lower than what we're is one company putting into this space. So I think unequivocally there needs to
be more resources put into this. Now, you've got states like California that have that have put historically a lot of money into this. But but there is no question that you know, I'm talking about the US here, that we need uh multiples of what's being discussed right now to really pull off the full transformation that people really at least those you know who want this are touting.
What specifically do we need on the federal level. Give us an idea of the conversations that you're having not just in the state of California, but but also what's happening on the federal level. Like if you had a magic wand that you could wave, what would you want to say? Well, listen, let's just stick with the with the theme that we've talked about, you know, the set
the point five billion. There are analyzes that have been conducted one by the Public Policies too that suggests eighty billions what's needed to meet just the current sort of projections for demand over the next few years. So again it's in order of magnitude difference. Uh, that's the biggest, right,
It is the infrastructure piece. I mean, we we can build the vehicles, we can bring them to market, but if there isn't the infrastructure and the incentives for not just the public charging but those that we need at residences and multi family homes, high speed charging for certain situations where you've got you right, hail companies that need to charge those vehicles, the various kinds of commercial vehicles.
It's a whole sort of ecosystem of infrastructure investments that need to be made in partnership with electric utilities and every other sort of stakeholder that has an interest in that. Hey, spencer, is the trend to that you know, they become greener and greener because you know, as you guys were talking about lithium, I mean it doesn't just flow out of the ground and into battery plants. Electricity, right, you know, isn't captured without a great deal of capital and carbon expense.
There's really no zero emission vehicle. Right, We're not quite there yet, but do we move closer there? I mean, what is the R and D Now that we see a lot more evs coming out of global automakers, well, you know, listen on the youth side once the vehicles in the customer's hands. I mean, there are places like the city of Seattle, for example, that has essentially a zero carbon electricity grid because of investments they've made over a long period time. California's conversion on a zero missions
grid as well in the next few years. So I think from the use phase that sort of zero tailed type emissions, even if you go upstream, that we're close to being that already in many parts of the country. You look at the vehicle from you know, the full life cycle. That material is the extract from the ground that manufacturing processes. We in terms of what we control, we're working on that every day to reduce the carbon intensity of all of those steps. Um, you know, we're
a ways away from that. As an industry and certainly as a society. We've got to decarbonize in all of the colmy and then we get in the conversations during carbon pricing, which politically is sort of a third rail right now. But I think we're heading a good direction. We have a lot more work to do, but I think we're farther along than some people might suggest. Listen, this was so much fun. Please come back because we'd
love to continue this. Uh, your perspective and especially working for a major global auto manufacturer, really gives us something to think about. Spencer Reader, director of Government Affairs and Sustainability at out of America, joining up Zoom from Sacramento, California. We got to get him back. Maybe during the winter. We can talk about telemark skiing too. Yeah, he's really into that. If you check out his page on Twitter. Um, that's it. That's a wrap a lot of big macro stories.
We've got some big earnings. IBM still down about three point six percently after ours for Tim Stanavk and the Hohl Bloomberg Business Week team on Carol Masser, this is Bloomberg