The Electric Vehicle Revolution Is On, and It’s Going to Change Everything

the chip shortage. Yeah. I have noticed this too, particularly by the way over um in China, Like, there is just a massive amount of capital moving into cars at the moment, but it's concentrated in one particular type of car, which would be you know, electric nicles or um some

sort of hybrid plug in type things. Like. We have seen so much money move into that space recently, and I think part of it is the enthusiasm for tech that we saw last year, Right, People are looking for those big structural shifts, and the idea of electric cars is definitely one of those things. The weird thing though, too, And you know, I'll move it back to the US perspective for a second is like, okay, everyone knows like Tesla,

it's done sort of this way. It was way out ahead of the space and the legacy automakers have you know, are catching up and they're rolling out more and more electric vehicles, but like they're getting a lot of credit for it, at least recently like four past a billion dollars. It's not like these companies are like crushing it yet as far as I can tell on the e vs, but they're getting a lot of credit for it. And

as you mentioned, sales exploding in China. It's just investors not only seemed to rate like uh be bullshvs, but really just think like there's gonna be tons of winners into space. It's it's a is a lot of optimism. Yeah, well it kind of begs the question as well, like how much does it take for an old school car

company to convert itself into an electric vehicle manufacturer? And here I have to admit I really don't know anything about the technical differences between building gas powered car versus an electric car, but it seems to me like you cannot just flip a switch and suddenly go into you know, procuring batteries and making e V s. So I'm very curious how much of this, this narrative about the old school auto companies suddenly becoming e V manufacturers, how much

of that is hype versus reality. There's so many questions I have on that, Like, you know, one of the themes that we've talked to on many episodes, especially with advanced manufacturing, is this idea of like so of like tacit knowledge is something Dan Long talks a lot about. Something we've talked a lot about our semi conductor episodes, like do you just have the institutional knowledge to abuild these things? And then you're right, like there are different processes.

I remember we had a good story a couple of years ago about the unions in Germany being very anxious about the EV transition because there are fewer parts in theory that means for your workers. So all kinds of huge questions about how this is going to work and what what the EV transformation will look like, and like you, I really just like don't know much about this stuff, but it's happening so fast that I think we better, we better catch up. Yeah, let's do it, let's do it.

I am very excited for today's guest, we are going to be speaking to Nett Bullard. He is the chief content officer at Bloomberg and e F and one of the most knowledgeable people here at Bloomberg about all types of things ev energy, transitions, energy, tech, cars and all of it. Neat, thank you so much for joining us, Joe and Tracy, thank you for having me. As I used to say in radio, long time listener, first time caller, so a treat to be here. Thank you so much.

So to get it right off the bat, like the evy revolution is on right, like this is happening. That's right. I mean, we're right now at a position of let's see, ten years ago, less than a tenth of a percent sales of global cars were electric, and the third quarter of last year it was ten globally. And there is of course some regional difference within that. As you can imagine. China finished the year in December more than EV sales, and that's the world's biggest car market. That was three

point three million evs sold. Europe was about seventeen and a half percent. It's probably gonna end of the year, ABU, the US and the rest of North America a little bit lagging, you know, about ness than four percent in the in the fourth quarter or third quarter rather, but Nonethele, the trend very clearly is the electric vehicle's friend in

this case. I mean, this is something that looks like a very classic steep part of the ES curve in and exponential growth, and it's happening much more rapidly than even a lot of people embedded in the space would

have expected. And so it's really a fascinating time. And not just because you know, a lot of units are being moved in cars, but because, as you hinted at Joe, there are a lot of other industries adjacent to that, and I think, you know, we can have time to explore that maybe today, that it's so much more than just the car in terms of adjacent industries, things that flow into and out of this, what it means for all kinds of stuff, for the built environment, for behaviors

that customers have, and for new competitions probably emerging and new coalitions emerging between all of these different sectors that might previously not have had much of a connection. So can I just ask, I suppose the most basic question here, and you mentioned that demand for electric vehicles has really taken off in recent years. What is driving those sales, Like, what is the attraction of an electric vehicle to a normal buyer who's out there thinking of getting a new car.

So there's there's there's probably three things at the point. One undoubtedly is policy, so policies that either put limits on the amount of emissions per kilometer or mild driven in some jurisdictions, or policies that incentivized buying an EV, which is a relatively common thing here in the United

States at the federal and the state level. The other is this sort of industrial reorganization that some companies have done around this that just sort of made it a decision that, you know, going towards things that are mechanically simpler may be advantageous for their for their few, your production um. And then there's also, you know, the element that consumers. It turns out in many cases actually like the electric vehicle experience, and I think we should probably

widen out what that experience means. Obviously, driving wise, it's very different. It's almost impossible to find somebody who's driven an EV for the first time. It doesn't say, Wow, that's a great driving experience. But it's also a buying experience that's very different for many people. And you know, it's it's something that that falls into a an interesting place I think in our individual capital stack. Like for most people, of cars probably the second biggest thing that

they acquire in their life after a house. But most people were probably acquiring more cars than they are houses every time. And there's all kinds of other stuff that goes with it. There's he the hedonic signaling of who you want people to think you are, what you are aligned to. You know, how do you drive technology? I mean, anybody can have an iPhone, not everybody can yet have an electric vehicle, but you you can do a lot

of signaling with it. And and one thing that I think is unique and talking about this big sector that intersects all these other relatively stayed things like electricity or oil and gas, is that there's an element of personal choice here and style. But that is a challenge for a lot of long term planners to think of because it's never really been a thing. It hasn't hasn't been much of a powertrain choice in cars from like a hundred and twenty years really until really right now. So

I strongly. I still have a regular annult car internal combustion engine, but I think, you know, the next time I got a car, it's gonna be an e V. And I had that experience where I drove someone's and it's just like so smooth and nice. And then I went back to my car and it's like, you know, did that thing where like sort of like coughs and hiccups to start type And as I got and you know what, it felt like. It felt like going from

an iPhone back to like a flip phone. It was just like, well, and I this analogy is not bad, actually, Joey, you've gone back to candy bar que is and physical clicks as opposed to a seamless kind of universal service experience. So you hinted at this and then you said something specific and like, Okay, this is going to hit so many different adjacent industries because it's not just a technological change.

It's going to change everything. You said, the buying experience is fundamentally different, which of course calls to mind the power of the dealer networks of the legacy automakers. We know that dealers are politically powerful, and you know there's this sole established way people go to a car and they haggle and they get off and you know, uh a year of satellite radio, et cetera. What makes the

buying experience unique for evs? Why will that inevitably change? Well, I should I should qualify that a little bit, which is that it's it's for the hure play EV companies, they're just doing direct sales. The challenge I think is going to come about for a GM or a FORD or a VW group that obviously has this huge embedded dealer network that it works with that wants to sell things, you know, to get the to get that undercoat, to

get the four mats thrown in. You know, you've got to maybe cut a deal on your your service schedule or something like that. So you've got kind of two poles set up, which is one we haven't we have a new product, and if we're going to stand up in a new market, why not just do it differently?

I mean, the Internet does exist for all of these companies, and if you can kind of force a lot of your energy and attention into the web interface, you can probably save on other things versus you know, putting putting the car into a new electric car into a universe of other existing models, wherein you're presenting a choice within a brand that may be kind of challenging, and that itself implies all kinds of different stuff about how well does the sales staff know to sell an enter field book?

Do they know that, do they know the KPIs to talk about when they're pitching it, do they know the specs? And also do they know what kind of experienced sort that they could promise down the line. But there's a wrinkle to that, which is that you know, um, you

handed at this in your introduction. You know, uh, the engine and a BMW has got hundreds of moving cards, the murder in electric vehicle has a few dozen, and the battery itself is something that has much less complication to it in one sense, in terms of mechanical moving parts than the entire power train of an internal combustion

engine vehicle. And that's a long way of saying that there's a huge amount of embedded attention and business in the maintenance schedule for keeping a bunch of hot, contacting metal parts that need lubrication and precision matching to work. In the business like that, that's a huge part of the business. In fact, the last time I got an

internal combustion engine car, I have a Subaru outbag. I actually had to essentially sign a waiver top out of the maintenance schedule that they wanted to try to sell me. Because that that's a big part of the recurring revenue relationship that are the card dealers have with individuals. So we we've we've created this this inherent tension between not only what you're selling, but how you're selling, and also what people need to know and how they need to

convey that selling experience and stuff like that. And yes, it's gotten a huge amount of pushback from the dealers and as you, as you indicated, dealers are very very powerful locally. I mean pretty much every jurisdiction in the United States has got some kind of card dealer in it, versus not every jurisdiction having say, an auto manufacturer in it,

and even fewer that have purely electric manufacture. So, just on a related note to the differences in the buying experience, could you maybe walk us through the different fronts in manufacturing a traditional car versus an electric vehicle. And I guess one thing I'm curious about is whether or not something like building e vs actually requires a different work culture,

I guess, to building traditional vehicles. You know, people think of companies like Tesla as hardcore tech, you know, really innovating, doing something new, and when people look at GM, they tend to think of an old school car company, and it just seems like there's a big cultural divide there. Now there's there's absolutely a big cultural divide, and I think we should sort of clarify a couple of things.

So manufacturing the body of a car, if it's going to be stamped steel, you know, if you're going to be putting seats into it, if it's going to have windshields and windscreens, it's going to have wheels and tires and breaks. These things are largely coming from the same kind of supply chains and the same type of manufacturing.

But it's kind of the core I p. And I would also say a lot of the corporate identity elements that are kind of in fundamental conflict as you move from internal combustion engine to e v s, and that's the replacement of this massively complex and massively precise set of things that have been optimized for more than a hundred years to take things, take a fuel aeroson wise it exploded, turn that into momentum that then it makes the vehicle move, and that then also in the process

dissipates heat, gets rid of gases and all these things, and in the process of course, moves the vehicle, replacing it with a large, sealed up more or less inert slab of electronics that is oftentimes integrated somewhere else. And then motors that may or may not be made in house by an auto company and then put together in a in a in a package that looks the same

on the surface and that does the same job. It's still moving a car, but that definitely kind of changes the frontier of where companies see a lot of their identity. Like a great example here is that as that Honda in Korea has just closed, it's R and D center that develops new internal combustion engines that they've had this for thirty nine years, Like this was a massive part of the company's identity to be stood up as an

independent company was to do this. You know, the chief of R and D there said that, you know, it's an inevitable to convert into electrification, and that our engine development is a great achievement, but we must change the system to create future innovation based on this great asset from the path. So I guess it's a big psychological moment, like you know, what, what battle are you fighting technically within the automobile? Is it for greater efficiency? Is it

for more speed and power and torque? All of those things that used to run through hundreds of moving parts being integrated into an engine and through a very sophisticated R and D apparatus are now having to rotate completely. And it is a really important question to ask, like how much of that can carry over from one place to another. Now, assembling a car carries over, but making and making a battery pack and a motor maybe just not.

So you actually just mentioned one question, Um that I wanted to ask, which is where do batteries actually come from for electric vehicles? And do any e V manufacturers actually make their own batteries. Yes, Tescam makes its own for long term of course, in partnership with Pana sonic Um. There are a number of manufacturers not far from you in southern China, S A, T, L and B y D. There's there's an increasing interest in doing manufacturing in Europe

and some here in the America's as well. And again this this will be an intriguing question to see how it plays out in terms of do companies have our company is able to I don't know, better leverage their supply chains by being diverse, having a number of suppliers, or are they better off taking everything in the house, you know. On the motors side, the analogy would be that many automakers may do their R and D, but they have a third party here, one supplier that manufactures motors.

So it's you know, it's a bit of it's a bit of both at the moment. But but again it's very very different, and it's very highly concentrated at the moment, given given the fact that so much of this capability

is it China and the rest of East Asia. God, you know, there are so many different avenues we could go down, and already feel like Tracy, We're gonna have to do like ten episodes this here, because I'm sure I could ask an hour's worth of questions necessarily, like just on battery manufacture and then of course the chemicals and commodities that go into battery manufacturer. So like it's already, like my head is like spinning out at different thoughts.

But I want to go back to this question of what becomes of a of a automaker's identity in this

sort of evy world. And something I'm sort of like wondering about is, you know, and like the late nineties with the personal computer, and suddenly it's like, okay, everyone just like puts the same operating system in the computer, and everyone puts the same Intel chip in it, and suddenly all these like computer makers more or less lose their identity, and you know, we can sort of remember all the ones that fell by the wayside, like Compact

and so forth. Is there a risk that that happens in autos where the tech sort of is really happening somewhere else and they're sort of like assembling the same parts as everyone else and don't really have any sort of unique purpose anymore. It's a really great question, And I actually like this analogy because I can put it right back into a question, which is, if we think back to the late nineties, was there anybody who came be it as like I'm a compact guy. Sorry, you know,

I'm a gateway. I'm a gateway man, my family has been a gateway. Man that song I'm ever going to use for my desktop PC. Like Dell almost got there, They'll almost got dude, You're getting a Dell, right, Yeah, that was the closest it almost got there. I would say Apple has definitely carved that territory, even for people who spent some sort of years in the technical wilderness with with Apples. But I think the auto identity is not only deeper, but I mean it is really like

multi generational. My family as F one, not for it's F one, and they've had since we since my stepfather was buying them off construction site seventies. Like that identity is as old as I am in a sense, and so is definitely a challenge for the big manufacturer, which is you know where where does the kind of the

loyalty lie within? That is case in which people saying like I love the F one fifty, but now that it's gone electric, I won't buy anything from four or on the other hand, and this is data from Ford last month, is it the case that by electrifying an iconic nameplate the Machi and the F one fift lightning, are you able to new people to your brand and actually think fourd's case is really instructive because they've got about two reservations for the F one Lightning and THEE

for those of you outside the US, is the best selling car or vehicle in the United States for more than four decades. They have two reservations, of which sev of the customers are new to Ford, which is pretty extraordinary if you if you think about it from a captured perspective, being able to sure market in doing that is pretty great if you're looking at this as a manufacturer.

That said, there's always the risk of, I think the kind of the E V one experience, which is also from the late nineties, of delivering a subpar experience and

not necessarily self sabotaging it, but under selling it. And that could take the form of deliberately saying this is a compliance vehicle and we're not really interested in it, to kind of the soft pedal version, which is people just don't know how to sell it, but I but it seems to be that that with the electrification of the two best selling the F one Fifting Lighting and the Chevy Silverado full size truck, that you've got this and this sort of interpoment of new things into into

an old not just brand, but an old nameplate that people have a lot of loyalty to. So I think it's going to be extremely interesting to see how this plays out. Because of the time. Of course, you have companies building off of their own like what Eon Musket call first principles for e v s and that's not just obviously tested, but that's Ribban, that's Lucid. You know, the two friend vehicles of the years on the truck with the Lucid air car and the Ribban R one

P truck. So with all this attention on electric vehicles, investors getting very enthusiastic about the space, as Joe mentioned in the intro, lots of money flowing into it. Do we see any signs or should we be at all concerned about over supply? And one of the reasons I ask is because in China at least, we have seen some ev companies that you know, set themselves up, attracted a lot of initial investment, and then seemed to very

quietly shut down. And I guess one follow up question, and it's related to your point about brand loyalty earlier, but what does being competitive in the e V space actually look like. And how do you differentiate between winners first as losers as far as the knots of brands popping up and then quietly going away. Well, that looks very much like the early days of the auto industry, right large. You know, when we had hundreds of manufacturers in the United States, and you know, some of them

lasted longer than others. There were packards around and then our parents were born. But you know, Stuts as a brand is no longer with us, Detroit Electric is no longer with us. There are are more things that fall by the wayside than not. And actually, maybe to go back for our sort of best stop computing analogy, it may be the same kind of thing. Lots of people are trying something similar. Differentiation will be determined maybe more

by the market by anything else. But another wrinkle to this, and I hinted that I would afford, is that the fact that you that a lot of these new models are kind of doing a determination of product market fit and products scale by asking for reservations. Yeah, is a way kind of size the market and events. So for instance, Forward doubled and then doubled again the planned production capacity

for the uplift lightning based on reservations. So rather rather than like stuffing a lot with product that nobody wants to move, what they're working for here is is a more supple and a more kind of bi directional sense of demand and supply at the same time. I'm not quite sure how that plays in the in the Chinese auto market, but it's definitely something that as as companies are testing the thesis here in the AIDS, they're finding that the reservation method is is an interesting way to

get things going. Um, and it's been you know, it's also, let's be honest, it's also been part of a very nice story to tell the markets when when Ford is able to go to the market and say it an investor today, Hey, look we doubled our we double production based on reservations, and then we're doubling it again based on reservations. You know, I was gonna ask you, you know, you mentioned that the four F one fifty, the electric version,

it's had this extraordinary thing. New people are coming into it. What about your family or the old the families of F one fifty loyalists who had one specific idea about what an F one fifty was are they excited. I don't mean your family specifically, although maybe you can answer, but are the generations of F one fifty owners showing

enthusiasm for switching over to an electric version? I haven't seen that data yet, but I'm gonna sort of I'm gonna game this now, which is first tailgate and you're the dude who can run like hundred watt sound system your car. You pop up in the front trunk and you've got your yetti in there full of beer, and you're like, look, you know the space to keep things cold.

There's also and this is definitely the feature set for for for Ford and for Rivan as well, is using the vehicle and as essentially a mobile hub for all the other electric activities that you may need to do with work. I mean the fact that the fact that you can charge. You can run a chop saw, you can run a micro saw, you could probably run a table saw if you wanted. You can definitely charge every other peripheral battery that you've got off bits in the

F one. That's definitely gonna get noticed. I handed that my family always had one, but we got them as fleet cars. They were white F one fifties no crew cab with a with a flat six, and then they have been making for decades like they were just they were work cars. And so like when you when you put this into the work case, it's extra fuel you don't need to buy. It's all kinds of capabilities that I think people will find to have at the consumer level,

that kind of g whiz at aspect. I haven't thought about this at all, that like, this is the first time it's occurred to me or I realized this that if you have like this powerful battery and unlike with an existing car battery, you know, like zo right, you drained it out just by leaving the lights on for five minutes or whatever, Like this is like a really

powerful piece of equipment that you're carrying around with you. Yeah, I mean, like I think I think that that will be will be interested to see how that kind of

peripheral use cases evolve around this. Like if you look at like Ribbean's advertising, for instance, has got somebody set up and set up in the R one T in the woods at a camping site, but they're running, They're running like hundreds of feet of L. E. D. Edison bulbs, you know, basically setting up your Instagram ready camping site, but without being like, oh, I need to bring a generator for this, or I'm gonna drain my battery and

doing so. Oh that's cool. Yeah. So, I mean, we've been talking a lot about the one fifty, and when I think about pick up trucks, I kind of think about people, you know, I don't know, in the hinterlands of Texas or something somewhere out in the country, um, doing country things, And I know that's the stereotype, and it's probably not really true anymore. In pickup trucks are

very very popular in the cities as well. But this sort of begs the question of I guess infrastructure, and my understanding is that charging stations are still an issue outside of major cities, So I guess the question is how long is it going to take to build out that infrastructure and how much does demand for evs actually depend on that happening. So I haven't I have a different take on this, which is that actually I think that the charging infrastructure is largely a bigger issue in

cities than in the suburbs. Where it is an issue in the countryside is for long distance driving where you want to be charging as quickly as possible. The reason that I don't have any v is that I don't have a garage. I worked on the street, and I have yet to sort of figure out exactly how I would negotiate charging. Now, my neighbors down the street have two testamas. I have no idea where they charged them,

but obviously they do. And whether they're doing it at the office, whether they're doing it at at Whole Foods, or whether they're they're going somewhere else and kind of finding a charging solution, I'm not really sure yet. I think what's going to be interesting isn't like, yes, we're going to need this massive build out of charging networks. And right now, like globally we have about one point five million charging connectors worldwide, of which them in China.

By the end of this year, that's probably gonna be like two point seven million, so it's almost doubling in total size, and it's going to solve a number of different potential needs. So one of them is the is essentially replacing the in inner city gas station, so a place that that you would normally go fill up leave, but now you need to go and spend slighting more time.

The other is in a place like a big box retailer, where you're you're already going to be spending some time, and that kind of matches you're the amount of time you're going to spend. Then there's the third case of like, well we need to build a network for highway driving. I'm gonna drive on from from New York City to Miami and I want to do it in my EV Where am I going to charge it on the way?

And then there's the other case, which is, you know, I have a home and I have a place to park, and maybe I will use that as my charging solution. I think it's gonna it's not to play for here. You know, our homeowners is going to find the need to charge their car in twenty minutes, probably not. Are people on the highway going to be happy to spend two hours waiting for their vehicle to charge? Also? Probably not?

And so I think what's what's interesting to me is not just what gets built, but who owns it and what's the knock on business? And Joe I always think about this, even like what's the Buckey's future? Yeah for for for electric vehicles for those of y'all don't know BUCkies. I don't know, Joe, you can probably tell better, tell me better than than than I can with buckets. Yeah,

it's the best. You know, they have great bathrooms for one thing, so I have memories of like the best place to change your baby's diaper if you're on the road is definitely a bucket is. But it's like this like amazing sort of like Texas institution that has tons and tons of places to fill up your gas tank, but also like tons of gifts and barbecue inside and tons of like dried smoked meats and t shirts to try on and cowboy hats and like you just kind

of want to hang out there. And they pay their staff really well, so they have a very good staff. It's very pleasant. Like I said, the bathrooms are extremely clean and so like, uh and I think you know our colleague Connor Send and when your opinion wrote like a thing it is like if all gas stations were like as enjoyable as Bucky's, like, oh, thirty minutes to like charge your car, Yeah, I'm cool with that, but like obviously most gas stations are nearly nice enough that

you would want to spend thirty minutes there. But I think it's super important for us to consider what this is like because like you know, there's a time carve out two to charging. It's not as long as what a lot of people think. But it may not be that dona'nt think. I mean, if you're if you're on a road trip, you know, if you can say you had a four hundred mile battery capacity, well, at that point you're in a battle between battery capacity and latter capacity.

You've got to stop at some point and when you and when you do, maybe there's a charging is part of a sort of nexus of other attractions that take you to a place. Well you have to have to eat too, especially if you have kids exactly. And you know, like it's funny because the pushback I've gotten on this when I when I sort of point is that as we were like, you know, I had the road and I go I was like, do you have children under five?

Because you can't do that, Like you need to go somewhere and you know it'll be like it'll be like driving perhaps in the early days of the Interstate Ighway, in which attractions pop up, you know, you know, is it is it the mystery spot? You know, is it walled drug? You know, what kind of thing is it that people plan their journey around. But I just want to give some costs here. I'm like, how big this in this industry? Is the United States that is going

to eventually have to deal with this. There are nine dred and sixty thou people working in gas stations in the United States. Most of those have a convenience store related to it. There are a hundred and fifty thousand convenience stores of themselves fuel and they some about of the motor fuel that's purchased in the US. But also like of that hundred and fifty thous about ninety thousand of them are single operators. So like there's a huge

set of questions to be answered here. That's not just buying like the Buckeyes and the Flying Jay's of the world, but by tens of thousands of Soul proprietorships. So I guess we've been talking about how electric vehicles might change things like the way we live. This idea of using them as a center for all your electric activities or you know, a transportable center for all your electric activities, and the way they might change traditional car companies garages

and things like that. I wanted to ask, I guess ah even more macro question, which is, what is the impact on demand for oil if everyone is suddenly driving evs and do countries you know nowadays Saudi Arabia, United Arab Emirates big oil producers clearly hold some geopolitical sway because of their oil reserves. And I guess my question is does a country that has a bunch of lithium reserves suddenly become the new Saudi Arabia under a scenario where everyone is driving evis and there's a need for

a lot of batteries. So this this is one that's definitely worth parsing out to sort of figure out what's the same and what's different in the resource inputs for these cards. So yes, definitely there's there's there's potential on the lithium side, on the nickel side for some short term shortages, and you can definitely see that in in pricing. The price of lithium really went went really skyrocket in the last year by a factor of about five over

the course of the year. We do expect that to to sort of moderate over time as more capacity comes online, So you know, it definitely within that domain kind of shifts the locusts of control to like a few places at at a period of time. The one thing you can say about materials in battery, the battery metals, is that they can be and will be recycled. We hear

oftentimes people saying that nobody recycles them. I'm like, well, they're still on the road, like nobody recycles them in the way that they're not recycling a lot of iPhone thirteen max is Uh, it's just not you know, they're not rolled off the market yet. And also, um, I think that we will see a pretty sophisticated hipparatus to decide what to do with batteries at the end of

their life. But to take it back to the oil producers, the interesting thing here is that is that we think you should think about this among like a marginal cost curve. If if demand goes down, then you start chopping off with the margin, which is always the highest price and oftentimes sometimes the smallest units of supply that are in the market. And you know, my colleagues were expected by the middle of the center, we've got tens of millions of barrels a day less demand for road transport fuel.

Now that doesn't mean that it crams all oil demand down and then it starts to moves negative, but it's definitely entirely possible. But when that happens, what it's probably going to do is follow very kind of classical economics, which is, users with the most flexible will supply and with the lowest price are probably the ones that will

be pumping the remaining barrels of oil over time. And so what it probably does is but the the powerful position back in the hands of big producers lots of capacity and with low costs, and those are the producers

in the Persian Gulf, Saudi Arabia, the UAE, it's Russia. Um, you know, definitely, the the impetus there is that these companies will or these countries rather will almost certainly be pumping the very nast barrels of oil that come out of the ground because they're the ones able to withstand this change. On the margin. The bigger challenges for marginal small producers, for producers that have a very inherent fundamental

cost and and things like that. So you know, it's it may actually bed the strength of some of today's biggest oil producers that's really interesting and I hadn't I

hadn't thought about that at all. I don't only talk more about some of these like deep structural I don't want to say oppositional, but maybe oppositional like forces you mentioned like sell thing is going to happen with all of the gas stations and how many people uh that employees and all of the convenience stories associated, like there's gonna be that's going to be turned up somehow. We

don't know. Maybe they'll all be like BUCkies, or I'm excited about roadside attractions like random like dinosaur museums in the middle of nowhere. I want to go back to something we talked about the beginning, the labor intensity of e V manufacturer and obviously mentioned you know they're they're simpler if you're moving parts in theory, if you're moving parts and means if your workers on a shop floor.

What can we look at when we look at the labor intensity of a pure EV player like a Tesla versus a GM or a Ford and what does that tell what are the things that are going to arise for the legacy automakers even if they have popular products. You can solve that part in terms of the stresses on their own workforce. So I think I think where the stress actually in the first instance, is going to come in in the in the tier one and lower

supplier network. You know, Toyota has Toyota City, and it's made up of hundreds of suppliers that make very specific things. They make a specific kind of seal, they make specific types of valve, they make specific types of solarnoids or connectors, and all the different things that flow into into making and automobile engine have got their own supply chain of small companies that produce very precisely made and very precisely planned products. It's the same in Germany obviously, where you

have similar value chains. But even more than that is like there's another layer back from that, which is there's the capital, the capital equipment manufacturer. So the companies that make the tools that make those valves that go into a BMW engine or that go into a Toyota power train, We're gonna start to see it resonate resonate out further there.

I mean, like in the big auto businesses are assembly businesses for the most part, there are you know, there are still some companies that do full integration of things that they're making, but they're you know, the biggest part of the role in a plant is integration of pieces that have come from these very diverse supply chains. And it's the change in the supply chain. It's going to

be a big of a deal. I mean, if you think that, like, if you think you know this is this is not exactly precise, but basically every part, one way or another, is probably a company, and every company itself buys things from other companies that go into it. It's going to be this huge compression along the way. Now, if I'm an automaker, I may not necessarily find this all that problematic. Having a more consolidated network of suppliers maybe one that I can plan longer term with, maybe

maybe advantageous. But politically it puts it puts a kind of schism within what we think of as the auto industry. You know, like tires and brakes may still be aligned with the d s UH and infect tire manufacturers make a whole new set of products just for evs, but auto assembly and making of engines and making of finenges and valves and solennoids and fittings is probably going to have a little bit of a crack up in time.

So just on this note, I mean, we're basically talking about everyone who currently has a traditional car going out and buying a new car, which would obviously entail a lot of spending um and the possibility of making a lot of money for companies that produce e v s. I guess my question is, to what degree does this new industry spark a sort of follow on boom in manufacturing and the parts that you are just discussing, Like, is there a possibility that in places like the US,

as big car makers start to switch to e v s, that we do start seeing I guess, more battery making or you know, tire making or specific EV parts being made in the US, and that industry expanding. I mean, it's it's possible. It's possiblely we see these new industries popping up and expanding. But but another another possibility is that, you know, so much of this essentially becomes part of the semiconductor value chain, which, as we know right now,

is pretty complicated. You know, my colleagues estimate that you know, the semichonetric bill of vehicle building materials as a percentage of the vehicle building build materials is like about four is probably gonna be about So if you think about replacing, you think about replacing all these little pieces that manage the flow of liquids, gases, than the person of heat and then the lubrication of moving parts with things that maintain flow of electrons and do heat heat control uh

and do system maintenance within a battery. Those are those are much more tronic than they are panical. And so you know, it's going to be really interesting to see where that doesn't create new new value chains popping up. I mean, there's an intriguing kind of thing happening here for Ferrari, wherein the new CEO of Ferrari, Benedetoa, has come from ST micro Electronics, which is a major Apple supplier, and he in turn brought with him two executives from

ST Microelectronics that have come over. And this is a sort of like very in our face kind of example of maybe the new kind of core I p you need to fold into thinking about electrification and needing this to say, I think Ferrari has quite a bit of pride in the in the engines that it makes. I mean, you know, this sort of idea that all of these industries are tech semiconductors, etcetera. Bleeding over into each other.

I remember a few years ago there was a lot of hype about the silicon the fang is the silicon value giant making some play an auto and Google head a thing. I think they're a little bit more focused on the autonomous side, and every once in a while there's a story about maybe there'll be an Apple car one day. Are they playing in this space? Is it sort of like, actually, maybe there is not some connection between the search engine and a car, Like where are

they on all this? I mean, it's like like the question I guess is what the electrifications that have moved the abstraction layer of cars in a way that a tech company to get in and play and we can kind of we can kind of start carving this off, like do they want a business of stamping metal? Probably not? Probably not? Are they Are they in the business of doing an operating system? Me? But do you want to be in the bluing an entertainment system as well as that?

And also what's the value capture that you get and what's the model? Are you able to create a recur and annual recurring revenue relationship within the car that has software like margins or are you going to be doing auto industry park it for making physical stuff. I mean, it will be very interesting to see if Apple brings a product market is and what it what it views

as the relationship. But also like where does the technology point of control flow in a way that is important for a for a technology company to get into this. I mean, like in in a sense, Apple and Google are in all of our cars every time we plug in our phone and use that for mapping and for music. Um, you know they have they have actually they've taken away market share from like in that market share, but kind of presence and brand presence from companies own self developed

entertainment systems or from navigation systems as well. I really hope we don't have to start paying monthly subscriptions for like our operating system in an evy or the entertainment system. I know. But but Tracy, the way to think about it is that like I I as as I mentioned at the beginning, I had to opt out of the equivalent service agreement when I got my new car. So auto companies are will definitely do their best to try to steer you in that direction to to a services agreement.

I do think that companies will try to do that and want to do it. The question is, you know it, does an automaker know everything about me just because I I go get the tires rotated once a quarter, not exactly in the same way that the technology company might. You mentioned, Okay, of course, like the semiconductor intensity or the chip intensity of these new cars is going to be much higher than they were. We know that there's a shortage of chips for the legacy cars, but a

lot of them are at the low end. So it's kind of the chips are at the low end. It's kind of a different story than the longer term. But you know, like I'm also wondering about the sort of like the mechanics community, they used car parts community, the O'Reilly's of the world, the pet boys of the world,

the auto zones of the world. This has been an issue for a while that like cars are getting more like computers, and you hear it's like, oh, you can't repair your own car anymore, and you know, it's just it's not the same. So this is not strictly an evy thing, like this sort of like phenomenon has been going on for a while and there's been anxiety about that. Is that going to accelerate the stress or are is that whole industry going to find a way to adapt as it has for some time, even as our car

has already become more like computers. I mean, it's it's a really important thing. I mean, what's the pet Boys or NAPA Auto parts business when there are hundreds of fewer moving parts in in the part of the vehicle that wears out the quickest, that needs the most maintenance, and there are for the record, there are just under two million people who work in dealerships and parts the US. Like, it's a it's a pretty big business. And it's recovered

almost completely from UH from diving during the pandemic. So that's a good question, like would you would you go to pet boys for what? Like what's the job to be done? Are you going to go there too? Jail

break your vehicle software? Well, you know TESTNA will do that doesn't obviously jail break it, but TESTA will allow you to do over the ear up dates that happen automatically and improved performance or safety and other automakers are moving in the same direction, so it is a big challenge for them as far as repairs, I mean, body work and things like that are the same, but you've

got new things to be aware of. I remember Bores has to do training for its mechanics around the battery pack of the new tyicon because you know, you could you could burn yourself by touching hot metal in a in an eternal muntion engine, but you can absolutely electrocute yourself. So you know, like like, where's the specialization within that, And it's just not a big enough market probably yet for that to have emerged. Most of that still flows

back through dealers. Not only that, like these places occupy a lot of physical real estate, but what happens to the what happens to the bid the big box parts store and the people who work there. There There there's a lot of things that are in play here that we're I think only just beginning to kind of think ahead about, you know, and I imagine that there are strokes of all of these companies that are starting to ask these questions.

But you know, we're we're not there volumetrically for this to really make a difference, but it will that I mean that was amazing. I do feel like, you know, in my mind, there's like ten more hours at least of episodes. There's there's, there's, there's so much more. Each one of these things itself is like a multi trillion

dollar inquiry with tons of open questions. You know, what's the brand and loyalty to Brandon nameplay, the way the car moves, the business model, all kinds of stuff is gonna be going to be in play, and it's gonna be really interesting. I mean, I think that we'll see some incumbents that make it. They're all all even Toyota has now sort of come around to the fact that

they probably need to do this. But there is a place for new entrance, and you know it's gonna be It's gonna be interesting to see and I do look forward to going to Buckey's sometimes. Yeah, you gotta go. This was great. I think, you know, we really need to do a lot more and this was like a great starting point for what I think will be many odd lots on related topics. So Net, thank you so much for coming on the show. Thanks Joe, Thanks Tracy,

Thanks so much. Tracy. We gotta do a battery episode, obviously, like the battery supply chain, right, yeah, lithium oil, lithium, what else um, the future of gas stations, that's its own, like future of I guess car repair shops, future of car repair shops um, probably like unions and auto maker labor, either at the O E. M's or the part suppliers, and how they're going to navigate that. So many I'm so excited. I feel like that we have what future

of roadside attractions? Yes, be interested in the future of like the American road Trip is, like, it's what I'm super accepted. So I do feel like this is going to end up being any Conductor series reducs, where every time we record an episode on e VS it just leads to five more episodes. It already feels like that.

But on the other hand, the notion of everyone in the world, you know, maybe not immediately, but over the course of a few decades switching to a new type of car, that is a really compelling argument that it's going to have to have some knock on effects. Oh yeah, and you know, just the sheer number of like a employees in this space. You know, we're talking like a

million here, are a million there? Like in the US. Like, obviously cars are a huge deal in the US specifically, but there's so many like millions of millions of different industry not millions of different industries, numerous different industries with millions of employees that are going to be affected by this. And look, there's gonna be it's also going to create tons of new jobs in ways that we don't expect,

but yeah, it's going to. I think like that's thesis is that regardless of who wins, this is going to change so many different aspects of the economy and life. Is one that I find to be quite convincing and quite compelling, right, And I mean, if you think about cars specifically in America, they're they're so entwined with society and culture, the way cities and suburbs are planned and

actually work. It feels like once you start changing the actual thing that drives that pun um, once you start changing actual cars, it just it feels like it has the potential to impact all of society and the way we live. And I think that made a really compelling argument for that. You know, I was like kind of like wondering, it's like, are people going to, like, like what is the cultural pushback going to be when someone shows up at a job site or a football game

with the electric fifty. But I'd like that so compelling. It's like just like run all the machines and all the saws and all the equipment right from the car, like running awesome, like sort of like tailgate operation with like a working refrigerator and a stone and all that right for the car. Like that's awesome. People are gonna love that. So I'm like totally sold. Yeah, you'd be the cool guy, like with the best pregame, right, a great sound system, probably a TV, like a huge TV

or screen that you could set up. It's it's it sounds awesome. So I'm super excited about seeing them all over the place. Now Yeah, all right, well it looks like we have our work cut out for us. But for now, shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe wi Isn't Though. You could follow me on Twitter at the Stalwart. Follow our guest

Net Bullard on Twitter. He's at nat Bullard. Follow our producer Laura Carlson Laura M. Carlson followed the Bloomberg head of podcast, Francesca Levi at Francesca Today and check out all of our podcasts at Bloomberg under the handle AD Podcasts. Thanks for listening to