EV Future so Bright Biden Wears Shades

out to twenty fifty. The reports out and the time has come. This week we're lucky to be joined by the lead author of EVO and head of Transport for BNF, Colin mccarricker. I won't be labor the intro too much longer. I just want to say, come for the findings, stay for collins insightful opinions and observations. If you follow him on Twitter you'll know what I mean. He has a way of cutting right to what really matters in a

way that's easy to follow. Being if you just can get the electric Vehicle out one on BNF, go on the Bloomber terminal and BNF dot com as a reminder of BENF does not provide investment strategy advice, and you can hear the full disclaimer at the end of the show. I'm Mark Taylor and you're listening to switch down to BENF podcast. Colin, thanks for joining. Good to be here. Mark. Always a pleasure to join you on the program. It's

always wonderful to have you on, Colin. We missed our January ten Things to Watch this this year, and we'll make up for it here. We will. We'll have a good chat. I'm looking forward to it. Mark. So back when I was an analyst and I was editing, you know, my team's work and and the like, I always gave the suggestion when I was editing to avoid what I would call since the Dawn of Time statements you know,

and often begin with something like that. It was kind of off putting, in a little bit too big for the reports we were writing. But in Evil the Electric Vehicle Outlook, you rightly start with quote mobility is at the core of modern civilization and the way people in goods move impacts many aspects of life. So definitely that's true. This report is huge and far reaching. Can you tell

us a bit about it and the objectives behind it. Yeah, happy too, And I like the leading of of that opening line, and I did think about whether we shouldn't fluid that, but I do think it's important when you're talking about road transport just to recognize how personal it is. Right, the power system isn't that personal for a lot of people. They just want the lights to come on and and it's as long as that happens there, okay, And as

long as it's not too expensive, it's okay. Mobility is personal in a way that most other areas of the energy transition and things that that being NEF works on sometimes are not. So what is our electric vehicle outlook? The kind of high level summary is that this is our outlook for all of road transport, looking at how people and goods move from now all the way out to and then this year we actually extended it out to to try and look a little bit at net

zero scenarios and what that means. And we can talk about that in a bit, but that's kind of the high level the high level picture. Despite the name, it's not just an outlook for electric vehicles. It's an outlook for everything to do with how people and goods move on on roads around the world in different countries, and

what is the main objective with it. One of the things we're trying to do is really investigate different scenarios for how this might all play out, but also stitched together a picture that draws in the breadth of research that b an e F does. So it's we have a team that's called the Electric Vehicle Team. This isn't just the output of that team. It's the output of that team, plus our intelligent Mobility team, plus the oil team, plus the energy storage and batteries team, plus the metals

and mining team. So a lot of what we're trying to do is present an integrated house view from Bloomberg an EF about different possibilities for how how road transport might might evolve. And this is actually the sixth iteration

we've done of this report. We started it back in and really back then it was only oil companies kind of commenting on the future of road transport, and in our view, they were dramatically downplaying the changes that were afoot that we were seeing on improvements in lithium ion batteries and rapid drops in cost. And even though those early stages, surging demand and real real consumer interest and

in electric vehicles. So at that point we thought, look, there needs to be an independent voice digging into the long term outlook for road transport and playing out what it means across all these different areas that that we were looking at, And that's kind of how the project was was born, and it's evolved a lot since then. Each year we're adding new segments. Each each year we're

adding new countries, we're looking at different impacts. So it keeps evolving because we need to stay on top of what types of questions are clients are asking us and what types of things need answers. There's some things that we know more about than we need five or six years about, and others that are that are kind of still unknowns. So it's really about kind of tying all that stuff together, having an independent voice, and then playing

that out in across different across different areas. What were you trying to answer this year that's new that you weren't trying to answer in previous years. The big one this year is our our net zero scenarios. So generally what we've had is kind of our I won't call it a base case view, because in economic modeling circles and forecasting circles, base case is kind of this thing people don't like to say. We call it our economic

transition scenario, which assumes no new policies are implemented. It's a market lad transition. That's what we've generally done in the past, sort of a techno economic analysis of adoption potential in different segments. So the big difference this year is we did a net zero scenario where we said, okay, what do you have to do to get road transport direct road transport emissions all the way to zero by twenty fifty And it's important to note there that that's

direct tail pipe emissions. There are still possible upstream emissions from generating electricity and and potentially generating hydrogen. Those are covered in other areas of NF long term forecasting work. So long term out looks like our New Energy or

New Energy outlook. So that's the big change this year is to sort of say, let's do a bit more of an exercise in working backwards to say what speed do different segments have to go at, what has to happen over the next five years, ten years, twenty years, thirty years to stay on track for this net zero scenario by and then look at policy or sorry by and then look at policy recommendations that can help get

you closer to that. So before we get into those scenarios a bit more and into the results of the report, let's get into the how a little bit more. Thinking back, one of my favorite episodes we've done actually was with Ian Berryman and it was called Modeling the Energy Future, Ants, Birds and Doctor Strange, And in that episode we just talked about the only thing we talked about was his approach to modeling Energy Forecast Model NEPHEM, the model that

powers the New Energy Outlook. So I know EVO is a similarly complex task that you just mentioned with all these teams collaborating and trying to get a coherent view on something on the road Transport future. Can you tell us a bit more about the approach and how you actually got this thing done. One of the big things

we have to do is kind of start early. So we we kind of start at the end of the previous year saying what are all the things that we want to include in it, and then work for a big chunk of the first four or five six months of one on it and to put it all together. So there's there's definitely an element of planning and thinking ahead about what you're gonna do. The summary is that it's actually slightly different what we do depending on each segment.

So some segments have a very different architecture of the way you model uptaking them. For example, when we're looking at commercial vehicle it's really driven by total cost of ownership of different competing drivetrain technologies. When we're modeling passenger vehicles, it's much more driven by upfront prices and where did those get to. But the one common theme that we have across all of what we do is that we actually start with again come back coming back to what

we open with, how do people in goods move? So when when we try and forecast or do our outlooks for the amount of vehicles that are going to be sold, we actually start with kilometers of mobility how much do people literally how much do people move around in a different country, and freight time kilometers for how much goods move around, And then we look at all the factors

that impact that over time. UH and those can be some things that have been consistent or throughout the last twenty years or other things that that are just starting to come in. So something like e commerce changes the distribution of kilometers of freight between whether they're heavier trucks or lighter trucks, you might get more last mild delivery going on, and that you just start to see that

in the data. So basically with with starting with kilometers, it gives us a really good baseline for this is how people in goods move, and then from there we determine how many vehicles you need in order to satisfy that demand for mobility for people and goods, and then

from fleet we get to sales. So a lot of the and I think that's kind of something a bit different about the way we approach it, is that a lot of these a lot of the other exercise we've seen generally think of sales as just sales, but but people don't buy a car just to have a car. It's it's to serve a purpose and that purpose is mobility. So we kind of start with mobility and then work our way down to sales, and then within sales in each country, and each year we're creating an adoption outlook

for different drive trains. So the competing mix of different drive trains can be is quite different between different segments. So in trucks you might have C and G playing a role, compressed natural gas playing a role, whereas in the passenger cars it's really much more about um internal combustion, hybrid, plug in hybrid, battery electric and maybe a bit a few will sell that. We're a bit pessimistic on that.

So in each year, in each country, in each segment, we're building a drive train outlook, and that factors in all these different things around economics, but also other factors, and there's a lot about the way we kind of tie that all together in the long term outlook part. And and again the exact mechanics differ a bit depending

on the segment you're looking at. So it actually does sound a bit like power that you start with demand, right, you know, in power, you'd start with demand as well, and then you build some power plants to meet that demand sales or drive trains, and then you start selling megawatts, right,

so you get individual unit sales. I guess one of the things that was kind of, to be honest, controversial when we started doing this was that you could use consumer adoption modeling trends to actually forecast what was going to happen. When we started doing it in twenty six going and presenting a vast diffusion curve saying look it is going to follow and ask curve that was quite We've got a lot of skeptical looks at the time.

Now everyone kind of accepts that, accepts that, at least on the passenger vehicle side, this probably will be a tech knowledge adoption story, and it's just people debate over which speed and in which segments and how fast it goes in which country, but that that that that changeover is coming. So when we look at that part, we try and say, okay, here's here's what's happened in places where adoption has gone quickly, and here's the parameters that

lead to that. And then we look at how that might play out in other countries, and then we add some kind of gating factors, and these are sometimes controversial. So one of the things we do, for example, is when we're again in the passenger vehicle segment, we have a higher faster adoption rate for people who live in single detached homes than in people who live in high

rise multi dwelling units. Because we think people who have easy access to home charging infrastructure will probably go electric faster. Now that it might not be the case. A government may build its way out of that constraint and just blanket a country and chargers, and then the adoption rate might be the same. But those are some of the things that we can play around within our model and say do we think that's a thing, that we think that's not a thing. I think it's a thing. I mean,

I am I'm living proof. Last year I bought a car and I didn't buy one because I can't get a you know, I live in a row house on a on a London street, right, so I don't have a charging option. And the deal was that the next car we get will be an electric one because the assumption is that there will be a charging network by then, hopefully.

I'm sure that's the calculus for a lot of people. Yeah, And I think we're just getting to that point where, I mean, you have more conversations about this with people, right, that's a double edged sword. If you've been working on this stuff for a decade, it means everybody wants to chat about it, but it also means that you end up talking about your work a lot at dinner, which

which maybe isn't a good thing. As you said, it matters to everybody, right, So even if somebody is not necessarily interested in the S curve, they're interested in their mode of transportation. And then I guess whether that's even public transportation two wheelers, cars, trucks, you, I mean, you

put all of it in. There. Is there different curves for different types of technologies that you're seeing, Yeah, there is, and and so for example, plug in hybrids in the in the passenger vehicle segment, more and more they look like a compliance strategy primarily by automakers to meet tightening fuel economy regulations. And that's really why they've surged in Europe. There about over half of all the plug in vehicle sales in Europe right now are are our plug in hybrids.

The other half better electrics, of course, and that's really because Europe tightened the screws on on the CEO two regulations for cars this year or last year rather, and it's a bit more again this year, and that has really mend automakers who are skeptical of fully electric technology or who don't have their platforms fully ready to go are pushing a lot of plug in hybrids into the market, but the dynamics of that are are kind of much

more predictable based on policy than they are or earth. Sorry, the uptake of that technology is much more predicated on on policy than it is on other sort of more organic consumer demand factors. And that's that's kind of evident in the data. So you don't get the same kind of s curve for for plug in hybrids as you

do for better electrics. One, because they never get cheaper, They never get cheaper on and upfront basis than comparable internal combustion engine vehicles because they still have a combustion engine on board. And in our model, which is looking for the kind of cheapest path to do that, it doesn't build a lot of those beyond what is required by current compliance with with existing policies. So that's kind of an example of a technology that adoption is going up,

but it's not going up. It's we don't think it's going up on the same kind of ask curve that you're going to get with fully electric vehicles. Makes sense, Yeah, And I mean they just don't seem very interesting, right, Like they don't seem like a big enough change to really be all that enticing apart from a policy measure or a policy incentive. That's just me speaking, And I think for some consumers they are actually a good choice

if with the right needs. Maybe you just only want to go on the odd long trip out out of the weekend on the weekend, and and they're good fit in that case. I think our our skepticism is more that will automakers really build something that if there isn't a policy push to do so, that can never get cheaper than an internal combustion engine vehicle, because you do

have a lot of added costs. And so increasingly what we're seeing is it automakers kind of they're going to sell a bunch of peat plug in hybrids in the next little while. But then the strategy starts to get

a bit more, a bit like a barbell. You go fully electric, and then you do a bunch of mild hybrids, non pluggable the lowest level of electrification you can, because that's quite a cheap way to get the rest of the emissions of the rest of your fleet down, and then you sell a fair amount of fully electric vehicles

as well. This is actually one of the fascinating things that, to be honest, makes this out look really hard to do is that, for one, on the passenger vehicle side anyway, right now, in some places you're in the middle of a steep part of the curve. Right This isn't theoretical anymore. In Germany, more than of auto sales have a plug right now. China the latest data in June here around fift that's the world's largest auto market. You're really hitting

kind of the steep part of the curve. So one of the things that makes it tricky there is that it's already kind of happening. This isn't something way in the future. It's kind of happening now. The other thing is course, is that there's still a lot of policy in the mix. Like we're waiting kind of on tenter hook right now to see what the Biden administration does with fuel economy regulations in the US, because depending on what they do with those, it could go faster or slower.

So this is where when you're doing these long term out looks, you have to be really clear what the exercises and what we're trying to do is saying here's the policy or here's the outlook with no new policies, and then here's the net zero outlook. If you want to get to that, here's how how much further and faster has to go. But we recognize that in the near term there is going to be more policy, there are going to be more changes, There's gonna be a

lot of different things that happened. So I think that's maybe something we haven't explained as well as we could have in the past, that that economic transition scenario assumes no new policies, and therefore when there is a new policy, it might change the curve. So an example I always kind of give is, look, if you were building an outlook model in the US last year and you somehow knew that Biden was going to win the election, great good on you. But we didn't know that, and we're

not in the business of a forecast election. So we had to take sort of here's what the current policy is, and here's what what that means for adoption. So that's kind of one of the tricky things both to do and to kind of communicate what it means overall. Okay, so many different directions we could go down. There, so many roads we could go down. Huh No, pun intended. So much of our language is based on metaphors around transport. Once you start to see them, notice them, you can't

stop seeing them everywhere. Oh sure, okay, so let's actually do get into the results for a second, and then we can go down a few different roads about you know what some of the different markets are doing, some of the policies that are in place, etcetera. But as you said, your team has been doing this for six years now. Is there anything that surprised you from doing this year's EVO that you hadn't seen in previous years. I think doing this net zero scenario was a bit

of an eye opener. Even been working on the stuff for a long time, and you see how fast it's all happening, and it feels like, wow, we're we're in the middle of a huge transition. Things are really going But at the same time, doing the net zero scenario reminds you that it's still all has to go a lot faster, and I think that was probably the biggest surprise.

I mean, you sort of know that intellectually, but then you spend three months kind of in the data and you're like, well, we we have to as a like globally, you would have to phase out combustion vehicle sales um completely to stay on track for the net zero scenario, and even to do that, you need to do a lot of early retirements of older vehicles in to even

do that. If you wanted to and if you wanted to get to net zero without doing early retirements, you almost have to stop selling to internal combustion engine vehicles tomorrow because some vehicles that are sold now stay on the road for a very long time. So so there's just some reality of spending that time in the data around the net zero scenario that makes you go, wow.

Road transport is especially personal. Road transport is probably one of the areas that, um, we're most optimistic are in the in the energy transition, because you have the solutions today that can get you most of the way there and yet still hard. So I think that's important kind of kind of context in all of this that that was maybe a bit surprising, again even though you might

intellectually know it. The other one that's kind of related is that we did some investigations this year around reducing demand from mobility. Everyone talks about changing over vehicles and most of the government programs are aimed at at that, at having different options to do the same amount of driving and this sort of thing. But we are starting to see some governments saying, actually, no, we need to tackle how much people are driving around and we need

to reduce that. And that's through a combination of active travel, more dense cities, better public transit. And I guess one of the other kind of surprises that I'd like to go into a bit more in the future, and and and the sustainable transport advocates of course have been all over this for a very long time, but is just that if you can find a way to reduce demand even a little bit, it makes the job of getting to net zero a lot easier. So that means you

want to promote all those things. You want to promote more cycling, you want to promote more public trends that you want to promote more density and urban areas. You're gonna need all of that, and you're also going to need millions of electric vehicles in order to to stay on track for the net zero scenario. So we're given the sort of timing that we're all talking about all

around these climate targets. Were in the phase where you have to do all of the above and you have to do all of it very quickly, and that was definitely one of the things that really stood out from this year's exercise. The other thing that was interesting, again from from the net zero scenario stuff, is that some

segments are are closer to on track than others. So the main segments that we look at our passenger cars, light commercial vehicles, medium commercial vehicles, heavy commercial vehicles, buses, and two and three wheelers. And if you look at two and three wheelers and buses, you're actually already at pretty high rates of adoption of electric vehicles in those segments, and those ones are already pretty close to on track

for the net zero scenarios. So two and three wheelers globally of all vehicles sales last year were already electric. Uh and bus is I think we're at almost most of that is led out of China, but there's also quite a bit of activity spreading in other countries as well.

So that was kind of another surprise is that, oh, actually, in some of these segments of road transport, we're not too far off the net zero scenario, and in others were miles off, so the ones like heavy commercial vehicles, the transition there has not even started and there's a long way to go. That was really noticeable last time, well last time we were in Shanghai for the b NF Shanghai Summit. In they're electric scooters everywhere. It's just really, really,

really prevalent. I just gonna say that that I totally, I totally totally agree with you that once you start to look at how far there is to go, you realize that we haven't even really started yet. I did just back of the envelope calculations, you know, the day looking at our New Energy Outlook scenarios, right, and I just used some you know, average numbers for how big a wind or solar farm would have to be or

would be. And it took me in the huns and hundreds of thousands of projects to get to the point that we lay out in the New Energy Outlook NEO. And it makes you realize, Okay, we're not really even started yet. So yeah, definitely a long way to go. Yeah, And I think I think these long term targets are it's good that they're stretched targets, right. We want to

keep pushing as to what's possible. And and to be honest, this is kind of new turf for us at b an F. We've we've spent much more time saying here's what's happening, here's what we think it means, here's what we think a sensible strategy is, and a lot less time on what should happen, right because we're not advocates

were we're industry analysts. But this is kind of where these long term exercises start to blend the two, because you spend enough time in the data and you just feel like, okay, well, then if we're going to do this, this, this is what should happen, this is what has to happen. And you find yourself using language that would be much more associated with sort of activists or or advocates. And I find that in an interesting sort of transition and in in my analysts career to talk about that sort

of stuff. It also makes me uncomfortable sometimes too, because it's not what I've thought my role is in the past. I mean, we're at a juncture where, uh, where you do have to accelerate all this stuff where you are and even if you do accelerate all this stuff, you're gonna deal with some pretty negative impacts from from climate and we're we're seeing that right now. But that tension is getting strong between are you are you an analyst

or are you advocating for a technology? And and I think that's sort of one of the things you just have to sit with as you're doing these long term outlooks. I think you can be both, right. I actually really listened to Um part of Fatty Bureau of the IDA his speech from earlier last was it this year? Earlier this year? Yeah, where he said that you know, new exploration for for fossil fields just kind of has to stop, right, and the I as you know, analysts but also advocates.

But really I think you can you could just rest on saying if you want this to happen, you know, for example, in net zero, then this has to happen. Right. It doesn't have to be like we have to do this, there's no necessary you don't necessarily have to say it like that, but it's just if you want this, then you gotta do this exactly. And that's that's how we framed all of this, is look, if you if if we take these targets seriously and we want to hit them.

Here's the trajectory you have to be on. And just to give you an example, one of the things we tried to do to highlight that is we said, okay, what has to happen to passenger vehicle sales to stay on track for the net zero scenario. They have to get to about six fully electric share by So what does that? What does that conceptually mean? How do you

try to bring that make that real? Norway, very small market that's lad on evs, has gone from about three or four percent to about six fully electric share over roughly a ten year period. And what we're saying is that the global auto market, which was about four percent of sales are electric last year, has to go from about four to about six over the next tent. So the entire global auto market has to follow the same trajectory over the next ten years that Norway followed over

the last tent. That's gonna be hard there. There are going to be challenged with that. There are reasons to be optimistic about that, things like the vehicles are a lot better, there's more charging infrastructure, There's all sorts of things that you can be optimistic about that. There's other reasons to say, well, look, nor we had a very

specific tax structure. It also has a lot of single detached homes and a and a really big spread between the cost of petrol and the cost of electricity that's quite favorable to ev s. That's hard to replicate elsewhere. But so those are some of the types of things we're trying to say. Okay, let's not just talk about our net zero targets framed as let's talk about what you have to do in the near term to stay

on track for those targets. And that leads you to some of these more easy to relate to examples that are in the report as well. Now for a very short break, stay with us. So do you think net zero is really the motivation for deployment? Like, I mean, let's talk about deployment, right, So, like, are better cars more of a motivator or is it charging network more of a motivator? Or is it simply policy? You know?

And what are some of the things that other markets can do, maybe that don't have a lot of single family homes in the near term to encourage deployment. Yeah, this kind of policy versus consumer demand poll is a question that comes up a lot, and the detractors for electric vehicle adoption will say, it's all just policy, it's just pushed onto the market by governments, and it's it's

just it's yeah, there there isn't organic consumer demand. The people who are really pro would often say, no, it's all consumer demand and it's going to take off either way, no matter what happens with policy. I think it's it's it's a mix of those two. Write all the people who drive evs love them, but also where there is no policy support, there are no EV sales. Generally, to come back to kind of the question, it is going

to take off because it's a cooler, better car. I don't think there's very many things that have consumer products that have taken off entirely based on their environmental attributes. Right. That can get you a certain percentage of buyers, but it can't get you all of them. Yeah, and it probably can't get you more than four or five. It's hard to get everyone on board with something purely based

on environmental metrics. But so so it is going to They are going to take off because they're a better car, and that's not a future statement. They're kind of getting there now. But you do have to do a lot to help enable that, right, And one of the things, just as an example, I mentioned China sales data right now. So China just in June about fifteen percent of sales fully elect or fifteen percent of sales were electric. That's

in the world's largest autom market, a remarkable leap. Part of that is driven because China started building charging infrastructure way ahead of demand. So in December, China build over a hundred thousand chargers, which is more than the size of the entire US network built over twenty years. Depending on when you start, want to start the clock in one month. And so what they're doing is saying, look, we we recognize as coming, so let's let's build the

network for it. And now they start seeing starting to see much higher levels of adoption. So it's this kind of if you build it, they will come. And that is very true of charging infrastructure. But you need to have the in some cases government support or certainly a lot of buy in from from different groups in order to get that level of build out. But they're also

kind of doucing it a bit. Right. We had seen me on last week talking about some of the policy mechanisms they got in place, like the cap and trade for cars, what do they call it, the n e V program. Basically that puts the onus on the manufacturers to sell evs in that market. Is that working? Is it going in other markets as well? Yeah, and I didn't mean to imply that what's happening in China's entirely organic consumer demand. Definitely, the policy still playing a big role.

China's fuel economy regulations, the ny V credit system, the city level restrictions, those are also all a big part of what's driving the Chinese market. The interesting thing is is that's allowed there to be a number of uh, startup, very well funded startups, but I guess we still call them start up Chinese auto manufacturers that are producing models that do seem to have some real organic consumer demand to them, which is getting getting quite interesting. So this

is where it is. It is kind of a mix. It is kind of a mix of the cooler car that that that people love, but also the policy support to help enable the supply to get there. There's a podcast I listened to. I won't mention the name, but it's fantas Sick, and the host often talks about the pending Apple car and how he thinks that's gonna, you know, just take over the market when it comes out. You know, I don't know either way, But like, is there a

place for startup e V? Maybe you know, Apple would be a startup in this case, but is there a case where newcomers in this market? There are a lot of newcomers, and in my view, there are too many car companies. In my view, there were probably too many car companies before all this happened. If you look at how a lot of them just kind of replicate the same the same R and D spending, And I wouldn't say that's an especially efficient allocation of capital. You have.

As I said, you probably have too many car companies before all this hit. Now you have have way too many, I think. But having said that that those startups and challengers are a big part of what is pushing the market forward. I think the window on the startups is closing a bit. So a bunch of them have made it through. So obviously Tesla is very established now, other ones like Chinese ones like Neo, x, Pung b y D,

upcoming ones like Rivian and Lucid. There's kind of a top tier of these startups, and again I wouldn't put Tesla in that category the very established. Now there's kind of a top tier of this next group of startups, then there's going to be a large list of kind of also rans. I think if you're entering the v market now, you have to be entering it with a very different angle, which which I think would be Apple's angle. They would they wouldn't try and manufacture their own vehicles,

they'd rely on external party. There would be some sort of major software differentiation, whether that's some combination of connectivity on autonomous driving, you would need something quite special, I think to differentiate. I think this there was this there is this window around electrification, but it's closing fast as the established automakers really ramp up their spending and start

cranking out the models in the next few years. Okay, now, speaking of also rans, we've got the Olympics going on in Japan, and I know japan and Japanese companies have had high hopes and put a lot of investment into hydrogen fuel sale vehicles, but in the report they don't really show up in a big way. Why is that? There's been a lot of discussions on this over the years, and I won't try and kind of rehash them all

over over here. If you want to UM, if you want to have if you want to hear them all, you can just go on Twitter and say something controversial and people will pounce on it on either side and you can get a great back and forth in your Twitter mentions. But UM a couple of reasons they don't play a big role in our economic transition scenario. One of them is around the availability of green hydrogen. So bn F has done a lot of work we on

green on hydrogen. We do think hydrogen produce for renewables is going to get a lot cheaper over the next few years, in the next decades, but it's still going to be a scarce resource. There's still going to be competition for its supply. And I think you can make a case that you should use that green hydrogen in areas where you don't have a viable alternative for decarbonization. So that might be things like fertilizer, it might be things like um shipping by ammonia, it might be aviation,

it might be heavy industry. You do have a route to de carbonization for for passenger vehicles, so putting it into passenger vehicles. I don't think it is a great use of a scarce resource. So that's kind of the from this perspective of like efficiency and designing a system and all this sort of stuff. But of course there's nobody orchestrating everything around how this plays out around the world. The other reason is much more around just the numbers

about where we are today. So if you look at the amount of fuel cell vehicles on the road today, if you are to guest mark, there's a there's one point to billion cars in the world. How many fuel cell vehicles do you think there are? Mandod Yeah, order magnitude, So all across all vehicle types, cumulative sales are around

thirty thousand. The actual fleet is smaller than that, so not not not bad as as a as a guess, the actual fleet is around thirty thousand, or the cumuli of sales around thirty thousand, and the first generation of Maras from Toyota, a lot of those are getting taken back off Ley, so some are under thirty thou And so if you just stay with that number for a second, and again let's think about spending lots of time in the numbers and orders of magnitude and these sorts of things.

If the number of fuel cell vehicles on the road doubled every eighteen months, every eighteen months all the way out to they would still only be about one to one and a half percent of all the vehicles on the road. So even if you believe that scenario and it's really hard to double the fleet every eighteen months, that would be incredibly rapid growth. But the starting point

really matters. And again, when we're looking at these these kind of time scales were on you need you need to somehow go even faster than that for them to

make a material impact in the passenger vehicle segment. So there's all these other arguments about UH infrastructure and efficiency and all those sorts of things that are hashed out at nauseum elsewhere, But I think just the raw numbers part is something that's underappreciated, is that even in the scenario where these grow really rapidly, they're not a big part of vehicles on the road, at least in the

passenger vehicle segment. And then there's this other thing around There isn't a similar parallel industry that you saw with lithium ion batteries in the form of consumer electronics that's driving down the cost of fuel cell vehicle stacks, So they don't play much of a role at all on the passenger vehicle side in our in our outlook, they might play a role in the heavy and heavy duty long haul vehicles in the net zero scenario. So that's

kind of where we see. There's still a bit of a technology question, but we're actually getting more optimistic on the role the batteries are going to play in even in heavy duty long haul. So definitely a participation award there, not necessarily a medal. Okay, So where might we be wrong in EVO? What are some of the potential blind spots that came up. Yeah, one of them, as I mentioned, is trucks. So there's a lot of different technologies competing

for for the heavy duty truck and parts. So we think increasingly that fully electric trucks are going to going to play a big role, and and some combination of just fully electric or maybe overhead lines or overhead catinary lines or battery swapping for trucks, those are all sort of in the running, but that those that that can play quite a big role. We might be wrong there, there's this is at the very beginning of that transition. There's a lot of money flying around, so that could

still we could still be wrong there. Another one is that is autonomous vehicles, so and shared mobility more generally. Um, this is still kind of a wild card. So we do think shared mobility goes up a lot over the over the next years. So right now, about three to four of all kilometers traveled in cars anyway are in some sort of shared mobility application, so that includes taxis and things like that, and in some countries it's much higher,

but globally it's about that. We think that goes up to about but there's a lot of unknowns in that. Right if you really get fully autonomous vehicles that the sort of robotaxi scenario, it could go up a lot more than that. Um, we've been kind of skeptical about that and and sort of said no, that's much more of a late thirties story. Though you are going to get some interesting city level experiments in the Indian interim. Once you talk about global car markets and global energy picture,

it's probably not in the next ten years. But again we might be wrong there, and that that's an interesting one, and then the last one I would just say is that it's very hard to know or quantify the pushback that you might get on some of these transitions. So if you think about I think about the last couple of electoral cycles in the US where coal became this really big issue, right like it became a sort of mark, a signaling device and part of the kind of culture

wars and and all this sort of stuff. And I think the day I'm this isn't my field, but I think the data says that's somewhere around the number of people who work in the US coal industry similar to the number of people who work at Arby's, a mid size fast food fast food chain in the US, not a huge employer. A lot more people work in oil and gas, and a lot more people work in in in in different parts of the internal combustion engine value chain,

so in the supply chain. So there is going to be pushback against a bunch of this stuff, and it's just a question of what form it takes, how strong it is, how long it lasts, and that's those are things that are hard hard to quantify for us. We don't assume anything on that right now. We don't assume there's a big backlash or anything like that, because we assume that the number of people who are driving electric vehicles is they're enjoying their purchase and they become part

of the ones who are supporting that transition. But the reality is this stuff may be messy in the interim. You are both our outlooks in both the scenarios that we run. Oil demand peaks within the ties and then starts to decline. The politics of what happens then is probably going to get quite complicated. And I think that's something that we just don't know exactly how that's going to play out, but we're watching it carefully. So that's kind of another mind spot is that this is a

big transition involving big industries. The auto industry. Auto sales are a couple of trillion dollars a year, Oil and gas another big industry. How is that going to play out? And I think I think you'd be sort of foolish to think it's all just going to go very very smoothly. I think we're we're going to have some there's gonna be some battles there, and and and we don't know

exactly what's going to come from those. So will your analysis be to show up some of those blind spots to you know, factor in some of the battles that might take place, or what are your plans to change in the next iteration of this report? Yeah, I think unfortunately, some of those blind spots are just gonna sit as blind spots. I don't think this time next year we're going to have a hugely better view on exact timelines of a v S or how what what shapes some

pushback might might take. But I can say that we want to start doing more on the roadmap for net zero. So not just saying globally, here's what has to happen, but start saying on a country basis, here's what has to happen. Because our net zero scenario is actually a global one, whereas the the other scenario and the report is a country by country one built bottom up. So we want to start doing a roadmap to net zero four different countries and with specific policy recommendations on how

to get there. And then we also want to do

more on infrastructure costs. Right now, we have some high level conclusions on the amount of investment needed in infrastructure, but we want to do more on different deployment models, um, different support models, because increasingly that's kind of one of the areas that's really coming into focus as it becomes clear that the demand is probably there, the cars are probably there, the economics are getting good, all this sort of stuff, Um, we want to zoom in on those

parts that still have some uncertainty around them. So that's that's still around the infrastructure side, and that seems to make a lot of sense with Top twenty six coming up. You know, you have all these countries making pledges or not, and you want to have a bit more clarity on the country level. It seems yeah, definitely. You know, since since we missed our ten predictions this year, is there anything that we should be looking for, anything that you're

looking for? In h two of we're on pace for a record year on ev adoption, So we're just kind of watching the numbers there and I think you're gonna probably exceed our expectations again for this year and probably have over five million v sold. So that's that's important. We just crossed one percent of all vehicles in the world being electric, which is also important. One of the things that I'm I'm kind of watching that I think is going to be really neat in the next a

little more than just the next six months. But what happens with um some of these Chinese ev companies that are trying to sell levis in other markets outside of their own, outside of their home market as well, so some of them starting to export to Europe. And what that's doing is kind of keeping established automakers from just treating evs as a compliance only tool because there's these other sort of pressure of someone else coming in and and saying, well,

I'm I'm willing to sell these things. I'm and I'm going to take market share if you if you don't ramp up your effort. So I think that I think what that signals is that the competitive dynamics are getting interesting, because for a while, some automakers were sort of saying, no, this isn't the direction we're heading. That's kind of all gone. Now everybody's saying, there, look, our our future is is electric.

It's just all a question of segments and timings, and that's where you start to get much more interesting competitive dynamics. So forward, for example, coming out and saying the F one fifty lightning the base competitive base price is actually pretty competitive with with the with the base price of

of a normal F one fifty in the US. That's an example that they're saying, no, we're going to defend market share in the full size pickup segments so that electrification doesn't take anything away from our our our real cash cow there. And again that's just those things about Chinese evs, your Chinese automakers trying to enter Europe forward,

defending market share. It just shows that you're getting to the next phase of adoption where it's much more about competitive dynamics automaker strategies and less questions about oh do people want these are not? And I think that's sort of the one of the air is that we're we're

pretty interested in. And then one other thing I'm kind of watching is is at b n F, we're also expanding our our scope of our transport team coverage, so we're doing more now on on shipping and aviation, so we're starting to look more at what are the pathways around decarbonizing some of these other parts of the transport ecosystem, and and I think most of those are still much further behind where we are on a road road transport,

but there are still really interesting things happening. So we're tracking everything from procurement of electric aircraft to the types of shipping vessels that are being procured, and that's that's going to be something we're keeping a close eye on in the next six eight months as well. One final question, along with the predictions, give me your take. Are you more or less optimistic on decarbonizing transport than you were

in the past. I think I'm much more optimistic on the speed of adoption of some of these alternative drive trains. Things are going really fast. There's a lot of reasons to be very optimistic on on that. I think I'm also more aware of the sheer scale of the challenge

than I than I was in the past. And again, digging into that data on the net Serah scenario shows you that, yeah, you can be really optimistic about it happening fast, and it probably has to happen even faster than than you thought to stay on track for that scenario. So my optimism waxes and wanes a bit. It probably depends a bit on whether I've had two cups of coffee or on one when you ask me that question.

But yeah, I think I'm more optimistic on the speed of adoption, but more aware of just how how big the system is and how hard how long it takes to change. Colin, always a pleasure having you on. We look forward to have many back soon. Great Thanks Mark. This week's show was produced by Eva Gonzalez Visla and edited by Rex Warner of great Stoke Media. BLOOMBERGINNYA is a service provided by Bloomberg Finance LP and its avilion.

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