EVs in 2020: Buckle Up for Twists and Turns

think it's for Detroit. So since it's been running alongside the Detroit Auto Show and it's a hub for mobility, innovation and tech, you're also seeing a lot of this tech innovation and the mobility space showing off also at the Consumer Electronics Show in Las Vegas. And there's just

so much happening in this space. So while it can take up to five years from a concept to turn into an actual car keeping track, the innovation is actually coming out right now and how it's going to impact people and how goods move around in the future is something really to closely watch. And while we're on the topic of events, bienf is hosting our San Francisco Summit

this upcoming February. It's one of six annual summits that we host at different locations around the world, and as you might expect from an event close to Silicon Valley, there's a bit of tech focus, but as you might also expect from b n EF, there is an energy focus too. But here's the special part. We also talk about how tech and energy converge with the mobility space, making it a pretty interesting place to think about the

future of transport. So in today's episode of Switched On, Mark and I are going to interview Colin mccarricker, who is the strategic lead at be Enough for Advanced Transport Insight. He's going to take us through the transport team's ten predictions for in a note titled e VS and New Mobility Trends to watch in well even let you know a little bit about how his team did against their twenty nineteen predictions. You can access collins ten predictions on BF dot com, on the mobile app or via B

and e F go on the Bloomberg terminal. And just a quick note, B ANF does not provide investment or strategy advice. Our full disclaimer is at the end of the show. Hey Colin, Hey Mark, thanks for coming in today. We're gonna talk about your ten predictions for now. All three of us in this room, me Dana Colin. We've all been here at BENF for about ten years now,

and every year we've done this exercise. It started off as our company wide ten year predictions for everything, but back then it was really just wind and solar, and we've moved into more and more of these predictions as we've gone forward. Now today we brought Colin in to talk about what he sees. Colin, can you frame your ten predictions a bit for us, like why you do it and where it came about? Yeah, for sure. I think part of the reason we do it is because

most of the time it's not what we're doing. We don't actually spend as much time on predictions as people think that we do. They often see our stuff in social media and they say, oh, BENF just all does forecasts and we're all talking about years ahead. Really, actually, what we're spending most of our time doing is building data sets, doing analysis about what's happening now, trying to help our clients navigate a changing landscape that's moving really quickly.

So part of the reason to do the forecast is actually to step back from that step back from all this stuff that is happening really fast, and say, well, what do we think This actually means what do we think is going on in these industries that are changing really quickly. So a big part of it is just that um and it also helps shape our research agenda for the year ahead. So if we think every January, look, what do we think are the big things to watch?

Then it also gives us an idea of what should we be gathering new data sets on, what should we be writing research on for the year ahead. So that's why we pause and and do these ten predictions every year.

It's also fun. It's also fun to sit there and sort of prognosticated bed and say, okay, here's what here's here's one to watch, or here's an out there prediction, and then we tracked them through the year, which is more fun doing the predictions for the coming year or looking back on the previous year to see if you got it depends on how well you did. How did you do last year? I think we did pretty well.

There's a couple of misses at last year. One of the big misses as we overshot on the total number of electric vehicle sales globally because China cut subsidies, were expecting them to do that, but they actually cut them a little deeper than we were expecting. So our number in China was overshot. But most of the other predictions that we made for last year actually came out looking pretty good. I think we we try and objectively score them. I don't know how how if we fully succeeded that,

but I think they came out looking pretty good. So China cut their direct purchase incentives, and I want to know if they've done that because maybe air quality and emissions have dramatically improved, or is something there's something else going on there. I think there's something else going on. I mean, of course, the reason China is pushing on all this stuff is because of air quality and cities. It's also reduced oil imports, but there's also this big

industrial policy angle to it. I wouldn't say they've achieved all their goals and they're done. I would say it's more just that direct purchase subsidies get really expensive beyond the first three or four percent of buyers, and China cross that threshold last year, and they had this roadmap for a while of saying, actually we're gonna face them out, and I would say they're just hitting that point where you can't subsidize the real mass market. At some point

it has to take off on its own. So we're in this phase now where you're starting to wind down the direct purchase support in China and also starting to in the US, and there are more manufacturers moving into China. I think several of us have seen the videos of Elon Musk dancing in China and it was it a factory opening or something like that. If you haven't yet

google it, it's it's a good time. Um, what do we think will change about the Chinese market over the course of the next year in the future, I guess more broadly. Yeah, So China's in this interesting transition where

it's been subsidy driven growth for the last few years. Right, it's really remarkable growth, kind of a little over a million sold the last two years, and now they're switching to this much more supply side mechanism that forces the automakers to sell a certain percentage of all the vehicles. They still have to be electric or fuel cell, but most of them are going to be electric, so they but each one has their own choice on how the mix they want to use. Do they want to use

plug in hybrids per revs. More fuel cell vehicles, even hybrids to bring down their overall fuel economy or improve their overall fuel economy. So in China we're sort of it's something other countries are gonna go through in the future, but you're in the middle of this transition from direct purchase support and subsidies driving growth to bigger policy mechanisms taking over and in theory pulling the market forward. China has a goal of of sales being electric or fuel cell. Again,

most of them are gonna be electric bive. That's that's not that far away. We're in twenties now, and so that's kind of what one of the big things we're watching this year is can they keep those numbers growing? So we went straight into China. Was China your main prediction this year? Actually, I mean at a high level, the biggest part of prediction was actually saying Europe is the place to watch this year. So Europe again is sort of taking over some of the growth that we've

seen in the last few years. That in China, you're probably going to see electric vehicle sales here go from around five thousand last year up to eight to nine thousand this year. Which is quite remarkable growth. And there as well, there's an interesting policy story. So because this market is still really in large part driven by policy

support and policy mechanisms. The European Commission has a target for reducing CEO two emissions from transport, and automakers have to hit an average starting this year, and also that's getting really hard to meet. Most of them are not on track to meet it and are going to have to dramatically increase the number of plug in vehicles they sell in the next few years, starting this year, and

so that's going to lead to a big search. And also we think some of them have sort of been delaying their efforts to sell levis in ten because they knew they get more credit for them in because there wasn't much reason in the last three months of nineteen if you sold a NV, you don't get much benefit for it as an automaker, but starting in twenty you do, it starts to reduce the fines that you would otherwise pay, So that's interesting too. We think they've been sort of

building up an order book. If you win in and tried to buy one, and quite a few countries that was sort of oh, there's a three month way, so there's a four month wait, there's a battery supply issues, this sort of thinging. Uh, the those order books will get opened up again now and I think you start to see the numbers in Europe go up pretty quickly starting this year any markets, in particular Germany and also

the UK. There's a change to the benefit and kind tax on company cars in the UK starting in April. That's going to have a big impact on the market, so you're gonna see UK numbers probably go up quite a bit. And the German automakers are getting going finally. It's taken some time, but they're they're now starting to launch their more competitive models. The really big one to watch is probably I D three, Volkswagen's i D three in Germany, UM, other parts of Europe as well, but

particularly in Germany and the Nordics. UM. The thing is timing will be interesting though they've been touting it a lot, saying twenties the big year, but now they're sort of saying, well, actually, volume deliveries don't start until August. You could see they get pushed back and it may not be really until Q four in Europe that you see the numbers really

start to go. But that's kind of one of the ones we're watching too, is a lot of these new models launching in European markets to help automakers meet their CEO two targets. One of the things you had a prediction about were plug in hybrids verse is ev versus maybe traditional hybrid. So let's talk about that a little bit in in light of these models that are coming out.

What's going to look like? Yeah, I mean, one of the things we said this year was there's probably gonna be a bit of a resurgence in sales of plug in hybrids and more interest in them. And there's a

couple of reasons for that. One of them is what I just alluded to, that automakers are forced to improve the environmental footprint of their all the cars they sell, and plug and hybrids are treated pretty favorably by the regulations for that, so they're gonna push a lot of them into the market as a way of bringing down

their their average CEO two emissions. The other thing that's kind of interesting is that ranges on plug in hybrids are creeping upwards, so you start to get more of them that have kind of sixty seventy kilometers of usable range in electric only mode. The Toyota Rev four plug in hybrid comes out next next this year. I keep saying next year, but we're in this year. It happens this year about sixty kilometers range. That starts to get to a point where you can do a lot of

daily commutes in electric only mode. And that's quite interesting because if you have a garage and you have a place to plug it in, probably will you'll go, and you'll go and do that, and then it doesn't matter that you didn't go fully electric if your kilometers went electric. The challenge, though, is the flip side of that is do people drive them in electric mode? And there's kind

of mixed evidence on this. There's some data showing that yeah, most plug in hybrid owners are plugging the man at night and are diligently doing that and and driving a lot on electric mode. And there's other evidence that suggests in some cases you're just lugging around a heavy battery and making a very inefficient hybrid out of it. So I think what you will need to see for regulators to keep treating plug in hybrids favorably is more evidence

that they're being driven in electric modes. So I think you're going to see more automakers who are selling a lot of these trying to show that actually people are using tracking charging events, trying to behave trying behavioral incentives to get people to charge these things up at night. Dana, you're a you're a plug in hybrid owner. What's your I'm a plug in hybrid owner. Um. I mean I think that you know, as compared to a hybrid, you

pay premium for a plug in hybrid. But I think this actually seges really well to another prediction that you had, and that's regarding charging infrastructure. First, keep plug in or not well, so I'm getting to that. Okay, sorry, So we do not have off street parking. We have to plug in. You don't want to. You don't want to plug in on Sunday night because I only use my car on the weekends. You don't want to plug in Sunday night and then let the battery lose charge until Saturday.

So it's pretty much a wake up Saturday morning plug It takes two hours to get all the way from a charge, even if you've got a plug in battery. So I actually am thinking next time around full electric because I would have to charge less frequently and I want to be low emissions. And then if I'm going to go somewhere outside of London, just rent a rent

a car that's petrol a diesel. Yeah. I think there's a lot of interesting propositions starting to emerge around that, right, and if when we talk further out, not just predictions for this year, we sort of say, look, here's our long term adoption trajectory and what we think happens. I think if and that depends a lot on evs eventually

becoming cheaper than internal combustion engine vehicles. That's a thesis that we have based on years of looking at the battery experience curve for lithiumon batteries, and eventually we get there. You could debate the timing, but I think you'll start to see some really interesting services and business models come in to fill those gaps for the people who are sort of saying, well, look once a month, I do

this drive on the weekends. Um, there's a rental. There should be rental agreements, And you start to see that in places like Norway, packages that come up that's sort of ten days a year. That's meant to fill the gap. I think you see some more interesting things start to show up on that front too. So I do see chargers showing up all over the place, and I think that our our data supporting that. So what are we

seeing in terms of charging infrastructure globally next year. Yeah, I mean it's a story still of really remarkable growth UM last in eighteen. At the end of twenty eighteen, or a little over six hundred thousand public charging points installed. That's individual connectors, not different sites, but six hundred thousand points the end of twenty nineteen, or about eight hundred and eighty thousand we're calling one point two million at the end of twenties, so this is still growing really fast.

What we're seeing right now is pretty interesting investments from the big oil gas companies and from the big electric utilities, and also a lot of still government support. In many cases. UM it depends a lot where you are actually in large parts of Europe, it's it's really being driven by oil and gas and electric utilities and some pure play operators also building these. But we're expecting a pretty steady

increase in the amount built. But there are still big questions around the exact optimal charging speed, whether it's a really fast charger on the highway side it's two hours fast or pretty slow. It's it's pretty slow. I mean plug in hybrids is a bit different than charging battery electrics. The fastest chargers right now that are out there in theory can support three kill a lot charging, which gets

you falling around fifteen minutes. There's not many cars that can support that yet though, so there there's sort of this race to say, Okay, can the car support it, can the charger support it? Also, can the battery support it without significant degradation? And then can the grid infrastructure surrounding the chargers support it? And these things kind of inched forward. So there are in theory cars that can support charging, but they're very premium. They're very high end.

So one of the things we flagged this year to watch is actually more automakers trying to bring that down into lower segment or less premium cars. So Shun Diane Kia announced earlier in nineteen that they were going to start bringing that in fro. You have to redesign the vehicle off fair bit, you have to move to architecture in the vehicle to support charging that high rate. There's costs associated with that, but there may be some benefits

as well. So I think you'll see more automakers saying we're going to try and bring really rapid charging down into the vehicles. But again, it doesn't mean that every charger you go too is going to support that. So the charging network is still going to be fragmented, both in terms of the speeds that they operate at, the

physical standards that are used. There's different ones in different parts of the world that are backed by different automakers as well, the plans, the business plans and pricing plans that they're under are also going to be fragmented. So it's still I think is still gonna a year where you read a lot of stories in newspapers about so and so who is stranded. It is getting better, it's getting a lot better. There's a huge amount being built,

but I still think there's work. There's a significant amount of work to be done and a lot of a lot of groups working hard to try and solve that. Right now, Okay, so let's talk about the batteries, and you're talking about fast slow in your ten predictions, talk about high nickel magnese cobalt and how you know it was something that was this particular battery composition was something that we were thinking was far out in the future

and now is suddenly upon us. What is so wonderful about these batteries and why is it such a technical leap? I will just say that I think we had a more aggressive view at BNF as to how fast they were going to hit the market than any other kind of industry commentators did, So we'll give ourselves a pat on the back for that. But just generally, I think what you've seen is a move towards higher energy density batteries that allows you to cut material out of the battery.

That cuts your material cost. It also means you need less kill of what hours to get a given amount of range. So we've been sort of moving through this family of nickel manganese cobalt batteries. So what we're seeing is that the latest generation of that is called an n m C A one one battery. And yeah, as you point out, the thinking on that a few years ago was that, look, we won't really ever see this

in commercial applications until well into the ties. I was in um Guang show in China in December, and I wrote in a taxi that had an an m C eight one one battery in it, and there are other models that are coming to so ho. You know, I had to ask my colleague who was with me, one of our analysts in the China team, at which battery chemistry uses, and she was very on top of and so they're using a new n m C a one battery. So full credit to she got okay, So yeah, I

think there's there's interesting stuff on the battery chemistry. It is continuing to evolve. The main thing, the main message out of that, I think that it still surprises me is that people still aren't clocking that battery chemistry and technology is still improving. We're still in the early stage

of this. The amount that it's changed in the last ten years since we first looked at this stuff till now is incredible, and scale is really what drives innovation, and the scale that we're at now evs are now the largest source of lithiumaon battery man. Previously it was our phones, um or other consumer electronics, and that really jump started the whole thing and have us a supply chain and all those sorts of good things evs and the now the largest source of demand for for batteries.

And I think you're going to see that scale just keeps driving more innovation and that opens up new niches for the market, which drives more scale and drive more innovation. Can we go back to China for just a minute. Actually we were just in China with with Guangzho. Tesla just built another Gigo factory there, right, they did in CHINAI And in the note it said something to the effect of elon musk will really make it difficult for

startup EV companies in China. Is that true? Is tests like going to compete in China or is there enough muscle there to muscle note? I think Tesla's going to compete in China. I think, um, what you're what you saw over the last few years or quite a few EV startups launched in China, a whole range of them, a lot of them backed by kind of Internet or tech money, and they pulled in a lot of talent to they hired a lot of really good people and

some of them are legitimate contenders. Um. But Tesla has built that plant faster than a lot of people expected. And I know it's faster than some of those EV startups expected. They were expecting to still be a year where they had time to kind of grow into the market a little bit more, ramp up their own production, get their more competitive models out. But then all of a sudden, the Model three, which is is pretty competitively priced in China, is there, and I think that is

really hard for them. It might not be as hard for some of the big global automakers who are also launching their reviews into the China market, but I think specifically for the Chinese EV startups, they're a formidable force. Having been in Tesla that's in self driving mode that sort of didn't know whether it should stay on the road or not, I think this is a good time to then also bring up um the self driving space.

So you've got self driving and then you've got the advanced driver assist systems, and that was one of the things that we need to watch over the next year. Am I going to be having a robo taxi picking me up anytime soon? That's probably more than a million dollar question. It might be a billion or there might

even get t on that somewhere in the future. Yes, because we want one Okay, Mark wants one days is definitely the prediction that we put down this time was that actually on self driving cars in sort of passenger applications, that progress is gonna be pretty incremental. This year can

be pretty incremental. You're going to see more miles driven, You're going to see more data on disengagement rates, You're gonna see a lot of progress in China actually they're pushing that forward as well as in California where there's a lot of testing going on. But actually on autonomy, some of the most interesting things to watch are probably

going to be more on non passenger applications. If you think about where autonomous driving makes a lot of sense, there is this huge obvious opportunity in driving people around, but that's also in some ways the hardest thing to do right um, and some of the things around logistics, delivery vans, street cleaners, that sort of stuff probably is

a better nearer term application for some of this. So I think you'll see more progress on that and more recognition that when we play the timeline out of where this stuff comes, that's that might be where you can monetize this stuff a little bit sooner. Then on the advanced driver assist part. That's actually gonna be a big year in that. That's where we're looking at things like automatic front collision avoidance, automatic breaking for that, UM lane assist,

which both, by the way, work brilliantly. I have had cars override my apparently poor driving and save me on a few occasions with both natasist and front collision. That is an ADAS system doing exactly what it should. So I think we actually the regulations are also pushing that direction as well. So new regulations in Europe are going to require more of those features. UM So I think you're going to see a lot more of that rolled out. There's still a bit of a debate on whether it

makes everything safer or not. There is still some room to kind of missus some of these things because it can allow you as a driver to disengage a bit. And and this has been the thing with Tesla Tesla autopilot. There's this debate raging about whether it's making driving safer. Tesla claims it is, and then they're sort of skeptics are saying no, it's making it's making it much more dangerous.

I think they're both valid arguments. It depends a lot on how people, as with a lot of technology, how people choose to use it, and and probably how you communicate what you should do with it as well. Okay, so let's say let's say we're back to transporting people around. Um, we have this universe of shared mobility, and you know that's definitely got a local element to it. So it's whether you're in a city or your rural but you've got what you said. The big ones are d D, Uber, Grab, Lift, Go,

check Ola. These companies, I think many people in the industry have been watching their I p O s UM you know, some in some cases to limited fanfare. Uh. And now you're also looking at some you're looking at some local governments thinking about how they're going to regulate

them differently. And the thing that initially popped into my head when I was thinking about some of the implications for these now very large fleets of drivers is are these companies to some degree too big to fail both by the customers, the drivers and then the company is now operating on such a global scale. With these I think they can still fail. I think still out of room. There's still a lot of ways for it to go wrong.

I mean, one of the things you are going to see this year, and I agree these things are These are big companies now, and I mean we tap we tally up the users of right hanging apps, so for one point two billion users um really remarkable growth for something that wasn't there not that long ago. If you go to a conference and ask how many people took an uber or lift and the last week it will be most, it will be most people, So that that's pretty remarkable growth. But I still think it can go

quite wrong. So the one that we're watching a lot is regulatory pushback from cities. So there's a growing body of evidence saying, look, these things are adding to congestion and we're not happy about that. So there's regulations pushing them more towards at least if you're adding to congestion,

don't also be worsening their quality. So pushing them towards vs. Making that link between shared mobility and electrification stronger, but also just open questions about how many of them should there be allowed to be and and and what's the optimal mix of these services well, and cities taking a more activist stance. I do think though, as you point out, once you get in tens of thousands of drivers and

more importantly maybe millions of users. Then if you go and pull it out and and say as a government and a city city regulator that they're not allowed to operate, you will face some real blowback. So these groups have a have a position, have a good position in the market in some ways. I think the bigger risk is still can you make money? Right when you look at the financials of some of them, this story around exactly how they're going to get to making money is still

a bit unknown. So you've got scale, but you've got scale, and you're burning through a lot of cash right now. So I think that's more of the part we're watching is is there a credible way to get to these things being financially self sustainable. If they are, then I think they'll find a way to navigate the regulations and continue to continue to deliver their services. But if they don't, then that could be a pretty potent combination of regulatory

blowback and financial problems. So you have your ten predictions. You know some of them might be most surprising to you or your favorite predictions. No matter what you say, I already have my favorite or most surprising prediction for it was when I saw over the break a picture of an electric forward Mustang. So what have you got? What is your favorite prediction for I think this. I think the one that's going to catch people by surprise a little bit is how fast things are going to

move in Europe. We talked about that already A bit is like this has been building up a little bit. People are quite serious at the regulatory level and pushing this. I mean, you see the European Commission making long term commitments around net zero and many countries following that too. And we've been talking a bit about this gap between

long term ambition and short term targets. But I really think one of the big things that's going to surprise people is how fast it goes in Europe and how quickly the gap between Europe and China closes by the end of this year. So the message for a long time that we've been telling a lot of people have been saying, is like China is blowing everybody away on this,

their way ahead on this. I think by the end of gap between China and Europe is going to look a lot smaller, and it may even start to look like the approach in Europe may be more sustainable in the long term, let's see. Okay, So my favorite prediction on the list was one we haven't discussed yet today, and that is that it's it's actually complete departure from this electric vehicle space, at least on the land standpoint.

It has to do with marine and aviation, and that we anticipate seeing some progress, that we expect to see some real innovation in both of those areas. Could you actually elaborate a little bit on that for our listeners today and what we might be able to see in marine and aviation. Yeah, we'd like to try and put at least kind of one out there, one each each year.

And this was this was the last one on the list, and it was just sort of saying there's there's interesting things happening around the edges on on aviation and around

marine shipping too. So if we break them down, starting with aviation, there's all this stuff about vertical takeoff and landing and the taxis and this sort of flying car stuff right there, there's that part of it, but there is also this growing pressure on airlines to have a story for how they're going to exist in a carbon constrained world, and most of the short term is going to be about buying offsets to get someone to plant tree in somewhere else, or maybe bio fuels biojet as

a way of offsetting some of that. But I think one of the things you'll see this year is some of the biggest players start to making make more investments in groups trying to develop hybrid aircraft and fully electric aircraft. The technology isn't really there yet for fully electric aircraft in terms of the energy density needed to take any reasonable number of passengers any anything more than a really short hop, but there are a lot of short hops

out there, and you can start somewhere. So you see some groups starting to make announcements on that. I think you're going to see more investment and more commitment there as well, and potentially hydrogens in the running there too. Um So I think there's gonna be some interesting things

around how you might decarbonize aviation. On marine, I think some of the applications are a bit nearer terms, So you're already starting to see some some ferries other near shore vessels kind of making commitments and and already trying to electrify. And I think that's actually going to be quite interesting to watch as well. So you've seen a few big ferry operators saying we're switching vehicles, we're switching our fleets over um. They're The interesting thing is they

can do it kind of incrementally. They can add battery packs, add add more battery capacity as they go. Hydrogen is also still in the running there, but most of what we're seeing so far is on the electric side. I went and saw a big ferry line in Gothenburg recently in Sweden, and there they were started doing it in three steps. The first step was just for sort of

port maneuvers and bow thrusters and things. Then the next step that they were going to do this year was around enough battery capacity to get them well out of the harbor and then to the open seas. And then the third phase was going to be to actually do the crossing between Sweden and Denmark. So and that's a heavily subsidized project, of course, and that doesn't mean it's commercially viable right away, but that actually tells you that you can kind of experiment with this stuff and and

slowly incrementally get there. And I think that's really important for marine operators who are very concerned with safety and and we'll want to do things slowly incrementally. It doesn't solve long ocean going freight that sort of thing. We're still just talking about the stuff around uh and at least with batteries and that sort of thing and electricity um is more than your shot opportunity ocean going vessels

carrying lots of freight. You have to get a bit more radical with your designs or people talking about everything from nuclear reactors to hydrogen for that sector. But that's that's gonna be a very difficult one to decarbonize, Collin. It is always great having you in the studio. Thank you for sharing your ten predictions with us today. Thanks Dana, Thanks Mark, always going to be here. Bloomberginny F is a service provided by Bloomberg Finance LP and its affiliates.

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