September 25, 2025 • 36 mins
Something remarkable is unfolding in developing countries. From Nepal to Costa Rica, more people are buying electric cars than fossil-fuel vehicles, as battery prices plummet and cheap home-grown EVs come to market. And in China, more electric cars will be sold in the last quarter of this year than the total number of all cars sold in the US. Colin McKerracher, head of transport at BNEF, joins Akshat Rathi on Zero to unpack these trends, and what they mean for global oil demand.
Explore more:
- BNEF’s EV Outlook
- Articles by Colin McKerracher
- The Whole World Is Switching to EVs Faster Than You
- Nigeria's Solar Gamble Forces Millions in Lagos to Unplug From Dirty Generators - Bloomberg
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to zero. I am Kshatrati this week electric cars
in developing countries. I've been obsessed with cars since I
was a kid, but I didn't get a license till
(00:21):
I was thirty five because for me, driving is in
the fun part. It's everything else that I like about cars,
like design. Until I left India when I was twenty one,
I could tell every model of car just by looking
at the shape of their front or rear lights. That's
how obsessed I was. In any case, cars have been
a good obsession when covering climate and energy. Sure, the
(00:44):
best climate solution is widely accessible cheap electric public transport
in every city in the world. But we don't live
in the perfect world and cars aren't going to be
obsolete for a long time. So the climate solution for
cars is electrification. And what's happening now in the world
of electric cars is a big deal. They have impacts
(01:05):
at so many levels. At the consumer level, people are
starting to learn how to charge when there's cheap power
available because utilities are creating new teriffs. And on the
geopolitical level, petro states have to start thinking about how
long they can bet on oil In the future. There's
always so much news about electric cars, and for years
(01:25):
the best guide on this transition has been Colin Mcaracker,
head of transport for bloomergen Ef. So I wanted to
invite him on the show again, and this time it's
because there's something really remarkable unfolding in developing countries. Welcome
(01:46):
back to Zero Colin.
Speaker 2 (01:47):
Thanks, Akhad. Great to be back on the show.
Speaker 1 (01:48):
It's always a pleasure talking to you because there's never
a dull moment when covering the massive shift that the
world's transport sector is undergoing. You were on the show
in twenty twenty three, and I'll remind you that the
headline form that episode was titled It's done. The future
is battery powered electric cars.
Speaker 2 (02:08):
Yes, I remember.
Speaker 1 (02:09):
Now about forty percent of our listeners are in the US.
To them, that pronouncement might not feel true given the
rollbacks from the Trump administration, but surely the remaining sixty percent,
the majority of the listeners will be nodding along. And
in our conversation today, ivan to spend a lot of
time talking about electric cars and their takeup in developing
(02:30):
countries in the rest of the world. But before we start,
let's look at the long view. Each year Bloomaginif publishes
the Electric Vehicle Outlook. This year's report is your tenth,
and there's a thing you do in that report that
I really appreciate, which is you look back at your
own forecasts and you check whether they are true or
(02:51):
you got them wrong. And the thing I noticed is
that the BNF forecast has typically become more optimistic over time.
So in your twenty nineteen forecast, you were expecting one
hundred and thirty million electric cars to be on the
road by twenty thirty. Your twenty twenty five forecasts expects
two one hundred and thirty million, if we take the
(03:11):
long route. Why has the optimism grown?
Speaker 2 (03:15):
Yeah, there's a few reasons for that, And I think
it is really important to say you need to do
retrospectives on forecasts, otherwise they're kind of useless. Right, you
need to see what you got right and wrong, and
also you should tell people what you got right and wrong.
That's why we publish that section every year, is to say, hey,
here's what we were right about, here's what we were
wrong about. And so I think just general credibility, you
(03:35):
should do that. And also I will say I have
seen a lot of very optimistic forecasts that weren't reviewed
and weren't revisited and are now all sort of commically wrong.
So you go back six seven years, there's all these
people saying one hundred percent of car sales are going
to be electric by twenty twenty five or twenty thirty,
including by Elon Musk by the way, he said, we
think we can get to fifty percent of sales by
twenty twenty six. It's twenty twenty five now and we're
(03:56):
not there and we're not going to be close. But
so in terms of why ours have changed, and I'll say,
look from twenty nineteen till now, the size of the
fleet forecast has gone up a fair bed, but actually
in the last three years it's been level and even
slightly down. So twenty twenty five was the very first
year where our forecast, our global forecast, went down, and
(04:18):
that's because we were anticipating and starting to see now
a very strong drop in the US. It's not dropping yet,
but the policy leavers going away under the Trump administration
will absolutely have an impact. And this is an important
thing to mention, is that policy still really matters. You
still get the policies that you vote for, and those
(04:40):
policies have an impact on the market, but zooming out
and sort of taking the long view. I think the
biggest reason why it's gone up over a five or
six year time horizon is that we reach the point
of organic consumer demand takeoff in China about three years
sooner than we thought we would. So our general view
before was it China and the markets are policy push
(05:01):
markets for the next few years, and then around twenty
twenty five it takes off. What happened in China is
that around twenty twenty one twenty twenty two, organic consumer
demand now fastly outstripping what the government targets are. You're
over fifty percent of sales have a plug. The largest
auto market in the world, half of the sales are electric,
and that is way ahead of what the government targets were.
(05:22):
What that means is that that kink in the curve
where you get organic consumer adoption has come about three
years sooner than we thought, and so since then we've
adjusted that. In the last few years it's been pretty
accurate we've been forecasting for the Chinese market. But that's
probably the single biggest lever why the twenty twenty five
version is higher in twenty thirty than the twenty nineteen version.
Speaker 1 (05:41):
Most you were generous in not calling out the oil
companies who also put out their electric vehicle forecasts and
have been historically getting it really, really wrong. One reason
that is because they didn't probably expect as you were,
that battery costs would fall as far as they have done.
(06:02):
And in your own forecasting, surely the cost of batteries
and thus the cost of cars has played a huge role. Right.
Speaker 2 (06:10):
Yes, I should mention that the oil companies were also
their forecasts were dramatically off. On the other side, they
were dramatically underestimating ev adoption. Battery costs have come down dramatically.
We've been tracking that since twenty ten. That surprised a
lot of people. When we looked at some of those
early oil market outlooks, the biggest thing we noticed was
that none of them were very explicit about what they
were expecting on battery costs. And as soon as you
(06:31):
started to look at battery costs and battery prices, you
sort of concluded, WHOA, there's something really dramatic going on here,
and eventually you're going to get to price parody between
electric vehicles and combustion cars, and that's largely what's played
out now, not everywhere, Like a nava is still significantly
more expensive in the US and depending on where you
are in parts of Europe than a combustion car, but
in China it is cheaper. And again that's part of
(06:54):
why you've seen that organic consumer demand take off. And
I think this gets at something quite central too, which
is that when we do these outlooks, the underlying thing
is looking at vehicle economics, So trying to understand when
can you make and sell an electric vehicle profitably in
different segments and in different markets, and what battery prices
do you need to get there? And that's what determines
(07:16):
a lot of the uptake, along with some other things
around total cost of ownership and fuels and addressable market
and all those sorts of things. But I think that's
important because you're not just extrapolating historical growth trends. It's
really important not to just say, oh, yeah, I grew
at fifteen percent last year, it's going to grow at
fifteen percent this year. It's important to look where can
the economics work? Where are the economics working? Because vehicles
(07:39):
exist sort of at the frontier of purchasing power for
most consumers. So if the vehicle is way more expensive
in the same class, same segment, they're just not going
to buy it. So you do need competitively priced TVs.
We're getting more and more of those around the world
and that's a big part of why you've seen adoption takeoff.
And underlying that is the battery story, and batteries do
(08:01):
keep getting cheaper and they do keep getting better. If
that ever stops happening, then I will change my view
on long term via adoption. As long as batteries are
still getting better and cheaper, then the future for electrification
road transport is really bright. If it grinds to a halt,
then use would change.
Speaker 1 (08:17):
Let's talk about the US market briefly, because there's that
correction you talked about given the change in policies that
have already come through, but there is a further downward
risk that could come right.
Speaker 2 (08:27):
Yeah, So we have revised our US EV adoption forecast
dramatically down in this year's outlook, and the biggest thing
behind that is that the federal tax credit is going away,
So the end of September it's gone, and then the
other thing is that the fuel economy regulations the cafe
regulations are being rolled back, and both of those were
(08:48):
set to be big drivers, along with some parts of
the Inflation Reduction Act that we're incentivizing the supply side,
So virtually all of those are under threat now. The
other big pillar of USCV adoption has been California and
the standards that California sets for vehicles, and the zero
missions vehicle mandate in California that exists because of the
(09:09):
waiver that California has to set its own standards. Trump
has gone after that waiver. We're not legal scholars. There's
some groups that say that is the mechanism that was
used to do that is unconstitutional or wouldn't hold up
in court. But the reality is is that is a
further weakness in the US market. Our outlook this year
assumes that California retained some abilities set its own air
(09:30):
quality standards, and that things like the ZEV mandate in
California may be revised but not fully eliminated. That could
go down further. So we already reduced our outlook pretty
significantly between last years and this year's for USCV adoption
twenty thirty we could revise it further if that California
ability is confirmed to be removed.
Speaker 1 (09:49):
You said that China is now selling more than half
of all its new car sales as electric, But there's
a more shocking stat in the report that this will
be the first year when China will sell more electric
cars than the total number of cars sold in the US,
whether that's electric or those massive gas guzzling pickup trucks.
(10:13):
What is that going to do to the competitiveness of
US automakers.
Speaker 2 (10:17):
Yeah, this was one that came out right at the end,
and it's actually it'll be Q four, so it won't
be the full year where it overtakes it, but in
Q four we think there'll be more ev sold of
all types, not including two and three wheelers, but cars
and trucks versus combustion vehicles and all types of vehicles
in the US, which is pretty remarkable. So it's going
from very few sales a few years ago to overtaking
(10:38):
the entire size of the US vehicle market, which is
part of the reason we say as well that combustion
vehicle sales peaked in twenty seventeen because to make up
for what has happened in China. You would need to
add now an entire new US vehicle market into the
mix all combustion cars to get back to those twenty
seventeen highs. So that means there's just no way to
do that. There's no country in the world that can
do that. So we have past peak combustion vehicle sales
(11:00):
with growing confidence, and not only are they selling a
lot of electric vehicles within China, but the amount of
vehicles they're exporting is also rising really quickly. So China
has become the largest vehicle exporter in the world, overtaking
Japan last year, in Germany the year before. There is
a real risk right now in the US and US
consumers are not able to access these vehicles that the
Chinese automakers are producing because of one hundred percent tariff,
(11:23):
which basically basically makes it impossible for an automaker to
sell there profitably. There is a real risk that the
US market is sort of evolving as its own island,
if you will. If you think of sort of evolutionary
life forms, these islands that get cut off from other
parts of the world, they grow different species within them,
and there was always a bit of that within the
(11:45):
US and North American market, but it starts to look
like are stronger effect if the rest of the world
is moving much more forcefully towards electrification, and you don't
have to go very far from the US or from
Canada even to see that. I mean, if you look
at Latin America, other parts of the Americas, you're seeing
really strong growth in electric vehicles and coming from mostly
(12:06):
Chinese manufacturers. So there is a competitiveness risk. I will say,
and I've said this before, I'd probably say this each year,
and maybe I need to tone it down a little
bit each year because it's no longer I say it's Look,
it's still early in the transition, it's not that early
in the transition anymore. We're at about twenty five percent
of global car sales this year are going to be
plug in, so and majority of those battery electrics. So
(12:29):
maybe it's not so early in the transition anymore. But
there is still room for this to turn around. And
companies like Tesla, though their sales have fallen and a
little bit in the lasted a while in some markets,
they are still leaders in electric vehicles globally, so there
is still room to compete and to be at the
forefront of this, but it does look more and more
(12:49):
like under the Trump administration, the US will fall further
behind on electrification and on batteries, and it is unclear
yet whether that's something to be able to recover from
if that set of policy these lasts four years or longer.
Speaker 1 (13:02):
Some of the headlines coming from the US are quite remarkable.
The raid on a battery plant to pull out workers
that came from South Korea, and the sort of machinations
diplomatically that had to go on to make sure that
they can get back to work and the plant can
start operating again. We hear America first, but at least
on autos, it feels like you might end up in
(13:25):
a place where America is alone. But let's turn to
developing countries. And there are two reasons why I'm interested. First,
because what is happening in some of these markets is astonishing.
I followed these numbers, not as closely as you, but
fairly often, and some of these numbers still shock me. Second,
and more importantly, I think when developing countries start adopting
(13:48):
a green technology, you know the technology's time has arrived.
Because typically developing countries are buying into it because it's
the cheaper, better option rather than because it's going to
reduce carbon emissions. And for the last eight years, I've
been talking to my dad in India about electric cars.
Every second year, we go and test cars out what's
(14:10):
on offer, and every year he has said, no, I'm
not quite ready. He's a consumer who's only ever had
an Indian made car, so he has this old school
thinking that you know, they provide better services, so I'd
really need to wait till I get an Indian electric
car before I buy one, and then foreign cars, even
if I tried to convince him about the service, just
(14:33):
always felt like things were out of his budget. He's like, no,
I'm not buying an expensive car. I'm going to buy
one that I can afford. This year that changed. He
was impressed by the range of cars on offer, including
from Indian companies, and he felt comfortable buying a car
from a foreign company, but with Indian manufacturing. He ended
up buying a Hyundai, and independently, a first cousin of
(14:56):
mine in Mumbai bought a bid MICROCUV. So in between
these two decisions, there is something that is happening. I
say that I think of my dad as a bell
weather for the energy transition, because in twenty nineteen he
got rooftop solar just as the Indian solar boom was beginning,
and now this year he's bought an EV. Maybe the
(15:16):
Indian EV boom is really going to start. Am I
reading too much into what my dad's choices are?
Speaker 2 (15:23):
Maybe? But I actually one of the things I love
about working on these topics is you get to see
them in real life, right, And that's kind of what
makes it both professionally interesting but personally interesting too. I
don't actually think you are. And to come back to
the point you made at the start about the relative economics,
I completely agree. And one of the things we've often
said is that, look, the reason adoption has been slower
(15:45):
in emerging economies to date is because of primarily a
question of price elasticity of demand.
Speaker 1 (15:50):
Right.
Speaker 2 (15:50):
Consumers are very price sensitive and when things cost a premium,
they're not going to buy a lot of them. But
the flip side of that is that same price elasticity
of demand doesn't have to change, but just the equation
completely flips once that becomes the cheapest option, and that
means you go as the fastest buyers, because again you're
price sensitive and you are really seeing that. So again,
(16:12):
if you're sat in the US, this might sound surprising,
but you're getting higher rates of ev adoption in many
emerging economies than you have in the US, than you
have even in some European countries. And the list is
getting longer. So it used to be maybe one or two,
but now you say, okay, actually we've got quite high
rates in Brazil, in Uruguay, in Costa Rica, in big
(16:33):
parts of Southeast Asia, Vietnam, Thailand, Nepal, Ethiopia. These are
not places that are doing this for some sort of
obligation around CO two emissions or some sense of moral
obligation to other countries. Primarily, those factors can play a role,
but they're primarily doing it because it's the lowest cost
(16:54):
economic choice. Now, I think there is a bit of
a pushback from some of these countries if they make
automobiles themselves, to say look, look, and India is a
good example of this, we want more of it made here.
We don't want important technology. But what you're seeing in
places that don't make a lot of vehicles of any
type within the countries, they're saying, look, we're importing this
either way, we may as well import the one that
(17:14):
cleans up local air quality and it's cheaper to buy.
I've said for a long time that, look, if we
wait for electrification to start top down and come from
the wealthiest countries, the wealthiest vehicle buyers in those countries,
and the work, it's way down. This is a very
long transition. This is many decades. But if it comes
bottom up at the same time, which is what you
are starting to see, and again, not just in a
(17:35):
few countries, in many countries and in many different segments,
to wheelers, buses, delivery vans, cars, all those are really
moving in a lot of emerging economies, then the whole
thing goes goes a lot faster. So India is probably
the most interesting one to watch, to be honest, because
the numbers are starting to go up quite quickly. You
do have domestic manufacturing, so the model choice is going
(17:56):
up very fast. It's fascinating to hear your dad sort
of relaying that that stuff that we're reading about and
writing about and gathering data on, it's always neat to
hear it come back as personal experience.
Speaker 1 (18:08):
And he did test a few electric cars coming from China.
So even though India has a tariff one hundred percent
or so tariff, electric cars even after that tariff can
be cheaper. Like my cousin buying a bid because well,
it was just the best car that he tested out,
even though it was just on the budget of what
he was buying and was comparable to other Indian electric cars.
Speaker 2 (18:29):
I actually wrote a piece just a few months ago saying, look,
if you want your EV market to take off, let
the Chinese vehicles in right. And that may be a
questionable statement, and I think there are reasons for different
countries to consider whether that's what they want to do.
But if one of your goals is to catalyze competition,
give consumers a lot of choice, and see evs take off,
(18:52):
then look around the world. Look at the countries that
are going the fastest. The fastest growth rates are all
in countries where Chinese vehicles are part of the mix.
They're forcing competition, they're bringing down costs for consumers. And
sometimes I hear in the US people say no, no,
consumers don't want to buy these, and I sort of say, well,
let's take out that one hundred percent tariff and see
what happens. Let the consumer decide, and I don't think
(19:14):
we'll see that happen. But it's important to note that
that argument of let the consumer decide used to be
an argument against electric vehicles and saying no, if you
really let consumers pick, they won't pick these, And then
now it's an argument for let the consumer decide. Open
it up, see what happens.
Speaker 1 (19:36):
Join us after the break for more of my conversation
with Colin mccracker. And while I've got you, please give
Zero a review on Apple Podcasts and Spotify. It helps
new listeners find the show. Recently, Energy Nerds said I've
listened to clean energy podcasts for years, The Energy Gang, Volts, etc.
This is one of the best key topics, good questions
(19:57):
and important interviewees. Highly recommend ended. Thanks Energy Nerd. I
want to put numbers on how many developing country markets
(20:19):
are playing in the big league for electric cars now.
Nepal seventy percent of all new cars electric, Thailand sixty percent,
Vietnam forty percent. No developing country can quite match your
resident country of Norway, where one hundred percent cars that
are sold are evs. But barring that exception, we are
(20:42):
now at that place where many developing countries have begun
to leap frog develop countries when it comes to new
sales of cars, And it's worth noting these are the
markets that will have growing car markets in general. You know,
even if developed countries start sending more electric cars, their
markets are stable or shrinking in many cases. So this
(21:06):
is happening in emerging markets. It's not a unique story.
What do you think are lessons that you can see
from these markets that show what needs to be done
if even more markets want to adopt electric cars.
Speaker 2 (21:19):
Yeah, one of the things I think to just understand
the causes of that and why that's happening. We talked
about the economics. The other thing that I think is
important to note. If you map every country in the
world and say what are their biggest imports, you will
find two things come up in almost every single country
in the world in terms of value of imports. One
(21:40):
of them is cars and the other one is oil.
So if you're looking at that and you're an emerging
economy and you say, well, look, if I'm going to
import the cars anyway, then I'd rather import less oil.
And so I think one of the lessons from this
is that there are multiple factors that can drive these
(22:00):
things forward, and one of them is around energy security,
and countries may say, look, we have good hydro resources
in the country, and we are going to generate a
lot of power from that, and we don't have oil,
so let's start shifting the fleet, recognizing that it will
take a long time. So I think that sort of
multitude of factors playing a role in this is part
(22:22):
of why we see different emerging economies pushing harder on it.
I think the other thing that we have seen is
that and this kind of goes against my analyst's sensibilities
because I like the idea that if you look at
enough techno economic data you'll be able to predict things.
But I have actually found, having spent a bunch of
time with some of the people who work in the
(22:43):
EV associations in those different emerging economies, that people make
a very big difference to And again, people's a very
hard thing for US analysts to predict. But individual people
going out and organizing the EV association in their country
that then goes and does test drive events, lobbies for things,
pushes hard with legislators, just sort of makes the case
(23:04):
makes them visible makes a huge difference. So I happen
to know the people who worked on that program in
Costa Rica and continue to work on that. That's been
a great success story, and that's really people driven. And
that's a small country, but this stuff matters. So I
think it's worth remembering that economics and technology are not destiny.
(23:25):
They certainly shape the direction we're traveling, but that people
still matter a lot. And again this gets at a
point where we're not very good as analyst at quantifying
that because that's sort of an uncomfortable thing to say, Look,
what effect is people organization going to have? But certainly
I would say it does have an effect, particularly for
things like getting charging infrastructure up the agenda all these
(23:48):
sorts of areas, because eventually you run out of the
early adopters, and you run out of the people who
have detached homes to charge at home at and then
you need some public charging infrastructure. So I would say
those two stick out to me as interesting lessons. One
this idea of we're going to import oil or cars
and let's make a strategic choice on which one it
is and how that changes over time. And then this
(24:10):
other part about people still really mattering in that organization
effort that makes people, the consumers in those countries more
aware of the options that are out there.
Speaker 1 (24:18):
Now, I'm going to put a name on one of
the countries that you were thinking about when you were
answering your question, which is Ethiopia, the country with hydropower,
cheap hydro power, and the country that thinks it's importing
way too much oil, so it's banned the imports of
fossil fuel cars altogether, and that means it's just open
road for Chinese electric cars to sell in Ethiopia. The
(24:40):
other country in Africa that our colleagues and bloom News
have written about is Nigeria, where the country had a
huge shift in the subsidies that it was offering to
gasoline and they were taken off and suddenly there was
a solar boom because all the diesel powered generators had
(25:00):
to go away or become too expensive, and solar took off.
Electric cars are also starting to see a small boom
as a result. Are there other parts of Africa where
we should be looking at the electric car transition?
Speaker 2 (25:16):
I would say in other parts of East Africa, you're
also seeing some pretty interesting stuff on two wheelers and
three wheelers, and Kenya. I think that's an interesting one
to watch too, partially because with the two wheeler market,
the barriers to entry are lower in terms of setting
up manufacturing. So what you're starting to see there is
some homegrown African companies producing two wheeler electric motorbikes for
(25:40):
the electric scooters and three wheelers for the African market,
and so that's always interesting to see as well. There's
some other markets where buses are picking up, but I
think probably yeah, Ethiopia and Nigeria, Kenya, those are the
ones that I'm seeing as kind of the most interesting
right now, and I think the Ethiopia story is fat.
Obviously it's not a huge car market, but it's telling
(26:03):
you something about the competitive economics and also this geopolitics
of dependence as well.
Speaker 1 (26:09):
Now, I want to bring up one sort of future
oriented technology that is not showing up in developing countries yet,
but I wonder what you think about it, which is
autonomous driving. I was able to take a self driven
car in San Francisco. It was a weim and for
the first thirty seconds I was a little freaked out,
(26:30):
creeped out, uncomfortable, and after that I forgot that I
was in a car without a driver. Many of these
companies have invested huge amounts of money, you know, mapping
the roads, making sure that the car knows what it's doing.
You know, driving is a pretty complicated task if you
try and get a robot to do it. But there
is a very good reason for combining electric cars and
(26:52):
autonomy because you get this efficiency combo both in fuels
and in resources, because you're going to have fewer cars
ideally going around more of the time. Do you think
autonomy has any realistic role to play in emerging markets
where the cost of driving is still pretty low and
(27:13):
the roads are much much more complicated, either in infrastructure
or the way people drive.
Speaker 2 (27:20):
My view has been generally it doesn't play a huge
role in emerging economies. I've lived in India for a
number of years as well a shot as you know,
and I just struggle to picture sometimes the street scene
where it would be helpful to have an autonomous car,
right Like, I think in some cases people would just
sort of accept that this thing would have to slow
(27:40):
down if you got in the way, and some streets
that would just be very hard for them to ever
navigate right, and there's just more variety of people and
types of traffic and things on the road. So and
also an economic point, the part of the reason autonomy
is attractive is because it cuts at the cost of
labor of the driver and the asset can be used
or intensely. Some of that works in emerging economies, but
(28:03):
not all of it. So I generally think this one's
probably a wealthy country story for quite a while, and
I include China in that. It is really fascinating to
see the number of trips starting to go up really rapidly.
We had our just more anecdotal evidence. I mean, we
track all the data, but again to sort of bring
it back to what people actually see in experience. We
had our whole Bloomberg NIF team, both three hundred people
(28:24):
together over the summer and I was just giving a presentation.
I pause and say, how many people have been in
an autonomous car? And more than half the people put
their hands up because they've been through San Francisco and
ridden in one, or they're there based in Fisheng or Shanghai,
and so that that's quite a quite a number, right,
And that's gone from zero probably two years ago. And
the last time I was in San Francisco, I took
(28:45):
one in a rain storm, like a full on downpour,
and it handled everything really, really smoothly. So the technology
is getting better. The number of trips are going up exponentially.
You're seeing their first permits approved to pick up at airports.
And again, if you look at shared mobility patterns, airport
pickups is a really big part of uber and lyft
earnings and things like that. So there's a lot of
trips there available. When we look at it, though, in
(29:08):
terms of the global energy mix and the global vehicle mix,
the number of kilometers people do in a year is
in the tens of trillions. In terms of total population
of the world, how many kilometers they travel by car.
It's going to take quite a while to make a
material dent in that, and therefore to make a material
impact on the energy story. Now, most of those will
(29:28):
be electric. Most of those are electric today. Anything where
you have high utilization and the economics of electrification are
very good, low cost per kilometer, high upfront costs, you're
definitely going to want that to be electric to bring
down the running cost. And certainly what we see today
is I think it's ninety percent of all the kilometers
traveled in autonomous vehicles today are electric, So that's happening.
(29:50):
It's not hypothesized anymore that market is electric, but it's
probably more like the twenty forties and or say late
twenty thirties and onwards where it starts to make a
materi serial impact in global transit patterns and global energy
use from transport.
Speaker 1 (30:05):
We've talked about cars mostly because they form a big
part of this transition, but that's not the only place
where the electrification of transport is playing out right.
Speaker 2 (30:14):
No, it's not, and it's kind of the middle of
the transition. So we think about twenty five percent of
cars this year will be electric. That's battery electrics and
plug and hybrids combined. If you go down from there,
like commercial vehicles about ten percent will be electric this year,
Medium and heavy about four percent. So passenger cars are
ahead of those two segments, but they're actually behind the
two leading segments, which is two and three wheeled vehicles,
(30:36):
which is thirty nine percent of global sales this year
will be electric, and buses about forty three percent of
sales of the electric So when you think particularly about
emerging economies think of this sort of combined ecosystem of
different vehicle types. It's not all about passenger cars, but
you're seeing progress, rapid progress on electrification in multiple segments
of once. So it's not just happening in the car
(30:59):
you can picture that you might have in your driveway.
It's happening and how goods are moved. It's happening in
two wheelers, it's happening in buses.
Speaker 1 (31:04):
I could keep talking to you for a long time,
but I do have to draw a line at some place,
and there's one I'm going to draw which is going
to take us outside the developing country conversation back to
the global conversation, which is about the demand for oil
as a result of electrification of transport. I know Bluemaghinia
has tracked these numbers in the past. How are we
(31:25):
doing on displacing oil demand?
Speaker 2 (31:29):
Yeah, we've been tracking this for quite a while. And actually,
what's interesting in the oil displacement story is that early on,
a lot of it was driven by buses and two
and three wheeled vehicles, and just now you're starting to
see passenger cars start to make a material dent. It's
about two million barrels per day being displaced right now
by electric vehicles of all types. Now, that's against over
(31:50):
one hundred million barrels per day of oil demand globally,
and obviously that displacement has been built up over a
decade of selling electric vehicles. But I think what's where
it gets quite interesting is is the markets where you're
seeing higher levels of EVA adoption, because there you are
starting to get significant displacement. Sort of tells you where
you're going, because there's this kind of mechanistic effect between
high share of new sales eventually translates to a share
(32:12):
of the fleet, and that translates to demand displacement for
gasoline and diesel. So places like Norway, you're getting about
three to four percent drop in liquid fuel demand for
road transport every year, and that's just as the fleet
turns over. In China, which has been the biggest driver
of oil demand growth over the last two decades, various groups,
including Sinopack, the largest fuel distributor in the country, has
(32:33):
said they think gasoline demand is either peaking this year
or has already peaked. Diesel demand they see growing for
a little bit longer because of heavy trucks, but you're
actually also starting to see pretty rapid uptake of electric
trucks about sixteen percent right now of electric trucks, or
of truck sales or electric heavy truck sales or electric
much higher for vans, So that's starting to displace as well.
When we add that all together, we at Bloomberg and
(32:57):
EFC road global road oil DEMANDAD fuel demand, which is
a contributor to global oil demand peaking around twenty twenty
ninths within four years. Now, that doesn't mean overall transport
demand peaks. That's just road transport. With shipping and aviation.
You could see that growing for another couple of years.
But then our view is that the sort of weight
of that road fuel part, which is still the biggest
(33:18):
consumer of oil, biggest single consumer of oil in the world,
starts to out weigh both the rising shipping and aviation
part around twenty thirty one, and then you start to
get a peak around there. Now this is a hotly
debated topic, but I would say that you can look
a little bit just at the fleet of vehicles, Like,
the biggest thing driving oil global oil demand is the
fleet of combustion engine vehicles on the road. It is
(33:41):
still growing. Therefore, oil demand is still growing, but it's
not going to grow for much longer because we passed
the peak of sales in twenty seventeen. Takes above ten
years for that to fully float through the fleet, and
then that flows through to gasoline and oil demand. So
I think where people go a bit wrong is thinking
of a peak as the only thing that matters. There's
different shapes to a peak. Are we talking a Hemalaan
(34:03):
peak or an Appalachian peak? Right? Is? Is this a sharp,
rocky matterhorn or is this somewhere an Appalachia which has
been rounded off by millions of years of weathering? And
I think certainly what our data shows is that it's
more of a rounded story. Certainly right now, given what
we see, this will still take a long time, and
(34:24):
unless you see a significant acceleration, there is almost no
chance at this point on the trajectory we're on of
getting to this talk of net zero by twenty fifty,
even in road transport, which is one of the more
optimistic scenario or one of the more areas where there's
sort of more reason for optimism. So in our EVA
outlook this year, we said the net zero by twenty
fifty story is almost out of reach. You would need
(34:46):
to see a significant acceleration, and in cases like the US,
you're not seeing that, you're seeing the opposite. So this
is sort of when you work on electric vehicles, you
have to sort of hold hope and despare in two
and at the same time. Right in some there's a
lot of reasons to be helpful from a technology development
point of view, from an uptake point of view, from
just a better experience in cities and urban air quality.
(35:09):
But if you're looking at it purely from a climate lens,
we're still a long way from being on track, and
we would have to see more action, not less. Depending
on which side of the market you're on. If you're
selling oil, then maybe the hope and despair are reversed.
If you're a fan of trying to cut emissions and
improve urban air quality in cities and offering low cost
(35:29):
vehicles to consumers in the long run, then maybe it
goes hither way.
Speaker 1 (35:33):
It's funny you bring up the Appalachian Mountains because there's
not just nature that has shaped them, but humans do.
A bunch of those mountains have had their tops cutoff
because of coal, and so humans are driving this transition,
and it's been such fun to try and understand where
this transition is in developing countries, because that's a place
(35:53):
that few people look at, but more people should. Thank you, Colin,
Thanks ax Sha. Great to speak to you today, and
thank you for listening to zero. And now for the
sound of the week. That's the sound of lithium metal
(36:15):
in liquid ammonia. Sounds very different when lithium metal is
dropped in water, which would be a big bang. If
you like this episode, please take a moment to rate
and review the show on Apple Podcasts and Spotify. Share
this episode with a friend or with someone who is
as obsessed as I am with car design. This episode
was produced by Oscar boyd Our. Theme music is composed
(36:35):
by Wondering Special thanks to Eleanor Harrison Tengate, Samarsadi Mosses
andim Laura Milan and Sharon chen i'm Akshadrati back soon.
Welcome to zero. I am Kshatrati this week electric cars
in developing countries. I've been obsessed with cars since I
was a kid, but I didn't get a license till
(00:21):
I was thirty five because for me, driving is in
the fun part. It's everything else that I like about cars,
like design. Until I left India when I was twenty one,
I could tell every model of car just by looking
at the shape of their front or rear lights. That's
how obsessed I was. In any case, cars have been
a good obsession when covering climate and energy. Sure, the
(00:44):
best climate solution is widely accessible cheap electric public transport
in every city in the world. But we don't live
in the perfect world and cars aren't going to be
obsolete for a long time. So the climate solution for
cars is electrification. And what's happening now in the world
of electric cars is a big deal. They have impacts
(01:05):
at so many levels. At the consumer level, people are
starting to learn how to charge when there's cheap power
available because utilities are creating new teriffs. And on the
geopolitical level, petro states have to start thinking about how
long they can bet on oil In the future. There's
always so much news about electric cars, and for years
(01:25):
the best guide on this transition has been Colin Mcaracker,
head of transport for bloomergen Ef. So I wanted to
invite him on the show again, and this time it's
because there's something really remarkable unfolding in developing countries. Welcome
(01:46):
back to Zero Colin.
Speaker 2 (01:47):
Thanks, Akhad. Great to be back on the show.
Speaker 1 (01:48):
It's always a pleasure talking to you because there's never
a dull moment when covering the massive shift that the
world's transport sector is undergoing. You were on the show
in twenty twenty three, and I'll remind you that the
headline form that episode was titled It's done. The future
is battery powered electric cars.
Speaker 2 (02:08):
Yes, I remember.
Speaker 1 (02:09):
Now about forty percent of our listeners are in the US.
To them, that pronouncement might not feel true given the
rollbacks from the Trump administration, but surely the remaining sixty percent,
the majority of the listeners will be nodding along. And
in our conversation today, ivan to spend a lot of
time talking about electric cars and their takeup in developing
(02:30):
countries in the rest of the world. But before we start,
let's look at the long view. Each year Bloomaginif publishes
the Electric Vehicle Outlook. This year's report is your tenth,
and there's a thing you do in that report that
I really appreciate, which is you look back at your
own forecasts and you check whether they are true or
(02:51):
you got them wrong. And the thing I noticed is
that the BNF forecast has typically become more optimistic over time.
So in your twenty nineteen forecast, you were expecting one
hundred and thirty million electric cars to be on the
road by twenty thirty. Your twenty twenty five forecasts expects
two one hundred and thirty million, if we take the
(03:11):
long route. Why has the optimism grown?
Speaker 2 (03:15):
Yeah, there's a few reasons for that, And I think
it is really important to say you need to do
retrospectives on forecasts, otherwise they're kind of useless. Right, you
need to see what you got right and wrong, and
also you should tell people what you got right and wrong.
That's why we publish that section every year, is to say, hey,
here's what we were right about, here's what we were
wrong about. And so I think just general credibility, you
(03:35):
should do that. And also I will say I have
seen a lot of very optimistic forecasts that weren't reviewed
and weren't revisited and are now all sort of commically wrong.
So you go back six seven years, there's all these
people saying one hundred percent of car sales are going
to be electric by twenty twenty five or twenty thirty,
including by Elon Musk by the way, he said, we
think we can get to fifty percent of sales by
twenty twenty six. It's twenty twenty five now and we're
(03:56):
not there and we're not going to be close. But
so in terms of why ours have changed, and I'll say,
look from twenty nineteen till now, the size of the
fleet forecast has gone up a fair bed, but actually
in the last three years it's been level and even
slightly down. So twenty twenty five was the very first
year where our forecast, our global forecast, went down, and
(04:18):
that's because we were anticipating and starting to see now
a very strong drop in the US. It's not dropping yet,
but the policy leavers going away under the Trump administration
will absolutely have an impact. And this is an important
thing to mention, is that policy still really matters. You
still get the policies that you vote for, and those
(04:40):
policies have an impact on the market, but zooming out
and sort of taking the long view. I think the
biggest reason why it's gone up over a five or
six year time horizon is that we reach the point
of organic consumer demand takeoff in China about three years
sooner than we thought we would. So our general view
before was it China and the markets are policy push
(05:01):
markets for the next few years, and then around twenty
twenty five it takes off. What happened in China is
that around twenty twenty one twenty twenty two, organic consumer
demand now fastly outstripping what the government targets are. You're
over fifty percent of sales have a plug. The largest
auto market in the world, half of the sales are electric,
and that is way ahead of what the government targets were.
(05:22):
What that means is that that kink in the curve
where you get organic consumer adoption has come about three
years sooner than we thought, and so since then we've
adjusted that. In the last few years it's been pretty
accurate we've been forecasting for the Chinese market. But that's
probably the single biggest lever why the twenty twenty five
version is higher in twenty thirty than the twenty nineteen version.
Speaker 1 (05:41):
Most you were generous in not calling out the oil
companies who also put out their electric vehicle forecasts and
have been historically getting it really, really wrong. One reason
that is because they didn't probably expect as you were,
that battery costs would fall as far as they have done.
(06:02):
And in your own forecasting, surely the cost of batteries
and thus the cost of cars has played a huge role. Right.
Speaker 2 (06:10):
Yes, I should mention that the oil companies were also
their forecasts were dramatically off. On the other side, they
were dramatically underestimating ev adoption. Battery costs have come down dramatically.
We've been tracking that since twenty ten. That surprised a
lot of people. When we looked at some of those
early oil market outlooks, the biggest thing we noticed was
that none of them were very explicit about what they
were expecting on battery costs. And as soon as you
(06:31):
started to look at battery costs and battery prices, you
sort of concluded, WHOA, there's something really dramatic going on here,
and eventually you're going to get to price parody between
electric vehicles and combustion cars, and that's largely what's played
out now, not everywhere, Like a nava is still significantly
more expensive in the US and depending on where you
are in parts of Europe than a combustion car, but
in China it is cheaper. And again that's part of
(06:54):
why you've seen that organic consumer demand take off. And
I think this gets at something quite central too, which
is that when we do these outlooks, the underlying thing
is looking at vehicle economics, So trying to understand when
can you make and sell an electric vehicle profitably in
different segments and in different markets, and what battery prices
do you need to get there? And that's what determines
(07:16):
a lot of the uptake, along with some other things
around total cost of ownership and fuels and addressable market
and all those sorts of things. But I think that's
important because you're not just extrapolating historical growth trends. It's
really important not to just say, oh, yeah, I grew
at fifteen percent last year, it's going to grow at
fifteen percent this year. It's important to look where can
the economics work? Where are the economics working? Because vehicles
(07:39):
exist sort of at the frontier of purchasing power for
most consumers. So if the vehicle is way more expensive
in the same class, same segment, they're just not going
to buy it. So you do need competitively priced TVs.
We're getting more and more of those around the world
and that's a big part of why you've seen adoption takeoff.
And underlying that is the battery story, and batteries do
(08:01):
keep getting cheaper and they do keep getting better. If
that ever stops happening, then I will change my view
on long term via adoption. As long as batteries are
still getting better and cheaper, then the future for electrification
road transport is really bright. If it grinds to a halt,
then use would change.
Speaker 1 (08:17):
Let's talk about the US market briefly, because there's that
correction you talked about given the change in policies that
have already come through, but there is a further downward
risk that could come right.
Speaker 2 (08:27):
Yeah, So we have revised our US EV adoption forecast
dramatically down in this year's outlook, and the biggest thing
behind that is that the federal tax credit is going away,
So the end of September it's gone, and then the
other thing is that the fuel economy regulations the cafe
regulations are being rolled back, and both of those were
(08:48):
set to be big drivers, along with some parts of
the Inflation Reduction Act that we're incentivizing the supply side,
So virtually all of those are under threat now. The
other big pillar of USCV adoption has been California and
the standards that California sets for vehicles, and the zero
missions vehicle mandate in California that exists because of the
(09:09):
waiver that California has to set its own standards. Trump
has gone after that waiver. We're not legal scholars. There's
some groups that say that is the mechanism that was
used to do that is unconstitutional or wouldn't hold up
in court. But the reality is is that is a
further weakness in the US market. Our outlook this year
assumes that California retained some abilities set its own air
(09:30):
quality standards, and that things like the ZEV mandate in
California may be revised but not fully eliminated. That could
go down further. So we already reduced our outlook pretty
significantly between last years and this year's for USCV adoption
twenty thirty we could revise it further if that California
ability is confirmed to be removed.
Speaker 1 (09:49):
You said that China is now selling more than half
of all its new car sales as electric, But there's
a more shocking stat in the report that this will
be the first year when China will sell more electric
cars than the total number of cars sold in the US,
whether that's electric or those massive gas guzzling pickup trucks.
(10:13):
What is that going to do to the competitiveness of
US automakers.
Speaker 2 (10:17):
Yeah, this was one that came out right at the end,
and it's actually it'll be Q four, so it won't
be the full year where it overtakes it, but in
Q four we think there'll be more ev sold of
all types, not including two and three wheelers, but cars
and trucks versus combustion vehicles and all types of vehicles
in the US, which is pretty remarkable. So it's going
from very few sales a few years ago to overtaking
(10:38):
the entire size of the US vehicle market, which is
part of the reason we say as well that combustion
vehicle sales peaked in twenty seventeen because to make up
for what has happened in China. You would need to
add now an entire new US vehicle market into the
mix all combustion cars to get back to those twenty
seventeen highs. So that means there's just no way to
do that. There's no country in the world that can
do that. So we have past peak combustion vehicle sales
(11:00):
with growing confidence, and not only are they selling a
lot of electric vehicles within China, but the amount of
vehicles they're exporting is also rising really quickly. So China
has become the largest vehicle exporter in the world, overtaking
Japan last year, in Germany the year before. There is
a real risk right now in the US and US
consumers are not able to access these vehicles that the
Chinese automakers are producing because of one hundred percent tariff,
(11:23):
which basically basically makes it impossible for an automaker to
sell there profitably. There is a real risk that the
US market is sort of evolving as its own island,
if you will. If you think of sort of evolutionary
life forms, these islands that get cut off from other
parts of the world, they grow different species within them,
and there was always a bit of that within the
(11:45):
US and North American market, but it starts to look
like are stronger effect if the rest of the world
is moving much more forcefully towards electrification, and you don't
have to go very far from the US or from
Canada even to see that. I mean, if you look
at Latin America, other parts of the Americas, you're seeing
really strong growth in electric vehicles and coming from mostly
(12:06):
Chinese manufacturers. So there is a competitiveness risk. I will say,
and I've said this before, I'd probably say this each year,
and maybe I need to tone it down a little
bit each year because it's no longer I say it's Look,
it's still early in the transition, it's not that early
in the transition anymore. We're at about twenty five percent
of global car sales this year are going to be
plug in, so and majority of those battery electrics. So
(12:29):
maybe it's not so early in the transition anymore. But
there is still room for this to turn around. And
companies like Tesla, though their sales have fallen and a
little bit in the lasted a while in some markets,
they are still leaders in electric vehicles globally, so there
is still room to compete and to be at the
forefront of this, but it does look more and more
(12:49):
like under the Trump administration, the US will fall further
behind on electrification and on batteries, and it is unclear
yet whether that's something to be able to recover from
if that set of policy these lasts four years or longer.
Speaker 1 (13:02):
Some of the headlines coming from the US are quite remarkable.
The raid on a battery plant to pull out workers
that came from South Korea, and the sort of machinations
diplomatically that had to go on to make sure that
they can get back to work and the plant can
start operating again. We hear America first, but at least
on autos, it feels like you might end up in
(13:25):
a place where America is alone. But let's turn to
developing countries. And there are two reasons why I'm interested. First,
because what is happening in some of these markets is astonishing.
I followed these numbers, not as closely as you, but
fairly often, and some of these numbers still shock me. Second,
and more importantly, I think when developing countries start adopting
(13:48):
a green technology, you know the technology's time has arrived.
Because typically developing countries are buying into it because it's
the cheaper, better option rather than because it's going to
reduce carbon emissions. And for the last eight years, I've
been talking to my dad in India about electric cars.
Every second year, we go and test cars out what's
(14:10):
on offer, and every year he has said, no, I'm
not quite ready. He's a consumer who's only ever had
an Indian made car, so he has this old school
thinking that you know, they provide better services, so I'd
really need to wait till I get an Indian electric
car before I buy one, and then foreign cars, even
if I tried to convince him about the service, just
(14:33):
always felt like things were out of his budget. He's like, no,
I'm not buying an expensive car. I'm going to buy
one that I can afford. This year that changed. He
was impressed by the range of cars on offer, including
from Indian companies, and he felt comfortable buying a car
from a foreign company, but with Indian manufacturing. He ended
up buying a Hyundai, and independently, a first cousin of
(14:56):
mine in Mumbai bought a bid MICROCUV. So in between
these two decisions, there is something that is happening. I
say that I think of my dad as a bell
weather for the energy transition, because in twenty nineteen he
got rooftop solar just as the Indian solar boom was beginning,
and now this year he's bought an EV. Maybe the
(15:16):
Indian EV boom is really going to start. Am I
reading too much into what my dad's choices are?
Speaker 2 (15:23):
Maybe? But I actually one of the things I love
about working on these topics is you get to see
them in real life, right, And that's kind of what
makes it both professionally interesting but personally interesting too. I
don't actually think you are. And to come back to
the point you made at the start about the relative economics,
I completely agree. And one of the things we've often
said is that, look, the reason adoption has been slower
(15:45):
in emerging economies to date is because of primarily a
question of price elasticity of demand.
Speaker 1 (15:50):
Right.
Speaker 2 (15:50):
Consumers are very price sensitive and when things cost a premium,
they're not going to buy a lot of them. But
the flip side of that is that same price elasticity
of demand doesn't have to change, but just the equation
completely flips once that becomes the cheapest option, and that
means you go as the fastest buyers, because again you're
price sensitive and you are really seeing that. So again,
(16:12):
if you're sat in the US, this might sound surprising,
but you're getting higher rates of ev adoption in many
emerging economies than you have in the US, than you
have even in some European countries. And the list is
getting longer. So it used to be maybe one or two,
but now you say, okay, actually we've got quite high
rates in Brazil, in Uruguay, in Costa Rica, in big
(16:33):
parts of Southeast Asia, Vietnam, Thailand, Nepal, Ethiopia. These are
not places that are doing this for some sort of
obligation around CO two emissions or some sense of moral
obligation to other countries. Primarily, those factors can play a role,
but they're primarily doing it because it's the lowest cost
(16:54):
economic choice. Now, I think there is a bit of
a pushback from some of these countries if they make
automobiles themselves, to say look, look, and India is a
good example of this, we want more of it made here.
We don't want important technology. But what you're seeing in
places that don't make a lot of vehicles of any
type within the countries, they're saying, look, we're importing this
either way, we may as well import the one that
(17:14):
cleans up local air quality and it's cheaper to buy.
I've said for a long time that, look, if we
wait for electrification to start top down and come from
the wealthiest countries, the wealthiest vehicle buyers in those countries,
and the work, it's way down. This is a very
long transition. This is many decades. But if it comes
bottom up at the same time, which is what you
are starting to see, and again, not just in a
(17:35):
few countries, in many countries and in many different segments,
to wheelers, buses, delivery vans, cars, all those are really
moving in a lot of emerging economies, then the whole
thing goes goes a lot faster. So India is probably
the most interesting one to watch, to be honest, because
the numbers are starting to go up quite quickly. You
do have domestic manufacturing, so the model choice is going
(17:56):
up very fast. It's fascinating to hear your dad sort
of relaying that that stuff that we're reading about and
writing about and gathering data on, it's always neat to
hear it come back as personal experience.
Speaker 1 (18:08):
And he did test a few electric cars coming from China.
So even though India has a tariff one hundred percent
or so tariff, electric cars even after that tariff can
be cheaper. Like my cousin buying a bid because well,
it was just the best car that he tested out,
even though it was just on the budget of what
he was buying and was comparable to other Indian electric cars.
Speaker 2 (18:29):
I actually wrote a piece just a few months ago saying, look,
if you want your EV market to take off, let
the Chinese vehicles in right. And that may be a
questionable statement, and I think there are reasons for different
countries to consider whether that's what they want to do.
But if one of your goals is to catalyze competition,
give consumers a lot of choice, and see evs take off,
(18:52):
then look around the world. Look at the countries that
are going the fastest. The fastest growth rates are all
in countries where Chinese vehicles are part of the mix.
They're forcing competition, they're bringing down costs for consumers. And
sometimes I hear in the US people say no, no,
consumers don't want to buy these, and I sort of say, well,
let's take out that one hundred percent tariff and see
what happens. Let the consumer decide, and I don't think
(19:14):
we'll see that happen. But it's important to note that
that argument of let the consumer decide used to be
an argument against electric vehicles and saying no, if you
really let consumers pick, they won't pick these, And then
now it's an argument for let the consumer decide. Open
it up, see what happens.
Speaker 1 (19:36):
Join us after the break for more of my conversation
with Colin mccracker. And while I've got you, please give
Zero a review on Apple Podcasts and Spotify. It helps
new listeners find the show. Recently, Energy Nerds said I've
listened to clean energy podcasts for years, The Energy Gang, Volts, etc.
This is one of the best key topics, good questions
(19:57):
and important interviewees. Highly recommend ended. Thanks Energy Nerd. I
want to put numbers on how many developing country markets
(20:19):
are playing in the big league for electric cars now.
Nepal seventy percent of all new cars electric, Thailand sixty percent,
Vietnam forty percent. No developing country can quite match your
resident country of Norway, where one hundred percent cars that
are sold are evs. But barring that exception, we are
(20:42):
now at that place where many developing countries have begun
to leap frog develop countries when it comes to new
sales of cars, And it's worth noting these are the
markets that will have growing car markets in general. You know,
even if developed countries start sending more electric cars, their
markets are stable or shrinking in many cases. So this
(21:06):
is happening in emerging markets. It's not a unique story.
What do you think are lessons that you can see
from these markets that show what needs to be done
if even more markets want to adopt electric cars.
Speaker 2 (21:19):
Yeah, one of the things I think to just understand
the causes of that and why that's happening. We talked
about the economics. The other thing that I think is
important to note. If you map every country in the
world and say what are their biggest imports, you will
find two things come up in almost every single country
in the world in terms of value of imports. One
(21:40):
of them is cars and the other one is oil.
So if you're looking at that and you're an emerging
economy and you say, well, look, if I'm going to
import the cars anyway, then I'd rather import less oil.
And so I think one of the lessons from this
is that there are multiple factors that can drive these
(22:00):
things forward, and one of them is around energy security,
and countries may say, look, we have good hydro resources
in the country, and we are going to generate a
lot of power from that, and we don't have oil,
so let's start shifting the fleet, recognizing that it will
take a long time. So I think that sort of
multitude of factors playing a role in this is part
(22:22):
of why we see different emerging economies pushing harder on it.
I think the other thing that we have seen is
that and this kind of goes against my analyst's sensibilities
because I like the idea that if you look at
enough techno economic data you'll be able to predict things.
But I have actually found, having spent a bunch of
time with some of the people who work in the
(22:43):
EV associations in those different emerging economies, that people make
a very big difference to And again, people's a very
hard thing for US analysts to predict. But individual people
going out and organizing the EV association in their country
that then goes and does test drive events, lobbies for things,
pushes hard with legislators, just sort of makes the case
(23:04):
makes them visible makes a huge difference. So I happen
to know the people who worked on that program in
Costa Rica and continue to work on that. That's been
a great success story, and that's really people driven. And
that's a small country, but this stuff matters. So I
think it's worth remembering that economics and technology are not destiny.
(23:25):
They certainly shape the direction we're traveling, but that people
still matter a lot. And again this gets at a
point where we're not very good as analyst at quantifying
that because that's sort of an uncomfortable thing to say, Look,
what effect is people organization going to have? But certainly
I would say it does have an effect, particularly for
things like getting charging infrastructure up the agenda all these
(23:48):
sorts of areas, because eventually you run out of the
early adopters, and you run out of the people who
have detached homes to charge at home at and then
you need some public charging infrastructure. So I would say
those two stick out to me as interesting lessons. One
this idea of we're going to import oil or cars
and let's make a strategic choice on which one it
is and how that changes over time. And then this
(24:10):
other part about people still really mattering in that organization
effort that makes people, the consumers in those countries more
aware of the options that are out there.
Speaker 1 (24:18):
Now, I'm going to put a name on one of
the countries that you were thinking about when you were
answering your question, which is Ethiopia, the country with hydropower,
cheap hydro power, and the country that thinks it's importing
way too much oil, so it's banned the imports of
fossil fuel cars altogether, and that means it's just open
road for Chinese electric cars to sell in Ethiopia. The
(24:40):
other country in Africa that our colleagues and bloom News
have written about is Nigeria, where the country had a
huge shift in the subsidies that it was offering to
gasoline and they were taken off and suddenly there was
a solar boom because all the diesel powered generators had
(25:00):
to go away or become too expensive, and solar took off.
Electric cars are also starting to see a small boom
as a result. Are there other parts of Africa where
we should be looking at the electric car transition?
Speaker 2 (25:16):
I would say in other parts of East Africa, you're
also seeing some pretty interesting stuff on two wheelers and
three wheelers, and Kenya. I think that's an interesting one
to watch too, partially because with the two wheeler market,
the barriers to entry are lower in terms of setting
up manufacturing. So what you're starting to see there is
some homegrown African companies producing two wheeler electric motorbikes for
(25:40):
the electric scooters and three wheelers for the African market,
and so that's always interesting to see as well. There's
some other markets where buses are picking up, but I
think probably yeah, Ethiopia and Nigeria, Kenya, those are the
ones that I'm seeing as kind of the most interesting
right now, and I think the Ethiopia story is fat.
Obviously it's not a huge car market, but it's telling
(26:03):
you something about the competitive economics and also this geopolitics
of dependence as well.
Speaker 1 (26:09):
Now, I want to bring up one sort of future
oriented technology that is not showing up in developing countries yet,
but I wonder what you think about it, which is
autonomous driving. I was able to take a self driven
car in San Francisco. It was a weim and for
the first thirty seconds I was a little freaked out,
(26:30):
creeped out, uncomfortable, and after that I forgot that I
was in a car without a driver. Many of these
companies have invested huge amounts of money, you know, mapping
the roads, making sure that the car knows what it's doing.
You know, driving is a pretty complicated task if you
try and get a robot to do it. But there
is a very good reason for combining electric cars and
(26:52):
autonomy because you get this efficiency combo both in fuels
and in resources, because you're going to have fewer cars
ideally going around more of the time. Do you think
autonomy has any realistic role to play in emerging markets
where the cost of driving is still pretty low and
(27:13):
the roads are much much more complicated, either in infrastructure
or the way people drive.
Speaker 2 (27:20):
My view has been generally it doesn't play a huge
role in emerging economies. I've lived in India for a
number of years as well a shot as you know,
and I just struggle to picture sometimes the street scene
where it would be helpful to have an autonomous car,
right Like, I think in some cases people would just
sort of accept that this thing would have to slow
(27:40):
down if you got in the way, and some streets
that would just be very hard for them to ever
navigate right, and there's just more variety of people and
types of traffic and things on the road. So and
also an economic point, the part of the reason autonomy
is attractive is because it cuts at the cost of
labor of the driver and the asset can be used
or intensely. Some of that works in emerging economies, but
(28:03):
not all of it. So I generally think this one's
probably a wealthy country story for quite a while, and
I include China in that. It is really fascinating to
see the number of trips starting to go up really rapidly.
We had our just more anecdotal evidence. I mean, we
track all the data, but again to sort of bring
it back to what people actually see in experience. We
had our whole Bloomberg NIF team, both three hundred people
(28:24):
together over the summer and I was just giving a presentation.
I pause and say, how many people have been in
an autonomous car? And more than half the people put
their hands up because they've been through San Francisco and
ridden in one, or they're there based in Fisheng or Shanghai,
and so that that's quite a quite a number, right,
And that's gone from zero probably two years ago. And
the last time I was in San Francisco, I took
(28:45):
one in a rain storm, like a full on downpour,
and it handled everything really, really smoothly. So the technology
is getting better. The number of trips are going up exponentially.
You're seeing their first permits approved to pick up at airports.
And again, if you look at shared mobility patterns, airport
pickups is a really big part of uber and lyft
earnings and things like that. So there's a lot of
trips there available. When we look at it, though, in
(29:08):
terms of the global energy mix and the global vehicle mix,
the number of kilometers people do in a year is
in the tens of trillions. In terms of total population
of the world, how many kilometers they travel by car.
It's going to take quite a while to make a
material dent in that, and therefore to make a material
impact on the energy story. Now, most of those will
(29:28):
be electric. Most of those are electric today. Anything where
you have high utilization and the economics of electrification are
very good, low cost per kilometer, high upfront costs, you're
definitely going to want that to be electric to bring
down the running cost. And certainly what we see today
is I think it's ninety percent of all the kilometers
traveled in autonomous vehicles today are electric, So that's happening.
(29:50):
It's not hypothesized anymore that market is electric, but it's
probably more like the twenty forties and or say late
twenty thirties and onwards where it starts to make a
materi serial impact in global transit patterns and global energy
use from transport.
Speaker 1 (30:05):
We've talked about cars mostly because they form a big
part of this transition, but that's not the only place
where the electrification of transport is playing out right.
Speaker 2 (30:14):
No, it's not, and it's kind of the middle of
the transition. So we think about twenty five percent of
cars this year will be electric. That's battery electrics and
plug and hybrids combined. If you go down from there,
like commercial vehicles about ten percent will be electric this year,
Medium and heavy about four percent. So passenger cars are
ahead of those two segments, but they're actually behind the
two leading segments, which is two and three wheeled vehicles,
(30:36):
which is thirty nine percent of global sales this year
will be electric, and buses about forty three percent of
sales of the electric So when you think particularly about
emerging economies think of this sort of combined ecosystem of
different vehicle types. It's not all about passenger cars, but
you're seeing progress, rapid progress on electrification in multiple segments
of once. So it's not just happening in the car
(30:59):
you can picture that you might have in your driveway.
It's happening and how goods are moved. It's happening in
two wheelers, it's happening in buses.
Speaker 1 (31:04):
I could keep talking to you for a long time,
but I do have to draw a line at some place,
and there's one I'm going to draw which is going
to take us outside the developing country conversation back to
the global conversation, which is about the demand for oil
as a result of electrification of transport. I know Bluemaghinia
has tracked these numbers in the past. How are we
(31:25):
doing on displacing oil demand?
Speaker 2 (31:29):
Yeah, we've been tracking this for quite a while. And actually,
what's interesting in the oil displacement story is that early on,
a lot of it was driven by buses and two
and three wheeled vehicles, and just now you're starting to
see passenger cars start to make a material dent. It's
about two million barrels per day being displaced right now
by electric vehicles of all types. Now, that's against over
(31:50):
one hundred million barrels per day of oil demand globally,
and obviously that displacement has been built up over a
decade of selling electric vehicles. But I think what's where
it gets quite interesting is is the markets where you're
seeing higher levels of EVA adoption, because there you are
starting to get significant displacement. Sort of tells you where
you're going, because there's this kind of mechanistic effect between
high share of new sales eventually translates to a share
(32:12):
of the fleet, and that translates to demand displacement for
gasoline and diesel. So places like Norway, you're getting about
three to four percent drop in liquid fuel demand for
road transport every year, and that's just as the fleet
turns over. In China, which has been the biggest driver
of oil demand growth over the last two decades, various groups,
including Sinopack, the largest fuel distributor in the country, has
(32:33):
said they think gasoline demand is either peaking this year
or has already peaked. Diesel demand they see growing for
a little bit longer because of heavy trucks, but you're
actually also starting to see pretty rapid uptake of electric
trucks about sixteen percent right now of electric trucks, or
of truck sales or electric heavy truck sales or electric
much higher for vans, So that's starting to displace as well.
When we add that all together, we at Bloomberg and
(32:57):
EFC road global road oil DEMANDAD fuel demand, which is
a contributor to global oil demand peaking around twenty twenty
ninths within four years. Now, that doesn't mean overall transport
demand peaks. That's just road transport. With shipping and aviation.
You could see that growing for another couple of years.
But then our view is that the sort of weight
of that road fuel part, which is still the biggest
(33:18):
consumer of oil, biggest single consumer of oil in the world,
starts to out weigh both the rising shipping and aviation
part around twenty thirty one, and then you start to
get a peak around there. Now this is a hotly
debated topic, but I would say that you can look
a little bit just at the fleet of vehicles, Like,
the biggest thing driving oil global oil demand is the
fleet of combustion engine vehicles on the road. It is
(33:41):
still growing. Therefore, oil demand is still growing, but it's
not going to grow for much longer because we passed
the peak of sales in twenty seventeen. Takes above ten
years for that to fully float through the fleet, and
then that flows through to gasoline and oil demand. So
I think where people go a bit wrong is thinking
of a peak as the only thing that matters. There's
different shapes to a peak. Are we talking a Hemalaan
(34:03):
peak or an Appalachian peak? Right? Is? Is this a sharp,
rocky matterhorn or is this somewhere an Appalachia which has
been rounded off by millions of years of weathering? And
I think certainly what our data shows is that it's
more of a rounded story. Certainly right now, given what
we see, this will still take a long time, and
(34:24):
unless you see a significant acceleration, there is almost no
chance at this point on the trajectory we're on of
getting to this talk of net zero by twenty fifty,
even in road transport, which is one of the more
optimistic scenario or one of the more areas where there's
sort of more reason for optimism. So in our EVA
outlook this year, we said the net zero by twenty
fifty story is almost out of reach. You would need
(34:46):
to see a significant acceleration, and in cases like the US,
you're not seeing that, you're seeing the opposite. So this
is sort of when you work on electric vehicles, you
have to sort of hold hope and despare in two
and at the same time. Right in some there's a
lot of reasons to be helpful from a technology development
point of view, from an uptake point of view, from
just a better experience in cities and urban air quality.
(35:09):
But if you're looking at it purely from a climate lens,
we're still a long way from being on track, and
we would have to see more action, not less. Depending
on which side of the market you're on. If you're
selling oil, then maybe the hope and despair are reversed.
If you're a fan of trying to cut emissions and
improve urban air quality in cities and offering low cost
(35:29):
vehicles to consumers in the long run, then maybe it
goes hither way.
Speaker 1 (35:33):
It's funny you bring up the Appalachian Mountains because there's
not just nature that has shaped them, but humans do.
A bunch of those mountains have had their tops cutoff
because of coal, and so humans are driving this transition,
and it's been such fun to try and understand where
this transition is in developing countries, because that's a place
(35:53):
that few people look at, but more people should. Thank you, Colin,
Thanks ax Sha. Great to speak to you today, and
thank you for listening to zero. And now for the
sound of the week. That's the sound of lithium metal
(36:15):
in liquid ammonia. Sounds very different when lithium metal is
dropped in water, which would be a big bang. If
you like this episode, please take a moment to rate
and review the show on Apple Podcasts and Spotify. Share
this episode with a friend or with someone who is
as obsessed as I am with car design. This episode
was produced by Oscar boyd Our. Theme music is composed
(36:35):
by Wondering Special thanks to Eleanor Harrison Tengate, Samarsadi Mosses
andim Laura Milan and Sharon chen i'm Akshadrati back soon.
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