Course, you know the auto industry.
So you took it apart and put it back together for President Obama and
attorneys, you know, Evans where are we? Isn't as bad as it looks right now,
because at first it was really the cat's meow and now the blue is off the road.
Look, it's so like so many things. You start something new, people get
excited about it. You do get a new often and do a little
bit of irrational exuberance, to borrow Alan Greenspan's famous phrase, and the
world kind of resets. And so that's what's happening.
You had a lot of early adopters, you had a lot of enthusiasm.
And I think as this is settled down, people have taken a step back and taken
a look around. As you know, there's been a much greater
emphasis on hybrids, which are doing really well.
So people haven't given up the idea of an energy transition.
They're just a little worried about EVs, particularly about the range anxiety.
Representative Hayley Stevens of Michigan served with Steve Rattner on
President Obama's auto task force and her district outside Detroit has a lot
at stake in the move to EVs. She acknowledges that there's some
hesitation after an initial spurt, but says it should come as no surprise.
We were never expecting a linear trajectory of growth.
We've certainly seen big numbers coming out 18%, a million easy sold.
Very pleased to see where we are this year, technically over the last year, in
the year before that. But we realize it's it's going to be a
little bit more of a curve than just that straight linear line.
It's not so much that consumers don't want EVs as it is that they want them at
affordable prices. According to J.D.
Power Consumer Research, there are three key factors that consumers look for to
transition to an EV. The first is, is there an EV substitute
that meets their needs? The second is can they afford it?
And then the third is will the infrastructure work for them?
So when we break down those first two and we look at where manufacturers
really have the most impact today, we compare
availability of EVs to ICE and only 43% of the market is covered with a viable
substitute, and that's relative to consumer preferences, consumer
preferences relative to the segments, the brands and the price that they want
to pay. You know, premium segments have more
market coverage at 73%. But now as we're poised to move into
that early majority phase, there's just not enough coverage for for mass market
segments. If part of the problem with EVs are the
prices, why did the big automakers start with the high end of the markets?
Steve Rattner says it was understandable given the history of the industry and
some of the mistakes made in the past. Look, I think part of what went on in
Detroit specifically is the industry have been criticized for decades as
being behind that. It missed, you know, missed SUVs.
It was compact and system. It's that.
And so they really wanted to be ahead of the curve.
And GM going back to its investment in Cruise and so forth, was determined to
be ahead of the curve. I think they also made a determination,
which I'm not sure was wrong, that the early buyers were probably going to be
high end people because they had the income.
They didn't matter as much that the cost to the car was greater.
They had more commitment perhaps to the energy transition aspect of it.
And making an inexpensive EV is tough. It's really tough.
Making anything small and an expensive in Detroit is tough, but it is
especially tough. So I don't think it was it may not have
been absolutely perfectly fine, but you don't get everything 100% right.
There is, of course, a middle course for those in the market for a new car that
is environmentally friendly or at least friendlier, going halfway with a plug in
hybrid, which may provide a gateway to the full EV down the road.
Last year, year over year growth was 50%.
Plug in hybrid, year over year growth was 36%.
But these outsold plug in hybrids 4 to 1.
And the reason is because there are a lot more EVs available than than plug in
hybrids. You know, there's a consumer element to
this question. And then also the manufacturers
manufacturers have to balance their portfolio and meet the emission
requirements. But from a consumer standpoint, we do
collect data from both owners and plug in hybrid owners.
And our ownership data tells us that overall, consumers are very satisfied
with EVs, more so than perhaps in almost every category that we measure, and
especially in that category of the total cost of ownership.
It's much higher satisfaction for Ed's. But that said, he he has a great
introduction to EVs in our. The other shows that 70% of plug in
hybrid owners are very likely to consider stepping up into an EV.
There are people who want to go right into EVs, and as I said, a lot of the
early adopters have and there are others who are committed and believe in climate
change or they just simply want to save money on fuel doesn't matter and they're
going to take the hybrid step. We have hybrids have been around a long
time and they again, they went through their own sort of cycle.
They caught on for a while and then you kind of forgot about them.
And now every carmaker is going to have a hybrid version, I think, of most of
their cars. And I think it's great for people to
have a set of choices. And then there's the question of
charging your new EV when and where and how, and will that high speed charging
station be there when you need it most? The number one barrier to adoption is
available infrastructure and the reliability of infrastructure.
There needs to be more infrastructure and it needs to be more reliability
reliable. Now there we have noted some
improvements during the past year with the implementation of all of the Navy
funds and and really getting that fast charger on some of the interstates that
we've noticed a 5% improvement. One of the issues of some race is the
charging stations, the infrastructure for charging stations.
I mean, you followed I followed what happened with Hertz as they really
wanted EVs in a big way. And then I read the article actually on
Bloomberg that said one of the problems I never thought about, when you go pick
up your electric vehicle at a strange town, you wonder, how am I going to get
charged at my local motel? Where are we on the infrastructure?
And how much of a challenge is that? First of all, I thought that the Hertz
thing was fascinating and the idea that never occurred to anybody that that if
you fly into Omaha, you're going to want to know where to get your car charge and
not know. Well, look, we're way behind.
I think there was something like $7 billion in the infrastructure,
bipartisan infrastructure bill for charging stations.
And at least an article I saw in The Washington Post said that literally
seven have been built seven And so we have a long way to go on the charging
thing because Americans, we have much longer commutes than they do in Europe
and range and range. Anxiety, rightly or wrongly, is very
real in this country. And so we've got to fix we've got to fix
the charging infrastructure as the government, the US government done
enough. You mentioned some of what's been done
and I think most people think that the basic research has done more than has
been done before. Is it enough
by the administration is absolutely done more than has been done before.
There's no question between infrastructure, between certainly the
IRA, which is off the charts success. If you define success as people taking
advantage of the tax incentives and things that are in there, I think we've
done more than enough. Now, look, the one thing that we should
have done in this country still can can do, although highly unlikely, is a huge
tax on gas. I'm a market guy and you want the market
to operate as best you can as opposed to government regulation or mandates.
And if we had a 50 cent tax on gasoline rebated to low end consumers, so they
were kept completely whole, you'd see a hell of a lot faster energy transition.
Of course that so than in Europe. And that's part of why Europe is well
ahead of us. So what about that European model or
China for that matter? We're subsidizing EVs and EV charging
stations, but how much does the regulatory structure in one country
affect the EV demand and adoption in another?
I think it's incredibly important to look at the global regulations and look
at those trends for consumers as well as industry.
It's a bit early to really connect all the dots and understand that if if
regulations and consumer interest in in one market will apply to our market.
But when we do look at data within our country, which is so vast and large, I
mean we we stratos fy consumer sentiment down to the zip code level.
And within the US, as you know, several states have adopted that zero emission
policy in our data shows that in many of these are states that have adopted those
zero emission requirements, we are seeing more adoption as we go into these
policy issues. Obviously, we end up with politics.
You mentioned about the Trump administration putting tariffs on.
And even now, as I look at the Biden administration really pushing EVs, I
don't know how that's playing in my home state of Michigan and Ohio just like
that, because it's generally thought, with rightly or wrongly, that that is
not good for auto workers. Well, so it's also interesting, I saw
this the other day is that if you look at polling data, Republicans basically
say, I'm never going to buy any of it. Democrats say I'm can't wait to buy an
even. So even things like this, that should be
a more a political choice as to what car you buy have become politicized.
The problem with EVs, with Michigan or Ohio, as you well know, is that they
require less labor to put together. And so you get into this tension between
the energy transition, which I'm sure the autoworkers in principle believe
and. And the fact that it could have an
impact on jobs. But look, we have to go through this
energy transition for the sake of the planet.
We have no choice. And therefore, if it has some impact on
auto jobs, we just have to find help these people find other things to do.
Representative Stevens sees the need to make sure the autoworkers in her home
state of Michigan aren't left behind in the move to EVs.
But she also sees new job opportunities as well.
My building trades are very enthusiastic to see new plants being built, being
rehabbed every time I talk to our building trades union.
They are unions, they are busy, they are at max employment and they're working
many long hours. And so that's an exciting piece on the
infrastructure side and the manufacturing side.
We got with the Inflation Reduction Act also in investment dollars to rehabbing
manufacturing shops themselves for this energy transition.
But we can't be naive to how we need to responsibly deal workers in.
But we cannot have an electric vehicle revolution without the workers.
But in the end, the story may come back to government incentives.
How big and for how long? And as much as the Biden administration
has done already, it still may not be enough.
Certainly, we're thrilled that we got the tax credit piece done.
And I think if it was solely up to Democratic lawmakers from Michigan, we
would have done more. And we hear that from those who are in
the intersection between distribution and the dealership world, that more tax
credits might be desirable here. How much of it is up to the government
as we try to get to EVs and how much it really is up to the consumer and the
auto companies providing products that really are affordable that people will
buy? As I said, I'm not a big government
mandate guy. I much prefer the market to work.
I think, as economists would say, there are externalities involved with burning
gasoline. You're damaging the environment and
you're not paying your share of the cost of cleaning it up or the costs of
preventing it in the first place. And so it is appropriate, I think, for
the government to use market oriented mechanisms like taxes or incentives.
And we prefer incentive. Everybody likes incentives better than
taxes. But I think taxes are also important in
order to essentially equilibrate the price and make it fair to all concerned.
