00:00 Speaker A
So this year really felt like an important one for the electric vehicle industry, and not necessarily in a good way. In your view, have we seen a really fundamental change in, not only policy support, but also consumer demand for electric vehicles?
00:30 Speaker B
Absolutely. Thanks for having me. In the near future, there is no doubt that the demand environment uh will be challenging. Companies generally expect EV adoption to account for about 5 to 7% of new vehicle sales at least for the very near term. But our message over the next few years is don’t sleep on the US EV market. While the near term is likely to be quite difficult and there is not much visibility over the next few months. There are a number of tailwinds that we still think are out there that provide a more optimistic kind of backdrop over the next few years. Um, so I think we’re still optimistic in the next few years that EV adoption can grow. And to your point, a lot of it will be driven as it has been in the past, really by consumer demand as well as new product.
01:21 Speaker A
Okay, so you have a few reasons to be optimistic. Let’s go through them. Um, what do you see what are the consumer demand indicators that you see that there is still that desire for EVs because we’ve seen hybrids really take off in a different way, in an accelerated way, but that hasn’t necessarily been happening for EVs and we’ve seen automakers pull back on their plans.
01:54 Speaker B
Absolutely. There are three reasons to be more optimistic over the coming years. One is not to forget that the United States is a very dense car market. We have on average about two vehicles per household, higher than any other country. And so the burden of EV adoption is simply that more consumers wake up and conclude uh that you can have the best of both worlds. If one of your vehicles is a combustion or hybrid, and the other is an electric vehicle. If you were to start seeing more consumers make those decisions, and we’re seeing that in certain regions in the US, you could model a very robust decade, you know, a decade or more for US EV sales and still be left with a society that has one EV in the home and then one combustion or hybrid in the home as well. This is a very overlooked tailwind that we may have structurally as a country over the coming years. The second reason is that when you look at EV loyalty, meaning what current EV owners are doing when they’re coming back into the market, they’re still buying EVs at a higher clip than what we’re seeing in other ratio systems including hybrids. And so EV to EV loyalty uh being that high is a sign that we’re not really seeing uh consumer regret or people really turning back uh from their previous EV purchase. Once you buy an EV, it’s pretty sticky. And the third reason is really the product. Uh even though we’ve seen automakers pull back in the near term, uh we’ll see probably even more restructuring actions. Uh there are still a lot of investments in next generation products and we can’t forget that EVs are still innovating at a fairly fast pace where each generation is better and cheaper than the previous one. So think about upcoming vehicles like the R2 Rivian, obviously Tesla Cybercab, uh even Ford, right, making their investment in the mid-size truck uh that will launch in 2027 with a starting price of $30,000 or so, and GM making their investments in batteries and the next product as well. And within this, a final point is autonomy. You know, we’re very bullish on consumer autonomy in the next few years, and autonomy tends to relate well to EVs. And so if autonomy doesn’t win at the consumer level in the next few years and it really kind of picks up, you’re going to see uh potentially a tailwind for EV adoption on the back of that as well.