EP18 - Revisiting The EV Inferno: how has the EV market changed, five months on?

Drew Smith: 0:00

For all of the shit that we lay at the door of legacy OEMs for how slowly they've moved into this space. It's impossible to deny the brand equity that they have built up over the course of a century. Um, and,

Joe Simpson: 0:21

infrastructure that goes with it.

Drew Smith: 0:23

and the infrastructure and yes, like we can quibble about How the industry's externalized the costs of delivering customer experience and therefore consumers are left at the whim of dealerships and you know, how crap an experience that can be so on and so forth. But it's a known quantity, right? We, we know it's going to be mediocre at best. Um, but mediocre is, is better than non existent. Hello, and welcome to Looking Out the Podcast, in which we connect the dots across mobility, design, and culture. My name's Drew Smith, and I'm an independent design strategist and storyteller.

Joe Simpson: 1:07

And my name's Joe Simpson. I'm a design strategist at an automotive OEM in Europe whose views I do not and have never represented on this show.

Drew Smith: 1:17

And coming up in episode 18 of Looking Out The Podcast, we're going to be taking a look back at perhaps our most incendiary and therefore in the days of, uh, click hate and clickbait, our most popular episode, which we titled The EV inferno. Now, Joe Out of sheer narcissism? Was it sheer narcissism? Because he had nothing better to do actually took the time to listen back to that episode the other day, which we recorded, uh, close to six months ago to find out whether our views on what's going on in the EV market has changed. In the last couple of weeks, of course, we've seen lots of headlines about the slowdown in markets across the world. We've of course had news around Fisker and HiFi in China and of course the slow moving full self driving car crash that appears to be Tesla at this point in time. So Joe, I would be really interested to know in your learned professional opinion, how have things changed since we recorded the EV Inferno and how is your view of the future sort of updating?

Joe Simpson: 2:34

Yeah, it's a good question. How have things changed? Um I don't know that they've changed that much other than the market has slowed down. I think it's really important that people understand what's happening. If you look at the data and it's not that we have, uh, to kind of bad analogy, slam the car into reverse and are going headlong back into internal combustion engine vehicles. The growth of electric vehicles is still there. Basically people are still buying EVs. It's just that that growth curve has slowed down. So obviously as people buy more and more of something, you get a kind of, you know, as that happens over time, the graph goes up like this. What's happening is that the graphs kind of shallowing out. It's doing that. So it's still growing, but. It's not growing as fast as it was in many markets around the world. Um, what I think really changed is the sort of sentiment and the level of nervousness, negativity, and questioning that's happening. In and around the industry, but particularly in the world of commentary, journalism, and media sentiment. And that's perhaps being led most by the U. S. I think it's the U. S. market that's really leading this, Oh my God, is the EV a busted flush? Is this really an inferno? EVs are dying. That's not going to happen. No one's going to buy them. That's where that's coming from in my view.

Drew Smith: 4:11

And it Well, I'm just picking up on that point of on the U. S. Market. One of the interesting things to note is that in terms of the product that is available in that market, it is still actually relatively limited, right? And we're talking about Premium and, and luxury products that dominate in that market, you know, take, take F 150 Lightning aside. You know, the majority of, of, of EVs on sale in that market are, are, are, are still premium products with premium price tags. And I guess one of the things that's coming up for me is, You know, did, did we all think that, that, that Tesla was representative of the early adopter market? Uh, when, when in actual fact, kind of early adopter and fast follower, you know, have, have bought into these premium products, they're actually buying, certainly in the cases of of Hyundai and Kia, as many as the manufacturers can produce and get into the market. But actually, the reason we're not seeing this push into mainstream is because we still haven't got affordable EVs. And when I say affordable, I mean like sub 30, 000 US dollar EVs in the US market or in the European market.

Joe Simpson: 5:35

Right, right. I think it's important that we, um, disconnect a few things. Uh, and, you know, we talk about like, what's actual, what's kind of causation and what's kind of, what's actually happening. And as you say, there's still a very limited number of vehicles available in the US that are fully EV. If you look at the vehicles that are available, they tend to be larger sUVs and sedans, uh, they tend to be at a price point, I think the average transaction price point was still, I think it was 55, 000 euros, something around that point at a point where if you look at any sort of normal distribution graph of, of car sales, it's a bell curve. And that's right. In the kind of long tail, that price point, because as you say, the top of that bell curve in the U. S. is somewhere just over around 20, 000, we're talking Toyota Corolla type car, and there are not really available mainstream EVs at that price point in the U S right now. Um, so that's one side. The other side is the whole Tesla thing. And this factor that for the EV market, Tesla kind of has been the EV market. Tesla has dominated the EV market. The Tesla Model 3 and Model Y been kind of best selling kind of vehicles around the world. Tesla model Y was the best selling vehicle last year. Um, but. Those vehicles are getting older and they have a CEO that I think you might talk about later in this show is let's say at least a dividing opinion and perhaps not the most popular person in some circles right now. Um, at the same time, you have a legacy auto industry and some brands, and we'll call out Hyundai and Kia here coming with really, Really impressive products. And as you pointed out, look at Hyundai in the U S market right now, they have increased their sales of EVs by a hundred percent, just in the first quarter of 2024, that's largely down to a new product, the IONIQ 6, but they'll do it again because I've got an IONIQ 7 and IONIQ 9 coming and they're refreshing the IONIQ 5. And as you say, Hyundai seems like they can sell pretty much every one they can build. And they're about to build a factory in the U S to sell them, which will make them qualify for more grants and incentives. And they're saying, yeah, we're all in on this. They're saying we're doubling down. We're going to sell more EVs in the U S we believe in this. And they seem to be keen to kind of like capture as much of that market share as they can.

Drew Smith: 8:10

So, so there's a couple of interesting things in what you're saying there. I think, like, let's, let's, let's address kind of the, the, the Tesla issue up front. It was a Reuters article that, um, shared news from inside the organization, um, to say that, uh, Tesla's 25, 000 dollar car, which has been part of Elon's master plan since the mid 2000s, or at least Tesla's master plan since the mid 2000s was being cancelled in preference for a push for RoboTaxi. And

Joe Simpson: 8:45

Yeah.

Drew Smith: 8:46

I just wanted to say, you know, we, one of the other sort of most incendiary shows that we recorded was around the Cybertruck, right? Um, three months ago when, when, when the first Cybertruck delivery started happening and in that show, we talked about the cultural impact of, of that product and, and what it says about sort of the mindset of the organization, or at least the person leading the organization. One of the things that we didn't address, and I think we, we perhaps can start to address now, is that if you look at what Tesla really needed in order to consolidate its position as the American EV maker of choice for the mass market was a 25, 000 car, not a 100, 000 polarizing pickup.

Joe Simpson: 9:37

No. And, I think, Te Elon's come out, subsequently, Franz has been on record saying, This story's bullshit. It's not cancelled. Um, I think, What we can, or what I would say or predict is that if Tesla build a 25, 000 car, um, there was a good reason they were trying to kind of reinvent the production system, two good reasons. One was to get a 25, 000 car and. Given how they've sort of refined and built efficiencies into their whole bill of materials and production system, just with the model three, how to achieve that price point and still make money, one of the major ways to do that was to change the production system. Um, and there's this whole, we can go read about it online about how they're going to change the production system. And that was the kind of the big, the big, the big deal. So they could make literally so many of these cars per hour. Um, so I think that's, you know, that was kind of one reason, but the other thing is, I think if they build a 25, 000 Tesla, they will not be able to build them fast enough. They will be able to sell five or 10 million a year of those. Quite possibly because, and this is what I think is the crux for me of this episode: do you honestly believe if, if we're sat here and commentators saying the EV thing is a busted flush, do we honestly think that if a company like Tesla was to build a car for$20 or$25,000 that a, uh, big, you know, that kind of wad of that bell curve of distribution that I was talking about before of where cars sit in price, where people can afford, the majority of people can afford. Would people not want that because they've now decided they don't want EVs? I don't believe that. There are millions of people out there who would buy that product um, even with all the baggage that sits around Tesla right now. Um, the, the, the big, if then is, if If that were to be canceled, why? Is it because Elon believes his own hubris? And he thinks that he's got this RoboCab idea, which means that people don't actually need to own cars. That's sort of implied or what we've read in the notes that have come from his biographer. Or is it because similarly to what we're talking about with the Apple car, and here's another interesting thing then about EVs is that he's said, he's actually sort of said, I can't squeeze any more out of the system and make enough money on that product for my liking, because I've already got quite a bare thing. Um, I've kind of made all the efficiencies I can. I can take a bit of battery out because people will probably accept less range. It's a bit smaller. So my bill of, you know, metal materials is smaller. Um, I can, I can do a production system that's a bit more efficient and, you know, saves me this much in, you know, sort of money, but I can do a production But actually what you're talking about is trying to take a third out of the cost of a, of a Model 3 or Model Y and that's hard. So I wonder whether this is the really interesting thing that we should talk about, which is, is it for similar, but different reasons to Apple, which is to do with the affordability and the profitability. Um, and that we're just, are we not going to see these mainstream EVs? Until the price of batteries falls. There's something over here called China that's suggesting, you know,

Drew Smith: 13:13

Well, I was just going to say, so, so I was just looking up the price of a BYD Dolphin in Australia. Right. Um, so entry level BYD Dolphin in Australia is$38, 890. Uh, you'll pay

Joe Simpson: 13:30

And what, what's that in euros or dollar

Drew Smith: 13:32

yeah, sorry. Let me just look it up.

Joe Simpson: 13:35

For those of us that live in the, in the Western world.

Drew Smith: 13:38

So that's, um, so that's 24, 000 Us dollars at 38, 000 Australian dollars. So entry level price of 24, 000 and it goes up to 28, 000 Us dollars, right? That is kind of line ball Yaris

Joe Simpson: 14:00

Yeah.

Drew Smith: 14:01

in this country. So. The Chinese are kind of already doing it. And, and, and they're selling outside, bear in mind, they are selling outside of China. So we're talking, you know, selling cars with perhaps an international trade agreement, but certainly not with the much vaunted subsidies and, and market dumping that people talk about happening within, within the Chinese market. BYD is selling a car using established production technology. And presumably selling that in Australia at, at some kind of margin. Now, it might not be 30 points or 40 points or 50 points, but it's already here. So it kind of, to me, that cast an interesting light on the argument that, oh, well, maybe, maybe Tesla's kind of waiting until they can, you know, do this. And maybe they are, but here's the thing. They're losing the steal on the market by, by, by delaying. I

Joe Simpson: 15:08

I, I kind of a wonder in all this and this is to then I think, I think a little bit talk to the, to the Fisker, um, point, how much of this is then affected by share price, um, is Elon's stated aim with Tesla and with his other companies was to the world towards a more sustainable future, more sustainable energy or something like that. I'm badly misquoting, but it was broadly, you know, he's sort of originally said that was his aim. He was like, yeah, the more electric cars, the better, the more batteries out there, solar. Everything. Um, I, I, I'm going to sound very cynical saying this and I don't mean it from the same place that I think some people talk about Tesla's share price, but I do wonder whether there's been calculations done to say actually is adding this car now. And the investment in the factories and the new production system and the ramp that's going to require is that actually what we need for, you know, for our, for our share price and for our shareholders, or is it better to wait because over time, the price of batteries is falling. And you know, over time, things do get worked out and smoothed out. And I don't think you're going to see a Chinese brands in, um, in North America. In the very near future. So maybe he's taking the view that he's got time and that he doesn't need this product right now and if it's actually going to have a potentially negative impact on the share price, cause the margin isn't so high, I'm in the world of wild

Drew Smith: 16:42

He's, he's doing a good enough. He's doing a good enough job impacting the share price himself. I mean, it's down what 30, 35 percent so far this year. I think, I think 40 something percent since around this time last year. And, and, and I don't think. I, I don't think certainly at this point, it's impossible to separate the man from the share price. Uh, when you look at the research that came out of Pew, um, just a couple of weeks ago, you know, the, the shift in the public identity of, of Elon is now starting to impact the perception of the brand in the market. Um, I think if you, here's the interesting thing. It's like, okay, if you, if you look at the fundamentals of the business, um, at the end of the day, it is still a car maker, right? It is still subject, uh, unless you can dramatically change the means of production and source your materials at drastically lower cost. And, and, you know, changing the means of production is something that Cybertruck was meant to presage, um, and, you know, changing the means of production is something that has been meant to underpin the 25, 000. Unless you can do that, you're still fundamentally subject to the same financial mechanics of, of building a car

Joe Simpson: 18:11

Car

Drew Smith: 18:11

everybody else.

Joe Simpson: 18:13

Yeah.

Drew Smith: 18:14

Right. And you know, meme stock, real stock, meme stock, real stock. I mean, this is the question that kind of constantly goes through my head. And when you announce something like RoboTaxi, which will supposedly be full level five capable and on the market, or at least available for demo later this year, Uh, on the 8th of the 8th, which is a really disturbing date and yet, FSD as currently fitted to, You know available product on the market is just not doing the job. You have to wonder like is what is the share price for? But I want to I want to get out of the the realms of sort of speculation and And sort of trying to read the tea leaves on Tesla because there are people that do that far better and far more obsessively than either of us. The thing that's been really interesting about the last couple of months observing this market is there's the resurgence of hybrid, uh, and in particular plug in hybrid and looking at the role of P HEV, um, for North American manufacturers and the fact that they are starting to see an uptick um, in sales of those products and in China, you know, companies like Li Auto have been ticking along on the PHEV front for quite some time. Um, BYD has just announced a new, um, PHEV platform and, you know, we're talking getting ranges of a thousand to two thousand kilometers And there's something I have to admit ever since I went to Coventry and did my master's there. And I had my engineering lecture say to me, like hybrids are the most stupid thing in the world, because it's like taking a perfectly good set of legs and then putting another set of legs on it. And, and, you know, spending far too many early morning cab rides in Toyota Priuses around London. Like, as they, like, they were just horrible, they, they mooed, right, the mooing Prius. And yet, and yet, is this, is this the, the intermediate step that certainly legacy OEMs Might profitably mine while the rest of the market starts to catch up.

Joe Simpson: 20:38

So here's my, here's my take on this. I have had a plug in hybrid and I think I've been very vocal on this show that I've had and got EVs and I think the most interesting thing about a plug in hybrid or my reflection and a lot of people I know have had them have is that after a while you get annoyed when the engine comes on. If you use them properly at least and you charge them you're like damn it I've run out of battery or like oh I accelerated too hard and I kicked the engine in Um, so you,

Drew Smith: 21:12

They sound like very good behavioral nudges, Joe. Like, fuck it, I may as well just buy a proper EV. Like,

Joe Simpson: 21:21

Literally, so they are, they're really a stepping stone technology. And here's my slightly, and you should call me out on this- is this a biased, uh, like legacy industry person view- but, um, I feel that the media portrayal of, oh look and actually everyone's buying hybrids and plugging hybrids instead, that's being painted as a negative thing because no one wants EVs. Most of the people buying a hybrid or a plug in hybrid are not stepping back out of an EV into that. They're coming from a

Drew Smith: 21:55

They're Conquest.

Joe Simpson: 21:56

vehicle, and they're basically electrifying. Yes, a hybrid electric vehicle does not have a plug, But it's got an electric motor. So you're, you're having, you know, you're harvesting energy. You're getting used to that sort of the, certainly the regenerative braking. And then the minute you add a plug in hybrid, you've got a battery. And if you use that properly and we know that, you know, yes, some customers don't, but actually the majority of them do plug in and they do like to plug in when they can, and especially if they've got access to off street parking, then they like to drive an electric as much as they can. And then, yeah, as you say, then your next step is. Well, that was quite nice. It's actually worse when the engine comes on. I don't like paying for fuel and visiting fuel stations. So I'll get a fully electric one next time. So it's a way of bridging people into this. And this is something I think we really need to have an intelligent debate around. There are, there are kind of two things that work here, I believe, with customers. One is pragmatics and one is emotion. And what you've got to I think take into account is that the majority of people still haven't lived with and experienced an electric vehicle of any sort. So it is completely unknown. The 100 odd years of gasoline powered internal combustion vehicles is a known known. We know what to do when the fuel level gets low. We know there are gas stations, maybe not quite on every street corner, but we know, we know how that works. When I speak to people as part of my job and in my previous jobs, it wasn't that people were like, I am dead against this and I think it's a stupid idea. What they were saying was what happens if, or I don't know about that, or what about this scenario? And there's no one really giving them good or concrete answers. So then it's natural It's natural to then say, well, hell, I'm going to spend 60, 000 on this thing. I might not take that massive leap that into the unknown. I might take a, you know, I might dabble a toe in the water and wait. And I think that's what a lot of people are doing right now. It's not them saying, I don't want an electric car ever.

Drew Smith: 24:17

I, I have been banging this drum for years and I'm gonna put it out there. The legacy automotive industry is doing an utterly appalling job of educating customers about what that transition actually looks like in terms of driving the narrative, um, in the market through, you know, advertising and whatever, whatever else. And, and perhaps it's down to the, oh, will we, won't we, are we in, are we out? How's the market going to respond? It's kind of this classic chicken and egg thing. But if, as I think both you and I believe, we are not coming back from this- you know, one, 1. 5 degrees looks like a distant memory in the rear vision mirror. We're going to be lucky if we don't. If we constrain it to 2 at this

Joe Simpson: 25:07

Two.

Drew Smith: 25:08

Which which means that, and you know, we saw, uh, there was a case, um, in the European court of human rights this week in which a group of Swiss women bought a case against Switzerland for not having done enough to protect their health and wellbeing in a time of climate crisis I can only see things. in kind of Western liberal democracies and China, um, kind of going one way, which is we need to, we, we need to accelerate the decarbonization. So what can OEMs be doing to better educate customers on the one hand, and I, and I think here's the other thing. And look, Australia feels very similar to the United States in this, in this sense. How can we better support people in terms of physical infrastructure to make that transition? Now, I was having a conversation. I'm like, I'm going to put it out there. I'm too cheap to buy an EV at the moment. We have a 9, 000 Volkswagen up that uses about 100 kilometres. So like the case for us to even go buy a secondhand EV is, is, is not there at the moment. And yet I went and looked at the original Hyundai Ioniq, the, what do they call it? The air knife?

Joe Simpson: 26:31

that was like, uh, basically a kind of rough copy of a Prius

Drew Smith: 26:35

Yeah, exactly.

Joe Simpson: 26:36

like a hybrid of plug in and a full electric version. Yeah.

Drew Smith: 26:38

Now the plug in hybrid will do between 40 and 60 kilometers on, on electric. Like that would basically electrify 95 percent of the driving that we do in the Up in Australia, because the question that Chris came back to me with was something like we were looking at the, the BYD Dolphin. He said, okay, like how many charges would we need to do to get to Melbourne. You know, we drive to Melbourne occasionally. And I said, probably only one, like maybe, maybe two. And he said, and how can we guarantee that we're going to get a slot at a stall? And I'm like, Oh,

Joe Simpson: 27:22

So what you're, what you're hearing there is exactly the kind of conversations that I have previously had with people in previous lives. It's those kinds of conversations. And, and people are looking for that certainty and they're nervous about the uncertainty, even if that's a kind of 1 percent of the time edge case, because that's when you really rely on the car, you want certainty and where I think we've built our whole imaginaries around the car about, you know, typically the road trip or the moment where it saves you from disaster, or you can help a friend in need or something like that. Um,

Drew Smith: 28:03

where do you think it's all heading?

Joe Simpson: 28:07

um, I think, you know, just to respond to like the, the, the previous point you made. And I, I think that we need to find a way of, as an industry, to help educate. And just explain and allow people to have these experiences and to see how all of this works. Um, We then there's a conversation that sits around that, which we've had many times about how the whole, you know, charging infrastructure thing is still this great big elephant in the room that the industry is kind of broadly externalized and expects to be solved for it. I still think that was predominantly Tesla's killer app and the reason they have been so ahead and, you know, all credit to

Drew Smith: 29:11

if Supercharger got nationalized.

Joe Simpson: 29:15

But then, you know, we, to the, to the last episode, we, we see Porsche have something, we see Mercedes building some, we see a new alliance of, of OEMs building something. So I think we can't be, you know, hypercritical. There's, there's work afoot and there's lots of little small things. Rivian have got their adventure network. So there are things which it's a bit of a patchwork quilt. And I think this is one of the challenges we need to address. A level of standardization, you need one app or one card that'll just work everywhere. And that, that could be something that the industry could do itself a favor to, you know, to work towards. Um,

Drew Smith: 29:52

The Xiaomi SU7 up on, on the screen next to me, um, most, mostly because I was looking at the, at the pre sale statistics. It's a 33 week wait, and in the Chinese market it's 4, 000 cheaper than a Tesla Model 3. Uh, whose sales plunged 32 percent year on year, as an aside. Um, we've talked previously about You know, the challenge, the, the challenge and the opportunity posed by the software design vehicle to actually start to bridge some of these gaps in, in service provision. And, you know, it was fascinating to watch some of the launch, you know, like the early launch reviews of the Xiaomi. To see how completely seamless the integration of Apple products into that car has been made. So Xiaomi is, you know, they make mobile phones, they have a mobile OS, you know, the car has A Xiaomi OS and yet they're not putting up barriers to the use of that vehicle by Apple product. There's this fantastic video that we'll link to in the show notes showing how iPads mounted in the back seat actually seamlessly integrate into the vehicle and, and, and effectively can control the vehicle as well. And if there's anybody that's well placed, and I know we've talked about this before to actually start stitching together that service layer, which historically OEMs have not been particularly good at certainly in markets like the United States. Apple's really well placed to do that

Joe Simpson: 31:39

There you are. So we're back to the, you know, we're back to where we were on the previous show. The end. Good night.

Drew Smith: 31:50

it, with an Apple car. It's already here.

Joe Simpson: 31:56

um, no, I, I think you said sort of where it's going. What I, this is a, I'm gonna, I'm gonna put a slightly tongue in cheek point of view out. I think one of the things that's going to happen is we're going to get, um, you know, a world which is, I think, feels de globalized. I think, I increasingly think China is, and the Chinese brands are, doing a different thing.

Drew Smith: 32:25

Hmm.

Joe Simpson: 32:26

think they are likely to be, uh, stopped one way or another. It either won't work because of brand equity or they will be stopped through tariffing already to the U S and, you know, there's, there's rumors aren't there of it kind of with Europe about, you know, how they can export that product. And I think that'll be really interesting then because we already see. A lot of those brands, we know they're not making money. We know there's a kind of price war going on. Um, they obviously, some of them really get the software defined vehicle in a way that legacy OEMs in the West don't, but it feels like it's kind of, uh, maybe it becomes a, uh, you know, does it become a by China for China thing? I hope not. Cause I actually think they're doing some really amazing stuff, but I think. I don't think that those vehicles at twice the price that they are in China necessarily Are going to work in the sort of higher end of the market At the lower end of the market that's where it's going to get really interesting the whole Byd Dolphin example um, As a second point: What I wonder about then in America and Europe is with the Fisker example. I don't think that's an example of an electric car, an electric car problem. I think that's an example of a

Drew Smith: 33:47

That was just a poorly managed company.

Joe Simpson: 33:49

purely managed, poorly managed company, but what it's

Drew Smith: 33:52

know where their customers money was going.

Joe Simpson: 33:54

I mean, that's just

Drew Smith: 33:56

They didn't have back office systems in place. Like, come on.

Joe Simpson: 34:00

But the, the, the, what it, what it, I think. What I think it has thrown into relief and by relief, I mean, sort of shed light on for many people is, uh, well, if I back the wrong horse and I go with one of these, uh, startup brands, I potentially get gains of better technology, but then if it goes wrong, I am massively exposed. I am literally. On the hook financially, you know, the poor people who paid full price for those Fisker Oceans have now got a product That's probably you know, uh, not worthless, but certainly like they've

Drew Smith: 34:43

Probably sub twenty thousand dollars.

Joe Simpson: 34:45

Yeah, but then the second thing is that if Fisker does go belly up What happens to all the software that you're absolutely reliant on their servers for? Um, you know to for the vehicle just to continue to function and I think You In this kind of in, in the same like breath as, you know, people going like, but will I be able to find a charging stall or what does that mean? What they will then probably do is go, well, I'll go with a BMW or I'll go with a Volkswagen or I'll go with a Ford because you know what? They've been around for 50. The a hundred years and there's a dealership down the road. And even if it goes really bad, I don't think they're going to fold. You know, I, I can, there's someone I can go and shout at, you know, there's somewhere I can take it to get it fixed. And I think these really almost basic building blocks of car and life with car are suddenly being thrown into much sharper relief and are actually Probably going to focus customers minds in the U. S. and Europe. And I think that might play to the legacy OEM's advantages. But I work for one, so maybe I have a biased view. What do you think?

Drew Smith: 36:07

think there's something in that. I think there is something in that. I think, you know, um, for all of the shit that we lay at the door of legacy OEMs for how slowly they've moved into this space. It's impossible to deny the brand equity that they have built up over the course of a century. Um, and,

Joe Simpson: 36:36

infrastructure that goes with it.

Drew Smith: 36:38

and the infrastructure and yes, like we can quibble about How the industry's externalized the costs of delivering customer experience and therefore consumers are left at the whim of dealerships and you know, how crap an experience that can be so on and so forth. But it's a known quantity, right? We, we know it's going to be mediocre at best. Um, but mediocre is, is better than non existent.

Joe Simpson: 37:10

Yeah.

Drew Smith: 37:11

Right?

Joe Simpson: 37:13

Mediocre is better than I come out one day and my car won't open because It's no longer connected to anything. Um, and this is, you know, we've seen this in other areas of mobility when VanMoof went, um, to the wall um, I think it was Cowboy that actually had to step in and take their servers and provide a system to allow, you know, VanMoof owners to still literally unlock and ride their bike.

Drew Smith: 37:43

Yeah, we're already seeing it happen in, in, in the automotive industry with the shut off of the, of the 3G networks, like the, you know, the Nissan, the, the Nissan Leaf, um, famously, uh, I think in the space of the next few months will lose its connectivity. Because Nissan's kind of switching off the 3G modems in the car, so you won't be able to, you know, precondition or check, check the vehicle status of your Leaf. I mean, that opens up a whole other question around the software defined car that I don't think we'll get into in this episode. But I think if I, if I think back, if I sort of just reflect back on, on what we've covered, you know, Horace Dedu in micromobility talks about the, the Cambrian explosion of, of micromobility product and how we're seeing this sort of incredible kind of creativity and product mix coming to bear in that market. It almost feels like, and I think Ed Niedermyer made this point, we're kind of on the cusp of another era of that in the automotive industry as part of the transition to EV, where we're seeing things like PHEVs, plug in hybrids, starting to proliferate as a And I think that's stepping stone, but actually fundamentally the direction of travel is, is forwards into EV and long term will not be a retrenchment from certainly at a, at a, at a global level. I mean, if Trump gets in, in, in December in the United States, that may chill that market for, um, some

Joe Simpson: 39:24

I think it will, yeah, particularly if he removes like the incentives and things that sit there. But that's going to be what a four year sort of, uh, you know, period of time, um, at most.

Drew Smith: 39:38

Can do a lot of damage in four years.

Joe Simpson: 39:40

I know I'm trying to take an optimistic view of this, uh, rather than putting my head in my hands.

Drew Smith: 39:47

Yeah, exactly.

Joe Simpson: 39:49

but yeah, I, I quite, um, and I think, Maybe it's just less black and white than we expected. You asked me, you know, how I, how I felt about it sort of now. And then I would, I'd say like this, which maybe makes me sound stupid, you know, about a year, 18 months ago, I'd been spending some time in China. Um, you know, a while back. And, and one of the things I thought is the strategy that someone like BMW has, where they're going. Well, we're not going all in on EV and we're actually going to make a platform that can do ice hybrid and Bev. And we're going to make a three series and a five series. That's, you know, electric and hybrid and do this kind of thought it was like, Ooh, that was, that was kind of a, That was going to get found out because I was like, you haven't maybe got optimized EVs and the Chinese buyer says you're not serious about EV and they're not buying your EV products. And I would have said, you know, 18 months ago, that's, that's not the right strategy. As I sit here right now, I think it looks really smart because, you know, their products that are selling in China as a, you know, a legacy Western automaker are fundamentally ice anyway. And then they have enough brand equity and they've done a good enough job to make the BEVs fly for the people who want BEVs in Europe, despite those, you know, that's your quality buttons in the 94, 000 Euro 5 series that we've

Drew Smith: 41:16

And the way it looks.

Joe Simpson: 41:18

Yeah. Well, there's that, but you know, I see enough of them here. So obviously, yeah,

Drew Smith: 41:23

Obviously people are looking past that.

Joe Simpson: 41:25

Um, But you know, they're kind of the i4, the ix1, they're good products, they're good, they're good enough BEVs. And then there's a, there's an internal combustion version for those who aren't convinced. And you know, they, you've then got something that potentially pleases everybody. This is where I'm at. It's as much a sentiment thing as, as, as anything else. Um, and we're just, you know, the kind of the takes and the sentiment I feel is, is changing very quickly. But as a sort of potential final question to you, do you see, or do you think. 2024, maybe into 2025, are we going to look back on this and say, ah, it was a, it was a bump in the road. It was a blip on the graph before we continued onwards and upwards, or is it the inflection point where we do go into reverse and everything changes? And, you know, there's, there's going to be a blood on the floor in the automotive industry with people going to the wall and those with the wrong strategies, you know, getting really, really found out because of this and, you know, people adamant they're never having a Bev.

Drew Smith: 42:34

there's a lot, there's a lot to unpick in there and I think it,

Joe Simpson: 42:37

Yeah, there were a few too many things, sorry.

Drew Smith: 42:41

think in large part, as I, as I said before, I think in, in, well, I think it comes down to a question of geography.

Joe Simpson: 42:52

Yeah.

Drew Smith: 42:53

China is not going back.

Joe Simpson: 42:56

Yeah.

Drew Smith: 42:57

No question, right? And, and that therefore means that companies that, uh, sorry, countries that enjoy sort of free trade with China, Australia being one of them, is not going back. You know, we've already, we've already passed kind of 5 percent penetration for EVs in the Australian market, which is kind of widely regarded as a tipping point for, for, for, for, for wider scale EV adoption. And, you know, we'll see. Uh, EV pickups, I think, um, the, the Gly brand is, is readying a, a pickup, um, for the Australian market. BYD is as well. Um, so China is not going back. Companies that trade with China will not go back because they'll have access to high quality product at, at, at prices that, that normal people can afford. Um, Europe, I, I think ideologically is not going backwards. Um, but the industry. If we're kind is on such a back foot in terms of being able to really drive this transition from a, from a technology point of view that it will stumble. It's going to be hard work. And think there will be, I'm imagining it's probably going to be like China was in Eb's like 10 years ago. You know, when I remember I was listening to a podcast from the New York times about how. China, um, may have actually been the thing that set Tesla up for the fall, um, just because, you know, Tesla exported essentially, you know, it's, it's methodology and it's philosophy into China, which they've now learned from at the, at the, the launch of Giga Shanghai. Elon was interviewed about, um, BYD products and whether BYD would ever be considered a threat to Tesla and Elon laughed and basically said, have you, have you seen their cars?

Joe Simpson: 45:07

Uh, he certainly doesn't think that now.

Drew Smith: 45:09

Right. So, so I'll, I'll, I'll link to that, that podcast in the show notes. One of our listeners, Aiden blessed, shared it with me. And it's a, it's a really good listen. Um,

Joe Simpson: 45:18

Yeah.

Drew Smith: 45:20

so, you know, I, I think the European industry is going through the relatively early stages of building high quality, affordable EVs. And I think for OEMs that have deep integration with, with the Chinese, they're going to be able to do that better and faster than like your BMWs and Mercedes of this world. It'll be really interesting to see what kind of compromises Renault has made with the 5EV and the Twingo EV. You know, in order to be able to get those products to market cheaply. Then, I think we come to America. And it's, it's almost like a coin toss at the moment, what will happen, because we know that so much hinges on how the country votes in, in, in, in November. And I think what, what is really interesting about this scenario is, um, After kind of decades, I've, I've grown up in a globalizing world. I was born in 1982, right? And I've only ever known a world in which globalization has been increasing. And I think to the point that you made earlier in the podcast, we may be walking into an environment where the automotive industry becomes less globalized as a result. And you only have to look at the challenges that, you know, um, Companies that, uh, have factories in America, factories in Europe, factories in China, but are owned by Chinese conglomerates. Like the, the, the tariff challenges, like the, the 4D chess that you have to play in order to work out how to get product from one market to the other is just like wild.

Joe Simpson: 47:19

Yeah.

Drew Smith: 47:19

some point you've got to go, is this worth it?

Joe Simpson: 47:23

worth it. And I think, you know, we, we've just to sort of like quickly on, on segue on that, we've praised, we both praise and Ikea quite a lot. Those brands are doing amazingly well in the U S and very well in Europe. They have absolutely fallen off a cliff in China to the point where I think, and I've, I speak to people who predict and that they will pull out of those markets. Um, so that in a way, shows you, you know, that they've got like, they've got really great product, particularly in the EV space. Um, and particularly for the American market, I think it's very well positioned and executed. Doesn't work in China, doesn't

Drew Smith: 48:05

Isn't that interesting?

Joe Simpson: 48:06

So, you know, there you are, there's a kind of like, uh, a kind of, I think of a sort of pertinent example of what you're talking about.

Drew Smith: 48:16

A harbinger of what's to come, perhaps. On that note Oh, go on. Maybe not. Joey, you had something else to say?

Joe Simpson: 48:26

no. I think maybe we can, maybe we can shut up and give the listeners a rest. I was just going to say the one thing we didn't talk about, which is a huge factor in all of this is money and interest rates and the thing that I see a few people talking about, which needs to be held up, which is in all of this. Just new car sales in general, in terms of, we're not, if we don't talk about fleet and we talk about private buyers. The interest rate rise has made everything much more expensive for everybody and there's a lack of consumer confidence in, in, in, you know, many sort of parts of the world. This isn't just a European thing. The U S is doing better, but you know, China has its challenges and It's not just EV sales that have slowed down, it's all new car sales. And I think one of the things in the mix here then comes back to this affordability thing. I was reading just before we came on air. The newly facelifted Golf is now like on sale. From 27, 000 euros. And cars. In general have just got extremely expensive. Inflation has driven up the price of cars such that a typical average family car, new car is now, you know, uh, what people I think might in their head think it is. It's quite a long way from what it actually is. And I think what we're starting to run into with interest rates is actually just a kind of pure affordability problem. So I think it will still come back to this thing, which we're talking about with the Tesla 25 K car, with the kind of needing the Toyota Corollas of this world. I think for a lot of people for the next few years, it's as much as anything purely about affordability. And what people also want is that with that, not just the purchase price affordability, that's important, what the monthly payment is, but that certainty, and I think when there's uncertainty and you're looking at a product, which you think you might keep a three, four, or as leases and things seem to be going out now, six, seven years, where are you going to place your bet into something that you're not sure about that you don't know very well. Or something that you're familiar with and that you have faith in, and that will apply to the technology that will apply to the brand as well. So I think that's some of an explanation as to why we are where we are and are, and where I come back to doesn't mean that people don't want EVs. It just means that maybe this is a more messy, more diverse and slightly slower road in some parts of the world than, than we, uh, sort of expected.

Drew Smith: 51:01

Well, why don't we revisit it in five months? Because it seems, well, six months like we did this time, because it is it, yeah. Like I think taking this step back and sort of looking at the macro view of the dynamics of the industry is really interesting when we start to think through, okay, like what are the implications for for design and marketing and, and, and, and, and that kind of thing. Um, for now, that's it for episode 18 of looking out the podcast. Thank you so much for joining us. It's a pleasure as always. Um, we'd love to do some audience participation for our next show. So if you have a question. Hit us up, let us know. We'd, uh, we'd love to answer it for you or at least try. Um, if you like this podcast, why don't you go ahead and share it with somebody? If you really, really, really like it, why don't you go and leave us a review on Apple podcasts or leave a comment for us on YouTube? We love to read the likes. We're narcissists like that. Looking Out the podcast was written and presented by me, Drew Smith.

Joe Simpson: 52:06

I'm me, Joe Simpson.

Drew Smith: 52:07

This is Drew Smith and thank you so much for listening.

Joe Simpson: 52:13

There we are. Right, just remember to sit up. Okay.

Drew Smith: 52:17

teeth. Tits and teeth.

Joe Simpson: 52:24

Sorry,

Drew Smith: 52:25

And I'll start again.