Prepare to embark on an electrifying journey as Steve Levine and I unravel the multi-faceted world of electric vehicles and renewable energy as we glimpse into the 2023 rear view mirror.
We dissect the implications of the Inflation Reduction Act (IRA) on the industry, drawing a few parallels with past stimulus packages. The discussion extends to the influential works of both Steve and Levi Tillemann, who both wrote chronicles some time ago now on what we see unfolding all around us today.
We navigate the geopolitically charged issue of the US battery supply chain and Chinese involvement... and the potential role of oil and gas companies in the battery and renewables landscape. We also talk about my recent close encounters with Arnold Schwarzenegger and Professor Stan Whittingham, both of whom underscored the importance of relatable dialogue and urgency in tackling this global issue.
Prepare to embark on an electrifying journey as Steve Levine and I unravel the multi-faceted world of electric vehicles and renewable energy as we glimpse into the 2023 rear view mirror.
We dissect the implications of the Inflation Reduction Act (IRA) on the industry, drawing a few parallels with past stimulus packages. The discussion extends to the influential works of both Steve and Levi Tillemann, who both wrote chronicles some time ago now on what we see unfolding all around us today.
We navigate the geopolitically charged issue of the US battery supply chain and Chinese involvement... and the potential role of oil and gas companies in the battery and renewables landscape. We also talk about my recent close encounters with Arnold Schwarzenegger and Professor Stan Whittingham, both of whom underscored the importance of relatable dialogue and urgency in tackling this global issue.
Hello and welcome to the Electric and Eclectic podcast show with Roger Atkins and some truly smart and amazingly interesting guests.
Speaker 2:I would say that, that is, that the IRA is probably the biggest story of the year in the space we're talking about because of its scale. It's the largest industrial deployment of capital in our lifetimes, for sure. Are you sitting comfortably? Then we'll begin.
Speaker 3:This is an annual meetup, isn't it, steve? How are you?
Speaker 2:I'm pretty good. It's a pretty propitious time to chat again. Last year also seemed so, but what a year.
Speaker 3:Oh, what a year indeed, and let's, as we best, give people a flavor and recount some of that. We're not going to be forensic in that discussion, but I think it's always good, yeah, to take stock of the year that's almost been not quite finished and the one that's yet to come, through the lens of electric vehicles and renewable energy in particular. Those two, if you like. What do they call them, steve? Do they call them megatrends? Is that the thing that a lot of people like to call them?
Speaker 2:I think you could do that sure.
Speaker 3:Yeah, yeah, megatrends, things that for a hundred years essentially stayed the same, have been the same and are now at the cusp of being changed radically. Renewables, by moving away from fossil fuels, we hope. Given what's going on at the COP summit at the moment, that's another can of worms, but anyway, yeah, the shift to renewables. And, of course, electric mobility and other forms of mobility that perhaps we haven't seen before. And you know where does that all come together? And I recently by the way, I must apologize your book the Powerhouse. I've got it on Audible to listen to it, but it came out in 2015. Is that correct?
Speaker 3:It did it did. That's right, right. So inside the invention of a battery to save the world. Well, I'm not trying to compete with another book, but this book is particularly good as well the Great Race by my friend, levi Tillerman, and I think what you both do. I kind of know a bit about your book from other sources, to be frank, but I want to listen to it for myself. What you both do is take stock of what that world was in 2015, almost, you know, getting on for 10 years ago and consider what might be to come.
Speaker 3:And again, from what I've heard but I want to hear it for myself you both have come to similar conclusions. You know about geopolitics, about China, about things. Obviously I'm going to discover listening to your book. But so where should we start, steve? How about in America right now, as regards the IRA, the Inflation Reduction Act? It's now being deployed at scale, with significant money going into private enterprise and getting stuff done. What can you tell us about that from your perspective? What have you seen this year, steve, in that regard?
Speaker 2:I would say that that is that the IRA is probably the biggest story of the year in the space we're talking about because of its scale. It's the largest industrial deployment of capital in our lifetimes, for sure. Industrial policy, apart from what China has done. So those two things, and it's all in the execution. So whether it achieves its sought outcome, that's another matter, but the ambition of it makes it the largest story of the year in my view. And it has had an impact already in terms of announced materials plants. So Gigafactory's battery assembly plants were already in motion prior to the IRA and we have had some new ones announced. But the big story is in putting the US on the map in terms of materials. I think some things about the IRA are misunderstood. It's a lot more concrete and finalized in the latest interpretations that we've gotten from the Treasury Department. But we can come to that. But I'd like to hear what you think.
Speaker 3:I've been lucky enough to be on the East Coast and West Coast of the United States this year East Coast by way of Washington DC in the spring and then more recently on the West Coast in Los Angeles, on both occasions with benchmark mineral intelligence, and on that first trip, the spring trip. That was fascinating because of course in Washington DC there's going to be very much a political perspective in many ways, and so it was. We had Joe Manchin come and speak with Simon. He's very intriguing. He is obviously one of the architects on the pivot points around how we're shifting from fossil fuels to batteries and electrification. I know it's a bit more tricky than that and I don't want to get into because I don't know enough about Joe Manchin's particular, if you like, road to Damascus, if we want to put it like that, with renewables.
Speaker 3:But yeah, I got to go pop over to the White House to see a few people for a discussion about something which I probably can't talk about in public, but nonetheless, to get a flavor and a sense of how far and fast America was now going to get going was fascinating. The only caveat I'd say to that stay and I'd love your opinion on this was, as I recall the Obama administration put something like $800 billion into a package of trying to tackle and deal with what was then the banking crisis and what was happening in the auto industry back in those days. So whilst I'm not suggesting $360 billion, $370 billion now isn't insignificant. Would you like to give us a flavor on those two points in time Obama administration $800 billion and now current administration with quite a bit less? Is there anything to take from that?
Speaker 2:Yes, it's conflating two things. So the $800 billion was the total stimulus coming out of the banking crisis. If you count all of the stimulus coming out of COVID, you reach $3 or $4 trillion. That's the number to compare with the $800 billion. And in that $800 billion, $2.4 billion was for the electrification and battery industry. Which is really comparing this $2.4 and $3 or $400 billion.
Speaker 3:Do you know what I love it when someone is a proper greengrocer, as you just clearly revealed yourself as where you can properly measure apples with apples. So yeah, thanks, steve, you put me right, fair and square there. Thanks for that. But yeah, going back to then, what did I feel about the atmosphere in Washington at that time? I thought it was fascinating.
Speaker 3:I did learn that the IRA package is a bit more complicated than at first thought perhaps, but nonetheless, I guess that's inevitable, because what you don't want to do is to have a whole host of loopholes, or whatever description to give them, that people can just work around and then it doesn't actually get a job done.
Speaker 3:And funny enough, only yesterday there was a benchmark webinar online live on, and none other than Professor Stanley Whittingham popped up as one of the members of the audience. There was a very big audience, but he suddenly appeared there saying don't forget to take into account the fact that what this package does, what IRA does reshoring is about, is as much about reducing the carbon footprint of many of these materials that are shifting back and forwards across the earth. And don't just look at it purely through the geopolitical lens, if you like. Look at it as. Look at it holistically, but the first principle of what we're all trying to do with renewable energy and electric vehicles is to tackle climate change, and we do CO2 footprint. So the closer we can do all of that to home, by definition, that's doing a better job. So when you have a chemistry Nobel laureate suggest something to you, you tend to listen and typically, and definitely in this case, he's spot on, isn't he?
Speaker 2:Yeah, yeah, that's right that the that reshoring, bringing the supply chain closer to the end users brings, you know, has all of these qualities that you already mentioned geopolitical and economic for the companies, but also, yes, of course, for the carbon footprint. I'm interested in your, in your take, roger, if I can pivot a bit on the same subject. I listened, I watched the webinar yesterday. There were a couple of how could I miss that? So one thing there are two things that stuck out for me and I'm glad we can talk this through. So my understanding, first of the interpretation, the Treasury Department's interpretation that was released a week or two ago. One of them, like the biggest takeaway for me, was that the White House had left open a couple of narrow pathways, blocked a lot of pathways, but left open a couple of narrow pathways that you could traverse, knowing that the Chinese currently and for many years five years, and you know a picture number of years will heavily dominate the battery supply chain. We're just not going to get on the map in time and we will handicap our automakers and battery makers if there are not pathways. So one of the pathways is licensing. It was very clear in my view, like yesterday's podcast made it sound like it's not clear and there have to be more interpretations. No, it was like. So I spoke to people in the White House and it explicitly leaves open a pathway for licensing Chinese even if they are foreign entities of concern technology in your plant in the United States, as long as you have control over that technology.
Speaker 2:So you're pushing the buttons, you are loading the LFP, let's say, into the machine. You know you're running it and there's no. Basically, you can see what they're after. Right, they don't want a Chinese political leverage over US production by having that hand on it. And two, they would like there to be technology transfer. They would like CATL to show forward, for example, how to make LFP. That was one thing. Second pathway is this you can have partial Chinese ownership of a subsidiary. So a subsidiary based in the United States is not automatically viewed as a foreign entity of concern. They will look at it and see whether it is, if it's 24% ownership or less. That's the first stage. But then they look at okay, who owns that 24%, and so forth. A forensic example. Those are the two pathways. Okay, so I'm going to stop now. What do you think?
Speaker 3:Well, it's intriguing to hear you have that view, yeah, which is not just subtly different from what was being explained yesterday. I mean, it's pretty different and I think what you're suggesting I'm more inclined it's not a question to believe but to like because I think it's pragmatism and it's realism and it's also working on the basis of it's not a zero sum game, it's not an absolute. It's saying if 80% of, if we're going to change this particular arena, if we change 80% of it, that's better than changing none of it. But we might not be able to change 100% of it or we can't. Some of the timelines and some of the technologies and some of the things that are happening aren't all happening at the same time. Their cadence isn't the same. We're trying to do this all concurrently. Case in point, I think, would be graphite processing. Graphite processing is as good as 100% in China. We can't click our fingers and see that happening in the United States. January the 1st next year. There's going to be some overlap. There's going to be some time at which the inevitability is that if you want to make batteries, you're going to be getting your graphite from China. It's as simple as that. And so if what you're articulating there with your sources in the White House.
Speaker 3:Yeah, I'm enjoying your interpretation, or update, more than maybe yesterday, because I did think yesterday well, there's a lot of loose ends. If I'm an OEM, I'm thinking, well, when the blazes are they're actually going to conclude all of this? Because you've got to put a stake in the ground at some point. You've got to have a business plan. People have already planned for 2025, probably already. So what the heck? Okay, that's interesting. Another point in that regard again staying in Washington as it was was hanging out with Bob Gallion. So here's something I really think people might reflect on Do you know Bob Gallion? Have you met him?
Speaker 2:I do. He is an institution and we're very lucky to have him.
Speaker 3:Well, I'm glad you say that, because I'd heard and I'm not going to say from whom that in certain quarters in Washington he's not held in the highest regard because of what he did. Now, what he did is what we've all done over time, is we worked in different parts of the world for different people, primarily to earn a living. And so I think, having been the CTO of CATL during the particular growth spurt, the phase where, with Robin Zheng in particular, they dramatically took the business forward, it seems to me that there are huge lessons to be learned there from an American, an American working with a Chinese entrepreneur, and to see him in a positive light and to use him as a resource, and I'm sure he's ready, willing and able to do just that. You know, I think he's an extremely interesting man and I think the story of that American Chinese, if you like, partnership between those two individuals, robin Zheng and Bob Galleon, we could all learn a bit from that.
Speaker 3:Quite frankly and that is a nice segue, truly is a segue might not seem it into Mujeeb Ijaz, because I reference Mujeeb of our next energy one to Bob and he really believes that Mujeeb is going to be a significant player in the United States with battery development, and I know there have been recent events which you've covered. I know I've seen some of your coverage, so do you want to talk a little bit about that, because I had the chance to pop in on Mujeeb and our next energy in Detroit just before I went to DC. Do you want to give everybody a flavor, then, of how you see our next energy and maybe recent maneuvers, if you like, in that company?
Speaker 2:Yeah, yeah, it's. I'm glad you brought that up. So, for those who aren't familiar with Mujeeb and our next energy, it's a next generation battery company in Michigan. Mujeeb is a former Apple executive. He headed Apple's secret EV program for five years. He was an executive executive working on EVs and fuel cell cars at Ford for 15 years and he also was CTO at A123, which, of course, you are familiar with, and he was in exactly the days that you were familiar with them. He was there when you were gallivanting around A123.
Speaker 2:And he is in a very uncertain world where we don't know who's going to win and who isn't going to survive Our next energy. I have, you and others and I think you too have viewed our next energy as one of the likeliest to succeed. What happened over the last three weeks was that there's a stunning shift and what he was raising a series C round. I don't know how much, but it was in the range of $300 million somewhere there. The lead investor in that round, just Climate, which is a UK firm, had given a term sheet for $100 million and was leading that round and did some due diligence. Due diligence turned up a few things that they said needed to be addressed at the company. They, in addition, wanted a down round. So in his B series the valuation was $1.2 billion. We're in a different world now. Right, we're in higher interest rates and there's more uncertainty. We don't know what the EV world is going to bring and when it will bring that. So they wanted a down round and he was not prepared to accept a down round, as I understood, and I reported that they pulled out, just Climate pulled out, so they lost that money. This put our next energy in a cash crunch Around. Two weeks ago, the company laid off between 25 and 40% of their staff and this week Mujib himself was replaced as CEO, so he is now CTO and the chairman, paul Humphries, becomes CEO and a new chairman is named.
Speaker 2:So what I understand happened there and it's something you can understand and we can all understand, especially if we know the history, and that's one of the histories I told in my book. You're a little bit the powerhouse is a book of. It looks forward a bit, but it's really history. It's the history of the NMC battery. I spent years with the team that invented NMC, but there's a story in there of people getting over their skis when you're an entrepreneur and you're an entrepreneur in a business that says hard as batteries are, it's not semiconductors. This is much harder than semiconductors. You get people who are even more aspirational and they can end up drinking their own Kool-Aid, and so what happened here is I'll bring it to a close here and that's Mujib thought he was Steve Jobs, basically.
Speaker 2:So he wanted to be Steve Jobs, or he thought he was Steve Jobs, and he spent like Steve Jobs. So he spent far too much money. He was trying to do too much instead of focusing on just his EV battery and his grid battery and getting that done. He had all kinds of other pots of money that he was putting things in, probably all of them worthy, but when you're a startup, you got to be more disciplined. You spent all that money, the C round didn't come in and then you're stuck. You didn't have a fallback position and that's basically it. There needs to be more money, more money, disciplined, more focus on product Mujib. I spoke to Mujib and Paul Humphries on Sunday and he understand this. I understood that what I have just told you. Mujib feels humbled by what's happened. He knows that there are things he should have done and he didn't do and feels that Paul is the right guy. Paul Humphries is the right guy who can set things right.
Speaker 3:Well, it's good to hear the positive outcome from that. And can I just qualify and check? I mean, steve, you've been around a long time, you know how these work, but I'm still a trainee could've journalist. Is everything you describe there in the public domain, plus your own opinion from accounts? There's nothing in there that we couldn't or shouldn't be talking about explicitly. Can I just check that?
Speaker 2:Yeah, that's all. If you read my story on Sunday then you'll read Okay, good, I added in a little bit, like the part where I'm talking about Steve Jobs. You know that's my yeah, that's opinion.
Speaker 3:You're in talks to opinion? Yeah, absolutely Well, thank you for that update. I didn't know much of that. I hadn't read your piece. I should have done clearly before we've spoken.
Speaker 3:But you know, I'll be totally frank. When I met Mojib, I was bowled over by him. I really liked who he is, you know what he's done and, as you say, a-1, 2, 3, I kind of followed his story through. I asked him three times about what did he actually do at Apple and three times he didn't tell me anything. So, and I met a few people who've been special projects at Apple However they do it, I don't know, but no one ever talks about it.
Speaker 3:But what I came away from that encounter with Mojib and his team was someone just incredibly interesting, someone very focused. You know the classic three things vision, mission, purpose. Absolutely, the guy has that. But I think, yeah, you're right in the arena of being captain on the bridge, you know setting the speed, setting the course, being in charge of everything that goes on. You only need to get a little something, a little wrong and it can very quickly, especially on a big ship, cause you with, you know, huge problems. You can smash into the dock or bash into another boat. So I think and I'm not going to be explicit in any more detail on this cause, I only know a certain amount, but I think as CTO he is in absolutely the right place at that company, cause I do think what they're doing having blended battery chemistry is having hybrid battery propositions, the focus they've got on some novel chemistry capability it's all going in the right direction. So I think, inherently it's a very impressive business.
Speaker 3:But yeah, events, dear boy, circumstance, economics, the economy, it's always the thing that bites you on the bum, isn't it? And clearly that's what happened here. Let me go to the West Coast then. So I didn't have a personal encounter, unfortunately I'd like to have had with Arnold Schwarzenegger.
Speaker 3:He was guest of honor, together with Stan Whittingham, at the benchmark event, benchmark gathering in Los Angeles, and he came and spoke about we should focus more on pollution, which is where his story kind of began as government of California, the whole focus that CARB had right in the early days when they started looking at tackling the smog issue in Los Angeles, and the narrative then was very much about clean air, the Clean Air Act.
Speaker 3:It was about that whole focus and Arnold's sense was that we are too nebulous now in the storytelling, in the narrative of tackling climate change, and one and a half or two degrees, or whatever number we pick, and it doesn't resonate with enough people. It doesn't resonate with the general public, but pollution does and I was quite taken by that. When he spoke on stage with Simon and Ty Dinwitty about this, he was very passionate about it and very, very forceful in the fact that you know, whether it's in America, whether it's in wherever in the world, if you help people understand that clean air or the equality of air, when it's bad it just kills people and makes you know a lot of huge cost to the economy, huge cost in terms of health, huge human cost, of course. But do you think he's right? Do you think we've become, we've split this twin imperative of clean air and CO2 much together more? What's your sense of the state of America's understanding in the public domain right now?
Speaker 2:Yeah, yeah. So this is the first I'm hearing that that's what Schwarzenegger is. That's his take on things. It rings true to me, you know. I do know for a fact that the climate change debate is. It is an abstract thing in the United States, and you would think that it wouldn't be, given the events of the last two or three years, with massive forest fires and floods and hurricanes, mudslides, I mean all kinds of events, and we, of course, were aware of the gigantic fires in Canada as well, but they just haven't. They have not. There's a large part of the population that does not connect the weather events with climate change and with human cost. Right, because this is also raised by those who want to parse things and not have the politics change, the politics of fossil fuels and so on. And so I do think that, one way of well for sure, the dialogue has to change, right, the conversation has to change to bring this home. Perhaps that's the way to do it, with a focus on pollution.
Speaker 3:Yeah, it really stopped me in my tracks almost Whilst I can recall, when I joined Modec all those years ago in 2007, the little UK startup making an electric truck we very much focused on the twin imperatives. It was very much about air quality and CO2 reduction. But those two imperatives diverged very much. The dominant one, which gets all the press, all the talk, is always CO2. Yeah, I think Arnie has a point.
Speaker 3:He's a very smart man. That's the other thing about him. I'm not American. I haven't lived in America. I certainly wasn't in California all the while he was a governor.
Speaker 3:Of course I know what he did. I've read books and seen things about what he did, but his intellect struck me as being pretty impressive. I know he's an older guy now. He wouldn't necessarily say he's absolutely in his prime, but you can see why he became governor. He listens, he takes stock of detailed briefing. Clearly he knows his stuff around the technology pretty well. His character and personality and the way he comes across. He's all of those things together Movie star, ex-governor, leader, bodybuilder. He's like all of it combined into something quite unique.
Speaker 3:Oh, and I've got to tell you what he said at the beginning because I thought it was so funny. So he gets awarded an accolade from Simon and the team in terms of lifetime achievement. And he said and I won't do an Arnie impression, I'm tempted to, but it won't go down. It won't go down. So he says I've won awards for bodybuilding, I've won awards for things that I've done in my governorship. I've won awards for some of my movies. I've won awards for many, many things. But Simon, this award, this award is the latest. I just yeah, he can deliver a line. Of course he can.
Speaker 3:He's a movie star, but I think, the way to an engaged audience. And again going back to how do we deliver this narrative to help people go on the journey of change, I think it's very important to use humour I do and I really think it's very important to not dumb things down but not preach to people using acronyms and a whole host of technical things, assuming people have all got chemistry degrees or whatever, Because they haven't. I mean, I definitely haven't.
Speaker 2:So you know, yeah, the one thing I wonder is so Schwarzenegger is a Republican. His message resonates with the already converted, with Democrats. And the Republican Party has changed right, it's not his Democratic Party anymore, it's Donald Trump's, it's Trumpism. And Schwarzenegger is not Trumpist, right, he's a Reagan-style Republican. They reject Reagan, and so his message can resonate. But, like, I wonder whether but that's who you want to convert, that's who has to be converted, and is he the right messenger for them?
Speaker 3:Well, that's a good point. And look, he's never going to be president because he's born in Austria, of course, but I do think on the world stage he has a place still, and I think in Europe he would be very good at doing what he does. We've got the Geneva Motor Show coming up at the end of February, which has been around a long time. It is an institution, some people would call it the establishment, but I think you know I'm going to be working with some of the team there, to be honest, steve. So I declare vested interest in suggesting it's a great event. It is all my automotive career. The Geneva Motor Show has been the accolade event. I'm sorry to be partisan because I'm here in Europe, but it has. And I mean maybe to have somebody like Arnie at that event I think would be pretty useful. To be honest with you.
Speaker 2:Yeah, if you do that and you see him, would you tell him he probably knows this. But if he could find someone, bring someone from that Trump aside right to be his partner delivering this message, that would be very useful.
Speaker 3:Right, that sounds like wise counsel, steve Levine. So thank you. Thank you very much for that. Let me come on to an encounter then, if I may, with, and then we'll get into some of the general sort of things. I'm sorry this is being a bit self-indulgent, is that all right? Just for one more time.
Speaker 2:Good yeah.
Speaker 3:OK, I literally had a fireside chat with Professor Stan Whittingham. We found the only fire that was burning in the hotel because, believe it or not, we're in Southern California and it was cold and wet. So there is a fireside. We sat next to it and had a chat. So it was absolutely a fireside chat Only a brief one, sort of 15 minutes.
Speaker 3:But the striking thing he spoke about well, we spoke about together was that his journey began at ExxonMobil and, as I think most people watching listening to this will know, exxonmobil looked at the potential for the oil and gas industry impacting on climate change and climate change itself, and concluded that there was a big issue, that this chemistry experiment, if you like, that's happening with how the world works was a cause of concern. But it, then, is also the place where the founder, one of the founders, one of the inventors of the modern Lithium ion battery, professor Stanley Whittingham, started his work. His work was started because it was paid for and sponsored by, because he worked for the ExxonMobil. The curious thing and I'd love to know your thoughts on this that he kind of came round to perhaps suggesting alluding to I don't want to put words in his mouth was that maybe the people that are actually going to catapult this whole revolution faster forward.
Speaker 3:Ironically, ironies of all ironies could well be the oil and gas industry. Could well be people like ExxonMobil who, with past endeavour and reputation, people would put their hands over their eyes at that thought. But given now they're investing in the supply chain for batteries recent announcements, as I'm sure you know what do you think of that? I mean, is that like a pie in the sky notion, the oil and gas industry becoming the players in the renewable engine, electric vehicle arena, battery arena? Do you see that, steve?
Speaker 2:But did he spell out okay, yes, exxonmobil is investing in Lithium. Did he spell out any other like? Is he talking about battery? What's he talking about exactly?
Speaker 3:Well, again, I don't want to put words in his mouth. He spoke at length in detail on stage with Simon and he alluded to it. Again, I need to be careful here because I don't want to misquote someone very significant, but in the discussion we had I kind of put it to him do you think this is a potential? And I hope I don't have connected this with some other discussion, but the thought was who's got the money? Who's got the money and the power to really make these investments?
Speaker 3:Look at the market capitalisation of Aramco, of ExxonMobil. Exxonmobil what? 400, 500 billion Aramco, over a trillion. If you compare and contrast that with the market cap of somebody like, say, albemarle, the biggest Lithium producer in the world, it's nothing like that, you know. It's insignificant.
Speaker 3:So if we're going to go on a kind of multiple of 10 times journey in terms of take Lithium, so a million tons of Lithium this year produced to create the market we've got for both renewables and electric vehicles, for batteries full stop. If, as I've heard it said, between now and 2030, we potentially take that up to 10 million, a 10x multiple, where does the money come from to do that? You know who's going to put that money in Because we're seeing some of the challenges in the typical financial arena financial markets with a little bit of edginess and nervousness on that and governments being a bit reticent, certainly in the west, to do that. So I don't know. So I haven't really answered your question, but I really don't want to misquote Stan. So I suppose, just as a principle, do you think we could see a huge surprise, despite everything everybody thinks about the oil and gas industry, that they become very key players?
Speaker 2:Yeah, yeah, well, just going piece by piece. So, yes, you could see, let's just talk about Exxon, right, because Exxon and Chevron both have tons of cash. You could see them. Their evaluations are depressed in lithium companies. You could see them, one or more of them, swooping in and picking up a bunch of these companies, the biggest companies, abel Morrow you mentioned, right, we could look it up, but I don't want to. But you're right, whatever it is, its capitalization is minuscule compared with Exxon. It could be picked up Penny's on the dollar, really. Some of these companies, so that you could see, and they are, they're chemical companies, right? So while other oil companies divested their vertical integration, exxon did not. Exxon is a superb chemical company. So that's what? Lithium is a chemical process. It's not. I mean, it's mining, but it's chemistry. So yeah, but when we're talking about going beyond that, like, does it make batteries? I mean, does it buy sealant, nanotechnologies, does it buy quantum scape or someone else? I don't know, I have my doubts about that.
Speaker 2:I do want to add, as sort of broadening this out, that the narrative of the end of the fossil fuel age and calling a sort of a deadline for peak, I think, the end of the fossil fuel age.
Speaker 2:That's a next century story. That doesn't happen in this century. Some of the best forecasts I see right now are burning a little over 100 million barrels of oil per day. Taking everything into consideration and the forecast, I see, even with the peak forecasts of EV uptake by consumers, that in 2075, the world is still burning 80 million 80 million barrels of oil a day, only 20% less. So really I think that that looks like it's correct, and so what the world needs to focus on is scaling up these capabilities, like EV capabilities, the best batteries and all of that. But it's really a false narrative that the fossil fuel and the combustion, the long tail is going to be much longer. And this is the history of technologies, old technologies. When you go back into the beginning of the industrial age, the technologies that coal displaced hung around for a long time. That's what's going to happen. Yeah, so passing the baton to you.
Speaker 3:You're not the first person this year, as we're talking about this year, to say that I was in Berlin on stage with a few people Nico Rosberg, marte Rimmatz and others. And Marte Rimmatz, who's what? 34, 33, so a young man, young entrepreneur, fully focused on electric vehicles, all of that technology. Absolutely he is. He basically made this point, the point you just made the long tail, if you like, for what it is, that it's not a zero sum game and, in a sense, trying to make it that way is trying to push a square peg in a round hole. It means that you don't make anything happen. You're just jamming something up against something that doesn't work, rather than considering having a managed transition whereby you look at, you break it down, you say we're doing it now Fine, that's good, but doing it now in bits, in pieces, in stages, and you look at the places where, a bit like often, you see the Pareto Law. So, as a, for instance, I think I'm right in saying perhaps in your book you know this, but that the Chinese concluded a decade and more ago that there was a Pareto Law in terms of air quality 20% of the vehicles caused 80% of the pollution. What were those 20% of vehicles, buses, taxes, vans, trucks. So in terms of decarbonizing, in terms of improving air quality, perhaps we need to accelerate much faster and target that sector, the commercial vehicle sector, over and above the car sector, and maybe the maturity and the business case and many other aspects of it are much more credible and a bit like, yeah, not jamming that square peg in the round hole, calibrating it, having that managed transition makes more sense. But your notion there of it taking a lot longer. You're not the only person I've heard say that and you're not part of the, as some people call it, evil empire. Because when, if you were saying that as an auto exec, steve, people would say well, he would say that, wouldn't he? He's just trying to maintain the status quo, he's thinking of his pension, he's thinking of whatever, but you're not, you're a commentator, you're a professional journalist, you're an observer. So when people like you say that, who are independent, then I think it is much more credible. But yeah, I've heard that story said a lot this year, so that's intriguing.
Speaker 3:We have to mention, of course we do, and whether these things all join up with the fossil fuel industry, dominated, of course, by the Middle East, and so on and so forth, events that have occurred in the Middle East and continue to do so. Of course, they've had a huge impact on many aspects of things. I don't think for you and I it's something we can delve into in any way and be helpful to anybody in our thoughts and opinions. I will always share my thought and opinion personally with people one to one. I guess you'd be the same, but I think, in terms of thinking about 2023, we can't just not even mention it. So there we are. What else haven't we talked about? We should have Steve before we go for some form of wrap up in this chat.
Speaker 2:Yeah, I think a couple things. One thing we have to mention is that it's unclear. The transition, the pace at which it occurs, is less clear at the end of the year than we were when we spoke at this time last year, or what we foresee. We have to ask ourselves the question well, how does this happen? If you're not Tesla and you're not BYD, if you're the other guys, how does this unfold? We're just announced yesterday that it's halving the number of F-150 lightenings that it's going to make.
Speaker 2:The major automakers thought that they were in the movie the field of dreams and that if they made EVs, people would buy them. That's a false narrative. That's a romantic. Very nice. It isn't how it happened. People want again. They want Teslas, they want the BYD automobiles. They're buying everyone else's in small numbers. So what happens next? How does it really unfold? I don't know if we can answer that, but that's something.
Speaker 2:The other thing I wanted to bring up, roger, is that last year you asked for forecast. What do you forecast? I forecast that Apple would buy. Somebody would buy some EV company. That's how it would get into the business. I was wrong. It didn't. I still think that's a good play, right? I mean, when Apple came out with the iPhone in 2007, it wasn't the first company to have a smartphone. Smartphones had been out for 15 years. It was the one that right. So here, amid the rubble, amid the fire sales, apple could come out. Maybe it still can come out and say well, ok, all you guys screwed up, except for Tesla and BYD. Well, now we're going to hear Look at what we've come up with.
Speaker 3:You've got a great memory for lots of things, steve. I don't think mine is quite so good. So maybe I'm going to repeat a prediction then that I made last year that I forgot I wouldn't be surprised if Toyota bought Panasonic. If you want to be in the business of electric vehicles despite the yo-yoing that we seem to hear from Toyota if you truly wanted to really bind yourself, catching up, if you had a company like Panasonic, if you owned it, if you just bought it outright, you've instantly got the supply chain, you've got the technology, you've got all the right things in an instant, and so that's an outside wager. It's not in any way, shape or form any financial advice, because you and neither of us are licensed, capable or should in any way be interpreted as giving any financial advice. But yeah, I could see Toyota buying Panasonic. But coming back to your earlier point about the cadence in different markets, so for argument's sake we say Asia, europe and America. Asia's going like a train. Listen to this. This is the details from November. My friend Li Jing, who's co-host of China EVs and more podcast interesting guy is on LinkedIn, by the way. Worth following. He wrote this yesterday.
Speaker 3:Cam just announced November China NEV sales, including export numbers November 1.026 million up 30%. Share of auto sales 34%. Year to day 8.304 million up 36%. Share of auto sales 30%. Monthly NEV sales top 1 million units for the first time ever, he says. As expected, we're also going to have ourselves our first 3 million unit quarter, as December we'd be well above 1 million units. The split between BEVs and PEVs, important to note, is roughly 70.30. So year to day NEV export reached 1.091 million. Roughly 100,000 units a month. That's the pace with BEVs topping 1 million units. So China therefore, china's NEV sales will top 9.3 million units in 2023.
Speaker 3:So what we're seeing in China is a feeble atmosphere, oversupply, so many of the opposite challenges and problems we've got in the rest of the world and that is triggering this kind of almost like a wow, it's like a bun fight for EV sales. How profitable those companies are. Well, that's another matter there, not the figures he's sharing, but compare and contrast that with Europe or America. So America recently announced a million, I think, pure electric sales. So we have to be careful with the apples with apples thing again. But there's America saying, look, here's a million in a year. There's China saying here's a million in a month. Give or take a few hundred thousand. And meanwhile, here in Europe we're now seeing an imported China vehicles arriving in great numbers.
Speaker 3:We're seeing belatedly the European Union saying, well, hang on a second, we need to investigate this, we're not going to just let this happen. We're seeing some of the OEMs, particularly German ones, not showing their electric vehicles anymore at events that they're not doing. Geneva A few events I've been to has just been Chinese vehicles. That was in the beginning of the year in Sweden, an electric vehicle event. I can't recall seeing any German vehicles there. They were all mostly Chinese, 60% Chinese.
Speaker 3:So we're in this very strange place where there is an electric vehicle revolution happening fast in Asia let's not forget South Korea and Japan Absolutely not and Vietnam, but then Europe and America seem to be in this almost like rabbits in the headlights, and that's how it seems to me. So as to what's going to happen this year, the drawbridge is being pulled up in Europe. The French, for example, have a criteria where you can't get any support for your electric vehicle purchase if it's content or if it's not on a list of approved vehicles which is related to carbon content, including transportation of stuff back and forth. So yeah, it's all to play for in 2024.
Speaker 3:It's going to be fascinating, but there's no doubt to my mind that the China market is going to continue getting stronger and stronger, and stronger, and of course, that means they have the economy of scale. That's why they can make these things. They own the supply chain, they have vertical integration. They sell at scale. That's why they can sell at the prices that they do, which, incidentally, are a lot cheaper in China than when they export them, and so it's a kind of almost like. This is I hate the phrase, but it's the perfect storm. It's like all of this is not good news for absolutely Europe, but maybe later on, the United States. Am I painting the wrong picture here?
Speaker 2:Steve, no, no, I think you're not. I think you're not that we are looking at a we're very Western-centric when we're analyzing. Really, the whole analysis that we've given this whole conversation has been based on the West, and you very rightly raise hey, but what about China? And we do. It's totally wrong to ignore China's the biggest player. It is the most advanced player. It has everything that you just said right, all from soup to nuts. It's the biggest, the most advanced, the most scaled up, the most efficient. A real danger of pulling up the drawbridge. And we, of course, in the United States, are doing the same thing. We have a 27% tariff on Chinese goods. We're trying to keep. This protects American automakers and battery makers working here from having to compete, from having to make batteries, cathodes, anodes that are as good or better let's just say better, better than the Chinese. We set up a potential fatal outcome where we have an inferior industry.
Speaker 3:Well, that's not the note I wanted to end on, to be frank, steve, but I apologize. No, no, don't apologize, because I think your point that you opened up with is we've got to be realistic. We can't be US or Europe centric, we've got to be global. In this perspective, it is a global auto industry and that whole vision way back of Wang Gang in taking China forward by leapfrogging the West is exactly where we now see, if you like, the banquet of consequences of that initiative, of that move there.
Speaker 3:He was an Audi executive all those years ago back in I think it was 1991, he was an Audi and then from there going back to China and saying I have a plan. We can't catch up, we can't keep iterating the internal combustion engine, but what we can do is leapfrog Europe and America with electric technology. We can learn also from the Japanese, particularly the Japanese, and what they've done with batteries and power electronics and consumer electronics, et cetera. And, yeah, put together a plan and then that plan has been executed on over a dozen years or more. So for Europe and America, try and catch up in an instant by clicking our fingers or having a few policies, rather than having an industrial strategy long term which evolves over years, is a little bit kind of a fanciful notion.
Speaker 3:So here's what I think, just to finish, I think we have no choice but to collaborate and work with the Chinese, rather than just actively compete and just put up walls I think, to almost become John Lennon-ish. We need bridges, not walls. That's what we need now, otherwise I think we're going to have some very big issues. Please have the last word, steve, because I don't want to finish on that.
Speaker 2:Yeah, no, no. I feel the same way. I think that it's very important that everyone understands this is a game that isn't going to be one in one inning, it's a one quarter. I want to make sure that I'm dealing with the right metaphors. That include sports from all across the world, and it's a full game. And there is this issue was raised by you guys yesterday in the benchmark call, and that's that we do. There is the risk in our elections next year that all of this whole inflation reduction act, the whole program, gets put on ice depending how that election goes, and that would be the wrong thing to do. It's what you said play a long game and the IRA is a long game. It's funded through 2032.
Speaker 2:And the Chinese, even though they began and Wang Gong is someone who I'm quite familiar with he starts in the first chapter of that book that you've got there, of my book, and I met him to write that book and that's 2009. He starts 2009. Here we are, 14 years later. The Chinese just renewed their subsidies for EVs. They're tripling down on the game. They're not sitting on their laurels and so we have to. Also, I love what you've said about you know you have to. You know, the game happens with both teams on the field. You can't and you're not in the same game, super smart. So you know, I wonder if we're going. You know what we're going to see, what happens when we meet again next December. But what you've just said, that has to be part of the strategy.
Speaker 3:Yeah, and I think it will come. I think when you saw Xi Jinping and your president get together in California a month or so ago and, okay, this stuff ebbs and flows but I felt there was some cause for hope there and I think that if we can see more of that collaborative spirit, but also recognizing yeah, everybody is always at a point of trying to of course they should be look after their own country and, fundamentally, societies have always been about the same thing that the acquisition, the pursuit of resources in order to look after your community, your brethren, and you know we see the downsides of that often, sometimes pretty brutally so, but nonetheless, to live in a civilized society, which we kind of we do we just need to see more of that. And there are other things that you know. I don't want to go off on wild tangents, but personally, here's just a final, sorry final final thought.
Speaker 3:I think there was a moment in time when Deng Chaoping mapped out what he could see as the modern China, the new China, and created this thing called. You know, whatever you want to call it, but I'd call it hybrid of communism and capitalism, but this very unique thing together. But what I wanted to say was perhaps it's time for democracy to create some form of hybrid democracy. I don't mean communism. What I mean is to extract from democracy some of the long term things that must be long term things and therefore more apolitical rather than partisan. And the big one in all of that has always got to be energy.
Speaker 3:If we had some way in which you took out of democracy all democracies the management and the control and direction of energy and gave it to whatever you want to call it a quango and authority, a committee, call it, whatever a group of experts who then set about spending a proportion of whatever the available money was and set that long term strategy and stuck to it and politicians weren't allowed to fanny around with it all the time, and that be, if you like, a proper response to what Deng Chaoping reinvented with the new China, that's, the new democracy of the rest of the world. I don't know, maybe I'm just being a completely lunatic idealist in such a thought, but anyway, say something to wrap it up, for goodness sake, otherwise I'll keep rabbiting on and it'll be awful. Steve, please, you've got to say something to conclude our conversation for 2023.
Speaker 2:So, first, what you've said definitely food for thought, and I'm sure that political scientists and the folks whose whole job is geopolitics, they think through these sorts of things. But the one thing is that the space we're talking about, regardless of the turbulence, the turmoil that we're watching, it's of the very highest ramifications in terms of everything global economics, global geopolitics. Right now, the biggest issues are Gaza, ukraine, then this this is in that group, this is China policy, this really is, and along with Taiwan, and so it's super important what we're parsing. So I'm really glad you're in the business, you do a terrific job and it's really a pleasure to again participate in your annual wrapping things up.
Speaker 3:Well, look, you say some very nice things that I don't want us to turn into a love-in, but look, I know you are held in the highest esteem as well. You clearly get access to people that I don't necessarily get because of that reputation. I think both of us. It's incumbent on both of us to keep doing what we're doing and be as independent, as absolutely independent, as possible, and not get deflected one way or the other, and to say what we see.
Speaker 3:I think, a bit like you get with kids, young kids they say uncomfortable things sometimes because they just say what they see. So I think, if you and I can be a bit childlike and just come out with it, there's no malice of forethought. I know there's none from you, I certainly don't have any. We're just trying to make some suggestions and maybe offer up a few ideas and thoughts to try and yeah, what's that phrase? I know it's a cliched phrase, but both of us, as we've got older then we're not here anymore when we're gone that we left the world a better place, that we made some form of contribution. I think, if we can both have done that and everybody listening, that's the ambition that I'm hopeful that everybody truly has. They want to leave the world a better place than the one they arrived in. If we could all do that, then happy days yes.
Speaker 2:That's a good spot, that's a good rap, right, what you just said.
Speaker 3:Okay, good Well, steve Levine, thank you very much for taking us through your perspective of 2023. I hope you feel you did get a word in edgeways now and then. It's been a joy to catch up with you, and thanks for updating me on a few very important things and putting me right on some stuff. That's always good too. For now, thank you very much. I'm sure we'll talk before December 2024, I'm sure of it. So see you soon.
Speaker 2:Yeah, thanks, roger.
Speaker 1:Thanks for listening to the show and make sure you follow Roger on LinkedIn, where you'll discover almost all there is to know about the spectacular electric vehicle revolution.