Here's why EVs are farther along than you might think

It's late 2020 and the electric car market is still kinda confusing. What's the big deal? Is it range? Is it charge time? Is it price with the car? Is it charging infrastructure? Those are all important but you know what consumers care about? Simplicity and confidence in what they're buying. Now, what [MUSIC] Sam is gonna join us and he's going to have some great insights into this. He's joining us from guidehouse where he is principal research analyst and a guy who I always listen to when I see him quoted somewhere. Which is widely by the way. So it's a pleasure to have you here, Sam. And let's start with a quick peek at what Tesla battery day holds for us because that's what kind of got our juices flowing here at the top level, what do you expect from that event? That's a good question. Tesla hasn't really given us too many hints. There's a bunch of speculation. We'll probably see some information about where they're planning to head in terms of new battery chemistries in the coming years. One Potential thing that's out there is the move to lithium metal batteries, which is actually where before we had lithium ion batteries lithium metal were the first type of lithium batteries that were developed that they don't they basically just use straight up lithium metal for the For the anodes rather than a blend of nickel and manganese and cobalt and lithium, as we see in most batteries today, they have the potential to be you know significantly better energy density by. But lithium metal if you remember in high school chemistry class when the teacher dropped a strip of lithium and a beaker full of water. Yeah. Doesn't like moisture. So it's a it's a challenge to get that working safely and reliably. So if the energy density were to be dramatically ramped up and I guess Ilan musk had a tweet of roughly 50% he thinks he can do. In the next few years, do you think that that's going to be best used toward a battery that has a lot more range in the same amount of space? Or do you think it is a better use is to say let's make smaller less expensive batteries that deliver current range I think we're going to see a bit of both. You know, when you crank up that density, you have the opportunity you know, on the higher end of the market where at higher price points consumers are willing to pay those prices. You can go for more range or for certain applications, like for if you've got a vehicle it needs to tow you want as much rain as much energy as you can get. On the on the other end of the spectrum, though. The challenge we have today one of the one of the biggest challenges for EBs is the price point for mainstream consumers, you know, people that are buying, you know, cars in the 20 to $30,000 price range, there really isn't anything much available in terms of EBs. And so if we can have a. More energy density,you can use less battery and still have a reasonable amount of range in a car that's more affordable>>Okay,that brings me to an interesting poll that Castrol sponsored recently,but it was done by a legitimate polling company and they talked to 9,000 drivers I think in six countries and ask them.What do you need in terms of range and charge time to be excited about an EV and the number Once they did all the averaging was 291 miles of range and 31 minutes of charge time, which is interesting because if you're willing to spend a little over the average car price right now, you can get that, let's say a model three, for example, but obviously you can't get it at a really sweet price point. So are we at a point now where the technology is at a good place? And it's really just about pricing it down. Yeah, we're definitely getting getting very close there with DC fast charging, you can absolutely get into that 20 to 30 minute range to get most of the battery replenished. You know, maybe not a full charge 100% charge, but you know, get to, you know, from say 20 to 80% charge. Absolutely. You can do that in 30 minutes. And in terms of the range 300 miles 250 to 300 miles is absolutely achievable. Now, even in more affordable ease, certainly the model three that you know their lowest price one is only about 240 250 miles, I think But you know cars like the Chevy Bolt, the Hyundai Kona Evie and the Kia Niro Evie they're all in the 240, 250 to 260 mile range with you know at price points before incentives of around 37 $38,000 so you can get them down to you know around the $30,000 price point. Point. So do you think consumers are missing something? Are they dealing with old perceptions of EBS? In many cases, they don't work for everybody of course, but you think a lot of consumers are still stuck with old thinking I got those damn things don't go very far. They take forever to charge and they cost a fortune. Do you think they need to re examine them? Yeah, there's definitely a consumer perception problem. I mean, there are some other actual problems too, but perception is definitely an issue. We did our own guidehouse. We did our own consumer survey that we do on an annual basis of attitudes towards EBS and. The biggest barriers to Evie adoption that we found again this year were availability of charging time to charge purchase price and range. And the and but one of the other questions we asked was about, whether people have actually driven one and How their attitudes changed before and after what it once they've driven or ridden in an Eevee. And it's amazing how much better people's perception is once they've actually experienced it. Most people, most Americans especially have never actually experienced an Eevee. And experience that that thrust you get from that you know torque full torque at zero RPM, so the drivability of an Eevee is so good but most people have never had a chance to try it out even something like the Kona or the bolt, just not they're not as quick as a model three but It's six and a half, seven seconds zero to 60. That's right, which is almost anybody needs. That's a quick car by anyone's definition and quiet, which I think always gives the impression of even more effortlessness. And so the car even feels faster, quicker, more dynamic than it actually is because it doesn't sound like it's even breaking a sweat. Even for the average driver, you know, cars have been sold from station wagons to pickup trucks. They've always been sold on having a good pickup, good, good punch, whatever you want to call it over the different areas, And that's all nothing with an engine that beats an EV. No, right? Nothing. And so that's I think such an interesting driving experience cuz everyone thinks that EV are kind of, Okay, I'll do the right thing for the environment and, and I'll buy something that's part of the future. They kind of feel like they're being dragged into it. They don't see anything tasty about it until they try one like you say, Yeah, and that's the thing that you know, whatever else you may think of Elon Musk and his hyperbole over everything, you know, the hype around around Tesla, the thing that Tesla did better than anybody is demonstrating that EVs can be so much more than a glorified golf cart. They can actually be really fun, exciting cars to drive and they can be great vehicles in their own right, regardless of the environmental impact just as a vehicle to drive they can be really good and that's what Tesla showed the world with what everybody else is trying to catch up with now They've also brought a prestige to a market that was like you said until the Tesla, a bunch of golf carts a bunch of Nissan leafs great engineering project but no one looks at that and says I aspire to have a leaf. The Tesla. Has brought a certain sheen to the market. Even though we're in certain markets like where I am here in San Francisco, we're kind of sick of seeing them but they have a certain sort of a glamour about them that has always moved the car market. As you talk about Tesla Let me ask you about the importance of battery tech. Most consumers look at batteries and say okay batteries are commodity in my flashlight In my car, they're all pretty much the same. That's what we've learned over the years and yet, Tesla seems to have a really genuine durable advantage because it focuses on batteries. Is that correct? Remains to be seen how durable that advantage would be. I mean, one of the things that Tesla has done really well is focus on the efficiency, you know, because the battery is such a big physical and cost part of the vehicle you know represents you know, a third of the cost of a typical Eevee or more It's really important to try to get as much efficiency out of it as you can. A 400 pounds of battery has about as much energy in it as one gallon of gas that weighs six and a half pounds. So you have to get as much as much as many miles as you can out of every one of those kilowatt hours of energy that you've got. So Tesla has done a good job at that getting more range out of. Fewer kilowatt hours. That's something where some of the competitors like Audi with the E Tron and Porsche with the tie con, have kind of fallen flat over the last couple years with their introductions. Lucid now who just watched the the show the production version of the lucid air, but a week and a half ago, you. They've gone even leapfrogging Tesla with efficiency that really focused on getting the maximum efficiency out of their vehicle. And, they've been at least, they're estimating to beat Tesla by about 14% efficiency, in terms of miles per kilowatt hour. Okay, so that sounds like honing your actual power electronics and your motor, the power electronics, the motor, the battery management system. So the software that manages the flow of energy into and out of the battery power electronics in one of these Tesla was first to do is use silicon carbide for the power electronics for the switches. Those are bought 8 to 10% more efficient than the silicon switches that you find in other TVs, and other manufacturers are starting to adopt gonna be adopting that over the next couple of years as more production capacity for silicon carbide comes on stream. But right now Tesla was the first to do that lucid is doing that and we'll see others doing it as well but that Motor design. The actual motor design is another place where you lose, lose efficiency of generating heat instead of torque. So, everybody's focused on trying to optimize all those things, and I think we're gonna see a lot of advancements over the next couple of years. Okay, so it is very analogous in that sense to the combustion engine gug automotive world where you need to work on all your levers, you've got to get a transmission with all the right gear ratios, you've got to optimize intake and exhaust of your engine. You got to work on all the drive line and aerodynamics. So it is a soup. It's not really any simpler. Electric than it is in the combustion world. It's just It's just different ingredients. But Yeah, You're trying to try to mix them in the right proportions to get a big stew. Do the best, the best flavor. Let's talk about how carmakers are dividing into two camps. Some of them like General Motors, obviously Tesla. They want their own battery infrastructure that they own and develop. Other companies I think Ford is very notable in this area. So now we're just gonna go buy batteries from whoever has the best at a given time. Which do you think is the smarter approach? There's pros and cons to both. You know, one of the challenges right now for a lot A lot of automakers has been supplied batteries. some have been supply constrained they couldn't sell as many V's. Hyundai and Kia are particularly notable. They've said that they're they're limited in their supply batteries that can get so if you can control that supply by. Manufacturing your own or at least buying the raw materials. You know another approach that we're seeing is companies like Volkswagen and BMW, putting in long term supply contracts with the raw materials which is that's that's kind of the bottleneck and then working with suppliers like LG Chem and Samsung and SK innovation and CATL The OEMs buy the materials, give it to whichever supplier they choose, and then they get the batteries or the approach the GM is taking of doing its own battery production. Production. That way you control that supply and you're hopefully not gonna be supply constraint. The other side of it is battery technology is still evolving rapidly and if you invest in something too soon, but Before it's mature, you might end up having invested in something that might be prematurely obsolete. And Ford is taking that approach where, you know, they don't necessarily think they're going to be able to sell that many TVs. And so they're they're going to take you take the risk and, you know, go with whoever's got the best technology at the time. Okay, so it's really a timing question more than a, this is right or this is right issue. It's about what you do at what point in the battery development history it sounds like. Yeah. Okay, let's talk as we wrap up here about infrastructure we always talk about the batteries and the motors and the power electronics and that's what the consumer focuses on the thing they're buying. But in this case, we have an era when car makers need Need to be very focused on the infrastructure. They don't really care about fueling infrastructure. They know what's out there. And it's been there for many, many decades. But in this case, they've got to focus on how important do you think it is for the automakers to really be down in the weeds on infrastructure? Or should they expect that to just kind of arise? I think they were hoping that it would just arise. And again, this is another lesson from Tesla Tesla went out and built the supercharger network, at least for DC fast charging, and that really helped to convince their customers that hey, you can buy our car and you'll be able to go and fast charge it you And drive pretty much anywhere you want. And for the rest of the industry, they've had to rely on independent networks like Evie go and charge point and blink to build up those chargers and the challenges if you don't have the V's that are going to use it you You. They don't get enough utilization of those chargers. It's hard to make money and so it's hard to get them to invest in those networks. So now we're seeing the OEMs start to get more involved in actually investing in those networks. And one of the cool announcements recently was GM and Evie go announcing that GM is gonna pay for installation of about 2700. DC fast chargers at locations like grocery stores, because what they're trying to do is expand the potential market for EBS to people, beyond those that have a single family home. Home garage or you know where they can plug at home to people live in apartments and other places or have street parking where they can't charge at home. But if they have easy access, to go to the grocery store once a week. You're in there for 20, 30 minutes anyway you plug in, you charge it up, and then you're on your way and you're good to go. It's just like going to the gas station. So we're starting to see more investment from the OEMs to try to prime the pump for all these vehicles that they're going to be bringing to market. I think the infrastructure is kind of an overlooked piece for a lot of people that look at this space in terms of how important it is because, and often they think it has to map to the world of fueling liquid fueling, which is an awful lot of locations. And they're in their own kind of location. It's a street corner business, right? It's an intersection business, but what you're pointing to is it's a meet consumers where they are business. At the store at the mall or at work, that's a completely different lay of the land. Yeah, you've got about 160,000 gas stations in the United States right now. And, because it only takes you a couple of minutes to refill the tank. It's more can be even though it's it's, you know at specific locations. It's less of a hassle to go to a gas station. Yeah, its so quick. Then to rely on public charging unless you've got easy access somewhere where you're gonna be for at least you know 20 to 30 minutes. All right, we've been talking to sam i will also need he is principal research analyst at guidehouse. Research great thoughts on the future of batteries and most importantly, the way consumers perceive ease