EV Boom Changes Lanes as New Markets Take the Wheel

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If you've ever waited on a refill, or couldn't schedule a meeting, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get, and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one, for everyone. Learn more at business.optum.com. This is Tom Rowlands-Reese, and you're listening to Switched On, the podcast brought to you by Bloomberg, and by the company that makes the most money. We're here to help you get the most out of your life. this on a previous podcast but it's a fair way of like thinking about what you've just described is in the internal combustion engine world the engines themselves are quite complex and you have different even countries you would say that have built up that expertise and maybe have sort of reputations for certain different things so for example you know people always say like if you get a japanese car and i'm talking about an internal combustion engine car you know they're known for being very reliable whereas if you get say a german car known for really high performance maybe not as good at reliability and i suppose my point is is that in the internal combustion engine vehicle world the actual engine itself was a differentiating feature whereas in an electric vehicle world the battery and the kind of the drivetrain it becomes somewhat commoditized they you know i'm not saying that there's no differentiation but it is not noticeably different experience and so we're seeing in that world the kind of the drivetrain it becomes somewhat commoditized they you know i'm not saying that there's no differentiation but it is not noticeably different experience and so we're seeing in that world the competitive differentiation comes in all of the other stuff that you're talking about is that a fair statement is that where like differentiation and therefore maybe value add and margin for vehicle manufacturers in the future is going to come from is not in squeezing the margins on the the battery and the the motors because that's going to become somewhat undifferentiated it's in the the features i think there is still quite a big difference on the the kind of drive performance side of things and the battery and the economics of the those batteries and how much range you get and how quickly you can charge and all those other elements of it but the digital aspects are also increasingly powerful when you are looking at what consumers are wanting to buy and our colleagues on the bloomberg intelligence side have done some very interesting survey work looking at prospective ev buyers and what they they really value in different markets and in china in particular it is those those digital features that are what they look for and what they care about so being able to kind of offer those features is that is the competitive differentiator in some markets but in other markets it's still can i actually get reliably from from a to b and do the types of journeys that i want to do and then in some other markets it's also really about the fuel price and the the economics of of it so is it cheaper to buy own and operate this this vehicle and that's a very powerful factor in in our modeling and the work we do within this outlook it is very techno-economic based it's all about the the pricing trends that we see in the long run with batteries getting cheaper and getting cheaper to build and sell electric vehicles uh in the long run yeah it's interesting you see different competitive dynamics depending on whether electric vehicles are competing against internal combustion engine vehicles or whether electric vehicles are competing with other electric vehicles let's talk about china a little bit because we've kind of taken it as a given that china is the biggest market the most mature market i think we've known this for years but alex maybe you can explain the difference between the two markets why why why is it it's a good question um and i think there are many reasons why china is such a leading market market in electric vehicles space and that obviously has to do with its dominance around battery supply chains the capability to lower the manufacturing costs by reaching that scales access to the cheapest by far batteries but i think at the beginning of it uh that all sort of kicked off with policy with stable predictable policy that didn't change over the years so once china came up with their 15 euro plan and and and sort of set out to to create those domestic heroes in the automotive market they stuck to it um and that enabled a lot of nearly risk-free investment in the supply chain around electric vehicle space and what follows is really is the affordability question as i mentioned so china is the only market currently where electric vehicles are cheaper to buy than combustion vehicles everywhere in europe in the us um there's still a significant premium for consumers trying to switch to electric cars in europe i believe this is around 17 percent uh last year in in the us it's even higher around 24 percent it is a lower premium than it was last year but still china is the only place where electric cars are cheaper to buy so i just want to make sure i really understand this and maybe this is because i've been watching this space for so long and there used to be we'd talk about the cost of total ownership where we took into account you know future running costs you're not talking about that you're just talking about the upfront cost of buying the vehicle is cheaper in china than it is to buy an internal combustion engine vehicle is that that correct exactly i'm talking about the the sort of the sticker price uh of an electric car and you mentioned it's more elsewhere in the world and i will say compared to say the past it's not that much more do we have a view in our outlook as to when we'll be able to say the same about say europe the us or elsewhere in the world in terms of crossing that capex uh threshold yeah so it is this modeling of the sort of upfront price parity years is a big part of what we do in evo and it really underlies the sort of long-term adoption curves because in our modeling we assume that once electric cars become cheaper to buy than combustion cars adoption accelerates and in those markets and depending where you look uh that sort of those upfront price parity years will differ of course by segment by market but you know in europe um the us we're sort of in the middle of the world and we're sort of in the middle of the world and we're sort of expecting this price parity to come around 2028 2029 for most segments except for pickup trucks in the us we actually because of the very big batteries that those cars require uh we don't see that upfront price parity coming in until 2034 so that's quite interesting every business has a plan but even with the best strategy in place some factors are within their control and some simply aren't the supply chain shouldn't feel that way with penske logistics businesses perform at their peak because when everything runs with precision and efficiency it shows decisions get sharper and operations become more resilient penske logistics brings all the moving pieces together allowing you to focus on the big picture greater accuracy reliable delivery and the confidence to make stronger strategic decisions and when the unexpected happens because it always does penske logistics adjusts on the fly helping you see clearer operate smarter and stay ahead of the rush markets change demand shifts disruptions happen penske logistics helps businesses stay prepared for whatever comes next learn more about our cutting edge end-to-end solutions at penske logistics.com this is the bloomberg tech minute brought to you by chachi pt now with chachi pt work i'm carol masser walmart has become a major player in the burgeoning business of quickly fueling electric vehicles speeding past costco as well as more established charging companies bloomberg's kyle stock writes as of june walmart has opened about 46 high-speed public charging stations with 380 cords there are now ev chargers at about 326 of its u.s stores including adding this year four high-speed charging stations in bettenville arkansas even though the state has been a laggard in transitioning to electricity electric vehicles walmart has hosted chargers from other companies since 2018 the big difference now walmart is building its own network and quickly as of march of last year every ev station at a walmart is under the company brand now walmart is still a blip on the u.s charging map and yet it was second only to tesla among charging networks expanding in the second quarter that's the bloomberg tech minute brought to you by chachi pt put chachi pt to work on your most ambitious ideas and projects get started at chachi pt.com today by selecting work mode available on plus and pro plans let's talk about health care for a second it doesn't always work the way people expect it to if you've ever waited on a prescription refill or had a hard time getting the care you needed you know the feeling the system should just work better for everyone that's exactly what the people at optum are trying to do every day they're a health care company linking patient care to health care and they're trying to do it every day they're trying to do it patient care and pharmacy services and using data and technology to drive the whole system so care is connected not complicated for patients and providers things like making it easier to get care that looks at the whole person from primary care doctors to mental health support and even in-home care and then using technology to make sure they all work together technology designed to help doctors spend less time on busy work and more time with their patients and those prescriptions optum is working to bring costs down save patients' lives and save their lives patients money and make it easier to get refills little by little optum is helping make health care work as one for everyone head to business.optum.com to see how well it's quite exciting i mean the this is not very far away you know 2028 i mean who remembers what they were doing in 2024 seems like yesterday so you know i think someone in 2028 might be looking at buying a car and seeing it's cheap it's getting electric cars say in in europe and be remembering listening to this podcast just like yesterday this is a really does that mean we're on the kind of the cusp of a new phase globally potentially yes i think what we have to keep in mind with our upfront price modeling is very those years are theoretical right so there's a set of assumptions that we make around the scale of manufacturing around the battery prices that those automakers use um the range of the vehicles the battery size that we think evs will have in the future that those up from price parity years so it doesn't mean that every automaker will be able to reach those upfront price parity years it only means that if you reach that certain scale and you get batteries at a certain price, you should, in theory, be able to manufacture electric cars at a cost lower than comparable combustion vehicles. But yeah, I think, you know, utilization rates, capacity, battery prices, these are all very important parts of automakers reaching parity points. In our modeling, as I said, this happens around 2028, 2029. But yeah, it's all very theoretical still. I sort of was asking about China. And I mean, you answered my question about China, and then we went on a tangent about some global costs. I would like to talk about some other regions, and both the sort of the absolute sales numbers and the outlook for them, but also the role that intelligent mobility is playing in, you know, in those markets. So we've done China, I'm going to talk about them as a bundle, but you can always unbundle it if you think appropriate. Let's talk about the US and Europe for electric vehicles, and intelligent mobility have evolved in the last year. And you know, what we're seeing in the future. For Europe, we're seeing strong drivers in place, which is in particular fuel economy targets, which are driving automakers to introduce more electric vehicle models, which increases sort of model availability and consumer choice. And that sort of all impacts adoption. And we see Europe growing quite fast as well. It never sort of reaches the same adoption levels as China as a region, but there are individual countries within Europe as a region that even go faster than China is doing. The US, however, is one of those markets which impacts our outlook this year in a sort of negative way. So it's one of those reasons why our outlook this year is lower than it was last year. We expect EV sales in the US to drop by 19% this year. So a big, a big drop, and it's going to be probably the only region market where we see electric vehicle sales decline year on year. So the US is really in trouble. The EV market in the US is in trouble with the removal of the EV tax credit, no fuel economy targets in place, really. Yeah, we expect EV adoption to drop 19% this year. And that obviously has implications over long term as well. So right now in our outlook, it's very difficult to sort of pick up pace again. I think the bigger thing here to mention is that the US now lags global average adoption lines over the long term. By 2040, it's below the global average adoption line, which is 66%. And it's also below markets like Southeast Asia, Brazil, Mexico. So the markets that we have are used to thinking about as emerging EV markets. The US, which used to be a leader in EV adoption, is now sort of lagging behind those. I kind of like to turn it to Andrew, because when we're talking about China, you talked about the sort of some of the intelligent mobility features were becoming critical for differentiation because of, you know, the sort of ubiquity of electric vehicles. Does this by implication mean that it's in the US in particular, and maybe to a lesser extent, Europe, the uptake of intelligent mobility features has slowed down? Or am I thinking about it wrong? Well, I mean, you can think of two key aspects here, the partial self driving, the driver assistance features that assist with your vehicle. And then there's the fully autonomous robo taxi side of things. And for all the troubles that the US has had on the electric vehicle side of things, they're really racing ahead of many other geographies on the AV side of the autonomous vehicle side. By our count, they're about 8000 functioning robo taxis at the end of 2025. Nearly half of those were in the United States. There's a lot of bold targets that we are tracking from a variety of different players that are starting to deploy across the US. To date, Waymo is running commercial robo taxi services in 10 cities in the United States with plans to increase that. So that component of intelligent mobility is racing ahead. And I mean, it's still a really tiny portion of the total transport mix, but it's something that is increasing rapidly and does have an effect on our outlook in the longer term because these vehicles do get used more on an annual basis. The kind of private passenger vehicle in the United States is driven 15 to 20,000 kilometers over the course of a year. A Waymo robo taxi, that was up to 110,000 kilometers by some of the data that we gathered. So that means you can provide the same amounts of mobility with fewer vehicles or you can grow the amount of mobility with fewer vehicles. So let's talk about emerging markets. So in a way, I'm not saying that this has maybe been your universe as analysts, but certainly from people who sort of from the outside looking in, we've already talked about electric vehicles in China versus the US versus Europe, and maybe other markets we've paid less attention to. And it sounds like we can't do that anymore, that some of the other markets that we've paid less attention to, we can't do that anymore. that we had maybe thought of as also rands here are now genuine contenders in this new transportation universe. So tell us a little bit more about some of what you've been seeing there. So in a way, I'm not saying that this has been your universe as analysts, but certainly from people who sort of from the outside looking in, we've already talked about electric vehicles in China versus the US versus Europe, and maybe other markets we've paid less attention to, we can't do that anymore. But there were new policies that returned that helped in that effect. Africa had 150% increase in EV sales in Q1 year on year, but there really weren't that many compelling EVs being sold last year. BYDs only just started selling in South Africa. So there's a lot of other factors to consider and looking at kind of what that means with the longer term statistical correlation between fuel prices and charging prices is something we spend a lot of time doing. Yeah, absolutely. US is a very good example of how difficult it is to pinpoint this correlation because the US is this sort of blank canvas, no regulatory support whatsoever for electrification and very high gasoline prices, like comparatively to what it was before the conflict began. And we really have not seen that much sort of activity in terms of EV sales going up. Instead, consumers look to more fuel efficient vehicles like hybrids. But not really, you know, not a big impact on EV sales. But it doesn't mean that it doesn't have that impact. I think we need to take a bit longer, right, for those prices to have an effect on consumers because electric cars are an expensive item. A car is an expensive item. So it's not like you make that decision. It's not something you can make a knee jerk reaction on. Yes. This is the Bloomberg Tech Minute brought to you by Chachi PT. Now with Chachi PT work. I'm Chachi PT. I'll see you next time. Transitioning to electric vehicles. Walmart has hosted chargers from other companies since 2018. The big difference now, Walmart is building its own network and quickly. As of March of last year, every EV station at a Walmart is under the company brand. Now Walmart is still a blip on the US charging map. And yet it was second only to Tesla among charging networks expanding in the second quarter. That's the Bloomberg Tech Minute brought to you by Chachi PT. Put Chachi PT to work. On your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting work mode. Available on plus and pro plans. This message is brought to you by Apple Card. Shave ice by the beach. A trip to the state fair. And a throwback flick at the local drive-in. They're more than just items to check off the summer bucket list. They're also opportunities to earn two percent daily cash back when you use your Apple Card with Apple Pay. Apply for Apple Card now and use in minutes with Apple Pay. Subject to credit approval. Apple Card is issued by Goldman Sachs Bank USA Salt Lake City branch. Terms and more at AppleCard.com. Let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to help people. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. Do you think, though, because we're talking about the kind of the decision of consumers, and again, similarly with policy, you're not necessarily going to see a knee-jerk reaction, but do you think a situation like we've seen might, say, for example, EV policies that were maybe under attack and under threat in certain markets are now on a more solid ground in that they maybe can be seen as, you know, they're not going to be as effective as they used to be? Serving the national interest or that there's prospective EV policies that might have been somewhat, you know, for example, in the domain of just one political party that you might be getting political consensus on. So, you know, do you think this might drive in certain markets the moving of the Overton window in terms of what is considered a sane and sensible policy in favor of electric transport? In Europe, for example, what I find quite distressing is, for example, the situation in the UK where the biggest drive is the electric transport. However, for EV adoption is the ZEV mandate, so the zero emission vehicle mandate. And despite everything that has been going on for the last couple of months, the debate about relaxing some of the aspects of that mandate, relaxing the targets under the mandate, is still going on and still pretty strong. And the government is actually considering this. So I think mixed reactions. I haven't seen a lot of support for policies that want to push EVs forward, but probably were challenged before. But we're also seeing some examples of like the same, pushback on some of those policies as before the war as well. Final question from my side, just we're thinking about internal combustion engine vehicles being displaced by electric vehicles, and then the vehicles are also becoming more intelligent, which maybe changes how we use those vehicles as well. You know, we have the example, just to give one of robo taxis. Are you thinking about how all of this automation, the autonomousness is changing the actual number of cars that are needed? Yeah, absolutely. I mean, there's a lot of different ways of doing things. Yeah, absolutely. I mean, there's two ways to kind of think about this, and I'll explain the kind of way we go about it. And we start modeling with what are different populations going to demand in terms of passenger vehicle kilometers? And there's a long-term historical correlation with GDP per capita. And as populations get richer, they tend to drive more and they tend to use their vehicles more. And that is kind of the foundation of our modeling work within this report. And a big factor there is then once we've kind of got this top line number about how many passenger vehicle kilometers are being driven in whatever geography, then what type of vehicle best suits the journeys that are being made? So that's a big part of our modeling work. And with shared vehicles and autonomous vehicles being more productive on an annual basis than a private vehicle that sits in a driveway or a parking lot most of the day, you really need fewer vehicles to provide that mobility. And as these technologies get adopted more of the time, you need increasingly fewer vehicles. So in our outlook, which in a way differs from others that you might see out there, we have a peak in the total number of vehicle or passenger vehicles on the road. And as we get more shared and automated vehicles, that number declines. So there is sort of an evolution happening on multiple fronts right now. This is so interesting because we're not really just talking about, you know, as I said at the start, an outlook on electric vehicles. We're looking at an outlook on the evolution of how transport generally, and particularly with a focus on passenger vehicles, not just the way they are powered, but the way we use them, the way they operate, the way they're differentiated is all in flow. So, you know, in a way calling the electric vehicle outlook Evo, maybe was in some way works on multiple levels because it is about an evolution of the transport sector. And we spend a lot of time talking about passenger vehicles, but really the outlook also includes commercial vehicles, two and three wheelers, buses, and those are all kind of electrifying at different rates. And there's a lot of interesting stuff within the context of the reports, especially around commercial vehicles and vans electrifying quite quickly, but you might have to have us back or have some of our colleagues back to talk about that at another time. So the entire ecosystem is changing or evolving, but this has been fascinating to learn a little bit more about, you know, our thoughts. And yeah, as you say, we focus mostly on passenger vehicles. It's not the entirety of the vehicle, but it's a lot of things that we focus on. So it's not the entirety of the conversation or the entirety of what the team thinks about. But Alex, thank you for joining today. Thank you, Tom. It was a pleasure. And Andrew, thank you for joining. Thank you for having me. Today's episode of Switched On was produced by Cam Gray with production assistance from Kamala Schelling. Bloomberg NEF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute nor should it be construed as investment advice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg NEF should not be considered as information sufficient upon which to base an investment decision. Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any liability as a result of this recording is expressly disclaimed. Thank you for joining today's episode of Switched On. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience. Learn more at thehartford.com/riskmitigation. 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