Car Wars - China versus the world?
Car Wars - China versus the world?
My guest this week on Cleaning Up was Colin McKerracher, Head of Clean Transportation at BloombergNEF. No one in the world has a better - and more data-driven - understanding of the EV transition.
No other aspect of the net zero transition sparks as much debate as the shift to electric vehicles. No other aspect touches consumers’ as viscerally, no other aspect is as politically fraught as car manufacturing, no other aspect generates as much news, fake news, data and misinformation.
This week on Cleaning Up, I was joined by Colin McKerracher, to help separate the trend from the tripe, and identify the signal among the noise. Colin is a 20-year veteran of the clean energy and transport space. In 2011, I was very lucky to persuade him to join BloombergNEF, where he has now been the Head of Clean Transportation for nearly a decade.
Listen to my conversation with Colin McKerracher, Head of Clean Transportation at Bloomberg NEF, on your favourite podcast platform or watch it on YouTube!
Here are some of my main takeaways from the episode with Colin:
There is no EV slowdown - at least on a global level. What you see is a reduction in the growth rate of EV sales from a few years of very high figures, artificially inflated as supply chains recovered from Covid and a wall of pent-up household savings hit the market. The global growth rate is now around 20%, which contrasts very favourably with the growth rate in ICE cars, which has been negative since 2017.
One in five cars sold globally is now electric, one in two in china, one in four in Europe and one in ten in the US. We don’t see the impact of this yet, because the composition of the fleet lags the composition of sales by around 8 years. Buckle up.
There are individual countries which have seen sales go temporarily into reverse, most notably Germany. That is mainly an artefact of the timing of regulations expiring or being applied, new compliance commitment periods, and their interactions with model cycles. Car companies who have messed up up their model cycles, as well as the usual anti-transition activists and contrarians, have seized on this to spread a slowdown narrative.
The legacy car companies in Europe and the EU are playing a dangerous game. They are simultaneously claiming people don’t want to buy EVs, while lobbying hard for tariffs and for pushing back climate targets - all the while milking existing ICE and EV models for high margins. The problem is, Chinese EVs are getting cheaper and better with every passing year. Western car sales are collapsing in China, and China has gone from 5th to 1st place in terms of global car exports. This looks increasingly like a replay of Japan’s car industry vs the West, 1970 to 1985.
The next few years is likely to see a titanic fight between the EU, its car companies, consumers and voters. Massive imports of Chinese EVs would be great for climate and consumers, but bad for European car companies, jobs and political careers. Can the EU keep its finger in the dyke long enough for its car companies to become competitive? Is there a solution that doesn’t see nationalist-populist parties benefit?
It was a privilege to get an hour with Colin on all things EV. Sadly, we did not have time to cover two other areas that fall into his remit at BloombergNEF - aviation and shipping, so we promised to have him back next year to talk about those. Keep an eye out for that episode, which promises to be another banger!
Cleaning Up is supported by its Leadership Circle, whose founding members are: Actis, EcoPragma Capital, Eurelectric, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation and Wärtsilä. For more information, please visit https://www.cleaningup.live
Listen now to my conversation with Colin McKerracher, Head of Clean Transportation at Bloomberg NEF, on your favourite podcast platform or watch it on YouTube!
If you are enjoying Thoughts of Chairman Michael, or listening to/watching Cleaning Up, please recommend it to your friends, family and colleagues. Our audience is growing, and you can help!
And don’t forget to subscribe to Cleaning Up’s own newsletter: CleaningUpPod.Substack.com