EnergyCents- Ep. 15: I'll have Electric Vehicles for $400, Alex

Speaker 1 (00:01):
This episode of EnergyCents is brought to you by S&P Global's Financial and Capital Markets Energy Advisory Group. Our team of experts provides the investment community with actionable insight and integrated thought leadership that identify the trends and trend makers of global energy markets. Solutions cover the full energy and natural resources sector from traditional fossil fuels to emerging clean tech ideas and supply chains and are available via recurring reports, webinars, robust data sets, and personal engagements with experts.

Breanne Dougherty (00:30):
Welcome everybody back to this edition of EnergyCents where we discuss all things at the intersection of energy and finance. I'm excited today to have Hill Vaden with me again. Hi, Hill. How are you?

Hill Vaden (00:40):
I'm doing well, Breanne. How are you?

Breanne Dougherty (00:42):
Pretty good. It's Monday morning. This probably isn't being released Monday morning, but it is Monday morning now that we're recording it and it was a beautiful sunny weekend for me here in New York City, which was always nice and it was a pretty exciting weekend I think across the whole US for those American listeners that are dialing in.

Hill Vaden (01:00):
Yeah.

Breanne Dougherty (01:00):
Or I shouldn't say American listeners, I should say anybody living in America but then I should also say probably everybody watching around the world as well, right?

Hill Vaden (01:07):
Yeah. All those listening [crosstalk 00:01:08].

Breanne Dougherty (01:08):
Also necessarily American specific.

Hill Vaden (01:13):
Absolutely. All of those glued to their phones and television sets trying to figure out who's counting what in the United States.

Breanne Dougherty (01:18):
Oh, before we get into that exciting news though, Hill and I'm bringing this up because we talked about it actually on a podcast, was the last podcast or two podcasts ago. Alex Trebek died last night.

Hill Vaden (01:30):
Yes. I saw that this morning and the first person I thought of was you.

Breanne Dougherty (01:38):
Oh. I know, it's sad. Oh, Fellipe Balieiro is our guest today as well, sorry. In case you don't know, I watch Jeopardy every night. We had a little bit of the nerdy session the other week when we talked about Star Trek and I laid bare one of my little secrets that I watch Jeopardy every evening. And so, last night when the news about Alex Trebek came out it was very sad. Although supposedly, they prerecorded episodes and there's enough episodes to get through to mid-December or something like that.

Hill Vaden (02:01):
Really?

Breanne Dougherty (02:02):
Yeah. I didn't know this but he apparently stopped recording at the end of October. And because I found it surprising, I was like, I watch him every night and he looked to be in pretty good shape still, last episode I saw it but I guess they prerecorded a bunch so they have enough to go through to mid-December. But yeah, last night that was a bit of a shocking piece of news.

Hill Vaden (02:29):
And a fellow Canadian.

Breanne Dougherty (02:29):
I know. He was an iconic Canadian and yeah, I feel like he was part of the family. I saw him every single evening. I don't think they've announced what they're going to do or where Jeopardy is going to go now. I guess maybe they're going to make it an opportunity to potentially, I don't know, I won't speak for Jeopardy but maybe they're going to try to double supply and have a different visual to Jeopardy than what they've had for the past, I don't even know how many years he has been the host. I think somebody hosted before him but.

Hill Vaden (02:58):
Somebody definitely was reading his obit in the paper today and I think it was, I want to say 1984 or something like that.

Breanne Dougherty (03:04):
Yeah. My grandfather and great-uncle watched it every night. And I remember from the time I was very little laying on the floor watching with them. I don't know anybody other than Alex Trebek but yeah.

Fellipe Balieiro (03:16):
Yeah. And then there's Pat Sajak and he's still around right a little bit old?

Breanne Dougherty (03:19):
He's still around as is Vanna White and she's still in her heels. I give her full credit. I love to wear a good heel as well but I have to say that's kudos to her.

Fellipe Balieiro (03:32):
Yeah.

Breanne Dougherty (03:32):
For still wearing those that many years into the Wheel of Fortune Franchise. Yeah, anyways happy Monday morning on that glorious news. Let's just get back on topic at team briefly, our star of the show today is actually Fellipe Balieiro and thank you so much for joining us. He is with our Mobility and Energy Future's team. This is particularly exciting for Hill and I because EVs are just everywhere right now with respect to the conversation. And maybe first and foremost I guess that's exemplified by the run-up in Tesla share price over the last year, right. We're at 430, I think was the last time I checked and I think it was below 60 a year ago?

Hill Vaden (04:14):
Before the split, yeah. It was key because it got I think under 240 or something last year and then before the split, it may have gotten to 2,500 or 3000 or something. And Tesla on Friday sold-out of Teslaquilla because they've used the brand recognition from Tesla, Elon has. And so earlier this year he sold-out of Tesla Short Shorts, which were a pair of short shorts that obviously were directed at all of the investors who had shorted the shares. And so those sold-out instantly and he made some joke on Twitter maybe a year or two ago about tequila and how he was going to leave the company or something nuts like that. And so he created Teslaquilla for $250 a bottle I think. And it was sold-out and on eBay for a thousand dollars a bottle by the end of the day on Friday.

Breanne Dougherty (05:14):
Elon, he's our media darling, right?

Hill Vaden (05:17):
That's brilliant.

Breanne Dougherty (05:17):
I guess one of our media darlings. There's a few of them out at least eight I guess, but yeah. This is an audio recording this obviously an audio podcast but we have our cameras on and Fellipe in the background was laughing hysterically and actually put his hands to his head. Let's just jump right in to what he might have to say about all of this or all things Tesla and EV related because it seems as though he's got an opinion. Welcome and thanks for joining Hill and I we're very excited to hear what you have to say.

Fellipe Balieiro (05:49):
Thanks for having me Breanne and Hill.

Hill Vaden (05:51):
Thanks for being here. Did you get any of the Teslaquila?

Fellipe Balieiro (05:54):
I did not know. I actually there was not even aware that it existed.

Hill Vaden (06:00):
Well, it's hard to find now apparently.

Breanne Dougherty (06:05):
First is first things first, election results are arguably election results depending on how you want to look at things of what happened over the weekend. How do you feel on the back of that kind of where the directions are now headed and what do you think it means for EVs or the general energy future space?

Fellipe Balieiro (06:23):
Sure there's certainly been a lot of uncertainty over the last three and a half, four years with regards to the direction that the US was going to go in terms of either increasing fuel economy standards or there being some sort of centralized push for the decarbonization of the light vehicle fleet. And I think what this does is it signals with The Biden Campaign having come out and said that they're going to advocate for some sort of green new deal, that there will be at least some support for the adoption of electric vehicles. Now that's obviously dependent on what he can lead in terms of accomplishing any sort of meaningful legislation. It's very much likely that the Senate will remain under Republican control, which would signal that there'd be a lot of contention around there being any sort of stimulus for the purchasing of new electric vehicles. But perhaps what can be done or what would likely happen is the State of California will be given an additional waiver.

Fellipe Balieiro (07:26):
The waiver for their Clean Air Act standards are going to remain in place, right. Essentially what that means is they're going to be able to set their own air quality standards, they're going to drive towards a decarbonized light vehicle fleet. The governor Gavin Newsom has signed an executive order mandating that the agencies, the state agencies go out and look for how to actually accomplish this. It's not any sort of legislation yet. The California Air Resources Board has to come up with the legislative plan for having this happen. But what it does signal California being the largest light vehicle market in the country is that they're more likely than not going to bring understates on board, right. You have your other Section 177 States that follow the California Clean Air Act standards or at least their zero emission vehicle ambitions. And what does essentially does is it signals to automotive manufacturers that, "Hey, there's going to be demand for electric vehicles." To what extent? It remains yet to be seen but nonetheless something's going to happen.

Fellipe Balieiro (08:32):
Whereas the US has really been left on its own Island with regards to the rest of the world. Europe has made a lot of progress in pushing new sales of electric vehicles as is China and the US has kind of been left behind there's this real big or been railroad divide with regards to the electrification story.

Hill Vaden (08:54):
New sales I think are upright but the total penetration due to the existing ownership is rather low and I've heard Cash for Clunkers as an idea thrown out to try to take some of the fossil fuel powered cars off the road. Do you think that gains traction over the next few years?

Fellipe Balieiro (09:11):
Sure. I think over the next few years, it's going to remain a little bit of a challenge, right. When you look at the types of electric vehicles that exist in the market today, they still are relatively expensive. There's a very good argument to be made that perhaps they're not as expensive as we think, right. We like to think in terms of absolute purchase price but in reality there are a number of incentives or rebates that exist either for manufacturers or States. Even the State of Texas, which is an oil and gas state has an electric vehicle incentive. There's a $2,500 rebate for the purchase of a new electric vehicle. And a lot of people don't know about that. It's not widely advertised. There's also the fact that the average transaction price for a vehicle in the US this year is North of $38,000. And that's hard in the median income, right.

Fellipe Balieiro (10:06):
When you start thinking about what people are actually spending for their vehicles, it's not unreasonable to look at the 35, $40,000 EVs that exist in the market today that are relatively small and have decent range, 200 to 250 miles of range. And then when you add on top of that, either the federal rebates that may or may not exist for specific vehicle types or manufacturer incentives and then state incentives, a lot of times those vehicles come down in price around 25 or so thousand dollars, which is well below the average transaction price of a new vehicle.

Breanne Dougherty (10:39):
You think though that that policy is necessary?

Fellipe Balieiro (10:41):
Yes.

Breanne Dougherty (10:41):
Or these incentives?

Fellipe Balieiro (10:42):
Yes.

Breanne Dougherty (10:42):
And rebates and things like that?

Fellipe Balieiro (10:43):
Yes.

Breanne Dougherty (10:45):
That the EV fleet isn't necessarily going to be able to take off purely off market dynamics at this point? It [crosstalk 00:10:49]

Fellipe Balieiro (10:48):
Not at this point.

Breanne Dougherty (10:49):
Really does stimulus okay.

Fellipe Balieiro (10:51):
Yeah. And that just because not just the purchase price, right. But there's a lot of uncertainty. For example, does there exist a broad secondhand market for these vehicles? Do they depreciate faster than an internal combustion engine vehicle? Is there enough charging infrastructure to meet all of your transportation needs? Are there any other concerns that people have? For example, if you live in a cold climate, your range is going to decrease in a cold climate just as if you were to go outside in Vermont, say in the middle of December and you pull out your phone and you don't have it insulated at any way, your battery runs out relatively quickly because of the way that the chemistry actually works inside of your batteries. And the same is true for an electric vehicle, right. In order to keep that from happening, the vehicle uses its own energy to keep the battery within a certain operating temperature and that consumes extra energy making a vehicle less efficient. Your range as effectively decreased by 20 to 30%, depending on the kind of vehicle that you have.

Fellipe Balieiro (11:50):
And if your daily requirements for transportation are vehicle miles travel they're such that you're not going to get through the day without having to recharge and the infrastructure's not there, that's going to be a roadblock, it's a barrier for adoption, right. There's still a lot of these things that have to be worked out.

Hill Vaden (12:06):
Is there any skewness in sales where the warmer parts of the country are buying more electrical vehicles than the soda?

Fellipe Balieiro (12:13):
Yes, but I think that it's less a function of climate and more a function of the direction that a given state is going in, right. The State of California, yes you have mountains when we start going towards like Tahoe but the state of California has the highest penetration of electric vehicles but then they also have a lot of incentives for it, right. Both from a municipal level as well as the state level. And then you also have manufacturers that have incentives there because of previous quotas that they had to meet for the Obama era standards, right. Because they didn't want to be out of compliance so they sold a lot of compliance vehicles to help bring up their overall fleet averages. But then you also have utilities that are getting into game, right. If they can sell power or electricity to consumers during off-peak times, they can still make use of some of the renewables that are being generated at night when demand isn't necessarily there.

Fellipe Balieiro (13:11):
Now, when you move further South and you get to the State of Texas, there's very little support for electric vehicles but there's actually a very large and growing renewable power sector, right. There's a lot of wind in Western Texas and that gets fed into other parts of the state. But Texas is actually the fastest growing electric vehicle market in the country today, right.

Hill Vaden (13:34):
Oh.

Fellipe Balieiro (13:34):
On a volume basis. And that's without there really being any sort of Shaun marketing efforts, there's not a lot of state support for it. The rebate that I was telling you about is $2,500 not a lot of people know about it, is limited in number. I think 2,500 or 3000 rebates that can be given out but nonetheless it's growing, right. And those vehicles are selling in Dallas, San Antonio, Houston and Austin primarily around your large, denser urban centers.

Breanne Dougherty (14:05):
And I would argue Texas probably doesn't have the social pressure either. I think you could probably say in California there's a bit of a social pressure probably.

Fellipe Balieiro (14:10):
Yeah.

Breanne Dougherty (14:12):
Talks of EVS, at least in the metropolitan areas. Can we talk about the value chain a little bit though?

Fellipe Balieiro (14:17):
Sure.

Breanne Dougherty (14:18):
Are there bottlenecks that we see emerging in the value chain? That's always the biggest thing when we see these sort of new technologies come to the forefront, right, is oftentimes they get pinched in the value chain with respect to some sort of scarcity or escalating price or whatever that might be. Where are the weaknesses do we think right now in that value chain? If there are any.

Fellipe Balieiro (14:39):
Yeah. No, I think, yeah there's certainly is right. As everything is ramping up some manufacturers or automotive manufacturers haven't been able to get their hands on batteries just because others have secured longer, larger contracts for battery purchases and so that keeps certain volumes off the market for computing manufacturers. But also on the metal side you're right, when you start looking at the components that make up a modern lithium-ion battery that's use for powering these electric vehicles, there are issues around cobalt, right. A lot of it's mined in the Democratic Republic of Congo, there are some issues there. And we're already seeing a response from battery manufacturers in terms of the chemistry of the batteries, right. They're adapting by changing the makeup or the composition of the batteries so that they rely less on the more scarce or more difficult to procure metals. And you're seeing that already, right.

Fellipe Balieiro (15:36):
Some folks are moving to lithium phosphate batteries away from your more traditional lithium-ion batteries that are used right now by the likes of Tesla and other larger automotive manufacturers. They're thinking about this, right. The European Union is incentivizing or pushing for the construction of sites that will be able to not only make the nimble packs there, whereas a lot of that's being done in China and other Asian Pacific countries. There's a little bit of it in the US with the Tesla Gigafactory. They're building another factory in Austin, primarily for the manufacturing of vehicles but I believe there's also going to be some battery capacity there as well and General Motors is doing the same, right. They've made a strong commitment or at least they're positioning themselves for full electrification and are following through on those commitments, right.

Fellipe Balieiro (16:30):
They just a couple of weeks ago announced the Hummer EV, their first electric truck which makes sense since that's where the market is today, but they're also going to be building batteries here as well, right. They're starting to diversify the supply chain because there are some uncertainties with regards to politics, trade war tensions that exist today that perhaps may not next year. There are a lot of moving pieces and some of them are very difficult to address but nonetheless, as it seems that the industry is moving towards this decarbonization of the light vehicle fleet you're increasingly seeing more and more action to address the various bottlenecks or pinch points that we're seeing.

Hill Vaden (17:15):
Looking at that also there's a lot of focus obviously on Tesla and GM and Nikola and though I'm not sure if I've got to say it but where are the competitive advantages and I said, I think Tesla, for example owns the whole package, right. And it owns the technology inside the car as well as the car. Whereas I think a lot of the traditional auto manufacturers to oversimplify it or just building shells to move around someone else's software and you've got Mobileye or Intel and Nvidia and all these other companies that have the IP that it's just sitting on somebody else's aluminum structure is that at all accurate or due to some of the traditional auto manufacturers, are they bringing something to the table that is going to give them advantage long-term other than Tesla?

Fellipe Balieiro (18:02):
Interesting question Hill. And I think also a difficult one to answer, right. Electric vehicles are generally speaking, easier to manufacture than an internal combustion engine, right. I guess you could go out and buy an internal combustion engine and then build a shell around it but that's very difficult to do, right. You're going to have to somehow come to an agreement with another OEM to provide them with the engine or complete powertrain for the vehicle that you're trying to power without infringing on their market share. And that's all the times very difficult to do. And so we don't see it very often more likely what you typically see is collaborations between different OEMs and vehicle models. So they'll both sell, a vehicle that has very similar internals but very different shells. Whereas with electric vehicles, yeah they're just simpler to make. And so the competitive advantage I think today lies in how much of the value chain can you control such that one, it obviously optimizes costs for you but also helps improve their customer experience.

Hill Vaden (19:05):
Okay.

Fellipe Balieiro (19:05):
Right. I think Tesla, for example has made a very strong commitment to providing everything for their consumer and consumers that are buying Tesla's are generally speaking very satisfied with the product that they're receiving. Whereas if you're purchasing an electric vehicle from any other manufacturer, your ownership experience is very different, right. The software isn't as refined as a Tesla software for example, the charging infrastructure is a bit more difficult to deal with in terms of, there are a number of charge points that you can plug into and they're run by different companies and because they're run by different companies you generally have to have a different App for each one of those or a different subscriptions to each one of those. It makes it a bit cumbersome to navigate through that process, whereas if you have a Tesla and you only plugged into Tesla chargers you don't need to do anything. The supercharging network recognizes your car as soon as you plug it in. That's relatively simple and straightforward for the consumer and I think that explains their success.

Fellipe Balieiro (20:03):
But now from the OEM side of things, I think it's too early to tell though. I think that the competitive advantage question is one where it's still being decided, right. I think OEMs today have, for the most part they reach out through the suppliers who specialize in making small components that make up a complete vehicle. And that helps them to focus on marketing, designing vehicles, understanding what their consumers want as well as bringing new engine technologies without having to worry about the small bits and bobs that you would have to have manufactured yourself. If you're doing everything on your house like Tesla is doing. I don't know it's a excellent question I'm curious personally to see how that plays out.

Hill Vaden (20:50):
It feels like the Apple versus PC almost where Apple had no jacks to input other people's stuff. But the whole thing was baked and ready and easy to use, whereas the others are going to give you more flexibility but maybe isn't the competitive differentiation with somebody like Tesla has.

Fellipe Balieiro (21:09):
Yeah, that's an excellent analogy, right. It ultimately comes down to what is the consumer going to want? And when you look at today, for example in the US between 70 and 75% of new vehicle sales are trucks and SUV's.

Hill Vaden (21:22):
Yeah.

Fellipe Balieiro (21:23):
Whereas just 20 to 25% or 25 to 30% are cars, passenger cars. Sedans, Hatchbacks, Station Wagons etcetera. And when we think about, "Okay, what are the types of EVs that exist in the market today?" The Teslas are primarily Sedans in the model X and the model Y which are both crossover SUV's if you will and are selling relatively well. I think that that market share of smaller, more affordable vehicles is kind of I think Tesla saturated that market for all intents and purposes. And when you look at other things like the Chevrolet Bolt or the Nissan Leaf, they had very rapid adoption rates and it's kind of leveled out. And the next frontier for automakers in my opinion is SUV's and trucks, which is why I believe you saw General Motors bringing forward to Hummer electric truck and Tesla's latest vehicle that they're going to bring to market is the Cybertruck that they're going to be making in Texas, the largest truck market for US.

Breanne Dougherty (22:26):
Well, and I think you're in a unique position because you get to spend as much time visiting the automotive manufacturers, right. You've been in there, seen that space but you also talk to hydrocarbon kind of like typical oil and gas industry side. Let's be honest everybody's watching this space including the more traditional energy individuals, right. What kind of questions are you getting from them? Where are they seeing the potential for themselves to retool or integrate themselves kind of into this emerging story as well?

Fellipe Balieiro (23:00):
Yeah, sure. I think the first question that we're always asked is how big of a threat is electrification? Right, because I think ultimately it comes down to how fast is the fleet turnover? Because obviously if everyone's suddenly were driving an electric vehicle there'll be no more oil than that. But realistically speaking and thinking in more practical terms, there are over 260 million vehicles in the US fleet. And in the entire world, there are 1.4 billion vehicles that are 99.95% hydrocarbon powered. And how do you convince someone that doesn't have a lot of disposable income or is just say your average American family that can't afford to have more than one vehicle to adopt a new technology that remains relatively uncertain in terms of reliability, secondhand market that you could sell your car to, fixing that vehicle or just generally servicing it and traveling to see your family if you live far away during the holidays, infrastructure excuse me, isn't there.

Fellipe Balieiro (23:59):
It's going to be really difficult to change this, right. Especially when even if you had a healthy adoption rate of electric vehicles today, which in the US it sits at two, 3% of new vehicle sells. It is going to take a very long time to actually turnover the fleet. And so when our clients, our energy clients are asking a question of what is the biggest threat today to us? On one hand, yes it is electrification but on the other hand what is going to be much more detrimental to the industry in terms of demand degradation, is going to be increasing fuel efficiency standards, right. Even if the current EPA standards call for a halting or a holding of, of current fuel efficiency standards to the 2020 level for the next five years, every new vehicle that you bring to market today is replacing any less efficient vehicle that's generally speaking, 20 to 30% less efficient. You have a proportional decrease in fuel efficiency going forward, right. That's the biggest threat today to the energy industry, it's just increase in fuel efficiency standards.

Fellipe Balieiro (25:03):
And even if there isn't a mandated efficiency standard increase that's being dictated to automotive manufacturers by the EPA, automotive companies are still planning or baking into their new vehicles or every new vehicle models, efficiency standard increases it's right. They just bake it in as the technology becomes available and where it gets less costly, it's passed down or shared across different vehicle types. As new efficient efficiency standards are pushed overseas the technologies also trickle back into the US market, right. Because these are global companies, whatever they're doing overseas eventually it's going to come to our market as well and vice versa with exception of V8 and V6s. In the US you have more V8 and V6 equipped vehicles than anywhere else in the world combined. It's just startling to look at the statistics.

Fellipe Balieiro (25:54):
But yeah, so the kind of drifting a little bit, which I tend to do when discussing this topic. I think another question that we also get a lot of times is this question around hydrogen, right. The question around hydrogen I think makes sense if you're thinking from a refiner's perspective, right. You have equipment on the ground. If demand goes away, you're going to have to find out what to do, right. If gasoline and diesel demand for example were to suddenly disappear what can you do as a refiner? Or you can start making more Petrochemical Feedstocks, you can retool a little bit change some of your catalysts to manufacturers more of the feedstocks that a petrochemical plant would need or want but you could also make more hydrogen, right.

Fellipe Balieiro (26:37):
You already have reactors in place where you could reconfigure and make hydrogen. You have pipelines across the country that you could use to distribute the hydrogen with. But from an automotive standard or from an automotive industry perspective, they generally speaking aren't moving as fast with hydrogen fuel cell technologies as they are battery electrics, right. And so that's been really interesting to see, which is automotive clients be the manufacturers or suppliers or anyone else that's related to the industry. They're really focused on electrification, whereas our energy clients are very focused on, "Hey, what happens with hydrogen next?" These are two very different things that are being asked about, right. And just looking at the hydrogen question overall. Hydrogen fuel cell vehicles, they're about 10 years behind electric vehicles, right. In terms of sales, infrastructure, research and development, customer awareness or consumer awareness and with a few exceptions I think around the world and in places like Japan, South Korea where the government is trying to push the powertrain technology, we're not seeing a lot of movement.

Hill Vaden (27:49):
And maybe this is a good kind of last question to give a different perspective. You've, we've talked about energy companies and auto companies from the consumer perspective and driver perspective. One of the things I'll say that concerns me with electric vehicles or hydrogen vehicles or whatever, three of us all live in big cities. I hate sitting in traffic. I think with ride-sharing, Uber and all of that has in a sense, encouraged more cars to come onto the road when traffic is at its worst with rates being low and finance being flexible or people going to start buying more of their own cars and put more cars on the road. And so we're cleaner and greener, but it takes us forever to get anywhere or is some sort of urban planning, some sort of there's a wonderful onion headline from years ago that 90% of people favor public transportation for other people. Are we setting ourselves up for even more gridlock than we've already got? It'll just be easier to breathe while we're in that gridlock.

Fellipe Balieiro (28:49):
Well, yeah, you fixed one problem [crosstalk 00:28:51]

Breanne Dougherty (28:57):
Always so optimistical.

Fellipe Balieiro (28:58):
Create another. We are starting to see like cities, for example are starting to move such that they're addressing this very question, right. On one hand they want to address the question of pollution or just local air quality but also congestion. And so in the US you have examples in New York and San Francisco where the local governments are experimenting with restricting access to cars altogether or just internal combustion engine cars via or rather through certain streets or neighborhoods. And they're gathering data there, right. To see how that actually entices people to act one versus another, whether it makes them walk or ride a bike or a scooter or if they then turn to public transportation. I think it's going to take off, right. Ultimately the only way that you solve any of the issues that you brought up Hill is with some sort of central planning around public infrastructure. There's just absolutely no way around it.

Fellipe Balieiro (29:59):
If you are a ride-sharing company or ride-hailing company, from your perspective I think that you want to be part of the solution, right. You can provide transportation that's more flexible than public transport most of the times but the only way you get around the issue of as you mentioned, during high congestion times there being an incentive for people to actually get broad, because that's when they're going to make the most money is to force efficiency increases which can only come via pooling, right. And so if you don't have pooling occurring with ride-hailing then you create congestion. And you're seeing places like China that started to experiment with pooling mandates or having targets for companies. And that could come via either characteristic, if you will, right. You could give incentives or you could just say, "You can't do it. You have to do this."

Fellipe Balieiro (30:56):
And so it has to be an all-hands-on-deck type of situation to address all of the issues. It can't be one or the other and the same goes for electrification. Electric vehicles they are expensive. There's a lot of uncertainty with regards to the technology and infrastructure that support it as well as the familiarity and level of comfort that people have with making a relatively big decision in their lives, right. It's the second largest expenditure that most of us make in our lives. And it has to be a combination of everything, right. If we are to address the issue of climate change of worsening air quality, we have to start thinking about how can we make the most impact the fastest way possible. It's not, how do we get rid of it all at once. Because that's going to take a long time, right. If we've got 260 plus million vehicles in the road, they're not going to disappear overnight even if you were to scrap them. Where do you put all those vehicles?

Breanne Dougherty (31:55):
I think it's so interesting because, and obviously this is a conversation to keep up with over the next many years I assume, but we've got family in Germany and I think they had to turn in their diesel car and get a new car last year. I think there was something that might've happened with respect to regulation. But I guess it would be interesting to see because there's so many varied regional approaches right now, be it country to country but actually even within the US, state to state and that sort of disjointed movement towards the electrification of the fleet as well as general energy futures policies is something that's keeping us all on our toes right now and being watched by everyone. We really appreciate you joining us for that conversation.

Breanne Dougherty (32:46):
I don't know if Hill, if he has any lasting thoughts on this, or if there's anything else that Fellipe would like to impart on us with his great wisdom with respect to the space or even as outlook for the week. But if not we will wrap up and thank you very much for joining, Hill?

Hill Vaden (33:03):
Yeah. Thank you. This is great.

Breanne Dougherty (33:05):
You're going to go shopping this weekend for a new EV?

Hill Vaden (33:08):
No I've gotten hold of gas fire. I already gas fired in. Get a gas-powered automobile that has low frills because the other thing when remember I last bought my car I was like, "This car is going to depreciate so fast that there's no point in me buying anything nice." But I'm hoping I can give it to my son when he turn 16 but then I don't have to go buy an EV.

Breanne Dougherty (33:32):
There you go.

Hill Vaden (33:33):
Whenever that happens.

Breanne Dougherty (33:38):
Well, there you go. All right. Well, thank you everybody for joining us again for this session of EnergyCents. We hope you enjoyed the conversation and we will be back with more probably next week so stay tuned. Thanks everyone.

Fellipe Balieiro (33:50):
Thanks.

Hill Vaden (33:50):
Take care.

Speaker 1 (33:52):
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Speaker 5 (34:13):
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