How governments and businesses can work together to meet climate targets

In this episode, we’ll explore how we can align the cross-industry system to achieve milestone climate objectives.

This episode explores:

The EV ecosystem and how we can align the cross-industry system to achieve milestone climate objectives to create a sustainable transport system.
Why businesses and governments need to consider the consumer point of view to achieve targets, and the fundamental changes related to EV ownership, around understanding the purchasing incentives, total cost of ownership, energy consumption, and charging logistics that consumers will need support on.
How supply chain and manufacturing feed into the EV ecosystem, and which approaches are necessary in integrated planning to achieve climate targets.

Learn more about the EV Y Podcast.

Podcast transcript: How governments and businesses can work together to meet climate targets

54 min approx | 30th September 2021

Ade Thomas:

Welcome to the EV Y, the eMobility podcast that asks the bigger and better questions of the EV industry.

Hello, and welcome back to EV Y, the eMobility podcast that asks the key questions on trending topics in the eMobility industry. I'm your host, Ade Thomas, and every episode I'll be talking to expert guests to delve into the what, why and how in the EV industry. Today's episode is all about the EV ecosystem. Grazing a sustainable transport system means overhauling transport and energy as we know it, at a rate incomparable to anything we've seen before, Achieving net zero by 2050, and curbing global heating requires a massive effort, and collaboration across industries, including the automotive, energy, finance, infrastructure, government, and of course consumers.

Ade Thomas:

Today, we'll explore what's needed to carry out that level of whole ecosystem thinking, and are asking how can we align the cross-industry system, to achieve milestone climate objectives? To help answer that question, I'd like to introduce our guests for today. Firstly, from EY, Charlie Simpson. Charlie is a partner at EY-Parthenon, and the UK future mobility lead for advanced manufacturing and mobility at EY. And our featured guests are Ginny Buckley and Doug Johnson-Poensgen. Ginny is a journalist presenter and founder of Electrifying.com, a site offering jargon-free advice to consumers looking to make the switch to EV. And Doug is the founder and CEO of Circulor, whose mission is traceability and due diligence of raw materials, from source to manufacturer.

Ade Thomas:

Charlie, Ginny, Doug, it's fantastic to have you all on the podcast. To start us off, I'd like to ask you why you're in the eMobility sector. Charlie, if I may start with you, what drew you to this area?

Charlie Simpson:

My background is pretty broad. So, over the years I've worked with car companies, energy companies, tech companies, finance companies. And frankly, I've never actually wanted to settle on all of them because they're all interesting. The beauty of this theme, as you described, is it is genuinely a system-wide change that impacts all of them. So frankly, from an intellectual, curiosity point of view, this is fascinating. More importantly, frankly, I've got relatively young kids. What we're doing around the energy transition and the broader theme, matters for us, it matters more for them. So, it's something that I'm passionate, so I'm very engaged in, and this is probably the most fun part of my career. So I'm in it for a number of reasons.

Ade Thomas:

Totally with you on that latter point about the kids side of things. Ginny, absolutely delighted that you can join us for this podcast. May I ask you the same question, what brought you into the EV sector?

Ginny Buckley:

So lovely to be here. I think like Charlie has said and you echoed, I'm a mom. And I'm really concerned about the future, about the kind of planet I'm going to leave, we're all going to leave for my son. But I think inevitably for me, I was always going to be drawn into it. I've been a motoring journalist for 25 years, so I've driven every kind of car there is. And I was always going to at some point, end up in alternatively fueled vehicles. So, I actually drove my first EV back in 1998, it was a VW Golf called a City Stromer. It was sold in tiny numbers. And I think what struck me about it then was that it didn't seem weird or strange or funny, it just seemed exciting and really logical to me, and I could see it being part of the future. Quite frankly, I'm just amazed it's taken so long to get here.

Ginny Buckley:

But I guess the light bulb moment for me was a couple of years ago, I made a program for, which asked a very simple question, which is are we ready for electric cars? And we were looking at the UK as a whole. And I think the answer came across very strongly that, yes, government, industry, OEMs are all gearing up for it, but consumers, they were just not ready. So I think for me, I was drawn to it with just that challenge of communicating this huge switch to consumers, really helping them clear the air. And also I just, quite frankly, love electric cars. I enjoy driving them, and I want to share that passion that I've got with other people. So yeah, I think it was always inevitable, but I'm surprised it took me as long to get here as it did.

Ade Thomas:

Thanks so much indeed, Ginny. Nice teaser into that idea that we'll get into, thinking about consumers as part of the new eMobility ecosystem in a minute. Doug, finally over to you, what is it that drew you into the EV space, please?

Douglas Johnson-Poensgen:

I've always believed that new technologies can unlock all problems. And I became aware a few years ago that the environmental and social cost of the energy transition is very significant. Probably not that surprising if you think about the environmental incremental costs of turning rock into cars or batteries is very significant. And if you are manufacturing electric vehicles, the majority of the emissions in that manufacture now comes from the manufacturing phase, and the inherited emissions from the supply chain.

Ade Thomas:

So, from rock to roll in a sustainable way. Thanks very much indeed, to all of you for those opening gambits. First of all, we have a question from one of our listeners to the podcast series. So, this question for all of our guests has come from Victoria Lions, who asks, "There are lots of startups in the EV markets at the moment. Do you think we'll eventually start seeing monopolies forming, and what effect would that have?"

Ginny Buckley:

It's a great question, Victoria. And of course, you know, this field is sector prior to this has always been dominated by, you know, big monopolies, hasn't it. But I think what's been really fascinating for me as the founder of a startup is just how open this sector is. You know, that there are very few areas in business and I can think of what you, you know, you can help start a startup like mine that are working alongside, you know, big blue chip companies alongside, you know, real cross-section of industry. And I think it's because just as I, when I talk about this from a consumer perspective, I say that, you know, this is a real leveller. It doesn't matter how much you know about cars. You may not know how to charge an electric car. And I think there really is a sense of a moment that everybody is sort of in this together, we're at a very exciting period in the sector and the sharing of knowledge for me and the share, you know, the conversations has been, you know, it's been fantastic to experience that. Will we see monopolies to go back to that where you've got 20 charging providers? I wouldn't be surprised if we see some amalgamation and I think, yes, maybe eventually we will. But I think we might be quite surprised at where we see relationships and partnerships forming, because certainly from my perspective, what's been interesting has been the fact that it is a very collaborative space to be in at the moment.

Ade Thomas:

you have a kind of a strategic overview of ecosystems. What's your take on that question?

Charlie Simpson:

It's a really interesting question. I think it will differ various parts of the industry structure. So what one lens is thinking whether natural economies of scale and there, I think we will start seeing an aggregation. So in areas that are capital-intensive and I think the seat, the charge points operating side of that, we will naturally see an aggregation. What one interesting mental model that we use thinking about the evolution of this is looking at the airline industry where globally, you have to OEMs to plane makers, namely Boeing and Airbus serving something in the order of 500 airlines globally. So economics has forced scale and monopolies where it matters, but then a proliferation of service providers where the market demands that. And if you look at what's happening with the car companies with the likes of Volkswagen Audi group, and some of the bigger Japanese conglomerates, you can start seeing that moving in that direction. Charlie Simpson:

But I think there's going to be a huge amounts of innovation as Ginny said, at the nearest consumer service end, where we will continue to see fragmentation, experimentation and innovation. I think one area that's particularly interesting, is if you think about the data dimensions of this. Because electrification, in our mind, goes hand in hand with connectivity going towards autonomy. And we can already see the benefits of, and also the disbenefits of large databases, data pools on top of which services are built. How that's architected is going to be civilly interesting. We think there will be some polarisation of larger players, but then hopefully a proliferation of innovation in smaller players playing around the edges of that. So I think quite polarised, but quite dynamic would be our view.

Ade Thomas:

Interesting stuff. And Doug, you're more downstream at the raw materials side of the spectrum. What's your take on that question?

Douglas Johnson-Poensgen:

Yeah. Obviously we work upstream with the miners, all the way through to downstream with the car manufacturers. But the first thing to say is that real innovation comes at speed through competition. And this proliferation of big established players like car manufacturers, looking to evolve what they do, coupled with a pile of upstarts, whether it's in charging infrastructure or key technologies like battery health diagnostics, to take a particular example, is actually very healthy at trying to drive a pace of change. And of course, eventually there will be consolidation. There's a significant amount of money, particularly venture capital and private equity money, flowing into everything and anything that is called climate tech.

Douglas Johnson-Poensgen:

And of course, that together with a combination of regulatory pressures and all the rest of it, is what is trying to drive change at scale. For us as consumers, that's all a good thing, but we're at the early foothills of what will be quite a large climb, I think, to get to sustainable energy transition.

Ade Thomas:

Thank you very much indeed, everybody. We'll be answering a listener question every episode, so please do send in further questions to evsummit@green.tv. So today let's get into the main part of the debate around the EV ecosystem, and how we achieve ambitious climate targets through this whole systems thinking. Charlie, could I hand it over to you to give your take on this subject to start us off, please?

Charlie Simpson:

Thanks, Ade. One of the ways we look at this is future thinking, and describing the world that we can all probably envision somewhere around about 2035, 2040. Where the transport world we live in is smart, connected, efficient. This sounds slightly futuristic, but it works at a systems level.

Charlie Simpson:

Now, that vision's nice and relatively easy to describe. The difficult bit is how we get from where we are now, to that point, and the level of coordination that's going to be required to get there. Now as an economist, there's an interesting trade-off between central command and control style planning and coordination at one end, versus the innovation that we think the system is going to need at the other. Somehow, we're going to have to strike a balance. But what's clear is that for the transition to occur in a relatively efficient fashion, and I use the word relatively advisedly, it implies a degree of, at least, joined up thinking between car companies themselves, the energy companies, technology and government. In frankly, a way that we've never tried to do certainly this complex, and certainly not in as compressed a timescale.

Charlie Simpson:

Now it's interesting, we work in various areas of government where the realisation, whether it's around the battery supply chain or the digital infrastructure, or the charging infrastructure, there is clearly a role for government to, at the very least, set sensible signposts and way markers to help de-risk elements of this. And that's on the supply side. And then very much in the, I know the way Ginny thinks about the world, is how the hell do we convey this to consumers at large, in a way that makes sense in day-to-day terminology? There will always be, and us around this virtual table are probably by definition at the early adopter end of the market, what really matters is how do we convince the mass market that this is a sensible transition?

Charlie Simpson:

And again, if this is purely left to the private sector, there will be an element of profit skimming of folks on the early adoption at a premium price. We think there is an active role for governments around that communication, around that de-risking, and around that enabling layer to then allow innovation to roll in on top of that. So, getting the supply and demand balance with the regulatory piece at the middle, it's going to be quite a trick to pull off. But if we don't at least give this a go, we think we could end up in a series of expensive technology and consumer dead ends, which is going to benefit nobody. So, that would be an initial view.

Ade Thomas:

Thank you so much indeed, Charlie. You mentioned that this would be say, the first time in human history that this kind of joined up strategic thinking has happened. What do you think is going to be the catalyst for making that happen? You seem to indicate that it might come from government.

Charlie Simpson:

Yeah. Well, I think the big game changer here is climate change. I don't think we've ever had as economically compelling, as emotionally compelling, as politically compelling a series of messages, that are pretty much well accepted in terms of consequences of not getting some of this right. I think, now, does it enable everything to happen? No. Does this change the landscape within which it's happening? I think probably yes.

Ade Thomas:

So, you're convinced, just to pursue this question a little bit, that climate change will be the catalyst that will deliver this integrated thinking?

Charlie Simpson:

Yeah. I'm certainly not naive, and there are going to be significant challenges on route. But I think we've got a better facing chance in the context of climate change than we would have done, say, 10 years ago, so I'm cautiously optimistic would be my view.

Ade Thomas:

Interesting. Good luck to us all, and good luck to our children. Thank you very much indeed, for that opening number. Ginny, from climate change to cars and consumers, I know you have a real focus on consumer engagement, as Charlie just indicated. What do you think is going to be the key that's going to get consumers to engage with this new radical approach to mobility?

Ginny Buckley: I think a lot of consumers are engaged already. And I think if you look at all the stats and the surveys, you see that people are open to electric cars and the thought of owning one, in a way that they wouldn't have been certainly a year ago, 18 months ago. But I still think there are a huge amount of people who, despite the fact that they might like the idea, they find it all so confusing still. As Charlie just talked about, it's going to be this huge piece of joined up thinking, this massive challenge. And I do worry that lots of government industry that is involved in that, is actually leaving the consumers behind. They're not necessarily following the lead that's being taken, and we're moving at a great pace.

Ginny Buckley:

And I think it's easy to underestimate how challenging the thought of owning an electric car actually is, even if you like the idea. This is an ecosystem all in itself, that we're asking consumers to get their heads around. There's different jargon to understand, you've got new technology to get to grips with, new habits to form. Let's face it, who likes making new habits? I know I certainly don't. We're busy, we're set in our ways. If you just look at the fundamental changes that we're asking consumers to make when it comes to car ownership, they need to think about how they're going to charge, where, how they're going to charge their car, when they're going to charge it. They've got to understand the purchase incentives that are on offer, they've got to understand getting charging points fitted to their home.

Ginny Buckley:

They need to stop focusing on the price of the car, look at something called total cost of ownership, get their head around energy consumption and how that fits with electric car ownership. Perhaps start thinking about a new energy supplier, start using and understand the apps. Even the prospect of driving an electric car can seem quite daunting. We surveyed 18,000 people earlier this year together with the EAA and the Department of Transport, and 50% of them told us that they felt that driving an electric car was something that they were a bit wary of. They were quite frightened of it. So, it's an awful lot that we're asking them to do, and I'm just not sure that the focus is there enough on giving them the information and the support they need. So I think as Charlie said, I think the will is there. I think we're really well-placed at the moment, but what we have to do is hold people's hand and guide them through this confusion that surrounds this sector.

Charlie Simpson:

And Ginny, just a question. When you talk about them, how do you see the different demographic, generational splits here? Clearly someone of my age, 50 odd year old established driver, versus 20 year olds, I'm assuming reacts differently. How do you see that playing out?

Ginny Buckley:

Yeah, it's really interesting. Because I think I would have expected that it would be perhaps more engaged, younger consumers who were more open to making the switch. But actually for a lot of them, that's still financially out of their reach. So, we do see an interesting cross section, certainly on the users to Electrify.com. We see a really interesting cross-section of people coming to us. We're pretty much there from 25 up to 60, is our core demographic. And 75% of the people that come to us don't own an electric car already, which is something that makes me really happy. Because I think there's quite a lot of preaching to the converted that goes on in this sector.

Ginny Buckley:

What I want to do is, I think we need to help the mainstream consumers make that switch. So, I come back to the point I make a lot, which is as I've said, it doesn't really matter if you can take a combustion engine to bits and put it back together, and you're obsessed with cars and everything about them. You probably don't understand how to charge an electric car. So, it's a real leveller, so I think a lot of these old assumptions about who target audience is for a car, I think they've gone out the window really for me.

Ade Thomas:

Thanks very much indeed, both. So Charlie, you mentioned governments needing to de-risk this new ecosystem. Ginny, I know that cost is a big issue in your research for consumers. Thinking about joining up those two things, do you think something radical like governments supporting consumers with things like means-tested grants for electric vehicles, is a way forward? Or how are we going to join up the government ecosystem with the consumer ecosystem, in a way which is going to really engage a new cohort of consumers around electric vehicles?

Ginny Buckley:

Yeah. We talk a lot to the visitors to the site, and survey consumers a lot. And the words that come up constantly when we talk about the blockers to switching, are cost expensive. Along with the things that we know, like range and charging and infrastructure. But it is a really expensive purchase, buying a new car is a really expensive thing. It's easy to underestimate that. I think for me, what we'd like to see is perhaps more incentivization for the used car market as well. It eclipses the new car market. In Scotland, they have a great scheme where you can get loans that you can choose to spend on new or used. And I think there could be more support for that in the UK as well.

Ginny Buckley:

Means testing, I don't know. I'm not sure we're there yet, I'm not sure I would support that. However, I think it was absolutely right for the Government to bring down the threshold for the grant. So, the grant was brought down to £35,000, there was lot of outcry about that. But for me, that actually was a really good move because there was a finite pot of money, let's face it. I would rather that was used to get as many people as possible. And I think, did it sit well that you are giving grants to people who can afford quite expensive cars? No, probably not. I think that was actually a sensible thing to do. So, I think it's important to not withdraw incentives, but equally it's important to recognise that they're not going to be there forever. So, there isn't a finite pot of money.

Douglas Johnson-Poensgen:

I think there's a challenge also for the auto industry to contemplate new business models. Ginny has just talked about incentives for the used car market. Well, one of the differences between a traditional internal combustion engine vehicle and an electric vehicle, obviously is the battery. And the battery has a finite life, every one of us has a mobile phone and we realise that the battery deteriorates over time. Well, batteries are expensive.And it means that if you're a secondhand purchaser of an electric vehicle, how long will the battery last? And how can you rely on whatever assurance you might receive about that? And can you afford replacement?

Ade Thomas:

I was going to come... Sorry Ginny, I was going to come to you, Doug. We all know the batteries are by far and away the biggest cost component of electric cars. From your upstream perspective on supply chain and supply chain and manufacturing, do you see those battery costs coming down significantly anytime soon, or not?

Douglas Johnson-Poensgen:

Well, so just to give a sense of scale for this, firstly, the battery accounts for about half of the entire carbon footprint of the manufacture of an electric vehicle, and accounts for about half the cost, so it's a chunky thing. And there are lots of attempts to look at different battery chemistries, different materials turned into batteries. And even as consumers, we've heard of lithium-ion batteries, that's what we have in our phones. And we know about alkaline batteries, which is the stuff, the AA batteries we stick into our remote controls at home. That's an example of different battery chemistries. There's a whole proliferation of them in the EV space. And of course, car manufacturers and others are experimenting with different types of batteries, all have trade-offs in terms of range and life. And particularly trying to grapple with this question about how do I increase the range, and reduce the cost, in order to enable electric vehicles to be more accessible to a wider group of people? They're not there yet.

Ade Thomas:

Very good. Let me ask that question to all of you, what radical changes do you think to help accelerate this ecosystem of usage and sustainability around eMobility, what are the radical changes that we might see in the next, say, three to five years?

Ginny Buckley:

I think ownership is becoming increasingly interesting, do we actually need to own a car? I think for some people, the answer is absolutely, for many of us it's a mobile office, home, place where we keep our kids' paraphernalia. It's a store room for me, I keep half my house in it. But I think more and more that will go, and I think certainly we see the increase in some of the innovations that are coming through in ownership, and shared ownership. And I think that's quite interesting, and I can see that that will extend and develop. It's convenience, isn't it? And I think ultimately that will win through for the consumer. So I think for me, it's do we need to buy, do we need to worry about what the battery life is going to be in five years? Because we probably won't have that car by then. So, I think that's... Yeah.

Douglas Johnson-Poensgen:

Including in cities, actually. A third of the real estate in lot of cities is given up to parking, which if we think about growing populations, that's perhaps not wildly efficient. So, shared mobility may well be more of a thing in urban centres than it would be in rural areas.

Charlie Simpson:

I think the point that Ginny's making is interesting, because it breaks down into two things: one is actual ownership, and the other's exclusive usership. So the reality is certainly in the UK, the majority of vehicles that are on PCP, PCH. As consumers, we don't own our cars, most consumers haven't quite caught on to that. But Ginny, your point about exclusive ownership was certainly important before COVID, and arguably it's become more important after COVID. So as consultants, three or four years ago we were doing lots of work on shared mobility models, shared usage of individual vehicles, et cetera. That does look different at the moment. How long that COVID impact will last for, is very much to be seen.

Charlie Simpson:

And I think Ade, to your... As with all of these things, it's carrot and stick. Now, at some point government sense invention can be effectively to do things such as banning single use four-seater vehicles driving on certain roads. So, there's a physical constraint set of options government could choose to deploy if they wanted to be more radical. The other really interesting factor is road usage pricing. So as we move away from road fuel duty on internal combustion engines, there's 23 billion, I think it is of treasury income which will erode under the current tax structure. Logically, you do start edging towards road usage-based pricing systems for constrained capacity. Economically, fairly logical, but politically very incendiary. So, it'll be interesting to see the way governments and treasury faces into that over the next few years.

Douglas Johnson-Poensgen:

This conversation is obviously talking about EVs as in cars, but actually I was in Munich last week where micro-mobility, electric scooters, electric bicycles are becoming all pervasive. You find them everywhere. And it seems, I admit obviously the pure anecdote is not data, but it seems that consumers are very comfortable with jumping on a scooter to go from A to B, and don't necessarily need to expect to own their own.

Charlie Simpson:

And I think Doug, the other piece in all of this is, and we do quite a lot of work in the freight and logistics industry. So, last mile delivery in cities by two, three, four wheeler EV type configurations, Ade, such as the ones we saw at the EV Summit in Oxford last week, I think we are really going to change the landscape. Hence, help demystify for the broader consumer base, so we can see some positive feedback loops on that front.

Ade Thomas:

There is a total sense in which we fetishize the car in this compensation, and forget that actually the e-bike is the fastest, highest growth sector in the EV, electric vehicle space. So there is that side of things. Interesting stuff, and thanks very much indeed, Charlie, for giving me a new sense of how I own my car or don't own my car. So, that comes from car share to exclusive usership via subscription, and probably my next stop will be a more full fat leasing agreement. So yeah, interesting stuff. Doug, what radical changes do you see in your world, that maybe will happen in the sector in the next three to five years?

Douglas Johnson-Poensgen:

I think the fundamental challenge, is how to make all these things we consume more sustainable. So I just, without wishing to nerd out on boring stuff like supply chains, I think all of us have become a little bit more aware post-COVID, with new world shortages and other things, of the challenges of supply chains. And they are horribly complex and global. World Economic Forum published a report at the start of this year, 2021, about the climate impact of supply chains. Supply chains for things like textiles, food, automotive, aerospace, consumer electronics, that's five of eight supply chains that account between them for 50% of all global carbon emissions. That's eye watering. And actually everything we might do as consumers, buy electric vehicles, eat veggie burgers, will have a pretty modest impact if we can't get a grip of the impact of the things we buy on the global supply chains, and their total carbon footprint.

Douglas Johnson-Poensgen:

And so, regulators are trying to push up the lowest common denominator, and you've even got countries like China now committing to be net zero by 2050, and I think they'll do it, particularly as they're a relatively directive regime. But separately, you have institutional capital trying to push from the top down, organisations to actually start meaningfully doing something about these really complicated issues, and that's a very positive thing. And of course, general interest with consumers in de-carbonization.

Ade Thomas:

Yeah. Sustainability is the driver for the sector, or climate change as you rightly outlined, Charlie. And we will be judged very harshly by history, if we don't transition into a sustainable new form of eMobility. So yeah, absolutely, interesting stuff. Anything else anybody wants to contribute on that subject?

Charlie Simpson:

Yeah, it depends how broad we want to do this, but the other part of joined up thinking we've not really thought about is hydrogen, and how hydrogen feeds into the transport system is going to be in part, determined by how governments think about hydrogen as part of the domestic heating solution. So, what makes this even more complex is you can't think about the transport ecosystem in isolation. And what's fascinating on the hydrogen side, is that, and this is a role for government, is de-risking the business model and the demand over a 50-year period. It mirrors interestingly, what's happened in the nuclear industry. Because the capital that's going to be required injected at the front end to drive the volume to get the price down, means that governments have got to make commitments around how much hydrogen goes into the domestic heating system. That will then have a knock-on impact on the availability of hydrogen for long haul freight transport. So, it really is joined up thinking on quite a challenging scale.

Ade Thomas:

Do you see in your work at EY, Charlie, that the transport secretary is having a meaningful conversation with the energy, or the renewable energy sector?

Charlie Simpson:

Yeah. Yes, but it's early days, and the agreements of the end goal between transport, energy and government is going to be one of the key deciding factors. So, very practically producing joined up road maps with milestones and conditions over a 20-, 30-year period, is not frankly things that Western governments and Western industries feel very comfortable in. There are other parts of the world, China being one example, where that approach to long-term planning is a more natural response. That's one of the broader geopolitical contexts that this is all happening within.

Douglas Johnson-Poensgen:

I agree, Charlie. Just on hazard and super quickly, hydrogen, just like every other raw material, is manufactured from something and needs a lot of energy. So, you take water and you have to split out the oxygen and the hydrogen to create it. Only about 0.2% of hydrogen today is produced with renewable electricity, so it's not necessarily better in inverted commerce.

Charlie Simpson:

Yeah, true. So, we're talking in the ideal world, this is a green hydrogen conversation rather than blue or grey, but you're absolutely right, Doug.

Douglas Johnson-Poensgen:

Totally agree.

Ade Thomas:

And Ginny, over to the consumer side, do you see consumers being concerned about renewable energy in the powering of their electric vehicles, or is that just totally eclipsed by cost?

Ginny Buckley:

I think it's a conversation that's coming into the mainstream more and more. It's certainly something that we're focusing on. I think 50% of the work that we do is around the wider ecosystem, buying the car is for me, choosing which car is only half the thing when it comes to an electric car. And we're talking more and more about how an electric car is only as green as the energy you put into it, talking to them a lot about, trying to get them to understand the benefits of smart charging and the role that vehicle to grid will play into this going forward.

Ginny Buckley:

We know that for consumers, one of the big blockers that they have, and one of the big myths out there is that the national grid just will not be able to cope. We know that it's very real, it comes up in all of the surveys that we do when we talk about what concerns people have. And three-quarters of people genuinely think we're going to have the Coronation Street moment, where we all go and plug our cars in at six o'clock as we go off to make dinner, and the grid will crash. And of course we know the reality of that isn't there, it's not there. We know the grid is ready, it's transitioning, we know that smart charging vehicle to grid will help, but it's about getting that message back across to consumers. And I think at the moment they really don't get that at all. So yes, I think a small group are starting to really think about where energy comes from, and that renewables is the right way to do it, but certainly not in the mainstream.

Ade Thomas:

And what about Doug's work in sustainable supply chains? I guess that's a conversation too far for most consumers at the moment as well, right?

Ginny Buckley:

It's interesting, because it's a question that we get a lot, and it's a question that gets asked quite angrily, which is how green are electric cars? So, consumers are aware of it, yes. I think it's often used as a stick to beat the sector with, to beat electric cars with, that they're not really green. To a degree, of course they are. There's a huge amount of the, as Doug has explained, the manufacturing, the battery, you know, all of that, that plays a huge part into it. But we need to look at, what we're talking again to consumers about, is how long do you own the car for? It's making sure you do put renewables into it, but I do think that the interest is there. Consumers are curious, but they're still confused about things like that.

Charlie Simpson:

Just two other bits of the consumer experience, and Ginny, I don't know what your view is. But one is the whole clean air zone, and some of the high-profile political court cases around the impacts of diesel in urban areas. Just interested to see to what extent that's crossing through. And then I think the other piece worth picking up on, is that the really visceral experience for EV owners at the moment is when they go to a charge point on route somewhere, and half of the charge points are rather out of action. That's a very real moment of truth for a lot of users in the early stages of this. I don't know to what extent you've picked up on either of those two from consumers.

Ginny Buckley:

Yeah. Again, along with cost and the financial side of ownership, is concerns around, "Will my car take me as far on a full charge as a petrol or diesel car would on a tank of fuel?" It's, "Will I be able to charge?" And lack of public charging points, as I said, the survey that we did earlier this year, 70% said this was a main reason why they were concerned about switching to electric. If you look though, we have actually more charging points, more charging locations than we do filling stations in the UK. But I think despite the fact that we've got, I don't know, it's 40 odd thousand connectors in 16,000 locations, around a third of those are in the greater London area. So, they're just not visible enough, they're not out there.

Ginny Buckley:

And then as you said anecdotally, things are getting better, but we all know about the stories on route, of people trying to charge on the motorway network, which had been woeful. Yes, that's starting to change now, but the charging infrastructure doesn't give people confidence to make the switch. And I think you look at also the location of chargers, you don't have to go fiddling on an app and into the corner of a dark car park in order to fill your car up with petrol or diesel, which you have to do often to try and find the charging point. So I think infrastructure is getting there, there's a lot of work being done in this area. But you're absolutely right, it's perceived as being a big issue. I think the reality is once you make the switch to an electric car, you realise it's not quite as big an issue as you thought. But we've got to get that message across.

Charlie Simpson:

Someone said to me we're in the equivalence of 1905 and people saying, "Well, there aren't enough petrol stations, so this internal combustion engine thing will never take off." So, I think there's a bit of a historical perspective on this as well.

Ginny Buckley:

It's perception, it is perception. But I think as a sector, we need to support people and accept that they do have these concerns and worries. It's easy to spout off numbers and to talk about, "Oh, the infrastructure's great, and this is being spent." But if you live in Lincolnshire, and actually there are more charging points in the couple of square miles of Westminster than there are in the whole of Lincolnshire, then you might not believe that. And I wouldn't blame you, because if you can't see them, how do you know they're there?

Ade Thomas:

A very interesting conversation, but I'm a little concerned were going down that kind of anxiety, rabbit, wormhole here. So, let's end on a high and think about what are the positives in terms of an ecosystem joined up approach to eMobility? What do you see, let's start with you, Charlie. What do you see as some of the really positives coming down the track for really igniting this sector?

Charlie Simpson:

If I reflect on where the conversation's got to, probably over the last three years ago, it was very much quite a high level of scepticism, veering on cynicism towards, well, is this just a flash in the pan and a complete load of hype? I think now, all of the actors are discussing how we do it most efficiently, rather than whether we will or whether we should. So, I'm definitely more glass half full about this. And I think there's a realism, and a recognition amongst all of the key participants that they have key roles to play. And whilst the climate overlay is challenging in many fronts, I think that gives very positive context and acceleration to what we're talking about. So, I think we can do it, we will do it, and frankly it's going to be quite good fun for the next few years, as we figure out how it's going to work.

Ade Thomas:

Doug, what do you say is the hugely positive moments that are going to get us into this sector in a big way?

Douglas Johnson-Poensgen:

Big industry is polluting, and now the auto industry can no longer escape from its role in trying to make things better. And so, I'm starting to see meaningful change by auto manufacturers and some of their suppliers, to try and grip sustainability. I think that's very positive for the planet as a whole, but obviously it has a bit of a journey to go.

Ade Thomas:

And from the consumer perspective, Ginny, what's the big positive in your world?

Ginny Buckley:

I think it's people power. There is a street that a friend of mine lives on, that has become known as Leaf Street, because he bought a Nissan Leaf, and before you knew it seven of his neighbours on the street have got them. And I think once you go into an electric car, undoubtedly, you don't switch. We know the numbers of people going back are very tiny. I think if we can support consumers, hold their hand through the transition, show them that. Yes, it's okay that they're worried, but they don't need to be, I think actually people power will really lead this charge going forward. And will enable us to meet this target in 2030, when we see the ban on the sale of new petrol and diesel cars. So yeah, power to the people is my final word on that.

Ade Thomas:

Well, thanks for your positive final remarks. We began talking about how children were a real driver for all of us in terms of our engagement with the sector. I think that working in the sector is like having young children, it's the best and the worst of times all rolled up at once, isn't it? With the spectrum of climate change hanging over us, but at the same time that climate change driver really, really pushing forward some incredibly dynamic solutions.

Ade Thomas:

So, thank you very much indeed to everybody today. Thank you very much, Ginny, thank you Doug, and thank you Charlie. Another hugely stimulating podcast chat as part of the EV Y Podcast series. Many thanks indeed.

Charlie Simpson:

Thank you.

Ginny Buckley:

Thanks for having us, Ade.

Douglas Johnson-Poensgen:

Thank you.

Ade Thomas:

Thanks very much everybody, that was great. Really interesting, disparate voices, I thought that was really interesting. Thanks a lot.

Ade Thomas:

To end every episode, we will be highlighting unexciting and innovative hyper fast growth company in the sector. Today, I'm absolutely delighted to announce that we have Michael Hurwitz, Director of Development, Mobility at Arrival, to tell us about Arrival's super impressive journey. Michael, could you start us off please telling us a little bit about your background and how you came to the eMobility sector, please?

Michael Hurwitz:

Hi Ade, delighted to be here. I started out as a management consultant actually, and did various things transforming businesses in the private sector. But I moved into central government, which is where I got the bug. And I moved into the department for transport, I started in corporate business planning kind of activities there, negotiating with the treasury, that kind of stuff. But I elbowed my way into the environment space, and I guess I worked my way up to be the most senior person responsible for the future of energy in transport. So, I set up the office for low emission vehicles, now is the office for zero emission vehicles, the connected and autonomous vehicle programme. And a range of difficult stuff, like the Volkswagen emissions scandal.

Michael Hurwitz:

And I was just really captivated by a fascinating topic, and one that's really important to the climate agenda. And then I moved from national government to Transport for London, as the innovation director there. Which was looking at the same issues, but in the context of a mega city. So, I guess I've been in this for a while, and it's tremendous really, You ask why I'm involved, because it's fundamentally important to the future of cities, to how we live our lives, to climate change, to air quality. And it's just such an exciting and dynamic area to be involved in. And I recently moved back into the private sector to Arrival, which is really trying to make all this stuff happen, to make a radical positive impact on cities from the private sector perspective. So I got the bug, I don't know, 15 years ago, and it's never ceased to motivate and excite me.

Ade Thomas:

Thanks so much indeed, for those initial insights, Michael. Great to hear about your personal history. I'd like to just move on now to your new chapter with Arrival. Obviously, Arrival is one of the poster boys of the eMobility sector, arguably gone from startup to scale up to SPAC in quicker time than any other company, perhaps in British history. Can you tell us a little bit more about the Arrival fast growth journey, and what's going on there?

Michael Hurwitz:

Sure. Well, Arrival was founded only in 2015. And winding forwards, we now have over 2,200 employees. And I guess the two things to say, is what does it do, what do we do? The goal was to make this radical positive impact on cities, with a focus on fully electric commercial vehicles to be produced for the same price as internal combustion engine versions. I guess the magic sauce there was a radical new approach to manufacturing, which I guess we can talk about a little bit more, how we can change that ecosystem moving forwards. But I guess the big process of growth in 2020, it really started to explode, where we had Kia and Hyundai investing. Shortly after that, we took a significant order from UPS for 10,000 of our vans.

Michael Hurwitz:

Wind forward a little more, we were listed on NASDAQ in March this year. We're now at a position where we've got signed contracts with a value of over US$1.2 billion. We've got nonbinding, but letters of intent for around 59,000 vehicles. We've got our trials with UPS for the van, we've got trials planned for First Group with the bus, we have a partnership with Lease Plan, who are going to start distributing our vans. As well as moving into new vehicle types, so we have a partnership with Uber, so we're going to also start looking at designing the perfect vehicle for the ride hail market. So, really it's been an extraordinary story of rapid growth, and we're really, absolutely focused on getting those first vehicles into the market according to what are now published commitments.

Ade Thomas:

Thanks so much indeed, Michael. You mentioned, you touched on the unique, localised manufacturing process as being one of the special ingredients in Arrival's success. I guess there must be more to it than that. Was there timing involved, was there a commitment to sustainability, was there brilliant marketing around the brand? Was it a mixture of all the above? What really helped to project and propel the Arrival story?

Michael Hurwitz:

Well, there is this sense of the way things have been done historically has been quite frustrating, and suboptimal. So, traditional manufacturing facilities are huge, hugely capital intensive, are limited in where they can be created. You have this competition for a giant brownfield site. And it comes back to some of the core technologies that my ingenious colleagues developed, which was around the two elements of traditional production, which are hugely costly, using a lot of energy and using a lot of space. Which is the body shop, stamping metal, and the paint shop, which is hugely energy inefficient. Multiple coats of paint, et cetera, very, very inefficient.

Michael Hurwitz:

And the fundamental approach was rather than using a metal for the panels of the vehicles, use tough and advanced composites. And so, of course you need a mould, but you dye the composites as they are moulded so you don't need paint at all. And the machinery and the capital investment required for the panelling of vehicles is radically reduced. And so, overall it takes the capital costs down by over 50%. But our approach was, that gives us this tremendous opportunity to build what we call micro-factories, rather than making hundreds of thousands of units a year, you convert a warehouse closer to the city where it will be used, and make 10,000 vans a year on two shifts, or maybe a thousand buses a year on two shifts. That gives you the opportunity to create local skills, local opportunities, local sourcing wherever possible, so that you have this redrawing of the ecosystem built around the local use case, and building up the local community to be involved in that production on those sites.

Michael Hurwitz:

And I think everybody was looking for an alternative to the slow-moving traditional model for manufacturing. Everybody was looking for more a energy efficient way, a more capital efficient way of doing things, but also this kind of local circular economy approach of using materials that are more sustainable, building skills for the future in a local workforce. All of those things together, it was just something that was attractive from a number of perspectives, whether you're approaching this economically from a capital investment point of view, from a local skills point of view, from a local air quality point of view. I think it was all of the above, Ade, that meant that this was attractive to investors and cities alike.

Ade Thomas:

Fantastic. Thanks for those additional insights, Michael. Well, Arrival has very well and truly arrived, and I'm sure with the kinds of investment and customer propositions that you've outlined there, there are some super exciting plans for the future. I wonder if you can give us a sense of what's coming next for Arrival. You've obviously got the American production facility opening up, but what's happening elsewhere around the world for Arrival?

Michael Hurwitz:

Yeah. So as you say, we're headquartered in London and the US, we've got our big R and D facility in Banbury, and building a factory in the UK in Vista. We've got a couple of microfactories being built in the Carolinas in North America, and a couple of future developments. The first is that we recently announced an R and D centre in India, a big opportunity in that market, huge energy, huge potential, huge opportunity for addressing all of the things that we're saying about facilitating the movement of people, and the movement of stuff around cities in a more environmentally friendly way, and a huge market.

Michael Hurwitz:

And the secondary is moving beyond the bus and the van, into the ride hail market. So we have our set of buses and our set of vans, where we have four vehicle variants at the moment. The most recent of which was, it's a non-exclusive partnership with Uber, but we're very keen to make a bespoke vehicle specifically for that market, rather than just taking a traditional sedan that was previously designed for something else. We think there's a great opportunity of good customer design, simplicity of design for that specific market. So yeah, that's just some of the stuff that's happening next.

Ade Thomas:

So a company like Arrival will almost certainly have a very, very strong customer focus. You're not going to be as successful as Arrival has been without having that kind of focus. Could you tell us a little bit more about where Arrival is on that customer focused journey?

Michael Hurwitz:

Yeah. Actually, that was one of the things that attracted me to Arrival, and I was really impressed with, is that it brings together a lot of people from very diverse backgrounds, with actually a very strong UX and customer pedigree, to say, "Well look, how can we genuinely elevate the experience?" Particularly for public transit, for mass transit and also for this rapidly growing urban delivery market.

Michael Hurwitz:

And just a couple of examples about really spending the time with van drivers, delivery drivers, with bus passengers, with bus operators, has led to this really extraordinary set of design innovations. So in the bus, we talk about bringing the city into that experience. A bus is fundamentally a box that carries a lot of people, but we have for example, increased the size of the windows, so you can see more of what was going on. Our batteries are underneath the floor, so it gives the opportunity on the single decker, for a panoramic roof. These are the ideas that can try and elevate that experience as far as we can.

Michael Hurwitz:

If you talk about the van, the ability of really focusing on what makes it convenient and comfortable for drivers, not just a walkthrough van, which means they're not bending and stooping as much as they were previously, but also better visibility. Really thinking about touchpoints, steps, handles, ergonomics. So much design has gone into that, that there's a real differentiator and a real focus on beautiful, simplistic, but fundamentally useful and efficient design. Which I think is impressive for me, and I think makes us stand out as a business.

Ade Thomas:

Impressive stuff. I was lucky enough to see one of your vehicles at the EV Summit, and the first thing I did after having taken a good look at the outside was go and have a look at the interior. So, seeing some of that user experience design comes to life inside the vehicles, super exciting stuff. Thanks very much indeed for that. Great to have Arrival on the scene here in my home county of Oxfordshire. I've been tracking your journey with enormous interest and excitement over the last few years, and I wish you all the very best for our sustainable transport near future. Michael, thank you very much indeed for those fascinating insights. Like the rest of us, I can't wait to see where Arrival will go next.

Ade Thomas:

So, that's it for episode three of EV Y. Thank you for joining us today. We've got three more episodes coming up in this series, so please do subscribe and stay up to date for those. And do keep sending in your questions and comments to evsummit@green.tv. We'll see you back here for episode four.

If you’d prefer to listen on the go:

Presenters:
Charlie Simpson – EY-Parthenon Strategy Partner – Head of Future Mobility

External presenters:
Ade Thomas – Founder, GreenTV & EV Summit
Ginny Buckley – Founder and CEO, Electrifying.com
Douglas Johnson-Poensgen – Founder and CEO, Circulor
Michael Hurwitz – Director of Development, Mobility at ARRIVAL

EV Y is a podcast series exploring the shift to Electric Vehicles. Episode 1 features a discussion on the future of charging infrastructure.

42m 16s

Why EV fleet transition is essential for transport decarbonisation

In this episode we discuss how and why fleets must transition to EV in order to help accelerate the wider decarbonisation of transport in the UK.

43m 52s

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

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