Trends in EV Adoption and Energy Transition, with Xavier Smith, Director of Research, Energy/Industrials, AlphaSense Expert Insights

Episode Summary

In this episode of Signals, Nick Mazing sits down with Xavier Smith, Director of Research, Energy/Industrials at AlphaSense Expert Insights. They dive into the evolving industrial sector, focusing on key trends such as the adoption of electric vehicles and the ongoing energy transition. Smith's insights shed light on how interest rates are shaping the construction cycle, a critical aspect of the industrial landscape.

Xavier first discusses the more dynamic “tech adjacent” sectors of industrials: EVs and energy transition, as well as the IRA (Inflation Reduction Act) effect on both. On the EV side, the episode covers costs, charging standards, range improvements, affordability, adoption curves, and more. On the energy transition side, Xavier discusses industrial battery storage, costs vs fossil fuels, geographic aspects, as well as newer technologies like offshore solar. 

In more traditional industrials, we discuss construction and building materials, and, more specifically, the bifurcation between home building holding up despite the increase in interest rates versus the difficult situation in office CRE. 


Guest-at-a-Glance

💡 Name: Xavier Smith

💡What he does: Director of Research, Energy/Industrials

💡Company: AlphaSense Expert Insights

💡Noteworthy: Xavier is the Director of Research for Industrials and Energy at AlphaSense, former hedge fund and long-only firm professional.

💡 Where to find Xavier: LinkedIn

Key Insights

Historic Shift: Clean Energy Investments Outpace Fossil Fuels

For the first time, investments in clean energy are set to outpace those in fossil fuels. A whopping $1.7 trillion is projected to be invested in renewable energy in 2023, almost double the CapEx number for fossil fuels. This shift is a clear indicator of the growing interest and confidence in renewable energy sources.

Energy Storage: The Game Changer in Energy Transition

Energy storage, particularly industrialized batteries, is revolutionizing the energy transition. These batteries address the intermittent nature of renewable energy sources like wind and solar, allowing power usage to be shifted according to need. The industry has tripled over the last three years, from a $50 billion business in 2020 to $160 billion today. This growth is expected to continue, making energy storage a key player in the energy transition.

Interest Rates and Their Bifurcated Impact on Construction

Interest rates are significantly influencing the construction cycle, creating a bifurcated market. Despite high interest rates, home builders are performing well due to the difficulty in purchasing existing houses. However, the commercial real estate sector, particularly office space, is experiencing challenges.