A Geographic Split Shows Why US EV Adoption Forecasts Are Plummeting

The US doesn't have one EV market. It has two, and the national average hides it.

Recurrent's Scott Case sits down with Nathan Niese, who builds EV adoption forecasts at BCG, to pull apart the number everyone quotes. The "15% by 2030" headline is really two very different countries averaged together: CARB states on a path that looks like Europe, with parts of California potentially hitting three out of four new vehicles with a plug, and non-CARB states sitting near 5%, where a lot of buyers haven't seen an EV on the lot in weeks.

For dealers, that split is the whole story. A regional group in the Bay Area or Seattle is on a fundamentally different trajectory than one in the Southeast, and planning to a national average gets both wrong.

What Scott and Nathan get into:

Why CARB states track Europe while the rest of the country tracks an early-stage market

The math behind the national average (high-30s vs. 5%) and why "50% by 2030" was never going to be evenly distributed

The $30K, 300-mile EV that doesn't exist yet, and why building it profitably is the real constraint, not consumer demand

How federal policy dropped out of the forecast, and why state-level decisions now set the floor

The wild card that would rewrite all of it: Chinese vehicles reaching the US market

What Toyota's late, full-lineup EV push signals about where the industry actually thinks this is going

Nathan Niese works at Boston Consulting Group. The views here are his own.

Recurrent tracks EV battery health, range, and used EV market data for dealers and shoppers. More research at recurrentauto.com.

Transcript

SPEAKER_00 0:00

Those carb states look a lot like Europe.

SPEAKER_01 0:01

So you can almost follow the same trajectory that Europe's following for carb states.

SPEAKER_00 0:05

If you are in a one of the western states or any of the carb states, like you are actually on path to 50% of your sales are electric or, you know, plug-in or full battery electric by 2030. I think that's like a like that's a pretty big deal takeaway for dealers.

SPEAKER_02 0:22

Welcome to Eeve Insider by Recurrent, where we make it easier to buy and sell electric cars by giving you access to leaders from across the industry. Let's get started.

SPEAKER_00 0:34

All right, Nathan. Uh hey, great to talk to you. I we always look forward to uh BCG's newest EV forecasts when they come out every year. Like, I don't know if I'm the only person who's like geeking out ready for them. What are the big takeaways? Like, you know, that you you guys had like top three takeaways of what changed this year.

SPEAKER_01 0:53

Yeah. Well, you you've always been tracking us. We you keep us honest. And we saw an article in uh February that you published that shows how it's changed over time. And it's it's changed again in a pretty significant way, particularly the the US, right? That we see that EV winter being a real thing and across the board, whether it be what drivers are looking for, what the automakers are producing, uh, what the policy is saying needs to occur. There's been a massive rewrite in our view for the United States that we had downward revised last year, but we we kicked it to a whole new gear this year in terms of where we see the dust settling. But I'd say that's that's point one, probably clear and obvious to those that are setting up.

SPEAKER_00 1:35

We're gonna get into it because that's that's what a lot of people who are gonna be watching this are gonna be focused on is like what is going on in the US and and what are the long-term implications for the short-term policy changes. But let's hit your two point two and three.

SPEAKER_01 1:46

Oh, the second one is just it it then just demonstrates even further how much regional divergence we're going to be seeing in the years ahead, right? So it's China remains its unique story in terms of how effectively one out of every two vehicles last year was was bought that has a plug. But the tremendous growth we see in in Europe, even over this first quarter that continues off the back of 30% growth last year, just shows that there's there's not like a Western world versus uh an eastern world or a China story, but it it really is now a US versus Europe versus China and and rest of the world as a different block of countries that are all moving at very different paces and it has very different implications in terms of the types of portfolios you will see automakers have to bring forward on a on a regional basis and the ecosystems they build around it.

SPEAKER_03 2:32

Yeah.

SPEAKER_01 2:33

But and then the the third one would love to spend some time talking about is what we just see happening on the used electric vehicle side, because that that hits the the US market in a unique way for all the doom and gloom someone might be pointing to in terms of new sales, just as a massive amount of leases are are coming to the end of their terms, and as we see what's happening with different world dynamics that are impacting gasoline prices and such things, the the renewed interest in the moment meeting the moment now with with used DVs is going to be an incredibly interesting pattern to continue to watch.

SPEAKER_00 3:06

So um you mentioned that his history. So um uh recurrent, you know, we we love poking at the academics in Boston, right? So, so you know, um, as you pull, like we've sort of like looked at and watched the BCG forecast all the way from 2018 through today, right? And they sort of like started at, you know, and and and the and the point we always watch to keep it sort of consistent is like what's the 2030 adoption? Um, sort of like sales numbers. Um, and uh, you know, back at the beginning 2018, BCG was forecasting that 21% of new sales in 2030 would be uh battery electric or plug-in hybrid. And then each year, you know, your model evolves and it takes in different data. It went up as high as 54%, you know, was the prediction for 2030, and then uh came down to 25, I believe it was last year, and now it's at 15, right? So the lowest that you've ever predicted for US EV sales. So what were the biggest factors that have changed this and really you know come made it go so far down in the US at this point?

SPEAKER_01 4:13

It's been a just a fascinating ride. Because in many ways, us having held with our 2018 forecast, we'd we'd be much closer to spot on in in the US market.

SPEAKER_00 4:23

Uh so even whoever had that 2018 forecast is like, I it gets the biggest I told you so right now. That's right. Yeah.

SPEAKER_01 4:29

So eight years on, had we done nothing, we've we'd have been closer to the right. We would have been uh still spot on in terms of what we're seeing in Europe, and we would have been actually underestimating in China. So net on a global basis, uh the 2018, the 2020, the 2022, and you can kind of name it, any any pattern on a global basis still feels like it's been holding. Unfortunately, the the US dynamics have changed so wildly that it's it's helpful to go through a little bit of that history. Uh, it was 2020, COVID hit, everyone thinking that this is going to be a path that says it sets EVs back another several years. When you have fewer volumes of sales, you have to think about your capital deployment differently. That would have been the expectation that we would have downgraded our our EV adoption forecast. And instead, right what Europe did to double down uh was was a great signal coupled with some of the performance that Tesla had that it it was it was shocking in many ways. What what we saw, the the the enthusiasm towards investing in EVs after coming out of the the the dip in the cycle. And that that euphoria in many ways actually persisted for the next couple of years, where you saw each automaker get in on this bandwagon make really um proud proclamations for how fast they believed they could move and that there was a an incentive and a need to move, not not just because of the helping the environment piece, though there was there was certainly a lot of that undercurrent, but you you add in the fact that the the belief that you'd be a dinosaur if you didn't find a way to to actually really take share through through EV adoption. And so the announcements and the the number of announcements, the breadth of the announcements to cover not just small sedans, but then pickup trucks and seeing the order books that were associated with that, electrifying many of the the most proven nameplates that were out there within the US, all were giving us an indication that there was very large potential upside. And if anything, in our 2022-2023 forecasts, we had every automaker banging at our door saying, You're under predicting what we are what we are expecting. Wow.

SPEAKER_00 6:37

So full of it. You're absolutely full of it.

SPEAKER_01 6:41

Yeah, sure. I mean, we we could say uh we had the mist, but in in many ways, the entire industry uh was was all working toward a different direction. And and then we we sort of hit the the start of a skid in 2023, where you see those order books disappeared and the launches that were coming out weren't hitting the MSRP promises that were were claimed to be, or the the wrong product market fit with the charging speeds or the ranges that were initially quoted and believed to be the next unlocked to the market. Uh and so some of that was you you put your first products out there, you you uh are doing your best to try to meet the moment. And as quickly as things have moved in China and as quickly as you would like things to move in the auto industry, they still take four to five years for product cycles. And some of those early misses on product market fit were just they were too locked in to be able to make the pivots fast enough to then understand the the extreme focus that was on affordability, even over range or charging speed, which we hear a lot about, but nonetheless, like the the what we'll get into in this conversation, I'm sure, as well, is just the lack of affordable options that continue to be on the market that hit such a core part of the of what EV interested buyers are looking for is they need the $30,000, $35,000, $40,000 vehicle, not the $60,000, $65,000, $70,000 vehicle, which we have plenty of options there, but that only serves a certain part of the market. And so then you start to see the inventory stack up. You start to see the slowdown of or not the automakers not able to make money on EVs. That was all preceding what we then had with the change in the administration last year that really just removed the floor on anything related to policy, tailpipe emissions, the the OBBA changing what was in the IRA from a the $7,500 for uh for a new vehicle.

SPEAKER_00 8:36

One big beautiful bill and inflation reduction act for those trying to keep those acronyms straight, just so you know. Yes, thank you. Yes, there you go. There you go.

SPEAKER_01 8:44

Thanks for keeping me honest. Uh and so all of that change took out the floor in at a federal level, at a state level, in terms of wanting to keep the drum beat going for EV adoption. And then this year it continues to see the further fall of that, fall out of that. Of now the automakers say, I really need to think about how much I'm conserving my cash, preparing for the next wave of EV adoption, which we expect to be in a couple of years' time. Not that it's not ever going to appear, but it's we have to be very thoughtful around what products are we launching, what are we doing in the interim. And so whether they be canceled what programs, whether they be removing main plates that were EB nameplates that were already on the market and now uh not offering them for the for the foreseeable future, the the the whole supply market has changed. And that that then guides where we come out in a place that puts you in the mid-teens on web adoption or phab adoption versus previously, we would have thought that there was a lot more of a drumbeat to take us further faster.

SPEAKER_00 9:42

Well, it's I mean, just uh reflecting on the you guys have been doing this models for through you know three presidential elections that in the US that were just sort of like a 50-50 toss-up. And I think a lot of people were surprised in each case. And the stakes for EV federal EV support were just like so wildly different if the person on the left or the person on the right wins. That just like gotta, I don't know how you I don't know how you do what you do the year before a 50-50 presidential administration and be like, well, you know, you've got to sort of bake in one outcome or the other, right? Like, and then when you're wrong, it's like, well, well, that's that's it's it the other way. And and if and if federal policy wasn't so like jam the the steering wheel to the left or jam the steering wheel to the right, it wouldn't be as big of a deal. But it just feels like that's what we've been in the last few the last few cycles.

SPEAKER_01 10:35

You're you're totally right. As we without getting too technical, we have four underlying methodologies that we use at the end of the day to think about EB adoption. One is your standard S curve, which is based on total cost of ownership and just the the the improvement on on price relative to an ICE vehicle. The second is is much more around the regulatory view and setting a floor and what that means to maybe have to go to go faster than otherwise would be a standard S curve. The third is more survey data. What are what are actually being looked and thought of from potential buyers in terms of what they want to see in turn in specs on range, on charging speed, on price other elements. And that sets a different path in terms of what we would expect on EV adoption. And then the fourth one is on supply by the automakers. Are you actually covering the full class or segments of vehicles and the full price ranges? And each of those can lead you to pretty different numbers in terms of where you shake out. But at the end of the day, we take the latest information, we don't project what's going to happen with policy going forward. And then we we might choose one of those methodologies or a blend of those methodologies to all to get to what is our base case. And the US, to your point, has had such variability on the policy side, which impacts the demand side, which impacts the supply side. Very different than what you see in China, where you could many ways follow that standard S curve and just see the path that it's taking because the policy has been consistent. The supply is there's no shortage of supply. Everyone has an EV offering out there. And so it's really about how do you get drivers to convert to now see EVs as the best option and the price competitiveness is there to allow that to actually play out.

SPEAKER_00 12:09

So has the, I mean, thanks for going into the methodology, has the methodology itself like changed over the last 10 years? Or is it basically the just the the, especially in the US, like that, the the Fed the policy one has just swung so wildly that that's sort of maybe the the root of why there's why the it's been less predictable of a forecast than it is in the other places?

SPEAKER_01 12:31

I I would say we've we've added the third and the fourth lenses that I mentioned. So the TCOS curve adoption and the policy ones have always been in place. But as we've seen more and more that, you know what, supply may not be keeping up. And there's a clear now product market fit set of questions that are sitting, particularly in the US, that's not just showing up in terms of cost of ownership, because you I mean, fleets can run the math and do run the math, and individuals try, but the the the shift to an EV has has long continued to point in a direction that if you are a high mileage driver and with the cost coming down on batteries and electric vehicles, that it's it's going to favor and even does favor in many places already today adoption of an EV. So it's not just about total cost of ownership, it's other things. And those things can be quite durable in people's mindset, even if not in reality, because there's a separation there that's uh that it's always important to say is you say you want a 600-mile vehicle and you want a two-minute recharge, but at the end of the day, no one can sit in a car for 600 miles without needing to stop for a few times. And often your stops are going to be longer than two minutes, anyways. They're gonna be you're to if you're gonna go to the bathroom, if you're gonna get food. And so that mismatch in what consumers' expectations are about how they would consider an EB versus what actually is is showing up in the market. We also need to piece apart.

SPEAKER_00 13:48

Wait, hang on. You're saying consumers are not rational economic actors. Well do you know? I mean, all of my medical economics classes in college, like they're all feel like they're all I've been betrayed by the profession. What? You're saying people don't people have a different set of buying criteria than use criteria. Wow.

SPEAKER_01 14:07

Yeah. No, but it makes for some fascinating debates in inside BCG as we work on this forecast every year. And that that's what's some of the fun here.

SPEAKER_00 14:14

I'm sure. Okay, so one of the big policy changes, um, I mean, there's been a lot, right, since the Trump administration came back. Um, but I think one thing that the um dealers on the ground, you know, here really, really feel hard is um up till September 30th of last year, there was like $7,500 or $4,000 if it was used on the hood of these cars, and then it went to nothing, right? Um when other countries that have sort of like pulled back uh a heavy incentive thing like that, we have two lessons, right? Uh happened in Canada and happened in Germany. The circumstances are a little bit different, but like in both cases, the data show in those countries, the year after uh the incentives were removed, there's a 30% drop in new EV sales. And then the following year they recovered back to what they were, right? Uh before. Is that what you kind of are expecting? And then by the way, that's right where we're at. We're down 25, 30 percent in the US compared, you know, year over year. Is that what you think that the the US follows? Like that same pattern that of Canada and Germany? Or do you think do you think go somewhere else?

SPEAKER_01 15:21

Yeah, we're we're seeing a little a longer, flatter dip or hold than we would have seen in the the Canada or the Germany, or in some selective cases China provinces or other pla in places in Europe. Uh because we do with all that data.

SPEAKER_00 15:36

Yeah, why the difference?

SPEAKER_01 15:37

Yeah, just uh it's gonna come back again to this the supply side is as we are seeing fewer models than there was even available last year now on the market, and not trying to compete as heavily in moving those EVs from the different automakers. And and so the durability of not finding the right price point and the right types of options available, with again no differ other elements of policy carrots or sticks in place, we we think is it's gonna be another depressed, not just this year, but into 2027 before our our latest BCG view is that the the EV winter then starts to to dissipate in the in the US or in North America closer to 2028.

SPEAKER_00 16:20

Okay, so how do gasoline prices factor into this model? Um, I mean, we are now two months into the war in Iran and you know, oil is sort of like sort of floating around $100 a barrel depending on which benchmark you're using. Like if that turns into an extended, you know, conflict that keeps oil prices, therefore gasoline prices up at that level and even higher, like how would that change your adoption forecast for the US, if at all?

SPEAKER_01 16:52

Right. We're we're watching the same things. And and again, as I those four methodologies I mentioned, it really impacts that first one on total cost of ownership and the and the S curve. Policy doesn't change. Maybe consumer mindset might change a little bit, but and supply is going to take a long, longer period for the automakers to say, I see clear enough signals, not just from gasoline prices, but uh EV interest to then turn the spigot back on and on on development of those vehicles. But really on the total cost of ownership side, yeah, it it it impacts. That's that's where uh it's not only the total cost of ownership over a three or a five or an eight-year period, because that's that's one way in which we certainly look at that that picture. It does have to impact purchase price, though, because there's there's such a mentality right now in US buyers. Uh always true, but but it seems particularly uh acute at this moment of just affordability. And the purchase price, whether it be that new or the used vehicle, is getting better on an ED relative to an ICE vehicle, but it's not fully there yet in in many cases. And so you have to get over that hump to then also believe that there's going to be a durability in place for the uh the gasoline prices to remain high and electricity prices not also to to continue to skyrocket, which there's there's some relevance there. Uh and those puts and takes coupled with uh our EVs being taxed differently, which we see state by state, and some of these other hidden fees that do add up to it not being quite as simple as you pay more upfront, you get it all back in terms of better miles per gallon and or miles per gallon equivalent. And so those considerations I think are are more durable in our model and ultimately leaving leading us to change the picture entirely. But to your point, to your other point, I mean, we are very much monitoring search data at what we call top of the funnel in terms of EV interest, which has significantly increased over the past number of weeks and months. And if that remains durable, you would think that that starts to trickle down to EV or people going and shopping for EVs and then purchasing EVs. And so there's there can be some momentum that kicks in there. It's it's moving a lot faster when you start to then think about what's happening in Australia. You think what's happening in Southeast Asia, or you think what's happening in Europe, where the price points of gasoline or petrol are are much more meaningful in terms of the impact how drivers are thinking about things there, coupled with the fact that there's more availability of vehicles and such things. Right. Supply different regions area. Yeah. Different regions have a lot.

SPEAKER_00 19:26

And and and we've gone and looked at there's like two, I think, interesting um historical data looks like one, just like price of gasoline in the US compared to EV adoption. And there, you know, that can that goes all the way back to back to 2010. And there's there isn't really a strong signal, like where you know, gas gas prices go up. Like people don't go and you know run down to the dealership immediately or even three months or even six months later. Not there's not a strong correlation there, except for one period, and that was in 2022 when gas prices went high and stayed high for six months with the uh the Ukraine, you know, sort of Russia's invasion of Ukraine. Um, that was that was there was a there was a huge ramp up in in EV sales like during that period, right? Because it stayed there. So it's part of me is like, well, it just it kind of depends on how quickly this gets remote. To be sustained, right? Yeah, yeah.

SPEAKER_01 20:22

It's that's high the height of the peak in terms of how how much it hurts, and then the duration of it as well. Uh and but yeah, I mean, and it may not be an EV, it's we still need to watch what happens with hybrids, because hybrids also can can lead to improvement. You have to watch what happens on the used EV side. And it's probably to your point, it's not getting people that were not looking to go buy a vehicle now going and showing up at the lots. But if you were already looking to get a vehicle and now you're gonna ask the questions a little differently and consider a broader set of options, that's the ones you see that really can start to convert in a way that might not have not otherwise been predicted in our model or anyone else's two or three months ago.

SPEAKER_00 20:58

Well, and then the other the other correlation, which you can go back and look at much, much further back, back in the 70s, you know, is every time there has been a gasoline price spike, it causes people to basically um turn away from new cars and buy used cars, right? That's consistent, right? And so there uh it seems to me that that we're entering in an inch uncharted territory in 2026 where for the first time there has been a reasonable supply of used electric cars where that could be the beneficiary. And to me, that feels like the sort of the untold story of of this year.

SPEAKER_01 21:32

Completely agree with you there. As you're teaching me the lesson from the 1970s, but yes, that's that's exactly what we're expecting in terms of you only have so many dollars to go around that's in your pocketbook or uh it with for the family. And so you now know if you're gonna have to pay more for gasoline. That means you spend less on that new vehicle and it has to be moving over to a used one. But thankfully, if you're you're looking for EV adoption, there's this huge wave of EVs that are becoming available and coming off lease that are now very. Very well-priced vis-a-vis their their ICE counterparts or their gasoline counterparts. And so that that gives real optionality for anyone that might be something interested in changing the powertrain that they they now drive.

SPEAKER_00 22:11

Yeah. And here's what we hear. I mean, we work with hundreds and hundreds of dealers all over the country, especially on the used side. And it was not very long before, like after the gas prices hit, went through the roof, that these guys were like selling through their entire inventory in a weekend, you know, and then like, give me more. You know, like I'm, you know, we had one dealer group who bought it, it was like 70 used Teslas in one day, 300 in a week. And it was like that was like a two-week supply of cars for them. So it they're, you know, on the ground, UCB dealers are just absolutely smoking hot right now. And and that's what we see in the data.

SPEAKER_01 22:51

Yeah. They're they're moving vehicles and they're probably getting some pricing power back and moving those data.

SPEAKER_00 22:57

UCB prices at the wholesale level have been, you know, increasing. You know, they're creeping up there.

SPEAKER_01 23:01

So that gets your near dealers more excited too, and they know they can make money on this. It's not just that they're having to move it, but you don't look at that as a as a downside risk anymore. You're now looking at it as an upside. That that changes the mentality that does have some staying power in terms of how dealers think about EVs, not just for this window of time, however long it may be, but you remember those moments and you say you want to add that to your portfolio because you now have a better experience with how to sell it and how to market it and how to get people interested in in those types of vehicles.

SPEAKER_00 23:28

And and to be clear, I mean, just I think like I've learned this now for uh five years of working directly with car dealers, is like it's not that if prices are higher, they make more money. Like dealers can make uh their margin that they need to, uh whether the prices are higher or prices are low, you know, like it doesn't make a difference to them. What they need is for there to not be extreme volatility. Like they can't buy a car at $20,000 and then the market drops by a thousand dollars and now they're losing money on it. They just need it to sort of hold or yeah, kind of like gradually be increasing. That's fine, you know, as well. But uh, so it's volatility is the is the problem in that market, basically.

SPEAKER_01 24:06

Yeah, makes good sense. And then if we extend that to what we're seeing happening, there's been articles now written around uh ride-sharing drivers that rent vehicles. They're they're more interested in renting EVs suddenly again. And so the the fleet level question starts to play in and you see shifts happening there too. So it all parts of this auto ecosystem get impacted, even after what are we at 60 days into the conflict. And but the questions about the the near-term pain that comes from higher gasoline prices and then how long that could be is certainly changing behaviors.

SPEAKER_00 24:42

When we consistently see when somebody buys an electric car and drives it for a while, like at that point, like we pretty consistently see they stay very loyal to the fuel type. Put that another way, like once you drive an electric car, you don't go back. So um basically in my mind, I've got this different model of EV adoption, and that's like there's just sort of a floor that comes through. Somebody, as soon as someone gets into a new or used EV and drives it for a little while, they're never going back and buying another ice car, right? And so to me, like, I don't see how that could be that could sort of allow for EV sales to remain flat at just like over a long period of time or the next five years. It feels like there just needs to, there will be a ratchet in there, uh, unless it's the exact same people only recycling and buying again and again. So like, I don't know, like like lay into that model. Why is that wrong?

SPEAKER_01 25:38

Uh I'll actually double down on that. And my my goal as my personal goal is to get friends and family and and others to sit have their butts in the seat that's the passenger seat. Because I think even when it's not just that you have to be the owner or the driver that doesn't go back, but when they they are part of the experience, they they get to see the excitement on my face, they get to ask questions, they get to plug in for the first time and just see how easy it is. That also then gets the wheels turning and it moves faster. So I would love to I haven't seen a survey yet, but I'd love for somebody to do a survey of if you've sat in the pat the front passenger seat of Eevees and know someone that has one, how much more likely are you then to purchase?

SPEAKER_00 26:15

Do you think it has to be the front passenger seat, or could I have been an Uber or a Lyft that was an electric car as well? Does that do it?

SPEAKER_01 26:21

It depends if you're gonna ask a bunch of questions and have some fun with that Uber driver, which I do on the way to the airport.

SPEAKER_00 26:25

I'm always the one that asks a bunch of questions about why they're driving EV. So, okay, so I mean what you're describing very much sounds like there is a network effect. Like the more cars that are out there, the more likely it is that you will encounter one, whether it's yours or your friends or the Uber. Like that doesn't feel like it's built into the the forecast. Like it's not one of the four things, right? Like, I guess that's the S-curve thing, right? Yeah.

SPEAKER_01 26:49

Yeah. But to your point, it's not explicitly in there. So there's that that's a factor that if and how we or someone else ultimately considers can add some upside. Because I agree with you. There's no downside to that one in terms of what how it can add to interested EBs.

SPEAKER_00 27:05

Yeah. And to be fair, I'm not trying to work the ref. I'm not trying to be like convince you to increase your model. I'm just open to be interested in the in the in the behavioral economics of like how how people make these decisions. And I feel like that's like that'll ultimately determine what the actual reality is versus what all the forecasts say. If you think about what beyond having a stable government sort of like policy set, like if you think about someday, what like yeah, uh in China and in the EU, like what are the key policies that you feel like they are pursuing and have pursued over the past five years that are that are just that have caused this divergence? Like, why are they doing so well? Like, what are the one or two things that you think are the most important? I'd start with durability. You you hit that point nail on the head.

SPEAKER_01 27:51

Don't change your mind so much. Don't don't change your mind. Have a longer-term view. That's what China particularly has done so well, as they've thought up and down the ecosystem. What do we need to have as the next building block in place to support EV adoption or Chinese OEMs, automakers to be the winners, whether it's EVs or gasoline vehicles. And they double down on that and they triple down on that when it comes to thinking about access to mines, when it thinks about the different types of innovations that need to happen for charging infrastructure and support. And so it it all 360 degrees is working there. You could claim that automakers may not be making money. There's a lot of policy support that remains in place, uh, that the price competition is severe. So those things aren't don't necessarily make for a long-term healthy market, but the the sales speak for themselves, the the independence that China has now relative to initially having to be a net importer of vehicle technology, now being a massive exporter of technology, uh sets them up in an incredible way as an economic driver for the country and and for the sector as they go forward. Yeah. Uh Europe, if you look just at the EV sales, you might say, oh, they're making good progress. It's Ben Rockier. Yeah. If you think about the setting up of the supply ecosystem and the automakers that call Europe home from a headquarters standpoint, they're seeing fits and starts here in figuring out how to make the transition. There's just there's a lot of legacy costs to consider. And there's just tough economics when you're competing on a global market. And access to the batteries and access to the battery components and some of the other technologies that can come from China is is making it more challenging to put together a local for local ecosystem that will be something that that Europe's gonna have to wrestle with for the years ahead, too.

SPEAKER_00 29:52

Yeah. It's so interesting. I mean, like it comes down to it seems like a big factor here is it comes down to is like, is there economic growth as a result of manufacturing the cars, you know, and all the components in that area? And China, absolutely, there's a huge economic driver for them, you know. And the US is like, I mean, Tesla, like, yeah, a lot of US manufacturing, all that kind of stuff. But like, besides that, none of the automakers here seem to be making any money. So, you know, doing this. So it's like it is pretty, seems like that's a just a C anchor kind of drag, you know, for us that's has nothing to do with market demand, you know. Right.

SPEAKER_01 30:31

And I'm fascinated to see what they do with the moment of now having these write-offs. It sort of takes away some of the legacy decisions on EVs for these US automakers. And what do they do with this moment to now have written off assets and to set themselves up for a different future?

SPEAKER_00 30:46

How much of um US demand do you think over the next couple of years is driven by just pure market demand versus driven by federal policy?

SPEAKER_01 30:58

At this point, we're not baking on any federal policy. Right, sure. So there's really yeah, that was in some ways it's easier question than the other.

SPEAKER_00 31:05

The only demand increase can be pure market natural demand at this point.

SPEAKER_01 31:08

Unless we see it on the state level, right? So there's some states that continue to have incentives in place. We'll see if there ultimately is a deciding court case on how states can regulate their own tailpipe emissions. And those will be giant factors to determine if there's sure not a federal aspect to it, but state level uh that can that can really change the the trajectory on on EV adoption versus its alternatives.

SPEAKER_00 31:33

Okay. Okay. So if you were to that this is actually an interesting thing. Let's let's uh not actually split apart the United States, but let's sort of like subdivide the United States for EV adoption into carb states, you know, California and the other 14 states that follow, and non-carb states. If you were to do that, what would your 2030 prediction be for the US carb states versus the US non-carb states?

SPEAKER_01 31:57

We have done this a number of times, and so it's always a fun exercise. And in short, what it amounts to is those carb states look a lot like Europe. Okay. So you can almost follow the same trajectory that Europe's following for carb states. Uh-huh. And then the non-carb states follow what amounts to like a nothing, a develop a developing country which has nothing and is there is very early on in its journey. And you put those two together and you get sort of where the US has been. Right. Uh and so yeah, the the real the real question is can the carb states keep it up in terms of a trajectory towards on that Europe path? Or some of the carb states that are now finding that they they didn't have it locked in law, but they had it more as a promise, are finding ways to fall back. And then California being the biggest domino in all of this, if if they can't continue to to legislate towards a a non-ICE future, then that again takes out the floor for what what is possible at a state level.

SPEAKER_00 32:55

So if you said the carp states are like kind of on a European trajectory, you've got Europe like Europe, you've got it at 53% BEV plus of plug-in hybrid in 2030. You're saying that that's what you think the carp states are on path towards?

SPEAKER_01 33:12

I would say California for sure. And then the other carb states that said they would follow a California path, then by definition should be in that trajectory, even though today it it is it it it's it's much more mixed, right? Some of the western states, certain states are are moving closer to to California speed, but not what California, not the pace that California's been keeping.

SPEAKER_00 33:32

Okay, so Bob, I mean, I like that's interesting, like because you know, a lot of dealerships are regional, right? And so you've got 20 stores in the Bay Area or you know, 10 stores in the Seattle area or whatever. So like if you are in a one of the western states or any of the carb states, like you are actually on path to 50% of your sales are are electric or you know, plug-in or full battery electric by 2030. I think that's like a like that's a pretty big deal takeaway for dealers uh around the country.

SPEAKER_01 34:01

Absolutely. Everything's all about de-averaging here. And it's even within California, Central California versus the Bay Area versus LA versus others, there's all those different dynamics up place. So it's it's not surprising if fast forward five years and some parts of California are saying three out of every four vehicles coming off the lot have a plug on it. That that's a very real and possible uh path forward we see occurring here when in the southeast people don't even even know what an EV is still because they they haven't seen one in in the last week or two. There might be that divergence.

SPEAKER_00 34:33

Just, you know, I'm just I'm just thinking about averages here. If you are saying California and those other western states are going to be 50 percent uh by 2030, and you're saying the overall country is at 15, that basically means that the non-carb states have to essentially be at zero in order for that to be true.

SPEAKER_01 34:52

It is less than five percent, yes. Okay. Wow. Because I think the carb states, and if we're including all the versions of the carb definition, yeah. So maybe that's 53, maybe it's in the 40s. Correct. That puts you in the I I think we last we looked higher 30s, and then everyone else is in the the five percent-ish sort of range for the non-carb states, and that gets you to that average.

SPEAKER_00 35:13

One of the big, I think, undertold stories this year is Toyota, you know, who's been lagging on EVs forever, right? And honestly, like pushing out marketing that was like, yeah, that's overblown, that's not very good for the environment, everything like that, which is a little bit of a head scratcher. So then to this year, just in the last month or two, they're coming to market hard with like a full lineup of four different EVs, you know, the at all price points, the BZ, the CHR, the BZ Woodland, which is like the Subaru Outback Killer, and the Highlander, you know, three row thing. And yet, you know, so they're they're coming hard to this market, and yet you've got them at less than five percent uh EV um sales in 2030. Like, do you think this is all for show? Like, what's what's going on here?

SPEAKER_01 35:58

Toyota has gotten hit before for being called a laggard. Uh we will not speak about any of our clients in one way, shape, or form as leaders, laggards or otherwise. I said this. I said, those are yours. That's right. Um and and so them bringing something online that's now meeting the the pace of VB adoption is quite interesting. When you see others that have jumped into the fray now pulling back, it feels like a less consistent story. So uh absolutely fascinating to see how Toyota's been managing this moment and the prior and the prior number of years and what it means for them going forward. But they'll have more offerings available than they ever have before. They've if I think about their hybrid offerings or they're even on their their Camry, no only having a hybrid offering now and not even having a an ICE vehicle option, they they stopped that last year. Just means they they recognize the direction of travel, but they and every other automaker is trying to say, what do I know about the specific customers I'm trying to attract and where they're at with the needs that they're looking for and how do how do I meet those? And maybe I'll just layer out one other thing, is uh also in the same chart you're referencing, is you'll see that there's very different predictions on how hybrids fit into their to the portfolios of the these different automakers. And some of that's legacy as well. Up to this point, the the Japanese, the Koreans, and really Ford were the only ones that had hybrid offerings, like full traditional hybrids. And so as we see the interest in hybrids really take off, you see some of the other automakers saying, Oh, I don't have that option in my portfolio. I was all gasoline and I was all electric vehicle, and now I need to figure out do I bring a hybrid to market for which category to and if I'm gonna do a plug-in hybrid, do I do this range extender that's getting all hyped, but maybe isn't yet a proven market in the in the US? Do I do a plug-in hybrid that you know it hasn't really taken off over the past 10 years in the US, but can can fit what customers might be looking for? There's lots of really strategic portfolio decisions that we're helping our clients with and that they're wrestling with as they think about how to fill this gap.

SPEAKER_00 38:05

Yeah. And to be fair, you know, my my read on Toyota, you know, and and their policies so far haven't is never been about like, oh, we don't like EVs. It's just that they put so much into building incredible hybrids. You know, the Prius was the king, absolutely, still is, right? Of the hybrids. And so it's like when you have invested that much into a technology set over the years, it you know, I just get that that feels like a lot of some cost of like, hey, we're not gonna go and roast that versus somebody else who didn't have really anything. Well, why don't I skip? You know, Cadillac is a good example. It's like they didn't really have any hybrids to speak of, and now they're going big into straight up to to EVs. And so I that that feels like they just, you know, you've got some companies that just didn't have much to lose. And Toyota, I think, did have something to lose by saying, hey, we're going to cannibalize all that hybrid technology by going very quickly to EVs. So and obviously both of them are a long-term part of the vehicle mix moving forward anyway.

SPEAKER_01 39:06

Right. And and each of those have different considerations now for how they play, not just in the US, but globally with that that same set of platforms, right? Cadillac being more US focused, Toyota being the largest global player in terms of sales and having significant same of those those same models being sold in Latham and parts of Asia. They need to think about how they bring all of it along in one way that keeps the economies of scale and economics moving in the right direction.

SPEAKER_00 39:35

Yeah. Um, okay. So uh you guys do have sort of a uh there's an uncertainty in these forecasts, right? So there's there's there's a bear case, there's a bull case, and you know that a year from now I'm gonna come back and dunk on you. What happens, right? I'm just gonna find a way to do this because it's I get to have fun with that and you have to do your job. What's the bull case for the US? Like, um, what would and not the numbers, but like what would need to happen over the next sort of like two years for you guys to be like, you know what? Actually, it's gonna be actually sort of 30%, you know, by 30 or 40 percent, you know, in 2030, and we just we missed it. And actually turns out the 2022 version of ourselves were the right ones. Like, you know, what what are the sequence of events that happened over the next two years that make that possible?

SPEAKER_02 40:24

Yeah.

SPEAKER_01 40:24

Have to have excellent, excellent launches in 2028, 2029 time frame. That's what a number of the automakers are gearing up for, but they think they have the right vehicles coming to market at that time. Okay. And if those are hits out of the gate and you have one or two years to be able to scale it up, the 2020 numbers, yeah, the bulk case can be high teens, can be 20% plus on VEV adoption. Um, it still feels like it's a relatively low probability of all that working for every automaker in every sector. But yeah, count us in for count us in.

SPEAKER_00 40:58

Okay. So, so so basically we need to look for like, and those model years take a while to develop. And so that we need to make sure they're actually on track and they look like they've got the right specs. What else needs to be true? What else needs to happen? What else would need to happen in you know this year and next year for us to set to like for us to be on that different trajectory?

SPEAKER_01 41:17

Yeah. Would love to see states have the okay clarity if they can pursue their own agendas on on alternative powertrains. Uh, because at this point, what we look at from a federal standpoint, even if there's an administration change in 28, just the timeline it takes for the EPA and for others to rule and then put put in place a new trajectory, it doesn't impact until post-2030. Right. Uh so you need state level policies to have the freedom and the the willingness to to set a new floor that otherwise isn't there.

SPEAKER_00 41:50

Yeah. And and and taking the lesson from China, they need to be, there needs to be clarity that they're not, it's not just, oh, it's a six-month rebate till money runs out. It needs to be a like a consistent, this is going to be the case from now until 230.

SPEAKER_03 42:03

Yeah. Yeah.

SPEAKER_01 42:04

And then I would call it a an absolute wild card, but one that's so interesting to think about is if Chinese vehicles are allowed to be sold in the US.

unknown 42:13

Right.

SPEAKER_01 42:13

Difficult to imagine that happening. Difficult to imagine it happens. But if you were if you were going to think about a bull case that would change how you have to compete in this market and significant amount of additional supply at different price points, wow, talk about a game changer. That's the one that that could really happen.

SPEAKER_00 42:31

Yeah, that is so interesting. Like I just imagine if like US consumers basically, you know, obviously 99.9% of us have not been to China and not been to a car dealership there. But like if people really realize like how much better the product is there and how much lower the price is, like, I think they'd be really pissed, you know, honestly.

SPEAKER_01 42:55

Yeah. And you can go rent a car in Costa Rica right now and on a family vacation. And many of those are Chinese EVs, so you can experience them in different ways.

SPEAKER_00 43:05

And 99.1% of the people are not going to Costa Rica on vacation, right? So yeah, I would agree with that.

SPEAKER_01 43:11

Uh, so there's there's different ways to see it, even if you're not in China, and nonetheless, we can all long for the fact that what China's producing in terms of technology that's pushing the overall industry, we would love to see it find its way into the US market, whether it be through a Chinese automaker, whether it be through a partnership, whether it be through any other means, for us to be able to see a better product here is is a is a win for those that are rooting for for EVs to continue to take the next step in in the US?

SPEAKER_00 43:38

What happens if uh this could this happen through like um a merger where you know one of the big three, for instance, either is acquired by a Chinese automaker or vice versa, you know, like Stellantis is bought by BYD. Like what happens then? Is that I mean, could that sort of cause that that thing to break down, the the terrafall, basically?

SPEAKER_01 44:02

A lot of it then comes to what we how we rule on cybersecurity and some of the other aspects that are being put in place for how the vehicles were designed, right? So because Stellantis has a partnership with Leap Motor, and that's one that's allowing them to bring in different types of vehicles to the Europe market. And they're thinking about how they can still leverage that technology through a Stellantis brand for the US. So we're seeing those partnerships materialize. It's somewhat slow, and it's it's not taking advantage of what we clearly know is already on the market in China, that if it was, if it was here, would be just a very different set of conversations.

SPEAKER_00 44:37

Yeah. And I guess, you know what, that that that merger deal in, you know, wouldn't do it because like if that happened, the car was still built in China, it's still gonna be subject to the massive like tariffs. So so it would you what you're talking about is like you really have to have like a Chinese company, maybe through a US brand, like set up a factory in the US and that to produce, and that takes a really long time. So there's steps involved to get there. Yeah.

SPEAKER_01 45:03

But certainly something to dream about. And and uh there's that would that would unlock a next degree of of how we think about the the path forward. In the same way, I continue to watch what's happening on the autonomous vehicle side. I continue to what's happening on the fleet side. There's those things are gonna be small in their part, but when you put all those dominoes together and get them in motion, they they can have a material effect.

SPEAKER_00 45:25

All right. So last question. You you do have to, you know, even though you got a model that's always sort of like getting updated with new data, you do have to sort of choose a moment to be like, okay, like boom, we're we're locking this, and that produces the report, right? So uh that's already happened. So what um what buyers more remorse do you already have? You're like, oh man, I really wish we could we we miss this. Like, what is it that you already think is wrong? And now the date.

SPEAKER_01 45:50

Yeah, the what's happening with gasoline prices and how that's gonna hit Southeast Asia, how that's gonna hit Europe. I think we're gonna underestimate what what we see in the market uh for some of those regions. Yeah, gotcha. All right. We wait for what happens. You you wait to close the year, right? You make sure all the data comes in for the end of 2025. You work hard on for a couple months, and then right as we hit the hit the final on our views here, something, something's gonna change. Okay, yeah.

SPEAKER_00 46:17

All right, Nathan. Uh awesome to talk to you. Um, I'm already looking forward to this discussion a year from now, uh, when one or the other of us is gonna get a bunch of, I told you so.

SPEAKER_01 46:27

So we'll see what our thoughts we should have we should have made a bet on the call so that we could hold ourselves to it in terms of who pays out at that point. Right. But thanks a lot for the conversation. Yeah, for sure.

SPEAKER_00 46:35

Take care. All the best.

SPEAKER_02 46:38

Thanks for joining this episode of Eevee Insider. Be sure to like, comment, and subscribe. And we will see you next time.