Why are electric vehicles still the 'car of the future'?

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Laia Barbarà, Director, Clean Mobility and Infrastructure, Centre for Nature and Climate, World Economic Forum: The bottom line is we have to make the cleaner choice the easier choice in everyday life, and that's both for companies and individuals.

Robin Pomeroy, host, Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them. This week, why are electric vehicles still the car of the future? They are cleaner, quieter and cheaper to run - but still seem to be a bit of a niche.

Paul Farrell, Chief Strategy Officer, BorgWarner: There's 1.3, 1.4 billion cars, the existing installed base out there, right. So this isn't your snap your fingers and you're just going to see electric vehicles on the road.

Robin Pomeroy: It’s a massive, global industry, with a huge impact on the economy, the environment, and our way of life. We hear about cost, charging infrastructure and range anxiety…

Elaine Buckberg, Senior Fellow, Harvard University, Salata Institute for Climate and Sustainability and the Belfer Center: Only about one to two percent of Americans do a trip longer than 100 miles each way every year. But it's the great American road trip and people think they might. And they want to buy a car that would suit any contingency that would come up.

Robin Pomeroy: We hear from experts from all corners of the industry and ask what could speed up the clean transition.

Agustin Delgado, Chief Technology Officer, Iberdrola: What creates a bit of a tipping point is now you start to see these very competitive, very attractive vehicles that are quickly moving in. And so it creates greater awareness, greater visibility, again, greater affordability.

 Robin Pomeroy: Follow Radio Davos wherever you get podcasts, or visit wef.ch/podcasts where you will also find our sister programmes, Meet the Leader, and Agenda Dialogues.

I’m Robin Pomeroy at the World Economic Forum, and asking why the switch to electric vehicles seems to be taking so long…

Agustin Delgado: But the global trend, it is like, this is a non-regret decision. It is no brain that this technology will be the most used technology, and not in 100 years, but in a period shorter than we think.

Robin Pomeroy: This is Radio Davos.

Welcome to Radio Davos. This week we're looking at what we might call clean mobility and what otherwise you would call electric vehicles. Why are they still the cars of the future in most parts of the world and not the default setting? Why is this part of the energy transition happening apparently so slowly?

Later in the episode, we'll be asking that question to an expert at Harvard University and from executives at a global vehicle component manufacturer and from an energy utility.

Before we get to those three interviews, I'm joined by a co-host for this episode, my colleague, Laia Barbarà, who's director of climate strategy at the World Economic Forum's Centre for Nature and Climate. Hi Laia, how are you?

Laia Barbarà: Hi Robin, thanks for having me.

Robin Pomeroy: It's great to have you back on the show. Tell us what you do more broadly at the World Economic Forum.

Laia Barbarà: So I do oversee the work that we do on clean mobility and infrastructure at the World Economic Forum, and that includes the automotive sectors, where we focus on making clean mobility work at scale. And that's for all stakeholders involved, for drivers, for the industry, and for the energy system more broadly.

Robin Pomeroy: So we've been talking about looking into electric vehicles and I came back to you and said, the question I would like to explore is, if these vehicles are so great, as everyone says they are, why isn't everyone driving them? I don't actually have a car, but I live in a city where there are lots of cars and most of them here are still fossil fuel, internal combustion engine cars. I mean am I right in thinking that's an interesting topic? There's stuff to be said about that?

Laia Barbarà: Thank you Robin. I'm happy to answer this question. It's good to get the elephants out of the room.

So you're right in saying that most cars on the road today are petrol or diesel cars, internal combustion engine cars, and that's because changing what people buy today happens much faster than replacing all the cars that already exist and are being driven on roads.

In 2025 fully electric cars and plug-in hybrids together accounted for 1 out of 4 new car sales worldwide, so 25%, but only around 5% of the cars on the road are electric or hybrid plug-ins. So that distinction really matters.

Robin Pomeroy: It's going to take a long time to shift this fleet. I mean a car. How long does a car last on our roads? 20 years? 30 years? More maybe?

Laia Barbarà: It's going to take around 20 years to have a higher penetration but ultimately the measure of success is how quickly we reduce emissions across the transport system.

Robin Pomeroy: I was in China and Ithink i mentioned this too many times in interviews that we'll be listening to on this episode i was there for the World Economic Forum's Summer Davos and I also went to that what seven years ago and it seems to have changed a lot in China in the big cities there, in Dalian where we were, or Beijing. It seems, at least in these big cities, most of the cars on the road are pure electric. And you can tell the difference in terms of air quality and in terms of noise pollution and just seems they've done it. Obviously, an entirely different political culture over there and industry base.

Do you have any figures on that, on whether I'm right in thinking China has kind of leapt forward with the adoption of this technology and why that's, if it has happened faster, why has it happened faster?

Laia Barbarà: There's not a single global story when it comes to EV adoption. There's a regional picture that paints different colours.

If you look at China, yes, this is the mecca of EVs. Absolutely every single car that's being sold today, it's electric.

Robin Pomeroy: Is that true? Every car?

Laia Barbarà: Pretty much. Almost the whole new fleet is being EV based.

And here where we see the success story that happens when you align policy with industry, with subsidies, with demand, et cetera. I'm not saying that this picture can be replicated everywhere, but for sure it's bringing the global cost curve down, and that's good news.

But then if we look at the global level, global sales growth has slowed this past year. And if we double-click into Europe, we see that the electric vehicle sales here were up around 30% through last month. And then that's the opposite thing that we're seeing in North America. So Europe and North America are telling quite different stories.

China is for sure the first mover, first adopter. And again, what matters here is bringing the global emissions down and changing the entire transportation system and how it works.

But it's going to take a while, and that's exactly what we do at Next Move here at the World Economic Forum. We bring together carmakers, suppliers, energy companies, and governments to address the barriers that none of them can actually solve alone, so that globally we see a more clean mobility system.

Robin Pomeroy: And it is, like many issues that we will talk about on Radio Davos, like many of the world's big issues, it is complex and it has these different actors and stakeholders. So you've got the consumer, you've the company that makes the car, you've go the company or the many, many companies make components of the car. You've then got the way those cars are fueled or charged and you've competing economic interests of incumbent industries, newcomers. You've got regional differences. China would love to be making cars for everyone in the rest of the world. While Europe doesn't want that to happen, Europe wants to make its cars, North America wants to makes its cars. There's so many complicated things.

And on this episode, we're going to talk to, a company that makes electricity and a company makes components, for example. They've all got different demands, different things they want to see happen.

What do you see as the, the kind of the sub-challenges. If the main challenge is how do we move towards cleaner mobility, the sub-challenges might be we need more charging stations or we need to change a subsidy thing or there's a policy thing going on there. I mean what are the types of issues that you're dealing with that you hear these companies saying, oh if only this happened that would change everything for us.

Laia Barbarà: I think the key barriers that remain can be summarised in three key questions.

One is can I afford it?

The second one is will it fit my life, my lifestyle?

And three is, can businesses invest with confidence?

I'm happy to double down and explore all the three, but the bottom line is we have to make the cleaner choice the easier choice in everyday life, and that's both for companies and individuals.

So looking at the three barriers that I was just pointing out, can I afford it?

Electric vehicles, they need to be cheaper in order for customers to adopt it fast. And today, they are already cheaper when you run them, particularly when you can charge at home. But these future savings do not solve the upfront price that the customers that cannot afford it, they cannot overcome it, basically. So we need attractive vehicles at accessible prices and financing schemes from the governments that support the upfront cost.

Today, with the prices of gasoline, it is clear that electric vehicles are getting more and more competitive and we see the increase in sales.

Will it fit my lifestyle?

Someone that lives at a home and has a home charger has a very different story from someone that lives in an apartment. So that's something we still need to work on, as the transition needs to work for both, ultimately. People need the charging that they can find, that they relay, and that they can pay for easily at an affordable price, ultimately.

And that brings me to the confidence that we need in the system. And that translates into confidence that businesses need to have in order for them to invest in that.

Because yes, it's great for individuals to have electric vehicles, but think about corporate fleets. Those are vast numbers of vehicles, of cars on the roads that can be easily changed into full EVs because they are less sensitive to price or the elasticity when it comes to the price. It's bigger than them.

So if we think about the car manufacturers or the charging operators or the electricity grid companies, they do make the investments years ahead of time. And that's why we need to intervene and get them roped in this conversation as soon as possible.

What do they need? They need credible direction and they need a stable policy in order for them to make those investments. And if that happens, the rest of the system, or if they move, the system will able to follow.

So predictable policy, coordinated planning, and the investments will be made possible.

Robin Pomeroy: Are companies and are consumers getting that policy stability? Because I've seen, just very much looking from the outside, even in Europe, you know, there was European legislation which was dictating that by a certain date, so many cars would need to be electric vehicles. There seems to be pushback, and those things change.

It just doesn't seem to me, again, looking at this from the outside that it's that clear that, you know, Europe is serious about moving to electric vehicles.

And I'm surprised by that, because I thought that argument had kind of been won on a technical side and on an economic side quite a long time ago, but we still got this kind of policy resistance to, okay, we've all decided this is the way to go, let's put it into place, which you would need to do things like better charging and some of the things you've just been talking about.

Do you think there are still policy arguments happening that, in my opinion, seen from the outside, should have happened 10 or 20 years ago? Are you confident that policy in democracies is going in a way that companies need it to go in to make those long-term decisions?

Laia Barbarà: You're pointing out something very interesting, Robin.

So yes we have different political systems, we have different needs in different regions, but to me any policymaker should be aiming at making the cleaner choice, the easier choice in everyday life.

If we look into Europe as you were referring to, Europe is having a hard time trying to square the triangle as it's trying to deliver three things at once. So on one side, electric cars that are European made. On the other side, electric cars that are affordable. And lastly, electric cars that are competitive and that keep the jobs within within the boundaries of Europe.

So, affordable, clean and made in Europe.

So, the challenge is to actually make those ambitions reinforce each other but also to accept that there's always a trade-off.

Robin Pomeroy: Everyone wants clear policy, but not everyone exactly wants the same policy right now because of those conflicting interests.

Laia Barbarà: So to me, actually, the piece of the transition is also competitiveness issue, because it helps determine where the next generation of investment and jobs will go to.

And that's something that, yes, Europe is taking very seriously, but that's at the expense of a slower transition, for instance.

Because it's a very complex topic and intertwined in the sense that it means working on energy costs, it means work on battery capabilities, It means working on skills, upskilling, re-skilling. It means working on manufacturing at scale and stimulating demand that is not always there.

So, the direction of travel may be clear, but the real contest here is over cost, speed, and who can deliver at scale. And to me, that's exactly what any given policy should be trying to address

Robin Pomeroy: Well, I think you've set out really well the complexity of the issue. And to delve more into that, we've got three interviews now that I did recently at an event called the Energy Forum here at the World Economic Forum's headquarters in Geneva, Switzerland. That was when more than 150 executives from around the world, from many different sectors involved in energy, were discussing issues about energy production, distribution, consumption, including what we're talking about in this episode today, the transition to cleaner mobility, transport.

The first one we're going to hear now is from a company that makes energy. This is a company called Iberdrola, which is a Spanish utility that generates electricity. I spoke at that event to the Chief Technology Officer at Iberdrola, Agustin Delgado.

Agustin Delgado, Chief Technology Officer, Iberdrola

Agustin Delgado: My name is Agustín Delgado and I'm the Chief Technology Officer at Iberdrola.

Robin Pomeroy: What is Iberrola?

Agustin Delgado: Well, Iberdola is a big Western utility. We have more than 125 years of history and we started as a private company building all the tools for the power sector networks, hydro power plants and everything. And then we went to coal, then nuclear, then combined cycles, and finally 25 years ago we started building a big portfolio of renewables.

So we have been at the forefront of the embracement of the new technologies that could deliver cheap electricity to our customers. With also a strong vision that we do all this for the benefit of our customers.

So we are really today thinking that how we can bring this electricity to more uses for our customers.

Electricity has been great for residential buildings, it has been great for some industries and so forth, but it is true that we cannot reach more than 20-23% of the whole energy demand. And now I think we are in the process of a big electrification of the economy, how we can bring electricity to more sectors.

Robin Pomeroy: Thanks for joining us. There's a meeting going on here at the World Economic Forum. You only have a few minutes to spare. I want to get onto as many things as we can in that time, but can we start with electric vehicles? You know, I was in China a few months ago for the World Economic Forum's Summer Davos there. Almost all the cars are electric. They look like beautiful cars. I know things are different all over the world, but I'm wondering why electric vehicles haven't taken off in Europe in the same way that they have.

People I speak to say there's range anxiety. You don't know how to charge it, you don't where you're going to be able to charge it. Is that a big deal and what can be done about it?

Agustin Delgado: It links with my previous statement.

Before the coming of the batteries as we know today, it was very difficult for one of the big sectors of the economy, mobility, to incorporate electricity in the energy matrix. And now it is possible, right?

For sure, there are barriers. First of all, we have the internal combustion engine that has been developed along the last more than 100 years, while the batteries are still, we could say, in its infancy, or if you want to say in their adolescence, but they are improving so much.

So it is true that we are not used to the need to plug our cars. We are used to have a huge range that most of the time we don't use it, but we think it gives us a peace of mind to have this range. But we are overcoming those barriers in a very short period of time.

There is a lack of charging stations. Yeah, that's true, we are building this infrastructure while we are talking, but it will be solved in a few years time.

It is true that the autonomy, it is not as big as the internal combustion engine sometimes, but you can also see new models that achieve those ranges. And it is true that you have to take a longer time than just fueling with your pump but you will have new technologies that will allow you to do so and besides sometimes you don't need to have so much time at home I charge my car in the nights and that's all it's fully charged when I take it.

So I think first, it's a change in the mindset. Second, we are overcoming all these barriers. And third, it is also the cost technology that is being deployed.

But the numbers are there. It's a matter of time, but not tenths of years, but it's matter of time in 15 years, 10 years, 15 years 20 years that most of the sales of mobility will be electric. I see this today in Norway or in Denmark or in some other countries.

Robin Pomeroy: And is Iberdrola involved in infrastructure when it comes to electric vehicles?

Agustin Delgado: Yes we are. As I said at the very beginning, we are committed not only to generate this renewable electricity or not only deliver this electricity through our wires and networks, but also to encourage and help our customers to embrace all this new technologies and use electricity in as many sectors as possible. And one of them is mobility for sure.

So what we have done is we are deploying this network of charging stations. The same as we have a network of poles and wires, we are building a network of charging station and with, I would say with two different approaches.

First one, it is to help our customers to have their own charging station at home. It is to have a petrol station at your home for your own service, right? So we're helping them very much with this. We are helping them to have time of use tariffs so they can charge their car at the most convenient time with very low cost, less than two euros per 100 kilometres, sometimes one euro, right? This is unbeatable.

And then we want to create that peace of mind that we were saying before by building what we call this safety network so you can travel far from your home and feel safe that you will have a charging station. You can charge your car in a convenient way, right? So we have a joint venture with BP, BP Pulse for Portugal and Spain. We have some other initiatives in other geographies in which we are present. And we are seeing this as an opportunity for us and a growing vector for electrification in most of the countries.

Robin Pomeroy: And Iberdrola is based in Spain, but you're a multinational company. What's been your experience of working in different countries with different policy environments and different consumer awareness and this kind of thing. Just look at Western Europe. Is it very different from country to country? Or do you think actually most countries are pretty much going at the same pace and in the same direction?

Agustin Delgado: No, not at all. I think there are big differences between countries, not only regulation and policy, but also cultural mindsets and rates of adoption, right?

But I think apart from these differences that can somehow make you think that, okay, things are not so clear. You were mentioning before things are not taking over in Europe as in China or in other places. What it gives you is the idea of what is the global trend. What is the baseline trend on all these technologies above hypes or very deep holes, right? What is that the global trends?

And we have the opportunity to see that in other technologies like solar, like batteries, like wind farms, offshore wind and everything. And for mobility, what we can see it's really an increasing global trend everywhere. With, as I said, up and down. But depending on policy, you have a big hype and then it decreases. But the global trend, it is like, this is a non-regret decision. It is no brain that this technology will be the most used technology, and not in 100 years, but in a period shorter than we think.

Robin Pomeroy: For a separate episode of Radio Davos, I'm looking at European competitiveness. You see China zooming ahead on so many things. You see the United States always so dominant in so many things. And AI in those two areas is a huge kind of growth sector. And then you've sometimes got old Europe, which seems to be slower growth and it's not quite sure where its future is. As a company involved in energy and electrification in the heart of Western Europe and the rest of the world, are you hopeful for competitiveness, and particularly seen from that energy point of view, where do you see the growth possibilities in the work you do?

Agustin Delgado: Yeah, this is a very interesting question because one thing we need to understand, I think much better, it is that new technologies are here to stay and we cannot just think in a blue way about good old times in which we have a big dominance on industry and our cars were sold everywhere or our technology was sold everywhere.

So new technologies need to be embraced. Old technologies, I'm not saying that you have to leave them, but it is a nonsense to protect them from the new ones that are coming because it is like an unstoppable force. And this is one thing.

The second thing I would say it is that regulation and policy can help you set up the path you want to go. But it is not the only tool to embrace all these technologies. So, for embracing those technologies, you have to, let's say, create an environment in which you have champions with enough capacity to compete in the global world. I'm not saying not a nationwide champions, but big champions, European ones, that can compete with other let's say continental champions like the ones in China or in the US. So this is the first thing, competition, not between European states, but between geographies like China, US, and Europe.

And making the new technology to create a new industrial sector that somehow will cannibalise the old one. But if you protect the old ones, you are somehow putting barriers to the new one, right?

And this mindset is difficult. I understand that you have to fight against people who fears about this future and so forth, but the future is here to stay.

Robin Pomeroy: Is that dialogue moving on or are we still at the start of that kind of fight?

Agustin Delgado: I think there are good, let's say, reports on the diagnostic of what is happening. There is an understanding of the situation, but then to implement the policies is not that easy.

We are a society, I mean, I'm European, I like living in Europe, but we are a a society that somehow we have been living in a comfortable way and we are moving out of this comfort zone. And nobody wants to leave the comfort zone. From my understanding, it's a great idea, but it still doesn't have the same strong mechanism as other blocs.

I think we can do that. I think we are trying to do that. The implementation phase is becoming more difficult.

Robin Pomeroy: And if you could wave a magic wand and change something to achieve what you're talking about, what would, what, would you change?

Agustin Delgado: Yeah, you know, this is like when you play piano, you have to play several keys at the same time, not just one key.

We have been able to decarbonize the energy generation, and we know how to do that. It's a matter of deploying. We have being able of creating the biggest machine in the world, that it is the electricity network. This is the biggest machines working together. I think that we need to all this capacity that we already have to the final uses.

We are not going to change the energy matrix if we don't change the final energy uses.

And I'm talking about changing mobility, that is today more than 95% based on fossil fuels, not electricity, and to change industry.

So, if I had a wish, I would say, let's try to accelerate the electrification rates and these electricity uses will pull the rest of the value chain, generation and power.

We're having some problems in some countries, we have more generation in solar days than we can accept, we have good elements, right? So if you have this electricity consumption, we will pull and we will develop the rest of the things. This will be my desire, my wish.

Robin Pomeroy: There was this famous Iberian blackout a year and a half ago, in Spain and Portugal. And I think the whole world noticed it. And there was lots of discussion about why it happened and what could prevent it in the future. We don't have a lot of time. We probably need a week to talk about this. But for those of us who remember that in the headlines from a year ago What should we know about it now? What have you learnt about it? What should all learn about it?

Agustin Delgado: First thing I would say, this is a wake-up call, right? We are so used to have so high reliability in a electricity system, power system, that we give it for granted.

It is not the same in other sectors. You have a cellphone and you don't have a signal, and it's, oh, I don't signal. And it is like, okay, I do not have signal. It doesn't happen in the electricity sector. You don't electricity. I don't have electricity. What is happening? Right?

So we are used and we've for granted to have very high reliability levels of power in most of the countries.

So this is a wake-up call that we shouldn't give it for granted. Why I'm saying that? Because you need to put in place the adequate mechanisms to provide for that. And those mechanisms cost money and you have to pay for that so when you hear people saying, no, PV is very cheap, now electricity is going to be very cheap. Yeah, sure, PV is cheap, electricity coming from PV is very cheap, but given this electricity to the customer with reliability levels, in adequate way, how it wants, it costs money.

I like to say it is like water, water comes from the sky, right? But bringing it to the to the customer at a good quality level and so forth, costs money.

So we have to make, to understand that giving them the electricity at the required levels, it is a job itself and it costs money.

This is the first thing. Second thing, it is about the need to have proper and adequate levels of very high technicians at the drivers' seats. It should be very technical thing. We need, and this is also a call for, we need specialised people to run all these systems. We can do that because we have been doing this for many years, but we need to think about it.

And for sure, I would say to separate very much who is the system operator and who are the transmission operators, right? To have clear rules in the electricity power so you have a system operator that can move all the wires to keep it up and running.

So with this I'm totally confident that we have a reliable power system and that these lessons that we've been showing all around the world can be understood by other power systems and keep the pace of electrification up and running.

Robin Pomeroy: Agustin Delgado is a chief technology officer at Iberdrola.

An interesting part, Laia, of this kind of web or network of companies, producers, involved in what you're working on, clean mobility, is the people who are providing the energy that fuels one way or another the vehicles that we travel in. What did you take away from that?

Laia Barbarà: Exactly, what stood out for me is how much of this transition happens beyond the vehicle. So the charger that people see depends on the electricity network behind it, like the one that Ibrodrala operates. So transport and energy decisions need to be planned all together. And that, of course, adds a good amount of complexity into this transition.

Robin Pomeroy: OK, well, let's go to the second of the three interviews that I did at that energy event.

This is someone in academia from Harvard University at, within Harvard, the Salata Institute for Climate and Sustainability. She's called Elaine Buckberg. And she used to work for General Motors. So she's from the auto industry, but now in academia. Let's hear what she has to say. This is Elaine Buckberg.

Elaine Buckberg, Senior Fellow, Harvard University, Salata Institute for Climate and Sustainability and the Belfer Center

Elaine Buckberg: My name is Elaine Buckberg. I'm a senior fellow at Harvard in both the Belfer Centre for Science and International Affairs and the Salata Institute for Climate and Sustainability.

Robin Pomeroy: Everyone seems to be saying the technology is amazing now, but in Europe and in North America, most people are still driving internal combustion engine cars. Why is that? And what is it going to take for the future of electric vehicles to really take off?

Elaine Buckberg: Right. So first of all, it's going to take a while to turn over the fleet. No matter how much we increase the share of set new vehicle sales, it's going to take a well turn over that fleet because people, you know, cars stay on the road for about a dozen years.

But in terms of really boosting EV sales, I think the biggest thing is continued technological progress around batteries that enables batteries to be smaller and lighter. So you can put more in a vehicle. At any given price. That means you can offer people a comparable range or close to comparable range, what they're used to, at around the same price.

And at that point, when you get to price equivalence with similar ranges and improving charging times too, then you're offering a better product that's quieter, smoother, like more fun to drive with better acceleration for around the price.

There's two other things I'd point to. One, that's charging, getting charging infrastructure, especially public charging infrastructure out there and reliably working and making it easy for people to find it, find out if it's working. That'll relieve a lot of anxiety about the potential change. And then we've had higher oil prices. That's making EVs look attractive.

Robin Pomeroy: A lot of the things you mentioned there are technological improvements that you think people are still waiting to find, but if you go to China, as I did a few months ago, almost all the cars are electric and the people there seem perfectly happy to buy electric vehicles. They're not waiting for a massive improvement in technology. Do you have any insight into why things have worked there? Obviously a very different market in many ways.

Elaine Buckberg: Yeah, there's a bunch of reasons here. And first of all, the stock of vehicles in China is not overwhelmingly EVs. Although if you look at the combination of battery electric vehicles and plug-in hybrids, the share of new vehicle sales is around 50 percent. So, first of all, this stock hasn't really changed that much.

There are a number of things that are different. You know, let's start with the battery technology. The leading edge vehicles, which are still on very small size, BYD, which is an automaker and a battery maker, and CATL, a battery-maker have introduced batteries that can charge your vehicle from 10% to, you know, in excess of 95% in five to 10 minutes if you have a really, really fast charger, which BYD has rolled out some of.

So, one, at the leading edge, you could get the same experience as gasoline vehicles, and that's really not in market yet and in Europe or the U.S. We can talk about why that is.

China's used a variety of very powerful incentives, though to drive consumers in that direction. So one is no purchase tax or sales tax on your vehicle. That's a savings of like 10%. And in certain of the largest cities in the country, like Beijing and Shanghai and Guangzhou, the only way you can get a first-time vehicle registration and licence plate is generally if you buy an EV. So that's been a really powerful incentive and driver.

So those are some of the reasons. The other is also the average range that people drive over the course of a week is shorter in China than it is in Europe, which is shorter than it in the US. And so that means you can suit your needs with a smaller battery, which is a smaller price gap. And so there's some fundamental differences in driving patterns.

Robin Pomeroy: Yeah, that's very, the range is really important. Do you have figures on this? People think they need a long range, but I mean in America, it's an enormous country compared to any European country. I just get the impression, again, and maybe I'm wrong, a bit like I was wrong, you've told me, about how many electric cars there are in China, but I get the impression journeys in Europe are usually pretty short. I know that journeys in America tend to be longer because it's got much more space there. Do you have some indication of the length, of the range that people really need compared to what they think they need or what they're used to having with old style cars.

Elaine Buckberg: Right, so that's a great question. So in the US, the average daily commute is about 40 miles round trip. So that would be about 65 kilometres. So if you were really going to plug in every night, a plug in hybrid, if you plugged it in every day, and, you know, then you could run on battery all the time. Or if you're willing to plug into your battery electric vehicle, a couple times a week.

Now the thing is that, one of the things I learned as chief economist of General Motors is that people buy vehicles for their extreme use case. So that means the vacation once a year where you drive a long distance and you take all the kids and their friends and their luggage and maybe the dog. Right. Only about one to two percent of Americans do a trip longer than 100 miles each way every year. But people, but it's the great American road trip and people think they might. And they want to buy a car that would suit any contingency that would come up.

So range is really important. And you often find in surveys that if you survey people who own EVs versus people who are contemplating by an EV, the EV owners don't think they need as much range because they actually understand what it's like.

My colleagues, Christian Kaps and Mike Toffel over at Harvard Business School have done a study where they've used data from a large automaker for both internal combustion engine vehicles and EVs. And they see that when away from home, if you have a pretty new vehicle with at least a 250 miles of range, the pattern in when you fill up, either your battery or your car, it's almost exactly the same.

Robin Pomeroy: That's so interesting. People are thinking of cars about that one journey a year.

Elaine Buckberg: But it's really important because, you know, I said only a couple percent of households actually do this long journey every year, but the new vehicle buyer who doesn't do them is saying, but what if, what if one weekend, even if we have two cars, like husband needs to take one kid to college this way and wife needs to take the other kid to college that way. And all my cars need to be full service. You know, that's the thing that holds people back. It's that what if.

Robin Pomeroy: You talk about the great American road trip, and I think a lot of Europeans, they often go on holiday to America to take a great American Road trip. It's probably slightly less of a fantasy ideal in Europe. Do you have any data on the difference in kind of mentality between a European driver and American driver? Is the European car buyer thinking about cars in a similar way, do you think?

Elaine Buckberg: You know, I don't have hard like comparative survey data on this. So here I have that anec-data, which is talking to European friends and reading about people's efforts to do European trips in rented EVs.

I think, you know, Europeans are less likely to plan road trips week along road trips because you've got a more developed train system. And in general, it's just more dense.

However. I hear the same sort of charging fears and like I tried to do a road trip and I couldn't find a charger, I couldn't find a chargers that's working and the importance of charging and transparency around charging so people can reliably navigate to a working charger.

The other thing is Europe has more, you know, old cities with narrow streets where people are parked in older buildings where people are more likely to park on the street rather than have dedicated parking and that makes all the more important charging availability, public charging availability in cities for people who live in cities to adopt.

Robin Pomeroy: And whose responsibility should it be to develop that infrastructure? Because the individual can't do it. I can't buy a car and say, right, I live in an apartment. I can't put one in my garage or anything. Can I call up the council and get them to install something or my local supermarket? I can't do that. So who should be driving that, do you think?

Elaine Buckberg: So those are great questions. I mean, first of all, there are a lot of charging providers and they have the incentive to put chargers where people are going to use them a lot. And I think that will make cities increasingly attractive and putting them either strategically at curbside if the city is willing to enable that and rent out the curbsides essentially, or places people go all the time, like everyone goes to the supermarket and most of the time you're inside for at least 15 to 20 minutes, that's a great place for fast charging.

Cities can also do other things, though. So the state of Massachusetts and the state of California and a number of other states have so-called right-to-charge rules so that if you lived in a condo building, an apartment-style building, but one where you are unit owners, the board of that building really can't deny you the right to install that home charging if you're willing to bear the price.

So they are trying to remove obstacles. There can be zoning related things that they can look at that can remove obstacles. State governments and utilities can enable rebates and other incentives for home charging.

So there are a lot of things that can be done at the government level as well as in the private sector, charging providers should increasingly see cities as areas of opportunity.

Robin Pomeroy: Do you think there'll be a breakthrough or is it going to be lots of these tiny incremental changes that gradually people start moving more to EVs? Could you imagine one thing happening that will break the ceiling if you like?

Elaine Buckberg: Yeah, so I think there really are tipping points.

And so if you look at Europe, right, Norway has always been the leading edge. It is by far the most advanced EV market in the world, with over 95 percent of new vehicles are pure battery electric vehicles. But then what are the next two countries next to it in Europe? Sweden and Denmark, right?

So that tipping point suggests that seeing something nearby induces behaviour. And there is this thing that people in the auto industry refer to butts on seats, like you gotta have the experience or have the friend who's driven one, and so on.

So I think that, one, you can get to tipping points. Two, there are other things governments can do, maybe national level governments. Ensure that highway network is there. Ensure the data transparency is there so people can reliably navigate to that working charger and know how much it'll cost to charge and do it in one act. Not have to cross-shop, across different apps.

And again, remove obstacles to selling. But this is when I think we should talk about the Iran war and the impact on oil prices and petrol slash gasoline prices. And that has increased interest, EV interest, around the world as people realise that they are contending with high weekly bills for fueling their vehicle. They are reminded that oil prices can be very volatile.

It's happened twice in five years, 2022 with the war in Ukraine, beginning this year. And we've seen in a number of countries a doubling of EV sales in the second quarter of this year over the year before. And countries as varied as Australia, Brazil, and South Korea.

Robin Pomeroy: Oh, so we have seen that post Strait of Hormuz?

Elaine Buckberg: Those high petrol mills make people say, oh, wait, I can, I can insulate myself both from higher costs and from volatile costs.

Robin Pomeroy: Also in countries where wind power in particular is becoming more part of the energy mix. There are times of the day when wind turbines generate electricity that is just not really being used. I know some countries and some companies and some utilities are doing differential pricing. I've heard you can charge your car in some places overnight almost for free. Is this, again, is this one of my misnomers? Is this really happening and is something like that an important incentive?

Elaine Buckberg: This is a real thing with respect to both wind and solar. So different places have more wind or more solar. I think there's a lot to be done still about differential utility pricing being passed through to the consumer.

Sometimes when there's differential pricing, it's actually when there's least demand for power, but not necessarily least supply, so not necessarily the most renewable hours of the day, for example. But I think there's a lot to be done there.

And while there's a lot of interest in stationary battery storage to smooth supply with irregular renewable generation, EVs are stationary batteries. But doing that vehicle grid integration and what the price signals are and so on, I think, there's a lot work to do there everywhere. It's a great frontier for effort.

Robin Pomeroy: Are you optimistic that this transition will happen?

Elaine Buckberg: Yes, I'm optimistic. And I think, you know, every automakers, virtually every automaker understands that this is the auto market of the future.

And is concerned about their position in it, while also trying to maximise profits along the way. And they understand that it's a better technology, ultimately, but there's a lot of stuff we're still working on in terms bringing battery costs down. That's both technology and learning. But that everyone in the industry thinks that's the future.

Again, they're more fun to drive and they become increasingly perfect substitutes for all the qualities you like in your internal combustion engine vehicle.

Robin Pomeroy: Elaine Buckberg, senior fellow at Harvard's Salata Institute for Climate and Sustainability.

That was an interesting Laia, because she came back to something that you were mentioning about consumer psychology. I don't think that's the word you used, but how does this fit into my lifestyle?

A car is an important thing for many people. And we sometimes think of it as something maybe that it's not. How often do we drive Route 66? Are we actually just moving around a city in a car? I mean, that aspect of this whole web of interests is very important, isn't it?

Laia Barbarà: Yeah, I think that point on the occasional long journey is really, really relieving, revealing. Because people want confidence that the car will work for the family holidays as well as the daily commute. And that is a very practical test for the whole charging experience.

Robin Pomeroy: It's interesting, I was just thinking, you said earlier, fleets, like company fleets of company car s are very important. And as I said, I don't own a car, but I often rent a car. And it's funny, I've seen increasingly car rental companies, which buy enormously vast fleets of cars all the time. They must be a huge part of the market. I am seeing increasingly electric cars made available, but I've never rented one yet for exactly this problem. Because usually, if I'm renting a car, it's for going a certain amount of distance. And I don't know where I can plug it. I can't plug it in at my home.

And so this psychology of it is important to car owners, to prospective car owners. Even to people who are maybe renting occasionally a car, they need to feel this confidence in it. And creating that confidence involves these various actors that you're talking to, right?

Laia Barbarà: Exactly. So this brings us back to the details that actually matter to people. Can I charge where I live? Will the charger work? Will I know what it costs in advance? Those details can actually determine whether somebody feels ready to invest, be it the company, be it an individual that rents and or buys, right?

Robin Pomeroy: Let's go to the third and final interview. Now we've talked about car makers. We're going talk to a maker of car components.

The company is called BorgWarner. It's headquartered in the United States. Really interesting, because you get in a car. You see the badge, you know, of the carmaker, on it. You don't think about the thousands of components that are in there, that have been made all over the world, that if someone has put them all together. And this is a company that makes lots of those things. So let's hear where BorgWarner stands on this. This is the Chief Strategy Officer of BorgWarner. His name's Paul Farrell.

Paul Farrell, Chief Strategy Officer, BorgWarner

Paul Farrell: My name is Paul Farrell, I'm the Chief Strategy Officer at BorgWarner. Borg Warner's a Tier 1 automotive supplier. We make propulsion components for a whole range of different applications, electric vehicles, hybrid vehicles, combustion vehicles.

Robin Pomeroy: What's a tier one? So what does that mean?

Paul Farrell: Yeah, it's a good question. So tier one suppliers, basically we sell to the companies that manufacture the vehicles. So our customers would be the Volkswagens, they would be General Motors, the Fords, the BYDs, or the next tier down from the OEMs, the original equipment manufacturers.

Robin Pomeroy: Right, if I'm driving my car, what kind of things in that car would you have made?

Paul Farrell: So BorgWarner, as I said, we're a propulsion company, so it can be a broad range of things. We're probably most known for things like turbochargers, but we do exhaust gas management systems to reduce oxides of nitrogen. We do transfer cases. We do ignition systems. But we also do inverters, we do electric motors, we do integrated drive modules for electric vehicles.

So it really spans the full range from more traditional combustion products, again, hybridization, so where you add in electrical components, and then full battery electric vehicles. We also on the commercial vehicle side do full battery pack systems as well.

Robin Pomeroy: So when, when an industry is changing company like yours has to be completely on top of I'm talking about from internal combustion engine, electric and hybrid and all those things. So what have you noticed in your time there?

Paul Farrell: Uh, yeah, so for sure. I mean, our, you know, our long standing position over, I mean the company's roots go back into the late 1800s. But you know our, our legacy is really founded in that combustion related products, transmission components. Again, the turbo chargers, things of that nature. We've made a really concerted effort over the last decade or so to build out that hybrid electric side of our portfolio. So that's, that's been a big focus.

So now we've, you know, there's been a lot of, I'd say particularly the last five years, a lot of investments gone in. Obviously the markets evolved quite a bit.

So now, you know, as we look at it, we have, we'd like to call it a resilient portfolio. So, you know, the market's moving at different paces in different parts of the world. And so we feel like we've got a good portfolio where if this segment of the market goes a little faster, we have the products for that. If this other type of technology is advancing more quickly, we have the right products for that.

So that's, again, we've done a lot of work over the last decade to create that flexibility so that, you know, we're able to serve the market where it is. And, uh, at that, at the pace and location where it needs it. It's very unpredictable.

Robin Pomeroy: It's very unpredictable, isn't it, the pace of change?

Paul Farrell: Yeah, I think it's been clear, particularly over the last five years or so, you know, it's, it's very easy to kind of lock in on a forecast and say, okay, here's where we're going to be five, six, and, and you need that in some respects, because you're making big, big investments.

But I think, you, know, the realisation, you know, The expectations for EVs were kind of cast in stone and clearly, you know they, there was a, I'd say elevated expectations probably around 2023, and then they'd started to come back out and down. And now I think we're seeing it really play out at different paces depending on where you sit in the world.

So it does, it is a challenge. I think in some respects, you know, we have to think less in terms of the ability to get to the perfect forecast. And it's a lot more about saying, all right, I can't predict that, how do I make sure I'm positioned so that I can adjust or we can adjust based on how the, how the market evolves.

Robin Pomeroy: It must be a bit like a weather forecast really, there are inputs. You know there's certain things that will impact this, but you don't know exactly how, where, and when things are going to change. Have you noticed what, what are the things I was talking to someone else earlier, the price of gas at the pump makes people think, oh, maybe I will buy an EV now, but there must be lots of other things. What are the things you have to keep an eye on?

Paul Farrell: Yeah. I mean, it's a whole range of things. You know, you can look at China in particular, where electrification is really played out even faster than probably was expected four or five years ago. And it's, it, I mean all the things that you think about as being impediments, I think in many respects have really been addressed there.

So affordability is there. Charging infrastructure is there. You know, lots of variety is available as well. Right. So I think. I don't know if it's really driven in some respects, it's obviously driven in part by the government, they've incentivized it and leaned into it, but the industry's obviously followed that and done well.

Where those don't exist, I think we've seen more fits and starts.

So, you know, charging infrastructure is always one. Policy is clearly a factor that has kind of on again, off again effects. You know, clearly in the U.S. there was a heavy lean into that with the prior administration, the current administration is placing a lower prioritisation around that. And you've seen more of a step back in year over year and at least EV adoption in the U S although I think hybridization has continued to grow.

So, I think to your question, there is a lot of variability and there just are a lot factors and they, and they differ. I mean, there was a lot different dynamics, the nature of density of population, you know, if you have a home and you have a garage, it's different situation than you live in a high rise building.

But you know there's a lot of different factors. And I think just people getting educated about the technology and getting comfortable with it is another factor as well. So so yeah, I think as a business, we need to be there to meet our customers where they where they are and where they're going to need to be in the next several years.

Robin Pomeroy: Are there things that you as a company have made, innovations you've had to make, that have helped that transition to electric vehicles? Are there technologies that you've been involved with? Things that your customers are demanding, we really need this solution, that kind of thing.

Paul Farrell: I think it's a, it's a natural evolution. I mean there's it's, you know, even combustion side or on the electrification side, there's clearly, I'm on the electrification side for sure. There's obviously a lot of push around costs just to make electric vehicles more affordable.

Robin Pomeroy: How did that happen? I mean, how, because it's true, maybe five, certainly 10 years ago, these are very expensive vehicles. Now, not so much. What happened?

Paul Farrell: I mean, a lot of it's just economies of scale, right? I mean it's really ramping it up.

If you think about the automotive industry, at least on the passenger car side, it's a 90 million vehicle per year sort of market. And as the bulk of that was combustion, call it 10 years ago, there's obviously a big installed base. And so as EVs have picked up, particularly locally, and you start to see those economies of skill kick in. You definitely see it in China.

And so I think that's a lot of it is just that, you know, it's not, it's gone from being more of a niche product to now it's more mainstream. And with that come a lot of efficiencies, there's experience effects as, you know, companies are on their second, third, fourth generation, as opposed to being the first one.

Technologies have gotten better as well. Clearly batteries are a big driver of that. And that technology has improved and particularly on the cost side has gotten better.

So there's a whole range of factors, but I think a lot of it's just this maturity that's growing in the technologies. And with that comes greater efficiency and cost competitiveness.

Robin Pomeroy: And do you see the pace of change in North America, in Europe, any other market you're involved in, pretty much staying the same or could there be other tipping points, other breakthroughs that could happen? What are the things that would suddenly make, wow, that suddenly escalated there? That's accelerated.

Paul Farrell: Uh, yeah, it's a great question. I mean, frankly, the Chinese OEM dynamic is a very significant factor. They've obviously moved from being focused on their local economy and now are a significant exporter of vehicles. And so I think that's really, and they have these strengths in around electric vehicles. And so that's. Where they have a presence, there's a growing presence in places like Europe, clearly bases where there isn't a large established auto industry, I think they've made significant inroads.

And so I think those, that's what creates a bit of a tipping point is now you start to see these very competitive, very attractive vehicles that are quickly moving in. And so it creates greater awareness, greater visibility, again, greater affordability.

And I think over time, as people see their neighbours have an electric vehicle or other things. It just gets more comfortable, more familiar. The infrastructure gets built out. But those are probably some of the main things that would drive accelerated adoption, but there is probably that slow adoption. And then as, as it gets more familiar, as a game, the economies of scale, you start to see, you know, a more steeper ramp, but, you know, we'll see how it plays out over time.

Robin Pomeroy: If you could mention one thing or two or three things that if they were to change aside from that gradual, oh, my neighbour's got this amazing electric car. I want one like that, which is clearly, and you're not the first person who said this to me, clearly that is going to be really important.

But if there were things we could actually change either in the vehicles themselves or in the charging infrastructure or the pricing arrangements or the policies, what are the levers that could accelerate the uptake of EVs.

Paul Farrell: I think the, so the vehicle technology has come a long way in the last 10, 15 years. And so it's, the vehicles are still probably too expensive. That's probably, you know, if you look at it at a vehicle level in particular, that's a key limitation.

And I think that's going to continue to get better over time.

Robin Pomeroy: Does that also get fixed by scale again?

Paul Farrell: Absolutely, absolutely. And again, if your in China now, electric vehicles, they are electric vehicles that cost less, or at least priced less than their combustion counterparts.

So I think that's on the vehicle side, at least in particular, there's a lot of positives with like vehicles in terms of efficiency, maintenance, just connectivity, levels of integration, obviously the driving experience, there's some kind of immediate torque, all that. But I think people need to get comfortable with that.

Just in terms, I guess, of the things, as you step out, I think charging availability, people have to get uncomfortable with that, That varies a little bit depending on whether, you know, in the U.S. You have a lot of people living in single-family homes, so it's a little bit easier to just plug it in your garage. But if you live in big cities, you know, now you need something where you don't have a, you're not going to just park in on the street necessarily. And so having access to easy charging becomes a much bigger factor. So I think that getting comfortable with that becomes a big deal.

So you need both probably charging in cities, but then you need faster charging solutions on the highway where you don't want to sit for several hours and wait for the vehicle to charge.

And then, you know, policies and other things can obviously help accelerate that. I guess is more where they come in, right? If there's incentives that help make them more cost effective. There can be incentives that helped induce the charging piece. It was probably educational things as well. I mean, I think it's a lot of it is a little bit of a different experience for the consumer. You know you get pretty you know that if you get in your car Probably between your home and maybe where you go to work, there could be one, two, three, 10 different opportunities to refill your petrol car or your diesel car, if you need to. Clearly that convenience isn't there. That comfort of peace of mind isn't necessarily there for an electric vehicle.

So I think there's more work to be done there, both in terms of infrastructure, but also I think just getting people comfortable. Cause right now, at least if you want to do a longer trip, there's a planning exercise that's involved in it. With an electric vehicle that you don't necessarily have with a petrol vehicle or a diesel vehicle.

Robin Pomeroy: Do you see a time in the foreseeable future where pretty much everything is an electric vehicle and an internal combustion engine is a niche interest? It's a beautiful sports car from the 1960s or something.

Paul Farrell: I mean, I think it's easy to see in passenger cars, how that could, how that could be the case, right? I said, there's a lot of advantages to the technology that said. I think if you look at it on a global basis and you look at all that one, there is 1.3, 1.4 billion cars, the existing installed base out there, right.

So this isn't your snap your fingers and you're just going to see electric vehicles on the road. So there's a lot that has to go into servicing and maintaining those even if everything switched tomorrow, which it won't. So I think that's there.

Again, I can look at the electric vehicle and say, assuming it's less expensive and other things, but again, it's much more efficient. You have immediate torque, so the drivability is quite good. Maintenance is quite a bit less. So there's a lot of things. The integration, a lot them, they're all. You know, software-defined, all those kind of words that you probably hear that and people like, what does that mean? But you know it is a very, it's, it can be a cell phone like experience, right?

I think you can envision that being an end-state, particularly on passenger cars. Maybe it's a little hard to imagine, at least right now, if you think about big class eight trucks and things like that, or maybe off highway applications where there's some special needs.

But it's going to take time. And again, it was surely going to play out at a very different rates depending on what region you're in and all the other factors that we've talked about.

So again, I think on passenger car, I could look at it and say, it seems like clear that it is an end state or a likely end state, but how that plays out could be look very different over a long period of time, depending on where you sit in the world.

Robin Pomeroy: Paul Farrel, Chief Strategy officer at BorgWarner, a U.S. headquartered global automotive supplier. What did you take away from that conversation with Paul?

Laia Barbarà: So I think Paul captures the investment challenge very clearly, and there is an interesting reinforcing effect here, because more affordable vehicles can attract more buyers, then greater scale, can help bring the global cost curves down further, et cetera, et cetera.

So the challenge here is getting enough of those conditions in place together so that it becomes a self-reinforced path.

Robin Pomeroy: Where could people go if they want to find out more about these interesting and complex discussions that you're involved in, Laia?

Laia Barbarà: So people can explore further the World Economic Forum's Next Move in Clean Automobilty initiative where we bring together perspectives from across the industry and look at what needs to happen across the wider system in order to accelerate adoption and ultimately decarbonize the system.

Because if we reflect on what we've heard in these conversations it is how connected all of those decisions are because on the one side drivers need confidence in the car and the charging system, then, on the other one, the industry that needs confidence in demand and on the policy, and lastly the electricity system that needs to be ready for both of them.

Robin Pomeroy: It's going to be so interesting over the next, I think, really short to medium term, the next five years to see how this transition continues.

So as you said, Laia, people can find out more about Next Move on the Next Move website, link to that in the show notes of this episode. Laia Babara, thanks so much for joining us on this episode of Radio Davos.

Laia Barbarà: Thank you Robin.

Robin Pomeroy: Please follow Radio Davos wherever you get podcasts. And if you enjoyed this episode, please leave us a rating or review wherever you're listening to this.

This episode of Radio Davos was written and presented by me, Robin Pomeroy, with my colleague, Laia Barbara from the World Economic Forum's Centre for Nature and Climate.

Radio Davos will be back next week, But for now, thanks to you for listening. And goodbye.