⁠Is the Electric Vehicle Revolution Unstoppable? ep170: Ben Nelmes

Transcript

Bryony Worthington

Hello I’m Bryony Worthington, and this is Cleaning Up.

As many have said, 2024 is the year of elections and as we record this we’ve just seen a dramatic redrawing of the political map of the United Kingdom. Tactical voting to get the Conservatives out of Government has seen Labour win by a landslide, and the Conservatives have seen their numbers decimated.

Their share of the vote was also poached by the Lib Dems, who have returned newly invigorated, and the new right of centre Reform party, who won 4 seats. The Green party have also picked up 4 seats, though from a smaller share of the vote, and there is a historically high number of independent MPs. So what does all this mean for climate leadership? In our pre-election episode we explored the party manifestos with Dr Simon Evans. In this episode we explore a specific sector and that’s transport, which will have to be in sharp focus for the new government if it wants to make progress on net zero goals.

My guest is Ben Nelmes, the CEO of not for profit New AutoMotive. I must declare an interest as I’m a founding board member of New AutoMotive and work closely with Ben on the challenge of how to reduce the climate and air quality impacts of today’s vehicle fleet. Transport is the UK’s largest source of greenhouse gas emissions and they have remained stubbornly high.

Under the last Labour Government, which ran from 1997 to 2010, while huge progress was made on cleaning up the power sector, we were driven down a cul de sac on transport as incentives were brought in for slightly more efficient diesel vehicles. Since then, vehicles have become much less fuel efficient as they ballooned in size and the SUV craze took off. While the Conservatives were in power, the industry was caught lying about the hugely damaging impact of diesel on air quality, and we lost at least a decade to inaction when we should have been focusing on electrification.

Fast forward to today and electric vehicles are finally becoming more mainstream, but this hasn’t stopped a flood of negative stories and political attempts to scare people away from making the switch to better, more cost efficient vehicles. This topic looks set to be a hot one for the new Government

Please welcome Ben Nelmes to Cleaning Up, as we dive into some of the details and the politics of the electric vehicle transition in the UK and around the world.

Michael Liebreich

Before we get started, if you're enjoying Cleaning Up, please make sure that you like episodes. Subscribe on YouTube or your favourite podcast platform and leave a review. That really helps other people to find us. Please recommend Cleaning Up to your friends and colleagues and sign up for our free newsletter at cleaninguppod.substack.com. That's cleaninguppod.substack.com. Cleaning Up is brought to you by the Liebreich Foundation, the Gilardini Foundation and EcoPragma Capital.

Hi, Ben, thanks for joining me on Cleaning Up. I wanted to start the conversation with the first question, which is always: can you introduce yourself in your own words, please, and tell us who you are and what you do?

Ben Nelmes

Yeah, certainly, and it's great to be with you. My name is Ben Nelmes, and I'm the director of New AutoMotive, a research organisation based in the UK that focuses on the clean energy transition in the area of road transport. So we we do lots of research into policies that help governments accelerate the transition to electric vehicles, and we open up and publish data that helps governments, consumers and the industry also navigate that transition too.

So this is a not for profit organisation based out of London. And how long have you been going?

We've been going for four years. In fact, I think this month is our fourth birthday. So yeah, we set up during the first coronavirus lockdown. So yes, we are based in London, but actually we're a very remote organisation, and we have members of the team based all over the world. In fact, we have a team member in New Zealand at the moment. And yes, we're a nonprofit organisation and yeah, as I say, the mission is to help accelerate the transition to clean road transport, and we have a particular focus on electric vehicles.

And personally, what led you to this role? What were you doing immediately before, and how did you get into this kind of advocacy with data?

Immediately before, I was working for a trade association based in the City of London that had investors and asset managers as its members, and they were all focused on clean energy investment. So I was working with them, and leading their public policy advocacy work. And before that, I worked for a member of the UK Parliament who was Chair of the House of Commons Environment Committee. And in that role, I saw the role that data plays in helping establish narratives and influencing political debate, and how that feeds through into the development of policy. One of the issues I worked on, actually, in that job, was completely separate to climate, in a way. It was to do with the problem of plastic pollution, where suddenly it came to the attention of Parliament and to the public that these tiny plastic particles were making their way into the environment and back onto our dinner plates in the seafood and fish that we were eating. And there was so much data and evidence that filled the pages of the newspapers and eventually drove the government into acting. And I think that was something that really made an impression on me in terms of how data and evidence can feed through into policy making.

You're an organisation that focuses on data. What are some of the data stories that you've been able to work on?

Well, one of the great things about electric vehicles is that they offer running cost benefits to people who own them, and that means that everybody who has a car has their own personal data point. Which is how much you use your car, and therefore how much you could save by getting an electric car. And so actually, one of the things we've done as an organisation is we created a bespoke cost savings calculator tool, which is really clever. You just put your car's number plate into it and it will look up how many miles a year you drive, and give you a personalised figure on how much you're going to be able to save in fuel costs by going electric. And so I think it's things like that that can actually be really effective in terms of moving people and getting them to think about how a new technology might work for their own personal circumstances.

And that example is of the running costs being lower. But what about the capital costs up front? Have you done any analysis of the purchase price as well?

Yeah, absolutely. It's something we keep a close eye on. We had a report out this week or the week before, just looking at this recently. And actually, we are seeing those costs start to come down quite significantly. So we found that looking across the market at particular kinds of very popular models, you're looking at electric cars being roughly in the region of 10 to 15% more expensive than an equivalent petrol or diesel model. But actually, there are some models where the electric version is now cheaper. And of course, many people buy their cars on finance. And there are companies now, car companies, that are looking at structuring their finance deals such that the monthly payments will be the same, even though the capital cost, the upfront cost, is slightly different. So it's a really complicated picture, but it is certainly moving in the right direction. That's something to be positive about.

And what you were saying earlier about the price calculator, it's partly a function of how much you drive, right? So those people who are car dependent, or who are driving regularly for work and for commuting, they're going to be the ones who save the most presumably?

Absolutely, they will save the most. And they're also the people who emit the most, because they consume the most fuel as well. So there's a really interesting group of people, and I think they need to be a real priority when we think about how to optimise the transition to electric vehicles. Our research has shown that in the UK, 10% of the cars on the road consume about 25% of the fuel and are therefore responsible for about 25% of the emissions. So if you think about your emissions reductions curve over time, as the fleet of all the cars on the road switches over to being electric, there are lots of different pathways that that curve could take. If you start with those who drive the least first, that's going to be a really slow picture and it's going to take a long time to see any meaningful emissions reductions. If you start with those who consume the most, unsurprisingly, that's going to be a much better, much quicker reduction in emissions. It's a principle that is employed across other areas of climate policy, which is to identify the largest point sources of emissions and start with those and try and switch them over to a cleaner alternative technology.

And of course, related to that is if you are driving a lot of miles, you need a car with a reasonable range, and you also need to feel confident in the charging infrastructure. So how much is it dependent on those two things being in place as well?

Yeah, I think it can be really dependent. I mean, one thing that is not well known, is it's not well known very well who this group of motorists is. And it's quite interesting that there's a bit of a gap in the research as to who are the owners of these cars that are driving all these miles? There are some countries who have put effort into trying to electrify these vehicle ‘use cases,’ you could call them, because sometimes they're not individual people. It might be a rental car that is used by a lot of different people. And sometimes they might be individual families who live in an area where they're a long way from amenities. They have to drive to work, they perhaps have kids, and they're doing the school round as well, and all those miles really tot up. But yeah, you're right. Some of these vehicle use cases will require significant investments in charging infrastructure. But it might not be charging infrastructure. A really interesting example is how the city of Beijing has tackled this. Beijing set itself a really stretching target to electrify its taxi fleets because it recognized that taxis drive a really significant number of miles. I once had a taxi driver in Britain tell me that they do something in the region of 50 to 60 thousand miles a year. That's almost 10 times what the average motorist here does. And so Beijing did two things: One is they built rapid charges all around the ring roads in the city to make sure that drivers could plug in. But they also invested in battery swapping technology that was really quick, and also really cheap, to go with models of cars that taxi drivers would like. So they've tackled it in a number of different ways. And the last thing they did is they made sure that at the rapid charge points, the cost of electricity was such that it would always be cheaper than running a fossil fueled car.

Yeah, that's what you can do, I suppose, if you don't have a market economy. But the City of London also recognized taxis - black cabs - were an issue, and they brought in a support package, I suppose, to get them to convert. But those vehicles are quite interesting for another reason, which is they often have range extenders on board, don't they? There's an extra element to that, which I don't know if you've looked at that at all.

Yeah, that's right, they do. They have a little generator in the boot, which you can pull a cord and it starts up. The spinning of the electric engine doesn't push the car forwards, but it will generate electricity that then charges the battery. There are some other models of cars that have this, not just the black cabs in London, and it’s for if you run out of charge, or if you're worried about running out of charge. I mean, you may never use them. And in fact, actually, I know some of the black cab drivers have competitions to see who can go the longest without using it.

Are they classed as full electric vehicles still? Or do they have a class of their own?

Yes, they are. They're classed as zero-emissions vehicles. And the fuel type officially, according to UK authorities, is electric, and they'll have an official emissions rating of zero. That's because they don't really have a tailpipe, so to speak. And so the way that the vehicles are rated, they're recognized as just being battery electric. But the source of power is obviously, occasionally a little generator that will be fossil fuel powered.

I'm just thinking, here I am in California now and the distances that people drive here, and also the remoteness of some of the locations, I could imagine a car which had that as a feature. Everyone drives pickup trucks, and these are large vehicles that could accommodate a little generator like that. I'm just wondering for countries like the US and Australia, where the distance is just so huge, whether that might be a necessary development. Where I am, everyone's driving a Tesla, but that's Silicon Valley, and that's a very small bubble, even within California, let alone the rest of the United States. So as we think about the Ford F150, which is the most popular car on the planet, I think, what will replace that, perhaps, will require a little bit of modification for a different market?

Yeah, I could certainly see it being used if you're doing very, very long drives, as some people do in the United States. Then, yeah I could certainly see this technology being used. If you live in a more built up area, I think it will eventually make less sense once there are rapid chargers available that are sufficiently high powered as well. You know, I've been caught out by needing a charge point in London when starting a journey with a hire car that somebody has left with not much charge in it. You go to a rapid charge point, and there might be a taxi driver sat on it, then you go to the next one and you plug in, and it's only giving you half the power output that's advertised. But these are all temporary problems that are to do with insufficient infrastructure, or lack of cabling, or whatever. Once they are sorted, you shouldn't really need technology like range extenders in an area like the UK and they built up areas of the US. But yes, I could see that they would be attractive for very, very long drives in Europe or the US.

So taking a step back, we are recording this in the period just before the elections in the UK, and we'll be airing just after. So I wonder if we can take a moment to think about the politics of all of this, because the electric car isn't new, it's been around for decades, but it’s started to now be seen as a solution for many issues, including climate change, as it goes up the agenda. But it's not been without its sort of setbacks. And I'm really interested in if you could tell us a little bit about what's in store for us here. You know, we can make a guess given the polls, who might be the government. Could you just talk us through the differences between the parties on this topic of electrification?

Yeah. Well, this election is quite interesting in some respects, because the UK has, for many years, enjoyed a consensus among the two main parties of government over most climate change issues. It's really been at the margins that there have been differences. Recently, we've seen parties try to make EVs a point of difference. So last year, the Prime Minister Rishi Sudak, at the time of recording — perhaps current Prime Minister when this goes out, maybe not — announced that he was going to delay the date by which the UK would aim to end sales of purely petrol and diesel cars from 2030 to 2035, and the Labor Party, which is/ was the opposition party, maybe still is the opposition party, is promising to reinstate that position, that was in place before the Prime Minister delayed it. The Conservatives are sticking to this delayed date, so that's quite a clear point of difference. Most of the other main parties sided with one or two of those positions, with the exception of some of the minor parties. I think the Greens were aiming to bring forward that date to 2027 and also get rid of all fossil fuel cars from the road by 2035. Very, very ambitious. And, of course, on the other extreme, you had a party like Reform UK, which I think actually just pledged to scrap all policies that would have promoted the adoption of EVs. So, yeah, clearly the UK will be either governed by the Conservative or Labour party. So we're going to have one or two of those dates. That will be the big impact on electric vehicles.

And the policy that drives this kind of stopping of selling of ICE vehicles, of combustion vehicles, was described as a ban on combustion vehicles, but it's really a mandate to sell clean, isn't it? And that kicked in in January 2024, so it was introduced under a Conservative government. Can you just talk us through how that mandate works, and what it's effectively doing?

Yeah, you're right to say that the ban, as it were, is not the only thing that exists. And in fact, the ban doesn't really exist in any sense other than a political ambition. There's no law that says after 2030 or 2035 that it will be illegal to sell a combustion engine car. The government needed a policy that was going to get us from where we are to a position where 100% of our car sales would be clean. And so they introduced this mandate, as you called it, the zero emissions vehicle mandate, to give it its technical term, which is a policy that has been used in places like California and China. Canada also has one. Now, many other states, actually in America, have joined the Californian mandate. And other countries as well, have used policies like this. And effectively, it is a regulation of the supply of new vehicles onto the market, and it sets annual targets in the years leading up to 2030 for car manufacturers to sell a growing share of electric vehicles, so that the share of all the cars that they sell that are electric should grow each year between now and 2030, by which point they should be 80% clean.

This policy was consulted on over a period of years, right? And it coincided with your setting up as an organisation. So you had quite a hand in this, as I understand it, and it applies to vans as well, doesn't it? That's the other element of it.

Yeah, we mustn't neglect vans. There's a scheme for cars and a scheme for vans. And the van targets are really important because electric van sales are much lower in the UK. As in many other markets, the technology is still developing, so it does need a little bit more support from policy. But yes, we played an important role in this policy. In fact, when we established in 2020, the government was just bringing forward the 2030 update and I think one of the things we really wanted the UK Government to realise was actually it wasn't sufficient just to have this target, just to have this ban. You needed an enabling policy to get the car companies to go through this transition, to get us actually to that ambition in 2030. So that was something we really advocated for. So we championed the policy in the media. You know, the media has been full of misinformation about electric cars, lots of scare stories about the government forcing you to scrap your old car. And you know, a vehicle is a very personal thing. It's one of the biggest financial outlays, biggest purchases that an individual makes, but actually, more important than that, vehicles really matter to people in a way that I think a lot of people don't understand. They’re status symbols. They sort of symbolise your position in society in many ways. One of the most eye opening things I ever did in this job was sitting in on a focus group of people who are going through the process of buying a new car. You know, I expected them to talk about cost, because just for me that'd be the thing I would think about. But for other people, they think about all sorts of other things. They think about the size, the model, the colour, you know, the features. So, yes, we championed this policy in the media as something that's going to actually promote consumer choice and be a net benefit for consumers, because transport and electric vehicles are actually one of the areas where getting to net zero will save the average consumer quite a lot of money. We also mobilised advocates for the policy as well. So we convened people from the energy industry. So electricity companies obviously stand to benefit from the EV transition, and also businesses who are either making or selling electric cars as well. We brought them together, convened them, and we spoke to government with one voice, which I think had a lot of power in influencing the development of that policy. And then, of course, we also produced lots of detailed recommendations and research into how these policies can be most effectively designed.

So this policy is pretty radical, and it sounds like it's probably one of the most ambitious that there is. How has it been received? Who've been the vocal opponents? Because I imagine there have been some,

Yes, there have been vocal opponents. Initially it was received fairly positively. So I think, as you said, it was developed over the course of two years with extensive engagement with industry. And the car companies engaged very positively with it, some of them actually taking very progressive positions and advocating for higher targets, more ambition. And it wasn't just the pure electric car companies that would always be in favour of higher targets. It wasn't just those. It was some of the legacy car companies as well, such as Ford, who were publicly advocating for higher targets. But now the policy is in place, now that the rubber is hitting the road, as it were, things are changing a little bit. And certainly from senior executives at conferences, as always happens, they're on a panel, and they start rubbishing it a little bit, pushing back and saying that this is not so good. And of course, it's always hard to know to what extent that is just a sort of throwaway remark, or to what extent that's actually a company really changing its position on these policies. So yeah, it's starting to stir things up a little bit I would say.

And has it provided a degree of certainty, though, for some of these companies? And, I guess other investors who are going to be needed to put the infrastructure in and get the supply chains?

Yeah, absolutely. The whole point of this policy is to provide that market certainty, and the clarity about the pace of change. One of the crucial areas where this policy is actually helping is in the delivery of the charging infrastructure. So companies are mobilising capital on the basis that they can say to their investors that there will be a certain number of these cars on the road that will need to use the chargers a certain amount of the time. And so therefore this is our whole business model. And there is billions being invested in charging ports in the UK. So, yes, that, but also in vehicle manufacturing as well. You know, the UK is building its first Gigafactory in Somerset. We already have electric vehicles produced in Sunderland, and that is being expanded. There's a company called AESC that manufactures the batteries over the road from the Nissan plant, where they're put into the cars. You know, that's a great business model, and Nissan is putting in lots and lots of investment to grow that. And there's also investments in Ellsbury port in the Northwest, where Britain has its first all-electric vehicle production plant making Vauxhall vans. The list goes on. So yeah, this policy is really important, and there is a lot of money behind it now invested on the back of it. But it is a mixture of carrot and stick, and the companies that are now facing the sticks because they are lagging behind where their industry peers are getting to are starting to complain about it.

But politically there doesn't seem to be anyone who's saying they should scrap it, apart from the very far right.

Yeah, that’s absolutely right. So even when the Prime Minister said he was delaying the phase out date from 2030 to 2035 he didn't change this policy. Because I think he recognized there was already a lot of money sitting behind it. The relevant companies that are going to be affected by this, whether they're car companies or charge points, or the energy industry, they're all investing money on the basis of this policy. I think he recognised that fact, so therefore that change of the headline target actually didn't matter that much, because the underlying policy remained the same.

And then thinking about the UK in the context of our neighbours in Europe. What is the balance of trade at the moment between the UK and Europe in terms of cars. Are we an import, an exporter? Has that changed?

Yes, we are a net importer of cars, and the two biggest trading partners traditionally for the UK have been the European Union and the USA. And in terms of electric cars, we import about £11 billion a year worth of electric cars. Now we export electric cars and electric vehicles as well. We export about £2.5 billion pounds worth of them as well. So there's a bit of a trade deficit, but actually that £2.5 billion is growing, or it had been growing. There’s been a little blip in the figures recently, sadly. But yeah, that will continue to grow. This is going to quite quickly become a very valuable export for the UK, too. This is going to be a policy that is not going to go anywhere, really, because it's just becoming more and more economically important for the UK.

And so then thinking about Europe, obviously we've just had elections in the European Parliament. There was an expected, sort of, I think some people have described it as a backlash against green policies. Others have said it's just a shift to the right. But the net effect is that green policies, and specifically car and transport policies, have become quite contested issues, haven't they? Could you give us a quick update on where we are in relation to Brussels?

Yeah, sure. I think cars… When the populists in politics focus on green policies, cars can become the real touch point for these kinds of backlashes. And yeah, the centre right grouping in the European Parliament went into this year's European Parliamentary elections promising to scrap the 2035 phase out that the EU is committed to for sales of new petrol and diesel cars. So it's quite an extraordinary position. They felt like they had been pulled by the promise of populists to the right, such that they had to make commitments. So yeah, fortunately, it being Europe, after the elections, there's obviously a lot of negotiation, a lot of horse trading. And it looks like the 2035 phase out will still stand. Obviously still on the condition that there is a carve out inserted somewhere down the line in the regulation for synthetic fuels, which was a condition that Germany demanded some time ago. But personally, I don’t think that will ever happen myself, because I think the regulations will always be too complicated to write, will be haggled over for years, and by the time they do end up getting around to defining it, I think the technology will just be out of date. So, yeah, fortunately, it looks like Europe has ended up in quite a good place on the 2035 commitment. I think that looks like it's still a place.

So just to confirm then, elections have happened, what is the status then of who's going to be governing Europe going forward?

So Ursula von der Leyen is going to remain as the President of the European Commission. We'll get the full details of all of the negotiation and where the European Commission has landed it in terms of its commitments later on. But it does look like the 2035 commitment is safe and that remains in place. But of course, the devil will always be in the details of these commitments. That ban itself is not going to move the market. It will be the policies that get us from where we are now, in terms of car sales, to 2035 that will really matter. And those policies are set at a European level. And actually it's the CO2 performance standards for new cars - to give its technical name - that sets the annual targets for fuel efficiency improvements that car makers have to have to beat in Europe. And that will be how Europe implements its transition to EVs.

And the threat that the most popular party, the EPP party, was going to ask for that to be scrapped, that's no longer part of their position? That's been walked back?

Yes, that is no longer part of their position. But of course, there'll be a review of this regulation in a couple of years time. There are still targets that have to be set in the future. There is a lot to play for over this regulation, certainly, but the kind of initial political danger of there being something lost in the course of those negotiations that that looks to have gone.

Well that's good news, at least. Now, where are we in relation to Europe and trade? Because we haven't mentioned it yet, but there's the China effect, right? China rapidly moved into electric vehicles, and electric battery manufacturers and the supply chain needed to make those batteries, and so now dominates this market. How is that playing out politically in Europe?

Well, I think it's caused a lot of head scratching in Europe. I think the car companies are worried that cheap Chinese EVs that are actually really… you know, China is churning out not just lots of cheap EVs, but actually good ones as well, that Europeans might want to drive. I think the European car industry is feeling very threatened by that. And we've seen the EU decide to provisionally implement tariffs on imports of Chinese EVs from certain manufacturers. It's quite complicated the way they've chosen to do it, and different manufacturers face a different level of tariff. The important thing here is what Europe is doing is different to the US, because the US has also gone down this road, and Joe Biden has put a 100% tariff on Chinese EVs going to the US. Europe can't do that because their decision on tariffs can be unjustifiable. They can be taken to court if the tariff is unfairly punitive. So they have to set the amount of tariff relative to what they view to be the amount of subsidy. And so different manufacturers have a different level of tariff. So a manufacturer called SAIC, which many people won't have heard of, but they manufacture cars and they own the MG brand in the UK, a very well known UK car brand. They sell a lot of electric cars in Europe. They are going to be hit by the most punitive tariffs, and that will be effective tariffs of 50% on imports of their cars. It will also affect Tesla, because a lot of Teslas are made in China, even though it's an American company, but Tesla will have a much lower tariff. But of course, this is all still to play for because the tariffs have to be agreed by a vote of the European Council that will take place some point after July 4th. So that could be after this podcast goes out. And the German car industry is actually not so happy about these tariffs, because they fear retaliation. They sell a lot of cars into China and there's been talk that China could put tariffs on other European goods as well. So I think Spanish ham was discussed. And you know, if you’re the Spanish, if you hit them in the jamon they might not be so keen on the tariffs on Chinese cars.

Thank you for that update on where we are in Europe. You're looking increasingly now at the sales of EVs globally. What highlights have you noticed in the data internationally?

Yeah, that's right. We're tracking car sales in key automotive markets, so countries that collectively account for about 80% of global car sales, and we're showing how many of those are electric month by month. So people can go and sign up, and they'll get an update every month. And it's the biggest, most up to date, free resource to keep a track of this trend. It's really varied across different parts of the world. So we have parts of Europe and North America where sales are growing, but perhaps not as fast as they could be, particularly when we look at a place like China, which is seeing really extraordinary growth in electric car sales. China accounts for about 65% of global battery electric car sales. So just to put it in context here: 7 million battery electric cars are being registered a year in China, out of around 12 million globally.

And what kind of rough percentage of the car fleet does that represent for China? How far along the transition are they? Are they still in the low teens? Less than 10%?

Yes, a little less than 10% but it is growing. China has growing car ownership. It's still a developing country or middle income country, and therefore car ownership is generally growing quite quickly in these places, but we're starting to see that that is being just about more than offset by the growing sales of EVs. And so that is really good for when China is going to reach the key tipping point, which will be the peak petrol consumption, gasoline consumption. As we know China, one of the reasons they really are going all in on electric vehicles is that they don't really have any indigenous oil production, so they see it as a strategic priority to reduce their reliance on imported oil. And actually, they're well on their way to doing it. The growth has been really dramatic in electric car sales in China.

But what would you say to someone who would say, ‘Well, that's all very well and good, but it's pretty much running on coal, right?’ What they don't have in oil, they make up for in coal. So is it still cleaner if we're running an EV on a coal fired power station in China?

Yes, it is. Petrol and diesel cars are just incredibly inefficient uses of energy. So when you have an EV, even if you're putting power in from a fairly dirty grid, then you're still going to see emissions reductions by going to an EV. And of course, as you and I both know, the grid in China is changing as well. And of course, you have to think over the lifetime of the vehicle. So if you're buying an EV today, you've got to think what that grid is going to be like in perhaps 10 years time, 15 years time or… These cars are proving to last a very long time, maybe even 20 years time. And most people who monitor the transition in electricity production and electricity generation will tell you that grids will be significantly different.

Can I run through a couple of other potential things that you might read on the internet? Are EVs more likely to burst into flames than traditional cars?

No they're not. This is something that pops up again and again in the newspapers, and it filters through into public policy. So Italy and one other European country considered banning EVs in underground car parks. And in fact, there are some underground car parks in some parts of the world that won't accept electric cars because they mistakenly believe that cars are going to burst into flames. There were several Italian fire brigades that conducted exchange programs with fire brigades in Norway to learn how Norway was coping with all of these electric car fires that they must be having because they have had such strong sales of electric cars. And my understanding is that they were very politely greeted with some bemusement, because the rates of fires are really, really low. These are really safe cars.

And are they so heavy that they're going to cause multi-storey car parks to collapse?

No, they're not. EVs are, on average, a bit heavier than your typical petrol or diesel car. But actually, all cars have been getting heavier in recent years and there are plenty of very, very heavy SUVs that you can buy that are petrol or diesel, that are gas guzzlers. And car parks and bridges are built to withstand the weight of very heavy vehicles going in them. You know engineers have thought about this and planned for it. The vehicles are not so dramatically heavy that they're going to cause problems in this area.

What about increased wear and tear on roads and tires and brakes causing huge amounts of air pollution? Is that an issue that's associated with EV?

So roads, it's not an issue. Roadwear is caused by the very heaviest of vehicles that disproportionately contribute to that. So that's things like HGVs and buses. It's not cars and again, EVs, just because they're a little bit heavier, they're not going to make a bigger contribution to roadwear. So the next one was brakes. Well, electric cars tend to… In fact, I think all new electric cars these days, I don't know of a model that comes without regenerative brakes. So these are brakes that take the momentum back out of the car through a device that then returns power back to the battery and charges it back up. That's one of the things that makes them so efficient, so well designed in terms of how they use energy. So you don't get significant brake-wear. You hear stories of EV owners who go for miles and miles, and then think, ‘goodness, I've never changed the brake pads on my car.’ And they look at them, and they're barely pitted at all. And that's because they're just very seldom used. Lastly, tire wear. Tire wear is an interesting one, because I think there is still a bit of a lack of evidence around the impact that the ultra-fine plastic particles have on people. You are going to find that driving a heavier car is going to wear out its tires more quickly. It's going to produce more of these ultra-fine particles. Another thing is that there may be technological solutions to this problem. There are people who have built devices that use electrostatic technology to gather in the particles as they wear out from the tires, so you could fit those onto the car. Perhaps there are tyres that could be made from different substances. I think there's a lot of work going on in that department as well. And lastly, also, we should just remember, the thing that is really, really bad is the carbonaceous particulate matter. That is the stuff that is proven to be carcinogenic. You breathe that stuff into your lungs, it's really nasty stuff. That is the stuff that we really want to get rid of, and it comes from the exhaust pipe, not the tyres.

Okay, thank you. Right. There's a few myths busted, but there is one question that may require a bit more of a think through from the political perspective, which is: at the moment, cars are often charged a tax on their fuel, which the treasuries receive, the government receives, and that's often topping up public spending for things like hospitals and schools. What is going to happen when we're all driving around in electric vehicles and those fuel-sale taxes start to disappear? Will we see a softening of government support? Or what are the options?

Well, I think the first thing to bear in mind is this is quite a long-term problem. So if you look at forecasts produced for fuel duty in the UK, for example, that is a tax that is charged per litre of fuel sold. And actually, if you go and fill your car up in the UK, you pay a lot of tax on it. The majority of what’s handed over goes on tax. There's the duty itself, but then there's also the value added tax, that sales tax on top. And that provides the government with a chunk of revenue, but it requires really significant changes in the composition of all the cars on the road before that duty is really going to change. And so the incoming government in the UK, if there is a change of government, they are not going to see a change in that revenue over the course of this first parliament, this first five years, according to the forecast from the Office of Budget Responsibility. So that's the first thing, just to remember, is that this is not going to vanish overnight. The other thing is, there are lots of options for how do you solve this problem? Fuel duty has been frozen in real terms in the UK for a long time, in cash terms in the UK for a long time. That's a reduction in real terms. So the receipts have already been declining. So one thing is, you could just slowly wither away those revenues and actually have different parts of the tax base take over. The other thing you could do is you could introduce some kind of per mile charging. I think that needs to be handled very, very carefully and very sensitively. I think that would be potentially a difficult thing to do. The government in the UK tried to do that in the 2000s and instantly stepped back from it, recognizing that it was politically very, very difficult to do. But there's also been some polling recently that shows people now see these sorts of taxes as an inevitability, because they know that this technology is inevitable. So there are options there. One thing I would like to see is a reform of the annual registration tax that you pay in the UK, so vehicle excise duty, or road tax as it's more commonly known. The UK has just a chaotic system that's the product of multiple reforms of bits of the old system in place. And actually, I would like to see a scheme that is introduced based on energy efficiency. So if you imagine, every car could be placed on a scale of energy efficiency, from the least efficient to the most efficient. Construct a series of bands, and have each car pay a fee that is based on its position along that scale. That would not only incentivize electric vehicles over the internal combustion engine, but it would also, within the array of electric vehicles that are produced, incentivize people to produce and to buy the most efficient electric vehicles. At the moment, the most efficient electric car you can buy in the UK is about twice as efficient as the least efficient. So when you think about demand for power, demand for charge points, and all of the infrastructure that goes with that, and the demand placed on the grid, it makes sense that we're going to go for the most efficient vehicles possible. So why not bake that into the tax system now, before you get lots and lots of these cars on the road and you have to do something painful and retrospective later on.

Yeah, so in the end, we might shift from standards and regulations focused on emissions to one that's focused on the quality of the vehicle, or the efficiency of the vehicle, the reliability, I guess. Going back to that conversation about what's happening in China, China's now got thousands of manufacturers producing relatively cheap vehicles. I imagine there's a fair divergence of quality amongst those vehicles. And rather than focus on the subsidy, one thing you could do is set some sort of standards that would then mean that the cheapest and perhaps the vehicles are most likely to cause concern for consumer experience, perhaps they're the ones that we try to keep out of the market?

Yeah, yeah, absolutely. And I worry a little bit that the policymakers are making some missteps here. This is a small example, but actually, I think it could matter: You see local authorities in the UK, particularly in cities where there are resident parking schemes, they want to have small vehicles on the road because they don't want congestion, and they're safer, and they're better for cyclists. But they are now introducing parking charges for electric cars that are based on the battery size. I think that is a really silly thing to do. If you end up with people thinking, ‘well, I want a big car because I want to be able to put lots of things in it, but then I'll buy the biggest car I can get with the smallest battery…’ That's a nightmare for demand for charging infrastructure, things like that. These people are going to be at central supermarket charge points all the time, or at the lamppost chargers. Even if they've got a driveway. That infrastructure is needed by other people who need it more. So, you know, there are lots of ways to get this very, very wrong. Why I like efficiency as the metric that you should focus on is because ultimately, it's about what can you make that delivers the most utility? It's about the miles that you're going to travel, which is the thing that we want a car to do for the least amount of input of the world's resources. And that just seems like a really, really sensible principle to base your policy on.

That, combined with getting it into the hands of the people who use them the most, because then you're going to get more savings in the short term than if you give it to someone who's just using it as a run about every fortnight, and not putting any miles on the clock, where that valuable resource — all the lithium, cobalt, whatever else and copper — is just sitting on a parkway and not helping in terms of reducing emissions.

Yeah, yeah, exactly.

If the future is electric, what are the implications for the grid? Because obviously one of the other things I didn't ask you in the myth busting session was this idea that the grid can't cope. There aren't enough electrons for all of this. So how does this integrate with the other challenge, which is getting the electricity that we use to be fully, fully clean?

So EVs are a significant source of new electricity demand, and so it would seem to follow that they should be a problem for the grid. Actually, as the grid is going through this transition towards more zero-carbon sources, EVs can actually be really helpful. The characteristic of a lot of renewables is that they are intermittent, so we have this mismatch between when they're going to be putting out lots of power and when people actually want the power. Of course, EVs have a power storage facility. You charge them up, and then later is when you use the power. So you can choose when to charge. You're not going to need to be charging them all the time. So through things like smart charging, the UK actually is a bit of a leader in this area. And there are tariffs available for EV owners. Now, if they have a smart charger and a vehicle-to-grid capable EV then they can get actually free power, because they sign up to provide capacity back to the grid when it's necessary. So there are all sorts of exciting technologies in this area that I think are going to mean that actually getting to some of the ambitions around grid decarbonization will look easier if you also have a rapid rollout of EVs as well.

Yeah. I mean, this is particularly interesting. I would have thought in the UK context, in Scotland, where you have in the north an awful lot of clean electricity, far too much at times when the wind is blowing. There was a scheme, maybe it's still running, where the Scottish Government was offering zero-interest loans in order to help purchase electric cars. And it would seem that something that enables the Scottish public to benefit from all of this excess of clean electricity and then translates that into saving costs, either on the running of their car, or how they heat and cool their homes. That's got to be, surely, something we should be trying to encourage?

Yeah, yeah, absolutely. The Scottish scheme, I think, struggled for lack of significant funding behind it. And actually, the more I reflect on it these days, I think I would rather see governments take action that will not put all of the costs on the taxpayer of this transition. I think we need to be looking for ways that those who are making profits out of the production and sale of polluting technologies will pay for the deployment of the cleaner alternatives. You know that that's the principle that we know is really going to effectively deliver these transitions. But yeah, if you're in a part of the world where you've got abundant clean power, one of the best things you can do in terms of delivering financial benefit to people, to the population, but also in terms of decarbonization, is electrified transport. So yeah, that makes a lot of sense.

I'm just thinking that through, because this should be happening, but I can imagine there are reasons why it might not happen, because, what it really needs is for the electricity suppliers to realise that if they sell an EV to a customer, it will help them grow their business. But at the moment, they're not really incentivized, because they're getting paid to not produce, right? If you're getting curtailment payments because your wind is generating and you can't deliver it anywhere where there's demand, you're being compensated. So that market signal, which would normally exist, hasn't been realised. So there's probably something really interesting here that needs to be thought through about how you get market signals into the places where they're needed, where the natural sort of monopolistic nature of some of the market today doesn't really uncover it. And there will be clever suppliers, I'm sure, who crack this. But there's a slight conflict of interest here, where we're not allowing those market signals to really be shown. I'm sure that's something that the incoming government will be starting to work through, and I hope at a great degree of alacrity, because it's really important, because it will benefit the consumer, right? If we can get the consumer really benefiting from very cheap electricity when the electricity is there, it makes this whole thing a lot easier politically.

Yeah, absolutely. It makes no sense to pay a wind farm to curtail in the north of the UK, whilst in the south you're firing up fossil power generation, because you can't get the power south. And the UK, as you say, has a national electricity price, a wholesale price that applies across the whole of the UK. And there has been this discussion of locational pricing. I'm not an expert in the power sector, I should say, but I think there could be some concerns from those in the renewable sector that locational pricing can affect the investment case. But ultimately, it would be a really good thing for EV owners if we could find some way to deliver cheaper power, perhaps cheaper power just for EV chargers at the times of oversupply of wind power.

Yeah, and leaning into those regions, where there is this question of curtailment, with some concerted policies to try and get these cars on the road. That sort of regionalisation of the demand side, which that Scottish scheme of the zero interest loan was an example of, maybe that's the way, rather than relying fully on the wholesale price changing, we can also do something on the demand side, which would then help to solve this problem. These are questions we can't solve in this podcast, and I know there’ll certainly be future episodes on the pricing of electricity going forward. But Ben, I just wanted to end by saying, is there anything we haven't covered that you'd like to talk about? I know one question I often get asked is, 'Isn't this electrification transition in cars just a done deal?' Why do we need NGOs like New AutoMotive?

Yeah, sure. I think it's certainly not a done deal. I think it is certainly possible to go backwards. I think as long as the car industry, which is a global industry, is still producing cars with internal combustion engines, no country can step back and sit on its laurels and think, 'well this is all just going to happen.' It won't. The car companies are still making more money from the sale of internal combustion engine vehicles than they are from the electric models. That means they are going to be reluctant to go through this transition. It's capital intensive. It involves some painful decisions, ultimately, about production and where to site production and changing production facilities. And we see evidence in our global data, when a government steps back from incentivizing the sale of EVs, we often see that play out as a fall in EV sales. So I think sometimes we become slightly too convinced that this technology is going to be like lots of other new technologies that followed an S-curve. I think there are aspects of it that are really similar with things like the rise of the mobile phone, but there are aspects of it that are really different. One thing is that this is being driven by an external necessity that is climate change, and therefore it's being driven by government policy. There was no social cause, really, that drove mobile phone adoption as something that we knew we had to do as a society. It was driven by the fact that it delivered a new kind of utility that we'd never had before. You could speak to people on the move. The same with the car when it replaced the horse and cart, you could get places quicker and you didn't have to feed it hay or clean up after it. You know, electric cars, in many ways, deliver the same utility as a regular car. That's actually their advantage, but it’s also their disadvantage in terms of being subject to these S-curve style behaviours. And so I think policy is going to have to play a strong role through quite a lot of this transition, until we really start to phase down the production of the internal combustion engine.

Thank you for that. And in the back of my mind, as you were speaking, I was thinking, given that land based transport is the biggest segment of oil demand, and the shift to electric vehicles is the killer app for bringing down that demand for oil, it's not just the car manufacturers who might be dragging their heels right. There's a lot of people who have vested in the provision of the fuels. Just before COP28, we saw that Saudi Arabian video that showed that they have an active campaign to increase demand for oil, and some of that is about selling ICE vehicles, increasing the scale of the ICE vehicles, the size, the weight, and encouraging people to hold on to the ICE vehicles. So it's certainly a contested area.

It absolutely is a contested area. The market left to its own devices is not really necessarily always free to choose the best technology. There are lots of people's hands that weigh on the scales, and lots of industries with very, very big revenues that are dependent on the technology that we are moving away from. They will defend their bottom line, that's kind of what a company exists to do, isn't it?

Thank you, Ben, it definitely feels like this is a topic where the politics is still in flux. I look forward to learning more from you as you carry on monitoring this transition, and thanks for joining us on Cleaning Up.

Thanks for having me, Bryony. It's been a pleasure.

So that was Ben Nelmes, CEO of New Automotive. As always we’ll put links in the show notes to the various data tools and reports we mentioned. My thanks to Oscar Boyd, our producer, and Jamie Oliver, our editor, and also thanks to you for listening.

Cleaning Up is brought to you by the Liebreich Foundation, the Gilardini Foundation and EcoPragma Capital.

⁠Is the Electric Vehicle Revolution Unstoppable? ep170: Ben Nelmes

Michael Liebreich

Ben Nelmes

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