Khush: 0:00

Welcome to the curiosity crisis, we challenge ourselves to explore the world of business tech, investing in science, get curious and be part of the journey, as we discussed, challenge and learn.

Luke: 0:09

So today we'll be talking about electric vehicles and where they're headed. We're going to be looking at battery chemistry supply chains, and the emerging market of China emissions, self driving technology and the infrastructure related to evey uptake. So we'll get into that shortly. But first, what's been keeping you curious?

Khush: 0:32

What's been keeping you curious, is I'm reading this book at the moment fiction book, but it's into the world, I think it's supposed to be a classic by Jack London, and it's basically a book about a dog. And it's pretty interesting. And I got told by a friend, or like a friend's dad, actually, that, you know, the, like, a lot of the stories from a while back are really worthwhile getting into because, you know, there's really good cultural lessons and stuff like that. And this book about a dog named buck, he goes through a lot of hardship and challenges and stuff like that. I'm just saying, you know, where are the crossovers to our day to day lives? So yeah, loving it. Great read so far, it's pretty short one. So we'd recommend actually, what's keeping you curious?

Luke: 1:12

Okay, oh, I wasn't really expecting that one. But that's good. That's good. Mine is a came across these books, which came from a website that I discovered previously. And it goes through mental models. So that's just a bunch of, of different ways of thinking about things. And it breaks them into three different books. One of them is general models that apply to all kinds of things. So you know, first principles thinking or, you know, a bunch of models like that. And then they have another one that's chemistry, maths and physics. And then they have a final one, which is, I think it's more advanced models or something. Anyway, I've been reading through the first book, but I've bought all three and yeah, I'm very interested to look through them and hopefully get some insight. So yeah, quite quite excited about that. Yeah. Awesome. Cool. Well, I think we'll we'll start with some, some battery chemistry. You have a bit of insight into this. And for listeners who don't understand what that is, outside of maybe lithium ion, what is the leading chemical compositions? In terms of Yeah, battery chemistry for EVs?

Khush: 2:16

Yeah. Okay, so, good question. And the place to start definitely is lithium ion before you go anywhere else. And that's because lithium ion batteries, you know, were really well developed before EVs. So the reason I think they've taken off in not only EVs, but other storage, stationary storage is because the supply chains were pretty well developed initially. So lithium ion is really energy dense and is really good for light applications. So where that fits is obviously for light vehicles, because the the energy density like so, like energy density to weight ratio is quite good. It sort of falls away in bigger or more energy intensive applications. So like, you know, longer form shipping and planes and all that sort of stuff. But for electric vehicles, they do a really, really good job. There are three main chemistries of lithium ion batteries used in EVs and NMC, NCA and LFP. And essentially, they are just acronyms for the key materials used in them. So, LFP stands for lithium ion phosphate, and MC stands for lithium, nickel, manganese, cobalt, and NCA is lithium, nickel, cobalt.

Luke: 3:29

Okay. And is there a clear winner out of any of those? So obviously, lithium ion is the most popular, but how does NMC and LFP compare? Is there like a clear winner in the future?

Khush: 3:42

Yeah, so it's all really about the materials that are sort of used to produce these batteries, you know that they're all surrounded by lithium so that the core ingredient is lithium in that but for example, NMC and NCA actually have better energy density and cold weather performance. So pretty important for the northern hemisphere winters and stuff like that. But they are more expensive. LFP is becoming a lot more popular purely because it's cheaper. It's also more sustainable and has a longer lifecycle. So you can charge and discharge it more times before it degrades. But yeah, it's heavier and has less rage. So there's trade offs and all of them but LFP is looking like it's being taken up. And that's purely because the amount of like the cost is low and the amount of critical, expensive high demand materials are reduced in in LFP. On alternatives really speaking for electric vehicles today, so we're recording this in in late 2023. There's not much else that sodium ion batteries have been talked about, and there's a potential for them to take off and be cheaper. We've talked about hydrogen fuel cells and stuff before but I think really speaking in terms of like passenger vehicles, lithium ion batteries and LFP ones are looking like The wind is at the moment.

Luke: 5:01

So it sounds like more of a supply chain and materials problem and less of a chemistry problem. That's yeah, yeah,

Khush: 5:08

absolutely. So that's, that's the big thing and perfect, perfect segue, we're gonna go into that supply chain wise. The thing is with these materials is they all had use cases previously, you know, all the critical materials. So like lithium, cobalt, manganese, graphite, copper, neodymium, they all had use cases, but they've been significantly ramped up for batteries for the energy transition in general, but a massive part has been for EVs. So might throw it over to you were like in terms of supply chain, where is most of it centered in the world?

Luke: 5:44

Yeah, so what we've looked at recently is that China has the most exports so currently their economic conditions they're really struggling but they if there's one area that they're not struggling it's EVs. They have the most they've I think they just overtook Germany was the the big thing for for all car exports. And the main competitor, there was VW, I believe, and now, obviously, you have Tesla, who are who are selling a lot. But yeah, in terms of just raw numbers, yeah, China, China is by far the most exports coming from that space. And the thing to consider is that they have so many different Evie brands, but there's some in particular that have been extremely successful. And one of them that comes to mind is BYD. And, you know, they have the manufacturing they have the population for that market. And yeah, they have the battery technology advantage as well because they're there they've been building this these batteries for so long.

Khush: 6:40

Yeah, so I was gonna ask you about that then you say they're the biggest exporter of EVs. You know, downstream finished product EVs, but from my understanding, they're pretty well embedded in the whole whole supply chain of, of batteries, and really speaking, the whole energy transition, like they have their fingers in a lot of pies. Is that the case as well, not just for EVs, but for other solutions, like you know, stationary batteries, home batteries, all that sort of stuff.

Luke: 7:05

Yes, it is. But I believe sometimes that comes down to the materials, not necessarily the manufacturing, or it's overseeing the manufacturing. So the company directly might not be like BYD, for example, whereas like, it might be a Panasonic is batching the batteries together, but the raw materials are coming from a refinery that's coming from China. Yeah. So it's a bit of a it's a bit of a mixed. Yeah, a bit of a mixed situation there. But, you know, the point is that critical parts of the supply chain are coming from China.

Khush: 7:37

Yeah, no, I think I've read that as well. I think that what I see as well is that China has the, you know, refining, and I think it's like tier two and three type type Industries, a lot more so than for example, like, you know, we're from Australia, we are really good at digging stuff out of the ground and shipping it off elsewhere. But we don't do any of those, those things that follow on. So that's one thing that, you know, China is way ahead of the rest of the world on. So yeah, it's pretty.

Luke: 8:05

I mean, if you if we look at the sales of you know, BYD, for example, here, they've gone up a lot, but they wouldn't in, you know, the USA, because they're actually bent over there. I'm pretty sure they don't import any, right. So they wouldn't get the same kind of exposure to that growth, the passing about to you, what are the supply chain constraints in terms of that materials problem?

Khush: 8:26

Yeah, we'll see what I found as well. I was reading more just like direct reports on literally just the green metals for the transition and EVs are a massive, massive part of that, because they're sort of like, it's sort of one of the big technologies or green technologies to have taken off and hit that scale. So what I found is there is like, the good news is, I suppose is that there are more than enough materials on Earth to meet the demand for the global energy transition, and, you know, power all our cars, or make make all our cars, electric vehicles, essentially. But the really big challenge is that you know, if we're trying to get to net zero by 2050 is ramping up that supply fast enough this decade to to decarbonize everything to produce enough battery. So, few stats that I found and this is from energy transitions Organization report, we can link it in the show notes by 2030 lithium supply from current levels so 22 That's when the report was produced need to increase by five to seven times current production, graphite, six to seven times cobalt up to 2.5 times and and most of the critical materials that I mentioned earlier have potential supply gaps in 2030, which absolutely will be realized if supply chains are interrupted, right. So what we can do to sort of help that is, you know, really concerted action into reducing the primary materials requirements through innovation recycling. So you know, we talked about you know, the The lithium ion technology is going through NMC MCA NCAA to LFP. Just finding cheaper and more economical and more sustainable ways to build a batteries. That's one thing, recycling is a massive thing. So, you know, at the end of life, these batteries only some parts of degraded badly, but other materials can be recovered if recycled properly. But I think that's a pretty Junior industry at the moment. And then obviously, like, at the end of the day, we definitely have to increase the mining of these materials, which obviously comes with a lot of connotations. And mining is obviously not always looked at in the most sustainable way. But if we can do it in a responsible, sustainable way, we can get around these supply chain issues.

Luke: 10:43

Right, I guess that raises that question around emissions, then as well, you know, speaking from a mining perspective, so, you know, you look at, well, do EVs create more co2 than than fossil fuel cars, which is, I think, is an interesting one. And I saw an infographic recently about that, where it was looking at the lifetime of the emissions from, you know, comparatively between fossil fuel and an EVs and it showed that unless the lifetime was, you know, something more than like, 10 years, that it would barely edge out the fossil fuel clearly, which is that's really Yeah. Which is an interesting, yeah, but the thing is, right, it what it doesn't consider Well, I guess it did consider it, it was is that that number drastically changes based on the renewable grid. So like, if, because most of that co2 is coming from the initial manufacturing, the big chunk is coming from that lifetime of the vehicle being drawing renewable energy from the grid. And that means that you now have a zero co2 emission rather than, you know, considerable amounts from, you know, other fossil fuel, you're carrying the grid? Yeah.

Khush: 11:49

And then I think there's a lot of follow through things as well, like, I think I mentioned like, you know, battery recycling and end of life of these batteries and stuff like that. Does that factor into it? So like, you know, for example, at the moment, if they're assuming in in a in analysis that says EVs are pretty close to the same amount of emissions as the internal combustion engine, but, you know, when the grid goes to close to 100%, renewables or you know, a significant portion, renewables, and then we get to those things like battery innovation and recycling, does that also improve the picture?

Luke: 12:22

Well, yeah, that's the other thing is one huge advantage that they have is that you just have less moving parts, right? So even if you only recycle the batteries, and you compare that to an engine, you know, we know how we've gone historically, with recycling combustion engines, we have wrecking yards. So how are we going with that? Not very well. And then you combine all the moving parts, and you know, the contamination of metal and plastic and all of these things together, it makes it very difficult. And I'm not saying that battery recycling is an easy problem to solve. But one advantage is that you only have one part, like you can say, Let's take out the pack. And let's focus on recycling this one individual piece. And you're drastically reducing the emissions overall by reusing those that initial manufacturing co2 contribution. So yeah, I think I think it's, it's definitely got a lot of potential, but it's still a difficult problem to solve. But I think either way, however, however, if you really look at it, it's still going to be better off than a combustion engine. So yeah,

Khush: 13:25

yeah, absolutely. And yeah, I think just building on that, I think one of the interesting things that I read a while ago, when I was looking into EVs actually, for my thesis was that where electric vehicle batteries degrade, you know, to a point that they're seen as, you know, probably end of life for electric vehicle, which is I think, 80% of of its, you know, battery capacity also. So these are work capacity goes to 80%. Then if you repurpose it and obviously there'll be a lot of work in this, but I'm sure there is potential that if you repurpose it, then you can use it as home battery storage, because I mean, yeah, just like an electric vehicle battery is massively bigger than any of the, you know, home batteries, like the Tesla Powerwall, the Alfa ESS that we're seeing today. So you know, Evie, imagine if that was your home battery, which is pretty useful. Yeah, yeah. Carrying on on the, the technology side of things, I know you this is a this is something that you're passionate about self driving, so it gets a lot of attention in the investment landscape around EVs. But can you tell me why why is like self driving important and what problem does the self driving solve?

Luke: 14:39

Yeah, so I mean, one thing to consider is that it's not exclusive to EVs, you know, you can put this technology on to a number of things, but one advantage that you have as you can get that maximum acceleration, and you have, you know, the the amount of power going to the wheels is very efficient. So, you know, with self driving, one of the main problems that it solves have is to do with with traffic and parking. And so you can have increased populations and decreased the amount of vehicles that you have, because they never need to park, they're constantly driving around if you have either mostly autonomous fleet, and then if they can communicate in a central way, you can imagine getting to a traffic light, for example, and they all accelerate at the same time. So you don't have to wait for the car in front of you to accelerate because when that traffic light goes green, everyone who's in the queue all accelerates at the same time. And so you end up with a lot more efficiencies as well in traffic. And so you can imagine the future of transportation is autonomous. And and it solves a number of issues. And it's not even considering Logistics Transport, you know, in terms of like, trucking and etcetera.

Khush: 15:45

Yeah, okay. Okay, quick one, then what happens, you know, in the interim period, because obviously, we will, there'll be a big portion where I'm driving next to potentially self driving AV. So in that instance, it's still super constructive.

Luke: 16:00

No, so that's, that's a really difficult one, I know that there are simulations that show that unless you have a significant uptake, and I'm talking 85% 90%, plus, you don't get a lot of the benefits. Because, you know, if you can imagine that same scenario, at a traffic light, if you have one vehicle that isn't going to accelerate with the pack, you now have everything bottlenecks behind that, whereas everything in front of it, it's not. So you end up getting similar effects without having to have many vehicles not be part of the autonomous fleet.

Khush: 16:35

Right. Okay. Okay. That's, that's pretty interesting. But well, in terms of self driving, then what is the state of play here? Like? So I don't obviously see any autonomous EVs driving around here, my streets, but where are they up to? What companies are working on it? What's the tech? Yeah, looking like?

Luke: 16:51

There's a lot of consideration around legality. So you need kind of more progressive states and countries to push for it. So obviously, California is a stereotypical example. But they have Waymo, you know, autonomous vehicles around the city of San Francisco. So that's, you know, that's pretty cool. That they already implemented already being used.

Khush: 17:13

Made. That's huge. Like you had no idea. That's crazy. Yes. Sick. Yeah.

Luke: 17:17

And then Tesla have their this full self driving, which I guess you can argue whether it is full self driving, but yeah, then there's plenty of other solutions as well. There's a there's a company called Colmar AI and they, they specialize in fixing an additional piece of equipment to pre existing car and using the OBD port to override and do self driving. So there's lots of very interesting solutions. And there's a debate around whether you use LIDAR, whether you use cameras and computer vision. And I think that there are plenty of solutions that will end up working. But I think one huge advantage that Tesla have is they have so many sales of their vehicles, and then they have so much data from that. And they're very well resource companies that are trying to solve that problem. And I think that pushes them very far compared to their competitors.

Khush: 18:08

Yeah, okay. Interesting, because I have definitely heard about that from like a number of people are follows sort of the, I think given Yeah, Cathy Wood was talking about how far that dataset advantages that I'm going to pretend to understand, you know, the huge thing there. Do you have any, like, examples of that specific examples?

Luke: 18:29

Yeah, I mean, there's, there's a few things because the amount of data and the amount of even just the effort that they're putting into it, they've had huge leaps in computer vision space. So I've I've dabbled a little bit in computer vision. When I was at university, I used some open CV, stuff to do with computer vision. But basically, one of the big things they've been able to do recently, which they shut off in Tesla ARD last year, I believe, was they were able to map a 3d vector space from multiple 2d camera angles, which is just insane. And the reason that that's so relevant is that, let's say you're doing object tracking. So let's say that someone's crossing the road, and then that person is obscured, you're still able to track that individual and understand where they are in a 3d vector space. So even if they walk behind another vehicle, you're still calculating their position based on the trajectory that they were already on and where they sit in relation to the other objects that are in your proximity. And so what that means is you just end up with so many more safety features, and it's so much more accurate than other things and that's that's a huge leap forward. And yeah, just computer vision in general, but specifically for self driving.

Khush: 19:44

Cool. That's massive bed. So so interesting.

Luke: 19:47

Yeah. So I guess moving on to one of the the final pieces of the puzzle is infrastructure. What EVs mean for the electricity grids that we have

Khush: 19:59

Yeah, That's a good one. And I looked into this. So I actually did my master's thesis at uni on essentially electric vehicles and what impact they have on the grid. And yeah, I've had a fair fair few conversations more on the Eevee sort of industry side, and somebody a lot smarter than I told me that whoever wins the charging infrastructure race will win the Evie race, which is pretty huge. So there's, there's some competitive advantage to be gained here. And when I thought about a deeper, and it kind of makes sense, because if you think about today, or like, you know, what we've sort of grown up through is the petrol stations and the whole industry around petroleum, and the real estate business model and convenience stores that you know, are on every corner of a major city, which is, which is where the petrol stations are, the same thing has to happen for electric vehicle charging, right. So you know, these cars will have to be charged all over cities all over the country. So it's gonna be a huge, huge problem to solve. And it already is, because of a number of issues. The one big one, and the one big thing I looked at was, essentially, will they overwhelm the grid. So obviously, EVs are going to be charged from electricity, we produce that currently to match supply and demand, what happens when there's a massive new demand on the grid. So what I found when I did that study was the grid capacity realistically was not completely challenged. And I was looking at a specific case of Western Australia, and the grid there, unless it was in some really particular stretch cases, which are highly unlikely, for example, every single electric vehicle that is on the road at like a 30, or 40, or 50%, penetration, fast charging at the same time, which is like a maximum draw at the same time. But what I also found was that, you know, they can absolutely be constructive or destructive to to the grid in terms of matching that supply and demand problem that we've talked about in an older episode. So basically, if all EVs charge, you know, at the evening peak, where everything else is also on when people come home from work, and the cooking and the heating and cooling design and Washington, it can be really destructive, but they can be used really constructively as a large load, ideally, to consume energy in periods of like solar or wind over supply, therefore helping smooth sort of the energy grid supply and demand problem.

Luke: 22:24

So essentially, it could add a lot of volatility, but it couldn't also fix a lot of volatility based on how you use them.

Khush: 22:32

Yes, absolutely. Absolutely. Yeah. So it really does, like exemplify the electrification trend, because it's just adding a massive, massive load to the grid. And some, there are some really interesting possibilities into how like how we can encourage these outcomes. Obviously, there's like tariff pricing and different types of pricing a cheaper when there's lots of energy available. But you know, there's also a lot of chatter about vehicle to grid sort of management. So you have these massive batteries or like distributed master batteries are connected and can charge and discharge to the grid. It's still a while away, but there's, you know, there's a lot of interest in people working on it. And then the other thing is like pricing the fuel, so electricity for these electric vehicles purely based on what the suppliers like. So in the middle of the day, when you know, we're seeing in Australia, at least lots of negative prices for electricity, like charging cars then could be really cheap. But that requires like, yeah, some some markets and policy innovation. So yeah, it's it's pretty interesting space,

Luke: 23:35

what you said before about how, whoever wins the infrastructure, kind of piece of the pie wins the whole thing. I think that's, that's really interesting. And I guess we'll see how that plays out. And it just begs the question, well, who's currently leading it?

Khush: 23:51

Yeah. Well, I mean, I have an answer for that. But it's. Yeah, I think if you look, for example, at Tesla, who obviously has the, like the biggest fast charging or super supercharger or fast charging network around the world, at least the developed world, it's pretty crazy to think that you can control the fuel source and the leading sort of Evie, manufacturer and cars are row by percentage, because you know what, like, tell me a internal combustion engine car that also owns fuel stations, that owns the fuel that goes into cars that not only can charge for fuel, its own brand, but also every other brand out there. So there is a competitive advantage there. But we'll see how it plays out. So who else protect obviously, as companies are building out this infrastructure, but what role do Do you see, you know, industry and government playing? Yeah,

Luke: 24:44

well, I think a really good example is the Electrify America program that they had. Yeah, which is, you know, it's a government initiative. And essentially, the goal was to be able to drive from the east coast of the west to the west of the east with an Eevee charging that way, and I think that a lot Countries are looking to implement something similar. And there's definitely, you know, geography at play there, which, which will drastically affect, you know, cost and feasibility and a lot of things. But I think it's a fantastic example of a way to implement it. And, you know, there's there's challenges and there's some, some good learnings from it. But I think that yeah, government policy and and initiatives are going to are going to be very, very influential in infrastructure space.

Khush: 25:29

Yeah, especially when I suppose that area jurisdiction, whatever has their own energy issues. So for example, like I looked at, like Norway in California, no way, it wasn't that bad, because, you know, they get most of their energy from hydropower, which they can turn on and turn off whenever they want. But California is pretty much it is moving very aggressively to renewable like solar and wind grid. So it's a lot more of a sort of thought processes to how we're going to facilitate the charging needs of these cars. Yeah, man has a lot to do. Yeah. Awesome. What I was just gonna ask you the one of the final questions, what is your your key takeaway from this? So if someone's tuned out and tune back in, what what would you like them to take away?

Luke: 26:15

I think, um, I think the big thing is that it's, it's a complex system, there's, there's lots of moving parts, and, you know, some of them are tightly coupled. And some of them are, you know, more decoupled, in terms of like, a technology or versus the infrastructure. But I think that, yeah, there's, there's a lot of moving parts here. And there can be innovation in all of these areas. So I think, yeah, kind of keep an eye on them, I guess, is what I'd say. They're a lot of them are fast moving as well. So yeah, that would be mine. What about you? What What would your key takeaway be?

Khush: 26:49

I think my, my really, like, the point of a lot of interest for me is, is a supply chain, essentially, you know, think about how many cars are on road at the moment. And if you know, the goal is to get to 100% EVs, or get somewhere near that there is a ton of supply chain that needs to be developed and, and brought online. And as we know, you know, with with any project, you know, as we've seen in the last few years with COVID, and, and whether OS or linear El Nino, and then looking at issues like geopolitics. So, you know, I'm thinking oil with the OPEC cartel at the moment. But if you think about that on the green metal side, so like, you know, who's got all the lithium or cobalt or any of those critical minerals, there can be, you know, these bottlenecks, so getting that supply chain, right, and having a good, like, the right amount of coordination is just as important, as you know, obviously, the technical and logistical and cost barriers being overcome. So, it's yeah, it's a crazy, crazy space and lots gonna have to happen in the next, you know, 510 years to see how we go.

Luke: 27:54

Yeah. 100% I, yeah. Great.

Khush: 27:58

Well, I think that's all we have for today. So to wrap. Thanks for listening. Find us at curiosity cross.com and curiosity crisis on Instagram. We're on all major streaming services, so you can listen how you like, before I go, I'll ask for a quick favor. If you've got anything out of this episode, please send it to a friend potentially that's into EVs. Your recommendation is worth a lot. Thank you and catch you in the next episode.