Battery Revolution Clubhouse Recording - VW Power Day vs Tesla Battery Day

0:00Transcript

0:00Today is kind of like a bonus session. I think we just spoke about this. Yep, yep. A true bonus session from Battery Revolution for people who have been following us and who know us. We have been doing this for about nine weeks, so the tenth time is going to happen this Saturday. We have a weekly discussion on battery topics all around from battery recycling to Second Life to EV battery swapping, etc. So like a really nice mix. And yeah, so we've been doing this for quite a while. And then, as you all probably know, if you're in the field, we have this exciting Volkswagen Power Day this Monday. And also about half a year ago, we had the Tesla Battery Day. And we just thought, you know, it could be a great time to discuss this topic, right? Kind of show a bit, maybe some of the, you know, similarities, some of the differences, etc. And I'm also really pleased, you know, Catherine and I, we are co-hosting this every week.

0:48And Roger has been a conversation starter before as well, which is brilliant. Really valuable for, I think, the entire community. And Roger also today, he gave another presentation or kind of moderated a panel as well for Benchmark Minerals. So it's fantastic. It was a really great session. So I think we can also dive into this a bit. But we also got many amazing other people in this room I can already see, including Martin and many others. So I think we maybe can also, you know, we have this dialogue flowing as well. Maybe I give it to you, Catherine, first, and then we can intro everything. Thanks. Great. Thanks for that. So this is something that's a little bit different than our usual Saturday session where we planned beforehand. And for this session, we really just thought, let's do it today. Let's do something impromptu. And let's just start a conversation and go in. So feel free to hop on stage if you have anything to add to the topic.

1:40I'd just like to, you know, join us for a chat. And this is something, you know, we're just sharing our thoughts pretty on the go here. And also, both Simon and I have just hopped off what Roger is sharing on Benchmark Turo. So maybe, you know, we would love to hear more about those questions and those conversations that was during that session that you had, Roger. That would be great. Personally, I do. Yeah, sorry. Go ahead. Well, it was a disaster because normally I pride myself if I host an event on getting all the questions answered. But we even running over by 30 minutes, we run a 90 minute session rather than 60 minutes. We still had 100 questions. Oh, wow. Yeah. I mean, it was embarrassing because, you know, I'm a great believer, and this is why I like Clubhouse, of, you know, there being the interaction. I think we've all now got very bored of PowerPoint presentations where someone goes through endless slides.

2:40Yeah. And, you know, you learn more and you learn more quickly by interaction, Q&A and that kind of stuff. So, yeah, I do wonder when we all go back to whatever we go back to, you know, how often I'm going to feel or anyone listening in here is going to be happy watching one of these slideshows that seems to go on forever. Because I just feel there's a better way to learn things and a better way to put things across than just a bunch of bloody PowerPoint slides. Yeah, absolutely. I mean, I was taking a lot of, you know, pointers and just notes from the conversation earlier. And I think some of the things will be very interesting for this group here with all the battery experts. So some of the things we talked about was about the unified cell, definitely. And I'm just curious as to why Volkswagen has chosen a prismatic form to be the unified cell. So I was actually reading a little bit about this and Reuters just published an article about a few hours ago on how apparently Volkswagen told LG and SK Innovation that they will be largely excluded from these new plans.

3:54And, yeah, so it's interesting because I was, during the session, we talked a little bit about this. But also five hours ago, this was a new article on Reuters. And I think it goes to say the Joe politics of this whole thing would change, wouldn't it? Because CATL, which is also a player currently in Europe, they are the ones who are doing a lot of prismatic cells. And even though I think Herbert Diaz also told Reuters that the Chinese have become very strong on this level. But he, you know, he kept the roof, he kept the floor up. And he kind of said, yeah, there could be some partnership with Samsung SDI and people who are still supplying prismatic. But I'm just curious as to why prismatic was being selected as the form for uniform cell. I'm not sure if anyone has some thoughts here. Well, do you think, Martin, does it have to do with packaging? I assume that that can be relevant. Yeah, I think probably from a scale perspective, in terms of manufacturing and mass production, if we're talking about a fixed dimension of prismatic cell, that could be easier.

5:18So if I'm looking at Tesla, you know, expanding from 18650 all the way to 4680 currently, they are seeing a lot of changes to the dimension, which would make mass production of the battery pack more difficult in terms of how you have to tune the machines and, you know, you have to change probably all your components that goes inside of it, the copper nickel plates, whatever, et cetera. So that would have to be tuned to particular cell type and cell size, whereas the prismatic seems to be easier. Although what's curious is, except for CATL, as far as I'm aware, there aren't a lot of companies that are currently working on, you know, mass production of that. And I'm just curious as to why that is being selected. I just wanted to hear everyone's thoughts on this. Well, what I mean with packaging is really in the battery pack itself, because there is less air in between the cells. Right. So you're referring to cell to pack ratio.

6:27Yeah, I think you can have more kilowatt hours per liter. I doubt if it is useful for manufacturing, because a circular cell, I think it's more easy in the production, but I'm not sure. I think a prismatic shape might be more difficult. But yeah. Right. But I can imagine for the packaging in the pack itself, you can get more kilowatt hours per liter. Yeah. And of course, that's relevant. Yeah. I'll tell you what I like. Simon quoted Robert Friedland's expression about where we're trying to go now with battery capacity supply chain and everything, trying to get the Hoover Dam to go through a garden hose. I really think that that's it. Because, you know, the intriguing thing here now is if you look at the chronology of the last number of years, we had two major players embarking on electric vehicle revolution and renewable energy revolution. Let's keep the two together, because I think that's important and significant as well. So one was a country, China.

7:35And, you know, I don't wish to be disingenuous to the rest of Asia, Korea and so on and so forth. But but let me clumsily suggest China. The other one was a company, Tesla. And then there's Europe in the middle of it all. Now, with the Biden administration, you've got another country in play with, you know, a full force ambition, assigning billions, you know, tens of billions, hundreds of billions into now the renewable energy and electric mobility revolution. And it would seem getting properly serious about it and putting it into the strategic roadmap for the country, just like China's done in the five year plans, which are publicly there. And we can all see what they've done. So that leaves Europe potentially as a bit of a, you know, meat in the sandwich between Asia and between America. And there's Europe. So now what we have in Europe is a company delivering this strategy, not not Europe as such. Although there are aspects of the European Union's ambition and things that are happening that are trying to do this.

8:39But it's not as cohesive now as we've seen in China and we're beginning to see in the United States. So what intrigues me in this is that a bit like Robert Friedland's comment, you know, the Hoover Dam through the hose. It's all well and good now with this wonderful, principled, grand, fine, perfect, lovely, wonderful climate change ambition to have more renewable energy and more storage and more electric mobility and batteries. How does it all add up? Where the hell is all the stuff coming from? You know, automotive grade lithium, because when people say, oh, there's plenty of lithium. There is not, not in, you know, capacity production in the right quality with the right people. And mines, as Simon said in the presentation, take, you know, four, five, six years to come together and get, you know, established. So the chronology and the structure of the business model of all of this now is extremely challenging. And potentially, you mentioned geopolitics earlier, Catherine, you know, the geopolitics of this now are getting so complex.

9:46You know, China being more seemingly independent in some of its mindset, people, you know, having political opinion about China's activity, especially with Uyghur Muslims and other things where, you know, the world is very complex. And I'm going to stray into something I shouldn't, but just forgive me for a moment. I'm not a communist. I don't work for the Chinese Communist Party or anything like that. But I do find it quite hypocritical of the West and people to talk about what China are doing in their effort and ambition to try and deal with internal terrorism, because that's the trigger for this issue. Whereas we're quite happy to watch people go and bomb the Middle East, you know, and to secure oil supply principally and do all the other things, you know, bombing women and children and all those other horrible things that happen. And, you know, it's a bit like the old biblical phrase, let he who be without sin cast the first stone. So there's hypocrisy mixed into geopolitics, mixed into the ambition to deal with climate change.

10:51My God, is it a complex picture. Holy moly. Yeah, yeah, absolutely. I think with, well, I think this was such a little bit on earlier as well. But was it the whole job politics issue? Things become much more complex than just technology, doesn't it? I mean, I think it is a ray of hope and light for Volkswagen as a company to start this initiative and probably will push for the other countries and governments in EU to start to really focus on this. And, you know, realize how important this issue could be and how it could potentially, you know, have an impact on the job politics in the area in general when it comes to 2030 and beyond. Yes. I mean, one thing that came out yesterday that I thought was interesting was the ratio between range of electric vehicles, typically, and charging infrastructure. Because if you think about it, range is twofold. It's, yes, what's in the battery and your duty cycle or whatever. But it's also availability of charging.

12:04If that becomes more ubiquitous and quicker and easier, you can downsize batteries because the battery at the moment, you could argue, bigger batteries and longer range, are a crutch against a relatively poor charging infrastructure. So, Marcus Dusman, Audi had said clearly, you know, they've been working on all of this for a long time. He said a little while ago, we need to be making smaller batteries and less range and moving that range into the charging infrastructure. And I think he's right. And I think Elon even said something not dissimilar recently. So, that's another dynamic to this is, you know, they're tied with BP for charging. The journey that Electrify America has gone on, which, of course, that's two billion of fines being spent to develop Electrify America. But, you know, they've got, what, 520, 530 stations. Give it another couple of years. They might have a thousand. So, you know, the charging ratio thing, and that's, I'd love to know what people think about where that sits in this sense of how many gigawatts do we need to build battery factories for the number of electric vehicles we might or might not make?

13:22And then where does that apportion as a ratio across to the charging infrastructure? I'd be very interested in people's opinions on that kind of arena. Yeah, Roger, maybe to give you my answer from my own experience. So, for a long time, I drove one of the first versions of the Tesla Model S. And in the end, I had, after 200,000 kilometers, I had about 380 kilometers of range fully loaded. And then I got my Model 3 with 500 kilometers of range. And the difference, what I experienced, is not in normal day living, but it's ongoing holidays. If you go to the south of France, it's just such a relief that you only have to stop three times on a journey of 1,000 kilometers. And I experienced that I was so happy with having a bigger battery. So, my expectation is that the drop in cost of batteries, and hence the increase of capacity, and hence the increase of range, goes faster than that people like to have smaller batteries.

14:35So, my expectation is that, in the end, all cars will be equipped with, say, 400 kilometers of range. I think it's ridiculous and not necessary to have 800 kilometers of range. So, but 400 is sort of, yeah, I would say a minimum. Not for your second car, but at least for your first car in your household, just based on my own feelings and experience. But do you think, Martin, range is a broad term? Because, yeah, it depends how you drive the car. So, I've got a Jaguar I-Pace, which has got nominally 230-mile range. WLTP is 290, whatever, but forget that. Now, that 230-mile range is only that if I drive it reasonably well. But if I really stick it into the drive mode that I enjoy the most, dynamic, and I enjoy overtaking, and I do all the things that, of course, are legal, that nominal range, that real-world range of 230 miles, very quickly becomes like 160. So, I think this is another part of the issue, you know, around how people drive, isn't it?

15:53Yeah, sure. But for shorter drives, then, of course, it's normal to don't think about too much about how you use your foot. But if you go on holidays for a long distance, for instance, you drive 1,000 kilometers on a day, then you stick to the maximum speed, and you drive a little bit more careful. And if you want to drive 130 kilometers per hour on a French highway, then you know that you have to stop a little bit more fast. So, what I meant with the 400 kilometers is something like, you will like that to have that also in the wintertime if you drive normally. And you accept it will be 300 if you drive like a beast, so to speak. But, Roger, I predict you, if you buy in the future a car with 400 kilometers of range, you will be the first time you will be happy every day you step into your car compared to what you have now. Look, I've never been unhappy stepping into my car, but I haven't been on holiday in it yet, Martin.

16:58Right. I'll be discusial, discusial, discusial. Yeah. No one's been on holiday recently. No, not recently. No. What about chemistry? So, they talked about LFP. They talked about NCA. They talked about synthetic graphite, which is all well and good, but obviously it's cheaper and easier to use natural graphite. So, I was intrigued by that. And, of course, they talked about solid-state and QuantumScape. Now, the overall thing which we discussed in the benchmark call was there's this very complex and incredibly impressive plan now that Volkswagen have. But how does it reconcile with a few of those elements still being work in progress, like, for example, solid-state? You can't predicate your business model over the next five years on the inclusion of solid-state because it ain't there yet. And whether it's going to be here in 12 months, 24 or 60 months, I'd be interested in people's opinion on how does this plan stack up in reality, given some of the important parts of it are still working in progress?

18:04Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris Kris the unified cell that that's willing to have as well. And it's also very interesting how as a automotive OEM company, it has moved on and focused so much on battery cell.

18:50And I was also wondering how would that impact the other battery cell manufacturers? What would they do? The OEMs are moving into the battery cells. What would the battery cell companies do? And the manufacturers do, you know, to tackle this or in terms of their business strategies. How would they? I'm just not sure. Would we see a lot of more mergers? Will we see a lot of more MAs happening between this space? And also, it's interesting that the outgoing Panasonic CEO just a couple of days ago was sharing that Panasonic should move away from Tesla, given that 90% of Panasonic's batteries actually provide to Tesla. So I'm just very curious as to, you know, this merger of batteries and the OEMs. Do you just want to take some of your thoughts here as well? Well, I think as, again, we discussed in the thing earlier on, not only know your supply chain, but potentially own your supply chain to secure, you know, to secure that supply. And that's getting interesting. The other thing is, of course, the business model of automotive has been very much linked to recurring revenue of friction parts, all the things that are to do with engines and gearbox and other stuff. So in shifting into the world of EEV, you've got to look at a different business model and find other recurring revenue components. So potentially owning things not as what they could be seen as liabilities, but assets that can deliver revenue, recurring revenue. So a charging infrastructure, for example, is one thing. And, you know, there's an opportunity potentially where you're then selling electrons in a way in which potentially they become, you know, a vast commodity.

20:47And the recurring revenue model is just like how we all have had to for a hundred years, go and fill up with petrol and, you know, oil and get gas, et cetera. And I wonder if you went back in time and said to Henry Ford, you know, look, this is how it's going to evolve. This is going to work out. Whether he would have tried to buy standard oil at that time and put the two things together. And here we are now in this part of the 21st century where, you know, will the big car companies kind of think that that's a lesson learned and think, yeah, we do. We're going to buy that. We're going to buy the charging infrastructure. We're going to buy the battery bit. We're going to properly vertically integrate to both secure, not be hostage to fortune, but also trigger and stimulate recurring revenue models to replace what will be lost with the move away from internal combustion and parts. So it is a fascinating time. It's a very dangerous time for people because whether you're an employee of, you know, in an OEM, et cetera, or many of the tier suppliers, I'm just trying to work out a, what is going to happen and be over what timeframe. So, you know, the conclusion of those two things as well. So what do you do? You know, when people talk about electric vehicle adoption, simply say, oh yeah, we should all drive EVs and let's all do it tomorrow. That's lovely. You can understand people saying that, but that ain't going to happen. It's too complex and challenging for it to happen overnight. And I think then the big question, and I'll shut up in a minute. I would like to hear other people, to be honest. The big question then is these deadline dates like 2030 and other dates that are now being even put into law for the cessation of the manufacturer of internal combustion engines, is that feasible? Is it credible? Or are we going to end up with a bit of a unintended consequence? You know, something of a catastrophe potentially? I don't want to be too hyperbole about it, but, you know, is this all, will this plan work to get to these deadline dates where we stop making internal combustion? That's, there's some big things, big questions around the place on all of this. But Catherine, I really want to listen and learn. I talk too much.

23:22Yeah, thanks for that. I think back to the question earlier about solid-state, I was just trying to read up more about Volkswagen's plans on solid-state. And it looks like they're saying unified cell is an intermediate step to their solid-state development, and they're still working on it. And you only mentioned about quantum scale, et cetera. I'm obviously curious as to how this would play an impact into the gigafactories, into their research, into all the battery chemistries as well. If anyone in the panel or in the audience has any thoughts to this, please feel free to hop on. And we'd love to hear our thoughts on this too. Yeah, I really would like to have more public coming on stage, but let me give you my opinion about how the speed of introduction of solid-state. I think that it will take a few years before it is at the level of automotive, and then you need a scale up of manufacturing, mass manufacturing, and that will take another few years. So I expect that the coming, say, five years, a solid-state will not be available in mass volume. That means that the current state of the art of lithium battery production, there is a huge market, not only for EVs as such, but also for stationary batteries.

24:49If we really want to make the transitions also to heavy duty, we need stationary batteries near charging stations, and we need a lot of them. So even if, say, in 2025 or 2026, there will be mass production starting for solid-state batteries, then even then, I think the standard lithium battery manufacturing, as we know them by now, will have an enormous challenge to deliver what the market is requesting. And also because the economy of scale is helping lithium production currently, batteries, it also means that they will become cheaper and better step by step every year. So I think that if I would be a CEO of a battery company or of a VW, so to speak, I would dare to invest into gigafactories. I would not be too afraid that solid-state will disrupt my portfolio or my business case in the coming, say, five to ten years. Because it can be in parallel, because the demand will be huge for all kinds of sorts of batteries, I expect.

26:01Thanks for that, Martin. Michael, you've just joined us on stage. Do you have any thoughts to this? Hi, Catherine. Yes, I do. I'd actually jumped onto another of Roger's calls a couple of weeks ago and shared my thoughts. And it does seem like we have very similar views. I would say, I mean, someone mentioned Ford, which brings to mind one of his most famous quotes, or at least famous to me, which is, you know, if we'd asked people what they wanted, we'd have just built a faster horse. And I really get the impression that right now, everyone's focused on building an electric horse. In other words, you know, we're not really starting from first principles and understanding what we use vehicles for as a first step and saying, you know, are the current way we even build vehicles and the size, shape and orientation of those vehicles, is that still the best way to go about moving us from A to B or carrying payloads from A to B or whatever else, the fundamental things we're using cars and vans and other vehicles for today. And I'm actually working on a bit of a stealth project, which I've been working on for some time, which tries to really answer those questions in a very different way. And I fully agree, we do need a huge amount of battery infrastructure. But my my thesis or hypothesis is, is really to put the smallest batteries possible that we can get away with at any stage into the vehicles we're using. For the simple reason that, you know, most city, most driving is city driving. And you're just lugging around a huge amount of battery that's basically not being used for most of its life. And so these are some of my thoughts. But ultimately, it's, it's really questioning whether we still need to think about cars and where we thought about cars for the last 110 years or whatever. I completely agree with that, Michael, that's very well said. And I, funnily enough, I put up a post today from Rhi in Israel, a guy called Daniel Barrel has a fascinating company where they've got a technology, which isn't just a platform thing, it's incorporating everything into the court four corners of the vehicle. Absolutely everything. And that's fascinating. The other thing, and I don't, you know, I'm not saying to just be a contrarian.

28:42I've explained it in a presentation I put together and delivered last year or something, just before that we all got locked down, which was that mass adoption of electric vehicles would be a big mistake, a massive mistake. You know, a real paradigm shift isn't switching to electric vehicles from combustion vehicles. A real paradigm shift will be not owning vehicles at all and using them when we need them, and then maximizing the utilization of the asset in the way in which, you know, nature does with anything, you know, AKA the circular economy. So, Michael, you're absolutely pushing on an open door with me on this, you know, not being disingenuous to what Volkswagen are trying to do. I think the bigger picture is much more than what sort of batteries should we have? Let's build a load of EVs and jobs are good. So thank you for what you've said. I completely agree with you. Roger, I'll just add to that one last thought. I mean, you know, you know, my position on owning versus utilizing a vehicle, which is in sync with yours. But it's really interesting that one of the key enablers to that, I sort of landed on a shower moment this morning, which basically solves the problem of enabling that, which currently is not possible. And that's full autonomous driving.

30:10And there is actually a solution to that with current technology, I believe. So that was almost the last ingredient in the vision I've got. Yeah, you know, it's exactly. We've got a few other people up on stage, so I'm going to shut up. You know, you know, one of the things that I'd wanted to mention, I just jumped on. So I grew up in Detroit, and now I live in China. So I kind of have, and I worked in Silicon Valley for seven years. So I've kind of seen a lot of different pendulum swing. But, you know, if we're looking at this from a dollars and cents standpoint, the automotive industry has really fooled us for 100, 120 years, right? Because if you're a finance person, you buy things that appreciate, and you lease things or rent things that depreciate, right? So the automotive industry has fooled us into thinking that we should pay 20, 30, 40, $50,000 for a product, for their product that we use 5% of the time on average. So, you know, this whole idea of owning a car, it should have never, reasonable people 80 years ago shouldn't have been like, yeah, that's a great idea, you know? And so if we kind of get rid of those norms, we look at how the rest of the world moves, because Asia has cities of 20, 15, 18, 30 million people. And so as the world gets flatter, and we all know there's no such thing as a global car, you know, what's good in Asia is probably going to head west. Whereas innovation used to come from the west, I believe it's now coming from the east, Southeast Asia, South Asia, China. And I think, you know, the China factor from a supply chain and manufacturing standpoint, if you look at the steel industry, if you look at the solar panels, battery factories and battery cells, the prices are going to go down because, you know, there's just going to be overcapacity because China's building a ton of it. And so that's going to play a role into, you know, the solid states, you know, because if it gets really cheap to put a lithium-ion battery because there's overcapacity in China, are we going to move to this new technology? I don't know, you know.

32:59So I think those factors need to be thought through as well, when we're talking about moving to EV, owning versus leasing, and whether or not, which type of battery technology is going to come out on top, right? That's very interesting too. So I've listened to a few, a couple of your sessions on Cliphouse. So that's why I invited you on stage to, you know, add more diversity to the session here. Yeah. So I think that was a great, that was a great point that you made. I think with, I think we do see a lot of Chinese suppliers being very strong in the industry and, you know, they're growing, growing very, growing very fast. And CATL has also focused on development solid-state for quite some time. So it's interesting, I think, on your point about charging as well. I think China has been trying, you know, various types of charging, being the charging that will be swapping, NeoEV having the swapping charging facilities, and also just the fast chargers in general.

34:06I would like to invite everyone here to kind of, how should I put it, be more creative as to envision the future. What are some of your thoughts about the future? So say, for example, solid states really do come into becoming a mainstream technology for powering EVs in general. And we're currently building more and more charging infrastructure out there, and more and more battery swapping stations out there. How does that play a part, say, for example, if solid states do become mainstream 10 years down the road, by the end of the decade, by 2030? How does that play out with all the charging facilities out there? And the charging network, the swapping network, how fast would this industry evolve? I guess that's my key question over here. I know I'm probably asking something. Catherine, I think one other thing that needs to be factored in to the switch over to EV is also the capability of the electricity distribution network to be able to actually handle all of those electrons. And it's not just the generation because generation is obviously one key thing, because guess what, we're not generating enough electricity to power all of our vehicles. Transportation is a good one third of all energy usage on Earth. And we need to build that capacity in and ideally do it in a renewable way. But the other problem is we need to transmit that energy long distance, which is relatively easy to do because those are big high voltage transmission lines and upgrading them is not the end of the world. But there's also the distribution network actually getting all of those electrons out to households, streets, and other charging points. And that network is enormous. It's vast, it's last mile network.

36:13And the copper size, the transformers, all of the infrastructure just is designed to handle household loads for the most part. And changing that network is going to be hundreds of billions per country. It's a huge undertaking. So this is one of the other drivers in my thinking that ultimately, we need to minimize the amount of energy we use quite apart from the fact that using less energy is fundamentally where the sustainability will come from, not just switching to EV, but actually consuming less energy. And, you know, that's why there's, I think there will ultimately be this pressure to have smaller. Yeah, I have to correct you, Michael. I agree with you that we should less, we should use less energy, but it's not correct to compare the final utilization of vehicles, if they are all electric, to compare that with the usage of fossil fuels and energy content now. Because, as you know, electric vehicles are about two or three times as efficient as combustion engines.

37:24No, I agree with you on that, Martin. Even if that energy is produced using fossil fuels, it is still more efficient when it's produced in a big power plant. I agree with you on that. Yeah. So for the Netherlands, I calculated, because there are a lot of people saying that we could not generate enough electricity to feed all our vehicles. I calculated for the Netherlands, if all of our 8 million vehicles would be fully electric and we would drive the same 120 billion kilometers a year, we would only need 20% more electricity production as compared to now. Only 20% more of the electricity production in the Netherlands, and we can all drive electric the whole year. And I even did not count the, say, 5% of electricity usage we now use for producing our fossil fuels in the refineries and transport of fossil fuels. So the amount of electricity we additionally have to make is very, very limited if we all drive electric. That will not mean that we don't have a problem with our grid system, with our electricity wiring. And for that one, I strongly believe that there will be a huge, a huge hype. No, no, hype is the wrong word. A huge increase in the usage of stationary batteries in both homes, as well as in fast loading stations, especially also for heavy duty. But if you have a stationary battery at a charging station, then you completely decouple with smart grid facilities, you can decouple from the power load of the local grid, and you can prevent the huge amounts of money you need to invest in the grid, compared to if you would not have a smart grid and not have stationary batteries. So I think if I would be young, I would start a company in stationary battery sales, I think.

39:35Brilliant. Maybe I can take it over as well. We have two new people joining us, which is brilliant. I think we really want to get the chance to also have a diverse group. So also, especially any women, highly encouraged, trying to make it a bit more diverse. And anybody is interested in this topic. Also, people having questions, right? I think we have many smart people in the room as well as on the panel. So feel free to raise these as well. But Tito, do you want to... Sorry. Let me just make a quick comment. Yeah, just let me make a quick comment. I think if we're thinking about switching one-to-one ICE to EV, we've lost, right? Because the whole point is to actually take private passenger vehicles so that we share more, right? Because there's two problems in Asia. There's pollution and congestion. So EVs might solve the pollution problem or help alleviate that problem, but it doesn't help the congestion problem. So we cannot think about a one-to-one ratio.

40:46And Uber drivers actually make it worse because now there's just more cabs on the road that are taking individuals. So the idea would be, at least if we're trying to answer those two questions, right? How do we resolve or solve the pollution issue and alleviate congestion? Yeah. If anyone's been to Thailand, if anyone's been to China, they know that traffic jams are just a way of life there, right? And that's because also there are lots of people on two wheels and three wheels. And so I think this whole... It starts off with the wrong assumption that we should be switching from petrol vehicles, a one-to-one ratio. I think what we're going to see is more more cities, major cities, restrict private passenger vehicles into the city centers. London had the congestion tax 17 years ago. New York City is also implementing a congestion tax. Paris is spending 300 million euro on dedicating bike lanes to the street. So I think that's the trend. And I think we'll start to see some of that in Southeast Asia and South Asia as well.

42:11So... Nice too. I really like that you look so much to Asia. Do you also see an increase there in light electric vehicle usage? So a shift of modalities? Yeah, I'd like to think that depending on the situation, the use case, will kind of determine the optimal way to use a battery, right? Because commercial vehicles, they lend themselves very well, buses, taxis, fleets, to battery swapping, right? Because they kind of sort of go the same routes and they're predictable. And then low speed autonomous, right? They have a different use case. Commercial trucking, there is another different use case. And so I think it's hard to to make broad statements without considering certain use cases, right? Because there's going to be the 80-20 rule, right? Where most of the battery capacity is probably taken up by private passenger vehicles, right? But should we try to not even get past that point of, okay, everybody still has their own car, and then start asking the question of, okay... And this is where it's probably not the car companies, how we solve this problem, right? Because...

44:01They're going to want to sell you a car. It's not in their best interest to take sales out of their own pockets. And so I think it should be really lean and other non-automotive related companies to really drive some of these suggestions and solutions. And I think an easier way to chew on this problem is looking at that the specific... that can be separated into like a clean, clean scenario and then trying to solve for that. Thanks for that too. I think we have Philo who just joined us on stage as well. Philo, do you have something to add to the topic? Philo, actually, I didn't want to talk about mobility in general, but to the questions and the battery usage, battery types and Volkswagen and so on. I wouldn't bet on it that Volkswagen really is going to bet on one specific technology in the battery. I think they will be open in the usage in the battery type. Because Volkswagen, not Volkswagen as a brand, but as a company with all its other brands it has, has mastered in the 1990s to do modularization, internal standardization so that every hardware device can be reused throughout the whole company.

45:47And that's required if you develop within the company. And that's really been mastered over the years. So they have a really high standardization inside. So that means I would say, I would think that they can easily switch battery technology when it is required, but doesn't have to change anything else in the car itself. I wouldn't also not bet on any battery switching, like external battery switching, which we see in smaller vehicles, or light electric vehicles or so on, because that would require standardization between different manufacturers. And we won't see that at all. And we won't see that at all, because that would limit the design of cars very hard. And I wouldn't see that come at all. I fully agree, Thilo. That's also why Renault had a failure there, because it really restricts the design of vehicles. So battery dropping will not be the future, to my opinion. Yeah, I do echo that sentiment as well. And we also had on battery revolution a couple of weeks ago, a conversation on this topic, which if anyone's interested, feel free to follow us on batteryinsiders.com for a synopsis of that session.

47:24We have a couple of more people that just joined us on stage, Sebastian, Vasco, and Marina. Can we go in that order to share your thoughts on this, please? Hi, Sebastian speaking. Sorry, I'm driving in a non-EV right now. I hope you can hear me properly. Absolutely. Perfect. I just want to share some views from my professional experience. We work in the blockchain hardware space. And since programmable money is three, four years away, and tokenization of industrial and physical assets will come, I think it's a big mistake to not include blockchain technology and crypto trust anchors and combine it with batteries. Most OAMs had blockchain teams, but all of them basically had a hard time to break through and get support from operational units. And this will at least lead to the industry here in Europe to fall behind. And, you know, Elon Musk is not buying Bitcoin just as a treasury stunt, that's for sure. Right. That's actually very interesting. I mean, that wasn't part of Tesla's battery day, but they did announce that they're open to using Bitcoins for the purchase of EVs.

48:50We did charge PV stations in Vienna with Austria's largest DSO last month. They're now issuing kilowatt hour tokens. And, you know, it's clear that electricity trading will be one, let's say, currency of industrial processes. And I think the auto industry is just making a big strategic mistake right now by not embracing them. That's very interesting. I think it's a whole blend of different industries, isn't it? I mean, the automotives didn't used to look at power source. They weren't setting up petrol kiosks around the world. But now they're setting up charging stations. They're looking at, you know, securing batteries all the way from the design level. So I think the merge of industry and probably it's a matter of time. And if Tesla leads this whole thing, maybe sooner or later the others may come on to join the wagon. But let's move on to Vasco and Marina and Leigh, who's just joined us on stage. What are your thoughts to this? Yes. Hello. Hi. Anyway, I just wanted to make a comment to the ownership issue or whether it's shared or whether it is rate-heiling or Uber or regular.

50:13I once had the chance to talk to John Elkhan, the owner of Fiat and FMC now, Chrysler. And he said a remarkable thing. He said, I don't care how the car is owned as long as it's bought here. It can be rented. It can be free hailed. It can be leased. It can be bought. Whatever. I thought it was a remarkable point. And from someone who really would suffer heavily if nobody bought any cars. And another thing in the discussion that I observed, there are some main players. And Volkswagen is certainly also a main player. And we love to see this happening on stage right now. Samsung and Hitachi and Tesla. And that's like a big stage of a theater piece. And to see how this works out. But there is in industry history, there are many examples where these players can be in competition in one project, can be in cooperation in another project, can have a joint venture there, can be supplier of each other, can be buyer of each other, all at the same time.

51:29That's the engine industry in aerospace. Rolls-Royce and GE and Snekma and MTU. They are all in all these roles that I mentioned. And I can imagine one day the battery industry and the mobility industry being also working in that way. And that can lead to amazing results. The whole story reminds me of Intel versus Microsoft. They were depending on each other, the processor's performance versus the software's requirements. And they pushed each other to incredible performance. And it was called coopetition. So no competition, no cooperation. It was called coopetition. And I think this could be also a guideline for the battery industry to pursue. Thanks so much for that, Vasco. I think that really echoed our conversation earlier with regards to how this battery, you know, how the battery manufacturers and the OEMs would evolve in the future. And I think that was a very insightful statement and potentially a great vision for the future of this industry, isn't it? Instead of competition and possible stresses in job politics, if we look at coopetition and how it could potentially pay off for the positive growth of this industry, that would be fantastic, wouldn't it?

52:59So let's move on to Marina and Leigh and Cecile in the order. If you just join us on stage. Yes, thank you, Catherine. I'm also thinking the same as my colleague Martin just told, is that the battery is swapping. We tried it in the Netherlands and it didn't work out there probably. So I think in the future, the main future, the fast charging network will be the most important things to do before the electric vehicles. Yeah. Yep. Thanks for that. What about your thoughts, Leigh? Would you like to chime in here? Yeah. Hi. Good morning from the U.S. I just wanted to touch upon the battery, the Power Day topic and as it relates to China. I think for those of you who watched the Power Day and also the Tesla Battery Day, you sort of see a lot of similarities for what Volkswagen is doing, but also very different in that I think Volkswagen talked about the entire kind of the closed loop, everything from materials, chemistry, manufacturing processes, recycling, using the battery, second use of the battery.

54:28So I think now it's different. I think one point I want to make is that with the unified cell, it looks like it's not banking on one particular chemistry. So they are using LFP. They are using high manganese, NCM, as well as solid-state. They said the end game is solid-state. But I think if you look at their plan for having 80% of their vehicles using this one unified cell, then you can sort of guess what their volume, how much of it will be the FLP share and how much are the other ones. You can sort of guess. So I think that they have one unified cell approach, but multi-chemistry plan. And now with respect to China, I think what likely might happen is they are working, Volkswagen is working with companies like Northvolt, right? Building the first gigafactory. And now you see GD working with a company called Thoracis, one of the cell manufacturers in China, who is also working with Daimler. So I would expect Volkswagen to do something similar in China, aside from their supply partnership, but also maybe moving into a closer strategic partnership with companies like Gotion.

56:10So I just wanted to make that comment. Awesome. Thank you. What's Cécile, would you like to go next? Hi, so I'm Dr. Cécile Perra. I'm a consultant in automotive industry. In my opinion, Volkswagen and the Tesla presentation were very different for a lot of reasons. The first important point is that it's not Volkswagen, but it's Volkswagen Group. One difficulty for Volkswagen is that they are not trying to promote one brand like Tesla is one brand. But Volkswagen is a full group. So inside the group, they have different customers with different needs, with different way to approach and also the mobility. So one difficulty with making this presentation and unified thing is what to say to people who buy a Taycan are very different from people who buy ID.3. So they are trying to make something homogeneous. But in fact, they are promoting different brands. I think this exercise is very difficult. Another difficulty that Volkswagen has against Tesla is that Volkswagen, even if they are promoting immobility, a lot of their cash is still coming from classical engine.

57:30So they still have to continue to engage some cash coming from this, I'm going to say dirty mobility, while at the same time promoting very fast. So they need to get return on investment very, very fast because they are not going to be able to support all this. It's a lot, lot of money. And if they want to develop everything they put on the presentation on Monday, it's really, really a lot of money. So for me, one danger is that they are going to spend a lot of time, a lot of money. But if the money does not come very quickly, it will become very hard knowing that they have put, I'm going to say, all their eggs in one basket. So I hope they can succeed at least. But yes, that's challenging. It's my opinion. So, Sil, thank you so much. It's a very interesting comment. I just want to pick up on that because in the early discussion that happened at Benchmark, they were talking, one of the questions was talking about how would Volkswagen be able to basically fund this part of the business?

58:33And there was some suggest about different revenue streams, such as the charging, now whether they're going to build, et cetera. And it's interesting that also Tesla has not been profiting from their sale of EVs. So I just wanted to pick up on that and take your thoughts as to, you know, what would be some of the potential challenges that Volkswagen would have to overcome in order to go very fully into their plans that they shared? And how, you know, they have to work across between different business groups as well. And I hear you about the challenges that you mentioned. What do you think some of the thoughts that you have comparing to Volkswagen's approach versus Tesla's approach to that? Volkswagen gets really the advantage that they are selling millions of cars. So they obviously can scale what they are doing. If you take the example of what they do in traditional engine, for example, sometimes you can ask yourself why they are doing this approach and you discover they're doing this because they reduce the price of their engine because they are using the same part in gasoline and in diesel.

59:44So sometimes the choice they are doing is technically not so much advanced, but it really makes sense because they are reducing the cost. I think in terms of mindset, Volkswagen is like that. They see the integration over all the brand. It's an advantage, of course, for reducing the cost, but in terms of innovation, sometimes it can limit them because they will sometimes stop themselves to use something because it makes less sense if you integrate that right now on the time over all the brand. So obviously, in terms of strategy, they cannot apply the same thing at Tesla and Tesla could not apply the same thing at Volkswagen. So the presentation on unified cell is completely on this stream, I think. Thank you so much. And I think during the presentation, they also mentioned a lot about scale, doesn't it? And how it could potentially drive down their cost of production. Absolutely agree with your comments there. I think if Hendy, who just joined us on the stage, Hendy, would you like to share your thoughts on this?

1:00:48Yes, please. Hi, everyone. It's a very interesting discussion indeed. And it's very dear to my heart as well. I come from the automotive industry. I think the focus only on the technology bit of the discussion is taking away a part of the story from the big picture. Yes, the technology is advancing. Yes, it's super expensive. Yes, it's challenging to make it profitable. As Cecile just rightly said, Volkswagen is going to finance all this or should finance all this logically from the profit they make from the ICEs they're already selling. And once this is declining, they will run into cash and investment issues. One of the advantages that Tesla has over the classic OEMs, I would say, is that they run on a completely different distribution model. So and this is very important to take in mind when we're looking into electrification. You cannot go electric with the current business model of the automotive industry, because there will be a lot of implications on the dealer network, on the revenue pools, you know, that the money you get from servicing from parts, which is a huge chunk for dealers, the role of the dealer itself, the role of the OEM in the future, be it a white label provider, a fleet operator.

1:02:29You know, there are many scenarios that are in the air today. So if I go back to the business model, one of the advantages that Tesla has over anyone else in this playground is the fact that they do direct sales. And with direct sales, by definition, you optimize 10 to 15% of margin. There is no dealer network. There is no dealer network. You have capital efficiency in managing your stocks. You have direct reach to the customer with all the benefit that this could bring in terms of in terms of the warranty to services, etc. So on the financial side, they gain massively on this. There is also the fact that Tesla runs on a very limited marketing budget. So on a P&L, that's a 5% of marginal profits. And they make use of all these optimizations or savings to compensate for the high cost of going electric. They've had their share of years when they lost a lot of money. And this year, actually 2020, it was the first time they generate cash.

1:03:59Sorry, they generate profits. They've been always good in generating cash and all the cash they do, they put it back in R&D. So what I wanted to do just in summary is electrification or the cost of electrification or the willingness to go electric is completely or is very difficult if it's taken in isolation from revising the entire business model and how you deliver value through your entire supply chain or value chain. So this is Hemdian. This is Hemdian. I'm done speaking. Thanks so much, Hemdian. So we've got about 25 minutes left in this room. I would just really like to open up to the floor to take your thoughts on what is your general thoughts when you were, if you did attend Volkswagen Power Day, what are some of your thoughts going through your mind versus Tesla's Battery Day? And if we could go around the panel here just sharing some, you know, some of your comments and thoughts on this, that would be great.

1:05:10June, please jump in here. Yeah, let me drop a couple bombs for food for thought. So number one, again, simple math. If a car has 30,000 parts or a petrol vehicle has 30,000 parts and an EV has 20,000 parts, logic says the car company needs less people to build that car, design that car. So until Volkswagen, General Motors, Ford can lop off a couple arms and then rehire a bunch of software engineers, they're going to have problems. Okay. And then number two, and maybe some Volkswagen folks are here. I still believe that their product development process is hardware driven. And only when they, they, these engineers give the steering wheel to the software guys, that's the only time they're going to be able to compete with the EV companies that are, that have native software development as part of their product development process. Now I'm picking on Volkswagen because it's battery day, but we can extrapolate that out to the Japanese, the Koreans, the Americans, it needs to be a software developed, a software driven product development process.

1:06:52And then, you know, the third thing is, I don't know how we can trust the team that got us into the mess. And again, this is all the car companies. So if we look, there haven't been that many changes to management, you know, there's been a couple of scapegoats here and there that got fired, but you know, when is there going to be a CTO from a Google that takes over and is part of the management team? You know, it's, you know, Einstein said, you know, doing the same thing over and over and expecting a different result is insanity. So we are trusting the people that got us into the mess to get us out of the mess. And I don't know until they start firing these people and replacing them or not replacing them, just, just being smaller. You know, that's when, to me, an indication of how serious these companies are, right? Because until then, these Chinese EV companies are moving faster, they're not moving slower.

1:08:05And these can say they're going to move faster, but I don't know if they can, not with hundreds of thousands of employees. And so I'll leave that as food for thought. And then I'd love to hear more comments, whether you agree, disagree with what I've just said. Yeah, I completely agree with you two. I really think that they have the cost of their workload is very high. They are very, I'm going to say, old. The problem is that in Germany, it's very difficult to fire people. It's very, very difficult in terms of law, I think. At least if you compare to America, I don't know about China, but I imagine it's easier to fire people. So I don't believe they can easily get rid of all these people very quickly. And what you say is that they would need to do that very quickly, because this will remove a high cost for them. And they would be able to get the right people developing the right thing.

1:09:06But I don't believe they are able to do this for the reasons that in terms of law, it must be difficult. And also in terms of image, because they have already announced they are going to fire a lot of people. I think it was on Sunday. But it's very unpopular, of course. So they have also to deal with their image within Germany, which makes things very difficult for them. Roland, thank you for joining us on stage. What are your thoughts to this? Hi. Thank you, Catherine. I agree with the previous speaker as a comment about the two cents. But in addition, I think Fograin could exploit more the uniqueness that they do have. They sell 10 million cars annually. They're a very huge customer base. I think if they do not focus so much on only a better performance of the car, but for example, a closer connection with the energy decision, the home energy management systems. I think their commitment to V2G that they expressed is very good.

1:10:11I think they have a unique proposition there. They should further exploit that. And hopefully it will counter their weaknesses on the other end. But that would be my point, that they are far better connected to the living world of all their existing buyers. It could make an additional case there. That was my idea. Maybe also just one quick thought on this one. And we're curious about the room as well. Because with Tesla, we've got the supercharged network. Then at the power, essentially, they show they're going to work with BP, Enel, and Ibarrola. Like three more traditional players as well. So just curious, any thoughts on this as well? Like kind of this build yourself versus kind of having these partnerships with other big players. Roland, do you have any thoughts on this one? Because I see you're right here on the EV charging room. Yeah, sorry. I think you're right. I think they could expand a bit on that as well. It's just that if they try to be Tesla number two, they forget about their unique elements that they do have.

1:11:27So it's a huge step they need to take. But I think, like I said, well, like you said, I agree. Let's keep it at that. Yep. Thanks for that, both. So we have about 15 minutes left in this room. If anyone wants to chime in here, please feel free to hop on the stage. And so I would love to hear, you know, Vesco, your thoughts on how, what are your initial just point of view where you're watching Volkswagen Power Day versus Tesla's Better Day? Assuming you caught both. And if you didn't, given a summary that we just shared earlier, what are some of your thoughts to that? Yes, I think Volkswagen is very strategic in whatever they are doing. And making a perfect EV and putting it on a trade fair is one thing. It's not easy. But building, making one million of these in time, in cost, that is the competence of Volkswagen. And I wouldn't underestimate Volkswagen in whatever they're doing. They will adapt.

1:12:44They will correct their steering if necessary, technology-wise. They have this incredible capacity of putting one million of whatever you want in time, in cost, on your yard. And they will be a major player in that. I have no doubt. And concerning labor laws, that's true. It's probably even as difficult as it is in France, Cecile. But it's more a cultural thing. As I said, making a million cars in time, in cost, is a totally different task than running a search engine or ad company. And the culture in the car company is this capability of logistics, of assembly, of sourcing, which I wouldn't ever underestimate. And if they look probably slow, they might be slow in some points. But they are very good observers. And they wait for the right timing and for the right technology to jump in. So I think we can count on Volkswagen to be a player on a long term here. So Wall Street will have them be the most underappreciated, best car-making company in the world.

1:14:11Is that what you're saying? Because, I mean, the idea is to be the most valuable company in the world, right? I mean, that's the ultimate return for the shareholders. That's how we're counting, right? You have to. I mean, I appreciate that Volkswagen makes beautiful cars. That's not what I'm saying. What I'm saying is that in order to compete in the future, right? Because even he said, even the Volkswagen management said, they're going to make nine figures in services, right? They didn't say anything about selling 10 million cars in 20 years, did they? So I'm not putting words in their mouth. They're saying this, okay? Number one. And then number two, I think we're only looking at half the competition because it's the tech companies that I'm more worried about for these automotive companies. You know, these automotive companies, they know how to compete against these guys. But if Waymo comes in, if Apple comes in, if Baidu comes in, if Alibaba comes in, game changer.

1:15:14This is different rules now. So they need to be ready for that too. Yeah. If I can comment on this, I think the tech companies are not coming with cars. You know, if you look at Waymo, Waymo is coming with a driver, right? So when they looked for, and then they're looking to partner with automotive companies to put their drivers on their cars. And it will take a lot of time. I mean, we have Tesla as a living example, right? So they got started in 2003. And the first time they had real growth was 2012, 13, when they came with Model 3, right? So it takes some time to reach scale and be able to build cars. And until today, I think 10 years after, they're only capable of doing 500,000 cars a year. But again, I think we're keeping score the wrong way, guys. Or at least I'm not keeping score by the number of cars being made. So I think we're talking apples and oranges here.

1:16:22So that's my whole point, right? Yeah, talking about Apple. Good point. Apple is backing all the time. They try to invest in the automotive several times, and they always step back. Why did they? The risk was to wait for them. They're the most valuable company in the world with 34% margins. So they're being smart and prudent. No? Yeah. And they realized they couldn't enter the automotive industry. Totally themselves. Maybe they have good software, part of the car, correct? And same for my view is also Google or Waymo. They are developing autonomous cars. That's a technology that will be a part. They can sell it to others, and they will do so. Yeah. Absolutely. I think this goes towards the point of Vesco made earlier about cooperation. For mobility companies, it is the ultimate goal to become an autonomous vehicle, ultimately. And we have to see more, probably more M&As involved, more JVs involved in the space for that to really happen. And I would love to hear other people's thoughts who have just joined us on stage.

1:17:50Tilo and Craig, before we end up the session for today, what are your thoughts to this? Hi. Catherine, yeah? Just a quick one on Apple, right? Comparing apples to apples. Apple has not left the process of moving into automotive. So I think it's, I agree with you in that sense that they're being very prudent about their next step. And I don't think at all that the background of Apple hinders them in any way of moving into automotive or into, let's say, digital mobility ecosystems, right? So when we're talking about Tesla, I think it's better to see this as something far beyond autos. And I think that's critical that Apple's probably closer to that than some of the current traditional automobile manufacturers. And at the same time, I would say Google is also present in this market, but they have not been as actively producing much of anything. So, yeah, I think Apple's still there. And I would agree with two. It gets really exciting now.

1:18:53But just my two cents. Just one additional take on this. I'm not agreeing to two in the sense that the company like Volkswagen or WhatsApp, their ultimate goal is to be the most valuable company in the world, like Apple or Tesla is doing. That's not a goal of any of those companies in Germany. You should think of this. The most whole shares in Volkswagen are belonging to a family. It's not some investment companies like Goldman Sachs with Tesla or so. It's also that the most important part of shares are belonging to a country, to a local government in Germany. So don't think of this. We are not thinking about Volkswagen or this as a company that needs to become the most valuable company in the world. That's not happening. And that's not their goal. I want to add something about what I've been saying previously on the mindset. I think this is very important. One strength of Tesla is that they are very strong, of course, in EV, but not only.

1:20:22They are a tech company. They put the right screens. They understand what customers would like and so on. This makes additional value to Tesla, not only EV. I'm just afraid that Volkswagen still sees a car as car, not really as something high tech. And in terms of mindset, it makes the things very different. When you work with Volkswagen, when you work with their procurement, if you sell something just 0.01 cents more expensive than something else, because your product is much better, but costs 0.001 cents more. They will not take you because they have the argument that because they do millions of cars, it costs them a lot of money. So they will chase any single cents of the money. Well, I don't, of course, Tesla is trying to get better cost, but I think Tesla seems a little bit more what they can bring to their customer rather than reducing directly the cost. And in terms of mindset, this is, for me, the difference between the traditional OEM and new tech, like Tesla, like NIO, like Lucid, all the new tech.

1:21:38They have a different mindset. Thank you so much. Just picking up on this, Cécile, I think that was a great point that you made on other types of newcomer EVs, such as usage, et cetera. Do you see that becoming potentially competitive with the other OEMs adopting EVs? And I just wanted to take your thoughts on it because I do see the value in software companies potentially adopting automotive solutions and producing products in this area, such as Apple partnering with Foxconn, et cetera, to provide automotive solutions. But I just want to take your thoughts on that. What about the others? Newcomers, do you think they will rise up to be better than Volkswagen developing EVs? What are your thoughts on that? I don't know. Again, the mindset, all the traditional OEMs still keep this vision. They try to adapt what they have done in the past in traditional engine, traditional cars, and try to replicate a little bit what they have done with EV and some new tech.

1:23:06I don't believe it can work. I believe you need to see the thing differently. Even the way you make marketing, even the way you promote, look at Tesla, look at Volkswagen. There is nothing to compare with because Tesla, they will get on their Instagram sometimes, time to time, just one video, and it will be like everybody is crazy about that. But again, they put something daily, just a picture of someone next to the car, and to be honest, no one cares. So can they really turn? I think people are now expecting something else from cars. And we focus here, of course, on the electrification part. But it's not only that. It's just the full car on its own. And it drives the costs very differently, and it drives the mindset very differently. From this point, I think Volkswagen will get difficulty because, as to say, they have a lot of people with this whole mindset. Yeah, I would like to echo Cecile on this. I think what she's saying is very valid in terms of the way of managing business, you know, in terms of program management, for example, on the OEM side.

1:24:25It's completely different from what Tesla is doing. The KPIs are different. As I said before, the business model is different. The distribution channel, the value chain is different. On the advertising side, also, you know, Tesla runs zero advertising where the rest of the OEMs cannot survive without TV and the other classic media channels. But here, I wouldn't say that it's one way or the other. And to your question before, Catherine, about Lucid and Tesla, they play in different playgrounds than Volkswagen. Tesla has no intention to build a more affordable car than the Model 3, right? Which means that the cheapest offer you can get from Tesla is at 50,000 euros. In Europe, this represents around 10 to 15 percent of the market, right? Where Volkswagen today is capable of building the OEM, for example, the E-OEM, that is worth 20-ish thousand euros, right? So, which is more than 80 percent of the market, the segments below 50K. So, and companies like Tesla and Lucid cannot go for more affordable cars because they have to sell the expensive cars with a premium to finance the investments they're putting from scratch, from zero, right?

1:26:01Where the typical OEMs will have cash sources other than the EV business that if they're smart enough, they will be willing to put it in the EV business. So, I think there's an opportunity for both here, right? So, the OEMs will excel in smaller segments and Tesla and Lucid will keep the higher end of the EV market. I'm Hamdi and I'm done speaking. If I can make a quick comment, Hamdi, I think Tesla announced that they're going to design a sub-$25,000 US dollar car that's going to be designed in Shanghai. So, they are going down market, number one. And then, number two, Elon doesn't look at vehicle sales as a bogey. He looks at install base. And I see a scenario, I could see a scenario where Elon sells all of his cars at close to cost. So, he captures the data and he has everyone in his ecosystem. And he creates services and stickiness so that they stay in his ecosystem. Again, we have to look beyond traditional automotive.

1:27:27But, you know, if you're sub-$25,000, he's exporting those to India, to Southeast Asia, to the rest of Asia. And he's going to build them at Berlin Giga too. So, I think the notion that he's not going to go any lower than a Model 3 or a Model Y, that's been dispelled because they've made an announcement that they're looking to design this up $25,000. And what is your source for this too? Because here, I'm very close in business with Tesla. And when I was quoting no intention to go below Model 3, I'm referring to the financial reports. And I'm referring to the master plan part one and part two, as Elon Musk calls it. And in both, he said nothing below Model 3. Next step would be to invest in ride hailing. And in autonomous drive, he wants to have an autonomous drive that is 10 times safer than the best in the market. And ride hailing to make your car makes money for you. And the next products, two products will be the high density passenger urban transport solution and the heavy truck, which it's in the progress already.

1:28:52So, this is my reference for Tesla plans. This is what is announced on the annual reports. This is what the analysts look at. For a company like Tesla, obviously, there will be a lot of rumors in the market. But in my analysis, I always look at the concrete elements that they put in their annual reports. So, this is one thing. The other thing is, even if he's willing to build more cars, he simply cannot because he does not have the production capacity. Giga Berlin is coming this year. And they announced it will only build Model Y. And it will bring their capacity up to 900,000 cars. So, last year, if you sum up Fremont, Shanghai, and Berlin, that will be a total of 900,000 cars. And it can barely give enough supply for the demand of today on Model 3 and Model Y. And next will be the Giga Texas. And that will build the semi truck and the cyber truck. So, A, I don't see official plans to go for smaller cars.

1:30:09B, even if they do so, I don't see where he will get the production capacity from, knowing that it's very clear what plans he's working on today and the announced capacities for all of them. Thank you so much, guys. So, if I could have one last comment from Tia and Craig, and we could go ahead to close the room. Hey, Hamdi, Google it. You'll see it. Well, there is plenty of stuff on Google, too. So, I just officially, I refer to the annual reports. Read the annual reports, and let's have the discussion offline. It's very interesting. I mean, you know Elon, right? He would tweet something today that has absolutely no sense or no solid foundations for reality, right? And the amount of data on Google out there that makes absolutely no sense are just enormous. So, in that case, I would just stick to the official position of the company, because this is what the stock market looks at. And this is how analysts analyze things and value a company, right?

1:31:20I'm very happy. It's a very interesting discussion, and I totally respect your point of view. I'll be happy to take it offline, because it's a very interesting topic. Real quickly to Hamdi. I just wanted to just really quickly to Hamdi. I agree also in holding Tesla to their official statements. I think that that's a really great way to measure Elon, and I think he's also happy to be measured against that. So, you know, I think that that's the best way to, let's say, analyze Tesla. But at the same time, Hamdi, I would also not limit the conversation to total number of vehicles produced. And when you compare, for instance, the long-term business case Tesla versus, let's say, Fossil Auto or Legacy Automotive, the amount of new revenues that are coming on board with regards to data, with regards to robotaxi, autonomous driving, obviously, the completely new segments that are opening with the semi, et cetera, et cetera. You know, I think that we have to look really at the revenue streams that the Legacy Automotive doesn't have, right?

1:32:26And so I think, yeah, I see it the way you see it as well. I fully agree with you, Greg. To his statements, to his real statements. But then let's not limit the vision to what has really been opened up at Tesla that is astoundingly difficult, astoundingly difficult for traditional automotive to keep up with. 100% aligned. Thanks for that, everyone. Cecil, do you have one last comment? I just wanted to say that I confirmed that I have also seen many, many times the 25,000 objective of Elon for cheaper EV. It has been announced, definitively. If you look at Tesla Day, it was announced there. Well, I think what we could also do just to kind of put this to a different discussion is let's just talk about total cost of ownership for these vehicles. And if we do that, then we're already seeing that the Model 3 in the basic setup is already competing over eight years with a traditional VW Golf in the European market, right?

1:33:33Or even better. So let's look at total cost of ownership. And then when this official, let's say, Model 2 or whatever it might be called comes out and we get a chance to drive it, then let's call it real. I really hold Elon. And having worked with him, I hold him to his own rules, right? I believe what I see and I can drive. I see the battery. And I know the battery exists when I can test it. Yeah, let's not talk about PowerPoints and these other things and let's compare, yeah, what's really out there. Absolutely. To your point, Craig, I think we mentioned earlier as well about the timelines that all these companies are making. It really depends on whether they do meet these targets in the future. So it's definitely interesting for us to hope for. And we look forward to all these vision happening as well. So thank you all so much for participating. It's come to the end of our session.

1:34:23This is an impromptu session, as we mentioned. And we usually hold battery revolution weekly topics on Saturday at 3 p.m. CET and 10 p.m. Singapore time and 10 a.m. New York time now. So please feel free to join us every Saturday. The session has for one and a half hours. And this week we're going to talk about battery for aviation. And so looking forward to having everyone back on Saturday if you're interested in the topic. And I'm very happy to have everyone here today. Do feel free to follow us on battery revolution for more updates and deep dives into the topic of batteries. And if you have missed out any session or any part of this discussion, feel free to go on to batteryinsiders.com where we do share the podcast for these cup house events. And if you have всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей всей