WEBVTT 1 00:00:11.000 --> 00:00:14.560 With Laurent segle And from London and Gerard Reed from Berlin. 2 00:00:15.080 --> 00:00:16.920 This is redefining. 3 00:00:16.480 --> 00:00:21.000 Energy linutes today on really if an energy job. 4 00:00:21.440 --> 00:00:24.600 What's your show? Where have you been invited? I was 5 00:00:24.640 --> 00:00:28.839 a Wisdom Try which is one of the largest managers 6 00:00:28.839 --> 00:00:32.759 of ETFs across the world. Wow Exchange traded pumps they 7 00:00:32.880 --> 00:00:36.159 might to command their podcast which is called The Commodity Exchange, 8 00:00:36.320 --> 00:00:39.000 and actually was. I thought it was good because listen 9 00:00:39.159 --> 00:00:41.560 back to basics talking about how you invest in this 10 00:00:41.719 --> 00:00:44.200 energy and transition, what you need to look out for 11 00:00:44.359 --> 00:00:46.640 going forward, also in terms of fossil fuels, what it 12 00:00:46.640 --> 00:00:47.960 means for that, etcetera, etcetera. 13 00:00:48.200 --> 00:00:53.000 So the episode is cool Energy Transition to Global Investment Guide. 14 00:00:53.320 --> 00:00:54.719 Let's listen to your interview. 15 00:00:56.000 --> 00:00:59.280 Welcome to the Commodity Exchange, a podcast where we bring 16 00:00:59.320 --> 00:01:02.039 you insights from the world of commodities. Whether you are 17 00:01:02.079 --> 00:01:05.359 an investor, I just want to learn more about the topic. 18 00:01:05.680 --> 00:01:10.280 I'm Abin Taher Director Macroeconomics and Thematic Research at Wisdom. 19 00:01:09.920 --> 00:01:12.799 True and I'm as Short head of Commodities and macro 20 00:01:12.840 --> 00:01:16.319 and economic research here at Wisdom True. Welcome Gerard. It's 21 00:01:16.359 --> 00:01:18.640 a pleasure to have you on our show. So I 22 00:01:18.760 --> 00:01:21.599 understand you wear many different hats, and what do you 23 00:01:21.719 --> 00:01:24.000 tell our audience a little bit about what you do 24 00:01:24.280 --> 00:01:26.959 in your own podcast and some of the other projects 25 00:01:27.000 --> 00:01:28.519 you have on Yeah, and. 26 00:01:28.519 --> 00:01:31.920 I suppose is three parts of my business life. So 27 00:01:32.079 --> 00:01:34.640 the first one is really I come from the finance 28 00:01:34.640 --> 00:01:37.599 industry and I'm a partner in business called Alexa Capital, 29 00:01:37.640 --> 00:01:40.439 which is one of the leaders in Europe in and 30 00:01:40.439 --> 00:01:44.159 around corporate finance in this energy transition space. That means 31 00:01:44.200 --> 00:01:47.480 we're raising money for companies, we're selling projects, and we're 32 00:01:47.480 --> 00:01:50.280 doing na So that's my first hat. The second half 33 00:01:50.319 --> 00:01:52.959 really is I'm involved in scaling businesses. I think this 34 00:01:53.040 --> 00:01:57.079 is a unique opportunity in our lifetime to have a 35 00:01:57.120 --> 00:02:00.560 really big impact by creating new things that actually have 36 00:02:00.640 --> 00:02:03.359 a positive impact on our world. And I said, the 37 00:02:03.400 --> 00:02:04.920 third thing that I do is I realized that the 38 00:02:05.000 --> 00:02:09.400 energy transition is really complicated. It is not easy to 39 00:02:09.520 --> 00:02:12.159 change an energy transition. And we're trying to move the 40 00:02:12.240 --> 00:02:14.840 energy transit. By the energy transition, I mean we're trying 41 00:02:14.840 --> 00:02:18.120 to move from a fossil fuel based system to call 42 00:02:18.240 --> 00:02:21.199 a clean energy based system. That's not easy and it's 43 00:02:21.199 --> 00:02:24.319 not easy for lots and lots of reasons, and because 44 00:02:24.360 --> 00:02:27.159 it's so complex, I just decided, look, and this is 45 00:02:27.159 --> 00:02:29.240 probably about ten years ago, I said, I'm just going 46 00:02:29.319 --> 00:02:32.120 to help educate people and give them an independent view 47 00:02:32.159 --> 00:02:34.240 of what was going on. So I've been a very 48 00:02:34.240 --> 00:02:37.879 active blogger and obviously I have the podcast, and I'm 49 00:02:37.879 --> 00:02:40.639 also involved in a think tank called the Energy Transition 50 00:02:40.719 --> 00:02:44.479 for And again I do this because again it's complex. 51 00:02:45.000 --> 00:02:47.479 I think a lot of our audience is familiar with 52 00:02:47.520 --> 00:02:51.120 the energy transition given the number of shows we're dedicated 53 00:02:51.080 --> 00:02:55.000 to the topic, but we'll always have new listeners. So 54 00:02:55.120 --> 00:02:57.199 why don't you tell us a little bit in your 55 00:02:57.199 --> 00:03:01.039 own words about what you believe the transition is, and 56 00:03:01.280 --> 00:03:04.639 more importantly, tell us why you think this mega trend 57 00:03:04.919 --> 00:03:07.439 presents an attractive investment opportunity. 58 00:03:07.960 --> 00:03:10.560 So let's take a step back. I by accident got 59 00:03:10.599 --> 00:03:13.039 into the whole renewable space twenty years ago, and I 60 00:03:13.080 --> 00:03:14.840 had an investment client who asked me to look at 61 00:03:14.840 --> 00:03:18.199 the solar business. And I came back to him and said, 62 00:03:18.240 --> 00:03:20.639 don't invest. He said to me why, and I said, well, 63 00:03:20.680 --> 00:03:23.280 the economics of solar make zero sense and never will. 64 00:03:23.919 --> 00:03:25.680 And he said to me, Jared, I need you to 65 00:03:25.719 --> 00:03:28.879 meet the founder, and actually met the founder of the business, 66 00:03:28.960 --> 00:03:31.599 and the founder explained to me why Solo was going 67 00:03:31.639 --> 00:03:35.240 to revolutionize the world, and it actually is in the 68 00:03:35.319 --> 00:03:37.520 process of doing that. Right when you think this year, 69 00:03:37.560 --> 00:03:40.479 for example, we're going to have five hundred gigawa's the 70 00:03:40.560 --> 00:03:44.639 solar installed across the world. We've never seen an energy 71 00:03:44.680 --> 00:03:47.319 technology come to market as quick as this, never you 72 00:03:47.400 --> 00:03:49.240 think of it. You know, nuclear at the peak in 73 00:03:49.280 --> 00:03:52.159 its seventies, you were probably building thirty forty giga what's 74 00:03:52.159 --> 00:03:54.360 a year. So just to put that out of that, 75 00:03:54.360 --> 00:03:56.719 that's the first point I say. But let's see where 76 00:03:56.759 --> 00:04:00.319 this came from. This technology would really not have got 77 00:04:00.360 --> 00:04:03.199 to market and to scale without a whole part of 78 00:04:03.199 --> 00:04:07.479 subsidy programs in the United States, in Spain and Italy, 79 00:04:07.879 --> 00:04:10.599 in Germany, and also with the help of the Chinese. 80 00:04:11.120 --> 00:04:14.759 The Chinese have produced and scaled the technologies like we've 81 00:04:14.800 --> 00:04:18.399 never seen in the history of mankind, and the subsidy 82 00:04:18.399 --> 00:04:20.800 programs in a lot of the Western countries. What they 83 00:04:20.879 --> 00:04:24.120 did was saying, now, what was a very expensive product 84 00:04:24.560 --> 00:04:26.680 to get to market so that there was a market 85 00:04:26.720 --> 00:04:29.000 for it and the prices went down. That was the 86 00:04:29.000 --> 00:04:32.120 start of it. So for me, at the beginning, it 87 00:04:32.279 --> 00:04:35.160 really was part of the green movement and a little 88 00:04:35.160 --> 00:04:38.160 bit about cleaning up the environment stuff like this. Twenty 89 00:04:38.240 --> 00:04:40.759 years on, it's not about that anymore. And I don't 90 00:04:40.839 --> 00:04:43.160 use the word transition anymore. It's not a transition. It's 91 00:04:43.160 --> 00:04:47.680 a revolution. And in the revolution, businesses people die, and 92 00:04:47.879 --> 00:04:51.279 there's winners and losers, and we're seeing the beginning of 93 00:04:51.319 --> 00:04:53.839 that already, and that makes it, by the way, a 94 00:04:53.920 --> 00:04:57.000 difficult place to invest. I just think of it like 95 00:04:57.079 --> 00:04:59.519 this energy. You look at some of the valuation to 96 00:04:59.600 --> 00:05:01.560 some of the companies, the gas companies out there, you 97 00:05:01.560 --> 00:05:04.360 could actually say, from a historical point of view, they're 98 00:05:04.399 --> 00:05:07.680 trading up very low multiples. Why well, there's a little 99 00:05:07.680 --> 00:05:09.759 bit of caution about the future in those businesses. And 100 00:05:09.839 --> 00:05:11.680 then you know, saying well, okay, let's put money in 101 00:05:11.680 --> 00:05:13.879 a solar business. Then you look and say, well, the 102 00:05:13.920 --> 00:05:16.519 margins of those businesses are so low do we really 103 00:05:16.600 --> 00:05:19.160 want to be in that? So it's a difficult place 104 00:05:19.680 --> 00:05:21.680 to invest. But I just want to say it's a 105 00:05:21.720 --> 00:05:24.839 difficult place to invest because there's a revolution going. 106 00:05:25.839 --> 00:05:30.319 Our observations that Wisdom Tree was that this energy transition 107 00:05:30.480 --> 00:05:34.240 were equal a revolution gained a lot of momentum in 108 00:05:34.279 --> 00:05:38.120 traction with investors back in twenty twenty one twenty twenty two, 109 00:05:38.519 --> 00:05:42.439 but are cooled substantially in twenty twenty three. However, just 110 00:05:42.439 --> 00:05:45.639 as you say, the investments in the physical assets in 111 00:05:46.000 --> 00:05:49.680 clean energy are now close to double those in fossil 112 00:05:49.680 --> 00:05:53.319 fuels when they were kind of equal in twenty sixteen, 113 00:05:53.959 --> 00:05:58.360 and solar adoption has clearly eclipsed most people's imaginations a 114 00:05:58.399 --> 00:06:01.519 decade ago. You including, there seems to be a huge 115 00:06:01.560 --> 00:06:05.279 dichotomy there. The energy transition or revolutions seem to be 116 00:06:05.360 --> 00:06:09.360 powering it, but investors seem less interested. Is this what 117 00:06:09.399 --> 00:06:11.360 you see as well? And why do you think that's 118 00:06:11.360 --> 00:06:11.759 the case. 119 00:06:12.319 --> 00:06:15.680 I won't say it's less interested. I think what's happened 120 00:06:16.040 --> 00:06:19.439 is that what we've had is a Chinese government who 121 00:06:19.720 --> 00:06:23.240 made a strategic decision fifteen years ago that they have 122 00:06:23.399 --> 00:06:26.600 to dominate these new energy technologies. What do I mean 123 00:06:26.639 --> 00:06:29.279 by that? I mean China doesn't have its own gas, 124 00:06:29.399 --> 00:06:32.120 doesn't have its own oil, and as to import them. 125 00:06:32.319 --> 00:06:35.000 In particular, oil is really the biggest oil import from 126 00:06:35.000 --> 00:06:36.879 the world. And they look at this from a strategic 127 00:06:36.959 --> 00:06:39.120 point of view, and they say, we don't really want 128 00:06:39.160 --> 00:06:42.480 to be continuing to import this Number one. Number two 129 00:06:43.000 --> 00:06:45.079 is there also is a view from the Chinese government 130 00:06:45.120 --> 00:06:47.439 really that they believe they should be at the center 131 00:06:47.439 --> 00:06:49.160 of the world. And if you'ret the center of the world, 132 00:06:49.839 --> 00:06:51.759 then actually you need to do good things for the world. 133 00:06:52.040 --> 00:06:54.439 And so the good thing for the world is could 134 00:06:54.439 --> 00:06:57.360 do something for the environment and lead on that. And 135 00:06:57.399 --> 00:06:59.199 then the third thing that is related to that is 136 00:06:59.240 --> 00:07:04.040 industrial policy in China, centralized industrial policy, which means that 137 00:07:04.079 --> 00:07:06.959 they've got full support to go and scale and take 138 00:07:07.120 --> 00:07:09.959 it a ten year of view. A lot of companies 139 00:07:10.000 --> 00:07:12.920 in the West take six month view these days, right, 140 00:07:13.600 --> 00:07:16.959 So we've never seen anything like that in terms of companies. 141 00:07:16.959 --> 00:07:19.160 And now the result of this is that you've got 142 00:07:19.199 --> 00:07:25.279 massive capacities of solar panels, wind turbines, batteries, inverters, you 143 00:07:25.399 --> 00:07:29.319 name it, core components of this energy transition, and they're 144 00:07:29.360 --> 00:07:32.120 all made by Chinese companies. And by the way, these 145 00:07:32.199 --> 00:07:35.079 Chinese companies, we never heard of them fifteen years ago, 146 00:07:35.680 --> 00:07:38.120 and now I look and I go gold wind Envision, 147 00:07:38.160 --> 00:07:42.439 bigguse wind turbine manufacturers in the world, c atl BYD, 148 00:07:42.879 --> 00:07:47.199 biggest battery manufacturer in the world bid biggest EV manufacturer 149 00:07:47.240 --> 00:07:48.759 in the world. You can go on and on and 150 00:07:48.800 --> 00:07:51.879 on about what China has done, but what China has 151 00:07:51.879 --> 00:07:54.519 done is and also does is they say, listen, if 152 00:07:54.519 --> 00:07:57.199 we're going to really dominate these technologies, we have to 153 00:07:57.199 --> 00:07:59.959 get to such scale that people aren't going to compet. 154 00:08:00.240 --> 00:08:02.680 So I can't compete because people like me and the 155 00:08:02.680 --> 00:08:04.439 finance world say I'm not going to give you a capital. 156 00:08:05.199 --> 00:08:07.279 So the result of that is we don't have manufacturer 157 00:08:07.319 --> 00:08:09.800 of any of these core technologies in the Western world, 158 00:08:10.079 --> 00:08:12.959 with the exception really a Tesla. Okay, with the exception 159 00:08:13.000 --> 00:08:16.360 of Tesla. The rest is in China. And that's what 160 00:08:16.480 --> 00:08:20.360 makes it very difficult to invest. How do you compete 161 00:08:20.360 --> 00:08:22.279 with the Chinese? And you can say, I can put 162 00:08:22.319 --> 00:08:23.720 a subsidy on it, I can do this, that and 163 00:08:23.720 --> 00:08:26.199 the other thing. But the investors really like putting money 164 00:08:26.240 --> 00:08:28.720 in a factory just because you're going to get a subviously, 165 00:08:28.800 --> 00:08:30.120 knowing that you won't compete with it, you know what 166 00:08:30.160 --> 00:08:32.879 I mean. That's what makes it very difficult. And the 167 00:08:32.919 --> 00:08:36.639 other thing is that you have hype circles in this 168 00:08:36.759 --> 00:08:40.279 space you talked about twenty twenty one, twenty twenty two 169 00:08:40.480 --> 00:08:44.279 massive hype cycle. The world's hydrogen. You know, hydrogen is 170 00:08:44.279 --> 00:08:46.159 going to be the next big thing. We're the leaders 171 00:08:46.159 --> 00:08:49.399 in it, and we've got plug power, we've got ballard, 172 00:08:49.480 --> 00:08:52.960 and we got this, and there's share prices of all collapsed. Okay. 173 00:08:53.360 --> 00:08:55.559 And also, by the way, we had the whole spack 174 00:08:55.679 --> 00:08:59.919 movement as well, again crazy evaluations in around companies that 175 00:09:00.080 --> 00:09:04.639 had nothing or very little, and you have a crash, 176 00:09:04.720 --> 00:09:08.240 which is probably similar in this space to the crash 177 00:09:08.519 --> 00:09:11.559 the Internet boom or BOST, but very clear, out of 178 00:09:11.559 --> 00:09:13.720 the Internet boom of BOST came a whole pile of 179 00:09:13.720 --> 00:09:18.480 great businesses right, including Amazon. So I'm not negative about it. 180 00:09:18.559 --> 00:09:21.159 I'm just saying there's an opportunity now to pick winrors. 181 00:09:22.120 --> 00:09:25.279 Jared, speaking of hype cycles, one thing that's very hyped 182 00:09:25.360 --> 00:09:28.720 up right now is the AI wave, certainly, and I 183 00:09:28.759 --> 00:09:32.360 saw statistic recently from the International Energy Agency which said 184 00:09:32.360 --> 00:09:37.120 that one query submitted to chat GPT requires ten times 185 00:09:37.120 --> 00:09:40.559 the amount of energy as a simple Google search. It's 186 00:09:40.600 --> 00:09:45.279 a good memorable way to just remember how energy intensive 187 00:09:45.360 --> 00:09:48.679 the AI revolution is. And of course, with more data 188 00:09:48.679 --> 00:09:53.519 centers having to be deployed, more devices with AI capabilities 189 00:09:53.559 --> 00:09:57.279 and so forth. But this also potentially has an impact 190 00:09:57.399 --> 00:10:01.679 on the energy transition becauseally some of those data centers 191 00:10:01.759 --> 00:10:04.799 good turned towards renewables and maybe that's a new source 192 00:10:04.840 --> 00:10:08.360 of demand. How do you see the impact and the 193 00:10:08.759 --> 00:10:13.360 increased use of energy from the AI revolution on the 194 00:10:13.480 --> 00:10:14.200 energy transition? 195 00:10:14.759 --> 00:10:16.759 I look at it very positively. And the reason I 196 00:10:16.799 --> 00:10:21.440 say that is because it's all about electricity and what 197 00:10:22.039 --> 00:10:25.279 any form of data center or software does it and 198 00:10:25.600 --> 00:10:29.639 power electronics. It enables you to control powerflows. I can 199 00:10:29.679 --> 00:10:32.320 see data centers being part of the solution going forward. 200 00:10:32.440 --> 00:10:34.440 Let me let me explain what I mean by that is, 201 00:10:34.960 --> 00:10:37.159 I can tell you, like I'm in Europe, if I 202 00:10:37.240 --> 00:10:40.480 use CHATCHBT in my morning, it's really quick. I go 203 00:10:40.519 --> 00:10:42.960 and use it in the evening it's really slow. Why 204 00:10:43.039 --> 00:10:46.559 is that Well, because we're using US data centers in 205 00:10:46.799 --> 00:10:49.279 the morning and guess what, You're all sleep and then 206 00:10:49.399 --> 00:10:51.600 when you guys all wake up, then guess what happens 207 00:10:51.600 --> 00:10:53.559 to get slow? Now where am I coming from this? 208 00:10:54.360 --> 00:10:59.000 That's already happening within this, which is your moving demand 209 00:10:59.200 --> 00:11:03.679 in data center based on where you have capacity. But 210 00:11:03.720 --> 00:11:05.399 I'm also going to come to another point. You're going 211 00:11:05.440 --> 00:11:09.120 to do this based on electricity. So where's the cheap electricity? 212 00:11:09.279 --> 00:11:11.960 Oh yeah, there's too much wind in the UK, let's 213 00:11:11.960 --> 00:11:16.000 go there. So we're going to flexibilize a lot of 214 00:11:16.039 --> 00:11:19.039 what we're seeing from the Googles and the Microsoft to 215 00:11:19.080 --> 00:11:21.080 this world. We're going to use them as part of 216 00:11:21.120 --> 00:11:24.080 the solution. And I'm very happy about the fact that 217 00:11:24.080 --> 00:11:25.879 these guys are actually putting their hands up and saying 218 00:11:25.879 --> 00:11:27.600 we're going to leave this, We're going to do this. 219 00:11:28.360 --> 00:11:31.000 They're not shying away and sort of saying, oh yeah, yeah, yeah, 220 00:11:31.200 --> 00:11:33.120 we're going to just buy carbon credits and keep our 221 00:11:33.159 --> 00:11:35.320 heads down. They're actually putting their heads up and saying 222 00:11:35.320 --> 00:11:37.240 we're going to be part of the solution. And tech 223 00:11:37.360 --> 00:11:39.720 is part of the solution. That's what I want to 224 00:11:39.720 --> 00:11:41.879 say on that whole issue. And it's very clear if 225 00:11:41.919 --> 00:11:44.240 you look at who the big energy user is going forward, 226 00:11:44.360 --> 00:11:47.320 or it used to be the big chemical companies, it 227 00:11:47.360 --> 00:11:49.919 was Dow, it was BSF, and it's not. I mean, 228 00:11:49.919 --> 00:11:54.559 the big big electricity us is going forward are Google, Microsoft, Accessia, right, 229 00:11:55.279 --> 00:11:57.519 And we have to make sure that they're part of 230 00:11:57.840 --> 00:12:01.320 the solution going forward rather than the And the other 231 00:12:01.360 --> 00:12:02.879 thing I would say is if you want to think 232 00:12:02.919 --> 00:12:06.240 about cleaning up our energy system, you have to electrify 233 00:12:06.279 --> 00:12:09.120 as much as you can. And electrifying as much as 234 00:12:09.159 --> 00:12:12.480 you can means actually that what you need to move 235 00:12:12.519 --> 00:12:15.559 into a world is where everything is connected together and 236 00:12:15.639 --> 00:12:18.600 it is powered by AI. So I can walk into 237 00:12:18.639 --> 00:12:21.960 the house, guess what, the house senses that I'm there, 238 00:12:22.000 --> 00:12:24.600 and the heating system goes on and then it actually 239 00:12:24.679 --> 00:12:26.960 goes Oh. But by the way, there's no sun out 240 00:12:27.000 --> 00:12:28.600 there today, so I'm not going to charge your car. 241 00:12:29.039 --> 00:12:31.200 I don't want to think about that. But the AI 242 00:12:31.320 --> 00:12:34.840 will enable decisions like that to be made and automated 243 00:12:34.919 --> 00:12:38.200 going forward. And that's the world that we're going into. 244 00:12:38.279 --> 00:12:40.799 And by the way, that lends itself very well to 245 00:12:41.279 --> 00:12:45.080 let's call it flexible side of renewables, because the reality 246 00:12:45.159 --> 00:12:48.879 is solar is the cheapest form of electricity producer in 247 00:12:48.919 --> 00:12:51.480 the world. But the problem is it's not there at night. 248 00:12:52.200 --> 00:12:54.559 Well guess what, we don't use our data centers at night. 249 00:12:54.639 --> 00:12:56.399 So there's ways around it. That's what I want to say. 250 00:12:56.480 --> 00:12:58.919 I look at it positive, don't look at it as negative. Anyway. 251 00:13:00.120 --> 00:13:02.879 The sector that is electrifying very quickly, and you just 252 00:13:02.919 --> 00:13:06.240 said it is cause that need to be charged electric vehicles, 253 00:13:06.360 --> 00:13:09.080 and they two go through their own ebb and flow 254 00:13:09.120 --> 00:13:11.600 in terms of the press they receive. Of course, recently 255 00:13:11.639 --> 00:13:13.960 there's been some negative press, perhaps more so out of 256 00:13:14.000 --> 00:13:17.360 the US, where EV adoption might be a bit slur 257 00:13:17.840 --> 00:13:21.720 compared to parts of Europe or indeed China, but the 258 00:13:21.759 --> 00:13:25.679 world at large, you know, overall, we're on track to 259 00:13:26.039 --> 00:13:29.120 sell seventeen million evs in twenty twenty four, and if 260 00:13:29.120 --> 00:13:32.399 you compare that to twenty twenty be so close to 261 00:13:32.799 --> 00:13:36.799 three million sales. So we're on this very strong growth trajectory, 262 00:13:36.840 --> 00:13:41.000 certainly in the electrification of road transportation. Give us your 263 00:13:41.039 --> 00:13:44.879 take on how you see the EV industry. Is it 264 00:13:45.159 --> 00:13:46.679 breaking or is it accelerating? 265 00:13:47.240 --> 00:13:49.159 Oh, it's accelerating. And by the way, it's a little 266 00:13:49.200 --> 00:13:51.879 bit like the solar industry in the past. What you 267 00:13:51.960 --> 00:13:54.519 tended to have was a boom of three years, and 268 00:13:54.559 --> 00:13:57.279 then what would happen would be would slow down, it 269 00:13:57.399 --> 00:14:01.759 might even go almost negative or flat accelerates again. But 270 00:14:01.840 --> 00:14:04.039 there is always one market up and one market down. 271 00:14:04.080 --> 00:14:06.559 That's where it is, right So yeah, okay, you know 272 00:14:06.600 --> 00:14:09.600 the German market is down this year somewhat, the Chinese 273 00:14:09.600 --> 00:14:13.200 market is up this year, right. The trend is very, very, 274 00:14:13.320 --> 00:14:16.399 very clear. And I think the most interesting thing for 275 00:14:16.519 --> 00:14:19.480 me in and around EVS is if you think what's 276 00:14:19.480 --> 00:14:23.080 happened is EV's manufacturers have focused on the upper end 277 00:14:23.120 --> 00:14:25.080 of the market. So if you think of a Tesla, 278 00:14:25.240 --> 00:14:28.320 it started at a model S and the cars are 279 00:14:28.360 --> 00:14:31.399 pretty expensive and it's normally right, that's what you do 280 00:14:31.440 --> 00:14:33.519 when you bringing new technology to market. You go with 281 00:14:33.600 --> 00:14:35.320 the upper end and you try to make as much 282 00:14:35.360 --> 00:14:38.639 margin as possible. Okay, well, we've seen in the last 283 00:14:38.720 --> 00:14:42.440 year forty percent reduction in the cost of batteries. Have 284 00:14:42.559 --> 00:14:45.919 we seen forty percent reduction the price of EV's? No? 285 00:14:47.080 --> 00:14:50.759 Why not? Because you know well BYD and Tesla actually 286 00:14:50.799 --> 00:14:53.519 have very strong margins in this business, and that actually 287 00:14:53.639 --> 00:14:55.840 enables them to keep that. Yes, they can push down 288 00:14:55.879 --> 00:14:58.440 prices if they want, but the point about it is 289 00:14:58.639 --> 00:15:02.000 they don't necessarily need it that. There's the point I'm 290 00:15:02.039 --> 00:15:05.120 also making is there is more room for prices to 291 00:15:05.159 --> 00:15:08.720 go down to these evs, and so the parity between 292 00:15:08.799 --> 00:15:11.440 evs an internal combustion engine at the upper end of 293 00:15:11.440 --> 00:15:14.080 the market is there already. And for those of you 294 00:15:14.120 --> 00:15:16.759 who are buying an expensive car, I mean, I just 295 00:15:16.759 --> 00:15:18.919 look at myself. I would just I'll never go back 296 00:15:18.960 --> 00:15:21.519 to internal combustion engine. When I've got a car that 297 00:15:21.600 --> 00:15:24.879 does three hundred and fifty miles over five hundred kilometers 298 00:15:24.919 --> 00:15:27.360 in range, it's sort of game over for me already. 299 00:15:27.720 --> 00:15:29.919 And if I look at the driving experience of these 300 00:15:29.960 --> 00:15:33.240 cars and compare them to these the old cars, way, 301 00:15:33.720 --> 00:15:36.080 so you can't stop. You've been trying to improve the 302 00:15:36.120 --> 00:15:39.000 internal commessation engine for one hundred years at this point 303 00:15:39.039 --> 00:15:42.240 in time, and we've got the law of diminishing returns 304 00:15:42.320 --> 00:15:44.759 set in a long, long, long while ago, while you 305 00:15:44.840 --> 00:15:47.799 haven't the opposite in the EV space, which is you 306 00:15:47.960 --> 00:15:53.279 still have technology improvements and cost reduction going forward. So 307 00:15:53.559 --> 00:15:56.320 my own view is it's really unstoppable at this point 308 00:15:56.320 --> 00:15:56.720 in time. 309 00:15:57.399 --> 00:15:58.919 I guess you and you have to look at China 310 00:15:59.039 --> 00:16:02.440 as an example that, right. I mean, the compact in 311 00:16:02.480 --> 00:16:05.840 the small cars are already cheaper in EV format in 312 00:16:05.919 --> 00:16:09.240 China than they are in internal combustion engine format, right, 313 00:16:09.320 --> 00:16:12.159 So I guess it's already written a blueprint for the 314 00:16:12.200 --> 00:16:12.799 rest of the world. 315 00:16:13.919 --> 00:16:15.879 And it's is you're talking right on that already. And 316 00:16:16.039 --> 00:16:18.159 by the way, but there's a cultural thing in China 317 00:16:18.279 --> 00:16:21.039 versus the West that we need to understand. In the West, 318 00:16:21.120 --> 00:16:24.519 we've had internal combustion engines for one hundred years and 319 00:16:24.679 --> 00:16:27.679 people really love them. It's part of the culture of 320 00:16:27.840 --> 00:16:32.039 society right now. China doesn't have that, and everybody is 321 00:16:32.159 --> 00:16:35.559 used to for the last fifteen years driving around in 322 00:16:35.559 --> 00:16:39.559 electric scooters where you know, you had extension cables coming 323 00:16:39.600 --> 00:16:43.799 out balconies down to charge a car, so everybody has 324 00:16:43.840 --> 00:16:46.080 had that experience of it. Now, we would never do 325 00:16:46.080 --> 00:16:47.879 this in the West. You know what, you want me 326 00:16:47.879 --> 00:16:50.679 to put an extension cable down to power my scooter 327 00:16:51.200 --> 00:16:53.200 for them was normal. So for them to then go 328 00:16:53.320 --> 00:16:56.879 for electric scooter to an electric vehicle, it's just normal 329 00:16:57.519 --> 00:16:59.639 for them to go to an internal combustion engine, which 330 00:16:59.679 --> 00:17:03.960 is no easy, dirty and a different expense. That's for 331 00:17:04.000 --> 00:17:06.720 them to step backwards. So to just think of the mentality, 332 00:17:06.960 --> 00:17:09.599 and that's why in the first half of twenty twenty four, 333 00:17:09.920 --> 00:17:14.400 fifty percent of Chinese newse car sales were hybrid, you know, 334 00:17:14.440 --> 00:17:17.880 with a large battery and are fully electric. So yes, 335 00:17:17.960 --> 00:17:20.640 they're ahead, they're ahead and adoption, but they're also ahead 336 00:17:20.640 --> 00:17:21.119 and production. 337 00:17:22.359 --> 00:17:26.759 Looking at your website for Lexic Capital, you have why 338 00:17:27.200 --> 00:17:30.359 called one hundred and fifty page book called Investing in 339 00:17:30.400 --> 00:17:34.400 the Energy Storage Revolution. Give us a little summary, tell 340 00:17:34.480 --> 00:17:37.880 us why you think energy storage is so important in 341 00:17:37.920 --> 00:17:40.119 a world of renewed books, and where do you think 342 00:17:40.119 --> 00:17:44.559 the storage revolution will lead to the most opportunities. Basic 343 00:17:44.599 --> 00:17:47.079 principle in human development. 344 00:17:47.000 --> 00:17:51.559 Is all around energy storage. Okay, you build a gas 345 00:17:51.680 --> 00:17:56.000 terminal that's energy storage, a coal boker, a fridge, these 346 00:17:56.039 --> 00:17:59.480 are all means to store energy and they have driven 347 00:17:59.519 --> 00:18:02.440 Manchi for in particularly the last hundred and fifty years, 348 00:18:02.440 --> 00:18:05.480 the innovation and energy storage. It's incredible. If I look 349 00:18:05.519 --> 00:18:10.200 in the last fifteen years, there's one technology, one storage 350 00:18:10.240 --> 00:18:13.200 technology has revolutionized our world, and it's called a lithium 351 00:18:13.200 --> 00:18:16.599 ion battery. Our modern lives are dependent on a mobile 352 00:18:16.680 --> 00:18:19.279 phone that has one of those batteries. And I can 353 00:18:19.319 --> 00:18:21.960 go on and on and on about where batteries are. 354 00:18:22.039 --> 00:18:24.079 I think I counted my own home in the region 355 00:18:24.079 --> 00:18:26.720 of four hundred batteries though. So that's the first point. 356 00:18:27.200 --> 00:18:30.480 The second point, though, is that if you want to 357 00:18:30.519 --> 00:18:32.599 go and see what's happened in terms of lidium IE 358 00:18:32.599 --> 00:18:36.200 in the last say decade, what's happened is performance improvements 359 00:18:36.440 --> 00:18:39.759 cost reductions has opened up new markets. So if we 360 00:18:39.880 --> 00:18:42.599 talked ten years ago and said George, do you think 361 00:18:42.599 --> 00:18:46.319 we're going to actually electrify aviation? I would have laughed 362 00:18:46.359 --> 00:18:49.039 at you. I'm not laughing anymore. The reason is because 363 00:18:49.039 --> 00:18:51.880 I'm looking at what's going on in batteries. I'm seeing 364 00:18:51.880 --> 00:18:54.640 the innovations in a realm of motors and paraelectronics, and 365 00:18:54.680 --> 00:18:57.680 I go, not only possible, but you know, you can 366 00:18:57.720 --> 00:19:01.279 see already there's a pathway to not just drones with 367 00:19:01.440 --> 00:19:07.000 short distance airplane rides being electric. And it's not because 368 00:19:07.319 --> 00:19:10.319 of climate, it's because of technology change, and because the 369 00:19:10.359 --> 00:19:12.480 economics of it make a lot of sense. That's what 370 00:19:12.680 --> 00:19:16.359 going for. We go forward and we say, okay, storage 371 00:19:16.400 --> 00:19:19.240 prices keep going down, Well what does that mean? At 372 00:19:19.279 --> 00:19:21.680 some point in time you might say, well, if I'm 373 00:19:21.720 --> 00:19:25.279 sitting in Nigeria today and I don't have electricity, do 374 00:19:25.440 --> 00:19:28.160 Nigerian government have a decision to make. Do they continue 375 00:19:28.240 --> 00:19:30.799 building out the power grid the way we've built it, 376 00:19:31.119 --> 00:19:33.480 or maybe they go, mayebe won't do that because that's 377 00:19:33.480 --> 00:19:36.319 a bit expensive. Let's actually go and put in solar 378 00:19:36.359 --> 00:19:39.039 and batteries. Let's think about it in a different way, 379 00:19:39.519 --> 00:19:41.359 and I said little in my batteries, but I said 380 00:19:41.920 --> 00:19:44.880 energy storage broader, because there is a huge amount of 381 00:19:44.880 --> 00:19:48.839 innovation taking place in that whole wider energy storage space. 382 00:19:49.559 --> 00:19:54.160 And again, every energy transition needs some fall of storage. 383 00:19:54.319 --> 00:19:56.599 You think of it moving from the horse and cart 384 00:19:57.119 --> 00:20:00.200 to the forward model T when you couldn't do this 385 00:20:00.319 --> 00:20:03.720 without the gasoline infrastructure be import in place. So as 386 00:20:03.720 --> 00:20:06.160 it stands now, as we're moving from a world where 387 00:20:06.400 --> 00:20:11.039 we burnt everything through internal combustion engines or burnt whatever 388 00:20:11.039 --> 00:20:13.599 it is for heat purposes, we're now worring to a 389 00:20:13.640 --> 00:20:16.160 world where you're electrifying. So that means we're going to 390 00:20:16.240 --> 00:20:18.640 have to find other ways to electrify. And there's, as 391 00:20:18.680 --> 00:20:22.240 I said, massive innovation taking place in that wider storage area, 392 00:20:22.680 --> 00:20:24.359 and that's why I think everyone needs to look at it. 393 00:20:25.279 --> 00:20:29.279 That's really interesting. I was thinking back to the energy 394 00:20:29.319 --> 00:20:33.279 crisis that started in twenty twenty two in Europe with 395 00:20:33.359 --> 00:20:37.960 the Russia Ukraine War. We used to gas flowing on tap, 396 00:20:38.440 --> 00:20:41.599 and then suddenly we had to stop that because of 397 00:20:41.640 --> 00:20:45.000 the Russian supply and go to firstly through shipment from 398 00:20:45.319 --> 00:20:48.440 liquefied natural gases. So I guess there's some similarity. So 399 00:20:49.319 --> 00:20:52.200 are you saying that when countries and there are a 400 00:20:52.240 --> 00:20:54.359 lot of countries who are at a much earlier phase 401 00:20:54.400 --> 00:20:57.160