Nathan Hunt

Hi, and welcome to this Seek & Prosper interview series from S&P Global. My name is Nathan Hunt. I am joined today by Tom De Vleesschauwer, who is the Senior Director, Transport and Mobility at S&P Global Mobility. And what we're going to be talking about today is the future of mobility.

So Tom, thank you so much for joining me.

Tom De Vleesschauwer

Well, you're welcome. It's my pleasure.

Nathan Hunt

Let's start with mobility as a service. You've written a lot on this topic. Do you feel this is a trend that is as fully developed as it's going to get? Or is there more that can be accomplished on this front?

Tom De Vleesschauwer

A short answer would be yes and no. It's a very complex topic overall. And a lot of people still think of, obviously, Uber, like in the west, well-known, but you have many other similar companies around the world. We've seen DiDi in China delisting or soon to be delisting in New York.

They're no longer effectively start-up companies, right? But they still want to portray themselves as that. It's been around Uber probably sort of like over the last 10 years or something already in the model as we know it today. And they're struggling to make money. They have a good time because they raised huge amounts of capital. And that made it easy for them because they had to lever buying market share, right? Everybody got discount codes for everything in the whole part.

And then, of course, the pandemic hit, people stopped using it, and sort of the first real crisis hit that mobility service sector. And things got very tough. Now slowly, people are kind of coming back, but we have a driver shortage, other kind of parts, waiting times are increasing. And the realization is there that actually we need to do something different, almost, kind of what part.

And it really sort of like -- right now, they're in a holding position, if you want. What they really need is to reduce their costs further and make it more attractive in the longer term for people. And that's really where we're looking at that next big step that could potentially unlock sort of that route to profitability is really about sort of these robotaxis that we're talking about.

But that's going to take a while, I think. So in the meantime, we do expect that the performance of these companies might be a bit hit and miss sometimes depending which markets. And yes, it's -- that's how it is.

Nathan Hunt

Okay. That brings us to driverless cars. I'll confess that based on the early experiments by Waymo and others, I fully expected, perhaps naively, I fully expected driverless cars to be everywhere by 2022. Are the barriers, technological, cultural, legal?

Tom De Vleesschauwer

We're just tough on this. I mean, I think if you turn back the clock like another 5, 6 years ago, I think the whole world was expecting, based on comments from some CEOs in the industry, that we would all be driving like that now. I think we had a slightly different view on that. And I think it's very early days.

I mean, technology-wise, I mean, these companies involved, they're very clever. They have been working on it for a long time. You mentioned Waymo. There's many others that are involved in it. They are very good at kind of specifically programming vehicles for a very particularly predetermined operating area. And that's why you see those driving around in San Francisco and a couple of other places.

Now if you would take that same vehicle and drop it like right here in the center of London or in Paris or in Delhi, those vehicles would struggle to operate down there. So while the technology is capable of a lot of great things, it takes a lot of effort and a lot of preparation work. And that's why it's kind of sort of really deployed on a case-by-case situation, depending on different cities, other parts.

So there will be quite a bit of delay in there, I suspect, in the meantime. And then of course, the other big sort of obstacle is, of course, legal issues. The U.S. has been leading this situation quite a bit, and that's just purely because it's a slightly less regulated operating environment, I would say that politically correct.

If there is no laws that tell you what you can do, what you can't do in the U.S., anything goes. And all of these start-ups have really been rushing putting vehicles out there on the street. Now slowly, more and more, kind of, sort of, guidances or regulations are starting to roll out to try to control that a little bit more.

If you look at in Europe. In Europe, we're probably the most overregulated region in the world. You can't test these vehicles on the road because you have to wait until there is a rule that tells you what you can do, how you can do it and where you can do it. So that's why Europe is kind of perceived as, like, we're lagging behind. But then the majority of the major European vehicle manufacturers all have tech centers in California. So they're kind of exploiting that opportunity there, too.

And if you're looking at like China is the other kind of big player in here. In China, a lot of things can happen very quickly. If they have the full support from the government, and they have, for the time being, China wants to be seen to be leading in the world in this technology. So there's an interesting sort of competition brewing up here between different geographic regions. And that can only improve the overall outcome of this situation and the rollout of these vehicles.

Nathan Hunt

To your point about that these cars work very well on a local level, there's a lot of talk about long-haul trucking and driverless technologies. Are we getting closer on that front?

Tom De Vleesschauwer

What's interesting that you raised that actually because I think trucking is sort of like the forgotten sector, but I mean it's not very sexy if you want to show off your technology, other kind of part. So most people haven't even -- man, the Street hasn't even thought about that breadth.

But I would say that the business case there could be significantly greater. If you're looking at it from an economic perspective, I mean making these deliveries long-haul trucking across the U.S., across Europe, there's a huge benefit that's to be had improving safety, but also, in many regions, you have, again, legal restrictions in driving time that your driver is allowed to operate.

It's typically like you can maximum, I think, 7 to 9 hours, depending where you are in the world, do a driving shift. And then you have to stop and you've got to basically spend whatever time is sleeping in the back of your truck or other kind of part. So if you can automate that whole process while you drive on the interstate long haul, the truck can take over, do all of that.

And we just need a little support from the regulation point of view, saying recognizing that, yes, we know this portion has been driven by the truck, this portion will be driven by the operator, by the driver. And we can become even more competitive then because that truck could almost be driving continuously majority of the day.

So there's a huge business case to be made for that. And of course, the biggest benefit is that on the interstates, on the Autobahns of the world, we're all driving in the same direction. We don't have cyclists, we don't have pedestrians, so the operating conditions are so much better for all of it. And you could still easily do it at the minute you take the exit from the interstate, the truck driver will take over.

So that job of a truck driver could change where he's kind of like a supervisor in the meantime, the technology of all the other parts and then just doing that final driving bit to the warehouses, depots, sort of parts.

Nathan Hunt

On electric vehicles, it feels like we're reaching some kind of tipping point. Maybe I'm being optimistic here, but Volkswagen announced they are planning to manufacture 800,000 EVs this year. Tesla continues their march to dominance. GM continues pursuing their view of an EV future. And personally, I've got a lovely Volvo EV that I quite enjoy driving. Is the market for EVs finally hitting its stride?

Tom De Vleesschauwer

I think definitely, we can talk about an inflection point in the EV sector overall. I mean, it's partly driven by regulation as many of these things are. But the regulation is also kind of there because we're all kind of -- we're making this mobility transition particularly from an environmental benefit from a climate change perspective.

We're all familiar with the Paris Climate Agreement. Nearly all countries in the world signed up for that. And it's resonating with the consumers. We -- during the pandemic, in cities around the world where normally the air quality is not very good, we weren't driving. Suddenly, it was nice air quality. We had sunshine. People liked it. Hey, we can cycle, we can do other things, safely all, too. So people have had a taste for what it could be in the city being nice and all the other parts.

So there is more willingness, but what we need now is product, more product offering. And I mean there is a big product offering already, and it's just going to increase every year now, almost, like. I mean, we're talking about probably globally, we should have something like, I don't know, between 400 to 500 different EVs that are available for people to buy.

So we've definitely hit that inflection point. But in some regions, the pressure is higher. And again, in Europe with the Green Deal, the push is full on, on that. They don't want us to drive an internal combustion engine anymore. What if you're looking at other sort of more developing markets? There's probably going to be sort of intermediate stages within there on the way to full electrification.

Nathan Hunt

Okay. So let's talk about the bad news here, which is we're seeing or anticipating shortages and high prices for electrical steel, battery metals, nickel, copper. Do we have the raw materials and manufacturing in place to meet all of these EV goals?

Tom De Vleesschauwer

It's going to be challenging. And that's a nice way of putting it, I guess. I mean we're soon going to get into a very sort of tight supply in the market. I think we've already had a taste of that with -- again, the whole supply chain is already out of sync with the pandemic that we've had.

Now the lockdowns in China are still -- the whole distribution chain, shipping, everything is out of sync. So it's already a lot of pressure on the whole wider system. And then, of course, we have to see if we suddenly -- that inflection point, it is accelerating. We see volumes increasing. You mentioned Volkswagen 800,000 that were quoted. Eventually, we're going to come at a point where if everybody starts pushing so many EVs out there, we can't supply all of them.

So -- and I don't want to put an exact date on that, but let's just say it's probably something like between now and for the next 5 to 7 years, we will be in a very tight supply market for this. So that puts some of the manufacturers in a slightly difficult position because they have to decide, okay, which markets do we satisfy first.

Typically, that will be linked to the regulation parts. We have to comply with these emission regulations. So okay, we definitely have to sell these vehicles in California. We will definitely have to sell them in Europe. But do we really have to sell them like in South America or in Southeast Asia? Probably not.

Now of course, they don't also want to exclude many of these markets. So there are kind of interim solutions, as I mentioned earlier. It could be that we see the majority of the EVs being reserved for those key markets and that we start seeing more push of like hybridization technology in other markets to sort of get people used to the fact that, look, this is the beginning of electrification auto part.

And of course, there's other issues that we have also. We need to change the mindset of people, right? If you have an EV, most of us, if you have one now, probably it's your first one just as yourself, you're getting worried about where do I charge and all the other parts. So there's many other issues. So it's kind of a culturally and an emotional journey for consumers, but I think most have a positive experience with it.

Nathan Hunt

All right. Tom, infrastructure is another challenge. Unless you own a Tesla in the United States, driving an EV is a game of connected dots. Service stations seem to continue to treat EVs like alien spacecraft, at least in the United States. How is Europe doing on this front?

Tom De Vleesschauwer

Not too dissimilar, I would argue. I mean just for the record, I don't drive an EV at this point in time, so -- but you start to see a lot more charging infrastructure availability, not just Tesla. I mean, Tesla is obviously very obvious. They look very cool, everything, all that part.

But very quickly, you start seeing on the key routes, all other kind of key locations. They are popping up. And I think I'm not too concerned about, yes, it is a limiting factor, to some degree. The biggest limitations that we expect to see is probably like in bigger cities. If people live in apartment blocks and all other parts, where are they going to charge? That's kind of the biggest issue overall.

So they will have to rely on public charging. So that's probably still a need that we need to do more there. But from a European perspective, the European Commission has kind of clearly factored that in. I mean, the way that Europe as a whole is kind of organized, it's a bit more complex. We have the commission sets kind of targets for all the member states. But then it's up to the member states to how to implement that. So they have completely free rein on that.

But at least now it's come to kind of a situation where it's being mandated at a European level. And so the member states know their individual targets that they have to meet. So how they do it, it's up to them. If they fund it, partly fund it, if they bring private money in. But it's moving, it's starting to move.

And I think, again, it's also partly to do with that consumer education element from it. People are very worried about it. But in reality, let's face it, I mean, if you drive your average driving on a weekday -- on a week maybe itself, you probably have sufficient range to do that with your EV. So once people get comfortable with that and realize that, actually, it's not too bad, I don't need it too much.

And of course, ultimately, it's very nice that you are able to recharge a vehicle at home. I mean you can't refuel your vehicle at home, right? And so that's a big draw there for a lot of people, I think, as well. And looking forward, a couple of more years from now, I wouldn't be surprised to see that some vehicle manufacturers might offer a vehicle with a reduced battery capacity because people suddenly get more used to the idea that you know what, it's actually fine.

So the vehicle can also become cheaper to sell. And we just might charge it a bit more often, but if we have that capability, why not. So I think slowly but surely, that is being addressed. Again, that's different where you are in the world.

Nathan Hunt

What about heavy-duty vehicles, by which I mean things like long-haul trucks, combines, stuff like that? Can this be -- can we electrify these vehicles? Or should we be looking at alternative fuel sources like hydrogen, in a case like this?

Tom De Vleesschauwer

It's probably going to be a combination of all of those factors. I mean, again, the trucking industry, long-haul trucking is an industry that's extremely conservative, even more -- much more than compared to light vehicle manufacturers. So for them, it's not like, hey, I really like the look of this truck. I'm going to buy it. It's solely based on economics, everything. Can we make this work? How do we make maximum amount of profit?

So from that perspective, the EV is attractive because it's low operating conditions from that. But then you have to think about it also, if I have a really big long-haul delivery truck, a big heavy truck. In many regions around the world like in Europe, you have weight limitations on there. You have linked restrictions on there. So if I want to have one of these long-haul trucks in Europe, and I want to put a lot of batteries that's required, it's going to cost me cargo space or weight that I can't -- I'm not allowed to transport other parts. So there is kind of sort of still quite a lot of issues there.

So I think we will see pure electric delivery trucks, but they're probably more in the medium kind of range where they operate. These vehicles, they will have enough range with 1 charge, in most cases, for their daily duty cycles. And of course, the benefit is that in the evenings, they return to base, they return to their depot. So you can -- the charging is not that much of an issue because you can control it.

So there is definitely a portion there for that. But you're absolutely right. If we're looking at the very long-haul trucking, the diesel engine is still -- it makes a lot of economic sense at this point, and we expect that to continue for quite some time actually into the future. But a fuel cell truck, hydrogen field starts to make sense at some point in the future as well.

We see that most of the leading truck manufacturers are also actually investing a lot of resources in developing that technology. And some of them actually are actually trialing already today. So we do expect that there will be sort of like a multi-energy solution overall appearing from that. And all of the above will apply.

Nathan Hunt

Tom, I have evidently made a mistake. 5 years ago, I did not ask for your insights on the future of mobility. So I'm going to ask now for you to look 5 years in the future. What do you think the major trends will be in terms of mobility?

Tom De Vleesschauwer

First of all, I think if you're looking at the wider mobility sector, it's actually quite a short amount of time, particularly if you frame it in the world where we are today, the geopolitical issues, we have all the other parts. So there's a lot of uncertainty in there. But if we start looking first at the certainty, what we do know is that there's climate targets upcoming, they're nearing closer and closer and particularly Europe, very dedicated to it. And other states in California and similarly minded states.

So electrification will be the top priority for this. So 5 years from now, we could walk out of this studio here, and we'll have to be very careful when we cross the road because it could be full with silent EVs, and we might even get hit by a car. So that's probably going to be the biggest change. People will almost find EVs on every corner of the street. And we'll have a bit more sunshine maybe, hopefully, fingers crossed, less pollution.

So that's a big good thing that's happening. A bit beyond that 5-year time frame, we'll probably start to have why not an electric robotaxi. So -- and that is kind of where it gets really cool for a lot of people, right? But that will be, again, in very specific operating conditions like what we see in San Francisco, but I wouldn't be surprised if we see a couple in London, in New York and in other kind of operating conditions.

I think Paris is a great example of a city. If you want to look, what is it going to look like 5, 7 years from now? Paris is almost kind of completely changing around becoming anti car. And they're rolling out all the cycle lanes, all the other parts, public transportation, perfectly operating, very cheap and affordable. And it works.

So I mean if you look at Paris today compared to like 5 years ago or something, you wouldn't recognize it almost. So I think there's a lot of sort of multi modality in the system that's also going to take over. But if we have if we make it harder for privately owned vehicles from people that we have to operate in our cities, unless you pay a high charge to enter the city or not, then you also make it much easier for those robotaxis to operate because there's a lot less risk that we're taking out of there.

So it all kind of goes hand in hand really. And I'd like to think that 5, 7 years from now, we do actually will have safer, more pleasant cities. And I think that's a good start. And then beyond that, we'll see. I mean we can look in our crystal ball, but the manufacturers are very good at designing and manufacturing technology and vehicles that could surprise many of us.

Nathan Hunt

Tom, with regret, I'm going to have to leave it there for today. But thank you so much for joining me.

Tom De Vleesschauwer

That was a pleasure. Thank you.

Nathan Hunt

And thanks to all of you for joining us on this Seek & Prosper interview series.