The global race for electric vehicles (Episode 3)

Note: This transcript is auto generated and lightly edited.

MARY: EVs have definitely become more popular. The problem is that the world is taking different parts of the world are taking up EVs at different rates. So if we look at all of the EVs that are on the planet today, 50% of them are in China.  The U.S. is really lagging in EV adoption.

MONICA: Welcome to Policy for the Planet, a new bimonthly podcast exploring the global response to the climate crisis.  

I'm Monica de Bolle, a best-selling author and senior fellow at the Peterson Institute for International Economics, based in Washington, D.C. My work bridges the fields of economics, science, public policy, and public health–all under an international lens. 

In each episode, I speak in-depth with experts to understand how governments are responding to the monumental challenges of the climate emergency. We'll unravel the complex tradeoffs of different policy choices to steer us toward sustainable practices and public well-being. 

Welcome to the conversation!

Electric vehicles have exploded in popularity in recent years. Five years ago, they made up only 2 percent of all cars sold globally. In 2023, they were 18 percent — with more than half of all electric cars now being sold in China. 

How is the EV industry changing? What do countries need to consider when it comes to trade, the environment, workers, and critical resources? And what will it take to get more people to switch to EVs–in the United States and worldwide? 

That's the conversation we'll be driving today with my guest: Mary Lovely. 

Mary is the Anthony M. Solomon Senior Fellow and my colleague here at the Peterson Institute for International Economics. She was the former Carnegie Chair in US-China Relations with the Kluge Center at the Library of Congress and is professor emeritus of economics at Syracuse University. 

Today she outlines the growing opportunities — and challenges — of the global EV industry, including what is required to transform the American automotive industry. 

Mary, thank you for being on the show. The discussion around electric vehicles is both topical and pretty controversial. So let's start with some unpacking for our listeners. Can you please describe the EV industry globally and which countries are making them? Who's buying them? 

MARY: Okay, first it's a pleasure to be here with you Monica. We all know that the energy transition is coming and I think, if most of us look ahead 10 years we know that most or at least many of the vehicles on the road will be some form of EV.

We're a little less sure as to what the pace of that transition will be, who will making those cars, and what exactly they will look like, because there's a lot of innovation coming down the pike as well as just the question of whether it's going to be some split between internal combustion engines, the ones we all know and love, pure… electric vehicles or hybrids. So there's a lot of unknowns even though we know that the endpoint is going to be a weaning of the transportation sector off of fossil fuels. With that, we look today and we see that there is a scramble globally for getting foothold into the industry and even dominance in the industry. And there's a lot of people who are concerned, of course, that China is going to achieve dominance. When we look at internal combustion engines, we see that not every country in the world produces cars.

But many countries do have a piece of the industry because they might produce a roof rack or you some tires, so other pieces. So the industry is actually really important to more countries than you might imagine. But there are the big assemblers, and of course the European Union is one, China is another, and the USA is of course the third, the home of the internal combustion engine. I think for these big three traders, there is no going back. The transition is coming.

But there's also the clear realization that they must have an auto sector. And I think that's where we start to see the conflict starting. 

MONICA: Which countries are using EVs the most?

MARY: EVs have definitely become more popular. The problem is that the world is taking different parts of the world are taking up EVs at different rates. So if we look at all of the EVs that are on the planet today, 50% of them are in China. So China has been an enormous early adopter of all the new registrations in 2023 in China, 50% of them were EVs. If we look at the EU, it's 25%. And if we look at the US, it's only 10%. The U.S. is really lagging in EV adoption. When we look outside of those big three countries, those regions, those regions account, these three together account for 95% of all the EV sales. What you have is the rest of the world, which desperately needs to be part of this transition, basically today is the energy transition really isn't taking hold there. So yes, EVs are more popular. They're very popular in China, partly because the government has supported them and done a lot of things, which lead households to buy them. But the transition still has a very, very, very long way to go.

MONICA: When we think about these big three countries, so the US, the European Union as a region with a whole bunch of countries that produce cars, and China on the other hand, how do you see the impact that China's having on the developing world affecting how Europe and the United States, which have been traditionally the two countries producing and selling in these countries, how do you see their role and how do you see their reaction? 

MARY: Okay, well, that's a big question. I'm going to try to unpack it a little bit. Firstly, for these developing countries, yes, China is shipping a lot of vehicles to middle-income countries.

Their EV shipments, as everyone knows, have really surged outside the country. And a lot of those are going to middle-income countries. So China is providing vehicles. And China itself has said, hey, we're doing the world a favor. These countries need low-cost EVs, and we're going to provide it. So it's important. These countries themselves want to get in on the action. And the global auto industry has always been one where a lot of differences in regulation, in road conditions, in environmental conditions. Some places are really hot, some places are really cold. That matters for an EV. so automakers traditionally have invested overseas and fragmented their production so that they're producing, say, cars in Europe, largely in Europe, or they're producing cars for you know, the global south and parts of the global south. So we've always seen that kind of fragmentation or disaggregation of the industry. So that's really important that China is providing something to these countries, but these countries also want in on the action. Chinese companies themselves, so BYDing, Xpeng, others are already going global. They are following this traditional business model of having production and R &D centers in places that they're going to sell. 

Now the production part is they're under pressure from foreign governments to say, you're going to come here. You're taking part of our auto sector. You've got to create jobs. So they're responding to that. They're getting some incentives in some places to go. So the typical thing that we've seen really with Western kind of companies receiving help to come in. So they are already going global and that is going to cause trouble because what the United States in particular wants to do which is to basically keep China out of its supply chains for EVs.

MONICA: You've talked a bit about costs and the fact that, and we're talking about China here and the fact that, you know, China has already advanced to a point where it's been able to produce relatively low cost EVs and hybrids. But if I may, can I ask you more specifically about the costs to build an electric vehicle and how that's changed in recent years?

MARY: Well, you know, China has many advantages, including that the government got serious about EVs before the US government, for example. We have, I've already talked about adoption here in the US. We're a bit of a laggard on this. So in some sense, they were appreciated, you they said, this is where the world has to go. We're serious about climate change, and we have to take this on. And it's also going to be a great industry for us. They have tried to move into industries where they don't see a dominant player already to block them. So they want to be the first move, have a first-mover advantage. But you know, the United States and Europe haven't always taken kindly to that, they're saying, hey, hey, hey, we also want that real estate, so what are you doing trying to dominate in this area? So that has caused friction, I think, for the industry. It has also meant that China as the low-cost producer is a real competitive threat to the US and Europe. 

Now here we go back to demand. One of the big determinants of cost per vehicle is how many vehicles you make. And the US manufacturers simply don't have the orders to support the capacity that they thought they were going to need. So we're seeing most recently in 2024, retrenchment on the side of General Motors, Stellantis, Ford. They're not canceling plans for investment, but they're slowing it down. And that is because many people think we've already hit this first wave of people who want, they're the techies of people who want the Teslas in the driveway, the people who drive very few miles each year and they have a plug in their garage, they've adopted and we're now in kind of like a lull. How do you get where, you know, the minivan family, the family that needs a three row SUV that may live in the city that can't charge their vehicle in their garage? Or wants to drive 300, 400 miles to grandma's house with the kids in the car. How do you begin to serve them? Those are the people that they say, so-called range anxiety. Well, I certainly have that, because I have relatives that I want to visit that are more than the typical range. We need to overcome those very legitimate consumer problems. And I think that's where we might get into what's the role for the government.

Tesla built out its own chargers, but everybody knows that wasn't entirely the solution. And I think my own opinion is you can't rely on one company, private company, to solve what is really a societal problem, a network problem, which is if I drive up to Syracuse, New York, where I have relatives, I have to be reasonably, and I would say very assured, that when I stop, I am going to be able to get that battery recharged. 

MONICA: If the US government's actions are not sufficient or not efficient enough in producing the desired results, the US is then likely to lag even further behind in spite of potential things that it has done to prevent Chinese EVs from coming into the US market. Can you say that? 

MARY: Yeah, I think it's really a concern because you want US adoption to go up so that we can reduce our carbon footprint. You also want our companies to stay competitive for their global sales, but equally important for their domestic sales.

I mean, if you look back 10 years, you know, a kid coming out of college could get a very sophisticated small vehicle, you know, and have the latest safety equipment and, you know, maybe pay $23,000. So we were in a very good situation, I think.

Much better than where we were in the 1980s when we had restrictions on the Japanese and the US manufacturers We're still thinking we're going to buy gas guzzlers, but the price of gas was much higher We weren't so we've gotten to this sort of nice equilibrium And now of course we're going to EVs and we're kind of throwing all the action up in the table up in the air So then the question is you know how can the government help? I think there's three different ways and some of them Americans won't like it will never adopt and others they would so what is just mandates.

And if you look at what China did, China basically said after 10 years, you can't register your car. Americans would probably flip out about that, right? But if you look, if you drive in Beijing, I was just there a few months ago, the fleet in the city is amazingly young. The first thing you think is this place looks very prosperous. And that's probably because you're in a cab from the airport and you're looking at all the cars and they're new.

And many of them, particularly in the capital city, are going to be EVs. And they're going to be nameplates from all over the world, most of which are actually made in China. But you're going to see European nameplates. You're going to see some American so -called nameplates, lots of Chinese nameplates, lots of Japanese nameplates, lots of nameplates that you never heard of before. So there's mandates. The second is, of course, carbon pricing. And the Europeans are moving toward this, where we just make the price of gas more expensive. frankly, that would begin to change my mind when I go to the auto dealer. Right now, you know, people complain about the price of the gas, but on real terms, it really isn't very high. And so I can still keep driving my gas vehicle without much concern about that. But if we did get carbon pricing, as they will in Europe, we're going to see more people moving to EV. US also has rejected that. Then the last is, of course, subsidies. 

MONICA: But Mary, what has the US actually done to encourage EVs? 

MARY: So with the Inflation Reduction Act, the Biden administration took action to encourage a whole host of industries related to the energy transition. Of course, adoption of electric vehicles is one of them. It also answers a lot of questions that people had about how are going to do this and be fair to auto workers? How are we going to do this and be fair to the communities that house these plants? And is it going to be the traditional automakers or is it going to be new automakers like China? And the way we did this was basically with two things, regulations and subsidies. And those two things are intertwined because to get the consumer subsidies, you have to meet certain criteria. And those are spelled out in the legislation. And those subsidies, those consumer subsidies, which are tax credits, but you get them instantly when you buy the car, are really important to encourage consumers to switch from a traditional vehicle to an EV.

Now there is where the politics gets complicated, right? Because with the subsidies you have to say we're also pursuing these resilience, economic resilience goals and national security goals. So whether you actually get the subsidy depends on where the critical minerals in your vehicle comes from and where the battery was made. And the timetable to require that 100 % of those things meet the targets that the government sets is very rapid. And so there's 3750 credit that's tied to where the battery is made and the criterion for that is going to be made in North America with North American components. 

So it's very restrictive. then secondly, it's another 3750 is on critical minerals criterion, which have to do with coming from countries with whom we have a free trade agreement of some type and definitely not what we call foreign entities of concern, which here mainly would be Russia, North Korea and China. For this, it's going to be China is the only one is going to be in the loop to be the place that we get critical minerals. And as China was early in thinking about these things, they tied up a lot of these supplies. They nailed them down for themselves. Not necessarily because they wanted to keep us out, but because they said, we have to have a very dependable supply of lithium. 

Where's the lithium? Maybe it's in Africa. Well, that's risky. Why don't we go in and buy the mine? Why don't we do the refining? So China is actually very dominant in these EV supply chains. And that's been a problem for the US — and the government doesn't want to go in and buy these things. We want to force the private sector to go in and it. And so we put in these requirements that if you want to get the full $7,500 for your consumers, you're going to have to figure out where you're going to get these critical minerals and you're going to have to get these batteries from America. 

MONICA: So the $7,500 being the subsidy. 

MARY: Yes, exactly. This is a full subsidy. And I think that's really, really important right now for a consumer who's trying to decide between a traditional vehicle and an EV. Over time, as the price of EVs come down, and this is a little bit like chicken and egg, right? Yeah. You have to get demand up so that you can get the price down to get the demand up. You know what I mean?

So that's where the government's saying, let's entice people to try to buy these, to get the demand up, and then hopefully we can withdraw the subsidies. And that's what's been done in China. China had a lot of subsidies for consumers to buy EVs, and they withdrew them largely. And they put in some different subsidies now that they're trying to stimulate their own domestic demand for other things. But that was pretty successful in getting consumers to buy.

MONICA: You know, just recently I had an experience like that because was the lease on my car was coming up for renewal. And I was thinking about, you know, should I just renew the lease? Should I get another car? Should I trade it in? What should I do? And in that, you know, sort of talking to various people, including friends, I was pretty much convinced that no, just trade it in, get another car exactly like the one that I had before, which is just a traditional car. It's not a hybrid. It's not an EV, although there was the option of getting an EV or a hybrid. And the reason why I went for that is because the hybrid and the EV were so much more expensive and the lease cost was obviously much higher. 

What are the issues with critical minerals? You've touched on some of them because you've already mentioned how China, as a first mover in EVs and hybrids, has already secured critical minerals in various places. But can you talk a little bit more about that? 

MARY: Well, we're trying to find new places and recognizing that the US does have some. For example, we can mine and we could refine rare earths. The problem is they're very dirty. It's very dirty business to refine these. So we have nickel in Indonesia. 

MONICA: When you say very dirty, you're saying this will have an impact on the environment on its own. 

MARY: It will. And those impacts can clearly be ameliorated. So mines can be dug, but then they can be covered back over to put it in colloquial terms. People don't want to go out and see a giant strip mines, we already have that in parts of the country, but that's costly, right? So this is part of the reason why we think we can't compete with China if we want to have these, directly with China, if we want to have these higher standards. We have been talking with the Indonesians a long time, they would love to provide the nickel, they have gigantic supplies of nickel, but again, the issue is many of those mines are controlled by the Chinese, which the US is trying to get away from, and secondly, we don't like the level of labor standards that are being used. in those mines. 

So it's been difficult to try to pursue multiple goals at the same time. You can do it all. You can have high labor standards. You can have high environmental standards, but you can't have low costs. And that's where it really becomes a problem for the U.S. industry. And there's one other very important issue here on cost, which is labor. We have very high labor costs in the US relative to the rest of world. I'm not saying they don't deserve their pay. I firmly believe in living wage, but they're high compared to other competitors with the way the relationship between the major automakers and the union, UAW, is that those jobs need to be more or less in the same place. 

So that's going to be different. Now that doesn't mean that there isn't going to be a lot of activity, say for example in the southern half of the US there will be, where they have more open shops, but they're going to, that's a real cost-raiser for the US. So if you together the following things. The U.S. must have an auto industry for national security, for our industrial base to maintain very important supports for communities that have depended on this industry for years. Those are all important goals. So if we have to have it, we need consumers to be able to afford it without the government have to subsidize twenty, $25,000 dollars. And, you know, we need those vehicles to innovate. You've got some real problems. part of the answer to that has been higher tariffs on Chinese vehicles. In fact, we know that President Biden recently imposed a 100% tariff on top of the tariffs that are already there. And just this week, we heard from the Canadians that they are also going to do the same. So that's pretty much making a kind of fortress North America for the industry to have.

Some people think of it as breathing room. The problem is tariffs are very rarely rolled back. We still have a very high tariff on trucks for something that happened 40 years ago. So it's very hard to roll back tariffs. The wild card for North America is of course Mexico. And there's a lot of anxiety about Chinese companies coming in and investing in Mexico and producing in Mexico. Under the USMCA, the US, Canada, Mexico, trade agreement, there is a domestic, there is a requirement that certain parts of the vehicle have to be made in North America.

But a lot of people think that that needs to be retooled to use an industry term to reflect the actual guts, the inside of an EV, and what we need to do to prevent a lot of content coming from China. I mean, I personally have mixed views about that. I think competitive pressure on American manufacturers or American based manufacturers should be really important. We need that to keep costs down, to get people to adopt and for us to reach our green goals. But on the other hand, you can see when you do the math, they're not going to be able to do that unless they have some umbrella to protect them for some time. 

MONICA: So 10 years ago, China was not considered an EV powerhouse. How did that change?

MARY: First of all, the government support. And a lot of people just say it's government support. That's not the whole story. But as I said, it's really important to stimulate demand. And if you think about the energy transition, we all know we're going to have to get consumers to do different things, maybe put solar panels on their house. So there is a role for the government there. And China stepped in. It's a very competitive landscape.

An EV, some people have described it as kind of a gigantic iPhone on wheels. mean, the electronics dominate the vehicle. so China already was doing all this electronic stuff. So it had comparative advantage in some parts of that. Third, producing just the chassis and other things. Well, they learned that from Europeans in the US or all these JVs that they had over time.

They were able to come in and produce these vehicles. How did they do it cheaply? Well, the first few vehicles they produced were not so hot. Like I rode in one probably 12 years ago and I felt like, my gosh, this is like a golf cart. I will be crushed on 66 in this vehicle, right? So no, and then all of a sudden now you see them when you go into say the airport in Brussels, you see what a BBD is going to look like and it's just completely different. They're a vehicle you would want to drive in. So they quickly came up the learning curve. But as I said, it was already kind of playing to strengths that they had. Very strong innovation environment, again, supported by the government partly, but also by the universities pumping out, you know, there's a battery university. There's, there's, know, the whole system supports this industrial plan. 

MONICA: Right.

MARY: And of course, CATL is by many accounts, one of the most or the most innovative battery manufacturer in the world is a Chinese company. It is now has licensed some technology to Ford Motor Company to produce in the US and that's been somewhat controversial. But to my mind is fabulous. Like if they learn from us, we should learn from them. 

And then lastly, they didn't have the legacy costs. Our manufacturers can't just turn around and start producing EVs, right? They're producing internal combustion engine vehicles for their existing base. Chinese didn't have that. They didn't have to keep things on the road. They didn't have to keep their dealership stock. They have warranties that they're going to have to fulfill with vehicle parts for 10 years. And they have these legacy labor contracts and, you know, retirement, I guess, obligations that they take into the future. So the fact that we were already established in some ways slowed us down. So I think there's some very understandable reasons why the Chinese were able to move quickly in this. And part of it is government support. But it was a very active private sector and ecosystem that emphasized innovation as well and a lack of legacy costs. 

MONICA: Yeah, this is a really important lesson, I think, because yes, people do think that the whole Chinese story is based on government support and hearing you speak of the other things that have happened in particular, the initiatives taken by the private sector is really critical because I think by and large that's not the story people have in their heads with respect to China. 

MARY: No, I don't think so and I think that's a mistake because it kind of says well if government created all this we can just do the same with the government and that's not what we're trying to do.

I think it just really simplifies what needs to be a partnership, not only between the government and the private sector, but also society. In the US, there's a lot of skepticism about climate change. This is what separates, I think, the US from the EU. The EU, as I mentioned earlier, has 25% market penetration on EV. And when you go to Europe and you talk to people, they're much more cognizant of the need to make that transition sooner rather than later. they're moving more strongly toward carbon taxes and other things. 

And perhaps this point plays into also how the US and Europe have reacted to China being what it is in the EV space, right? Because as you already said, know, President Biden earlier in the year put in these 100 % tariffs on EVs as well as, you know, other measures. European Union, the other hand, took a while. They were doing an investigation into subsidies and, you the subsidies that the Chinese and the Chinese companies, the Chinese government had given to EV producers and how that lowers up, obviously that lowers the price and it incentivizes the consumption of EVs and also the exports of EVs and so on. And so, you know, this has been an issue for the US, but Europe has taken a completely different approach. They have looked into these subsidies and they decided that, okay, you know, there were some cases in which these subsidies were in a sense excessive and therefore there should be some tariffs imposed but it hasn't gone the way of just slapping a 100% tariff across the board. What they've done instead is on a case-by-case basis looking at each company they've decided on tariff levels which are way lower than what the US has done understanding that they want to maintain their market presence in China, the Europeans. And that all of these issues, the innovation that's going on in China, all of that is really important for the development of their own EV industry. So there's a sharp contrast there. 

There's a very sharp contrast. And I think that when you're pointing out how they came to a very different place than the US, one of the things that is easy to overlook is that they followed their own trade laws and rules in a way that has been consistent with the World Trade Organization and the agreements under the General Agreements on Tariffs, on trading tariffs. So basically the Europeans are very keen to uphold the global rules. The US just acted unilaterally. We did have, we have ways under US trade law to implement anti-subsidy tariffs.

That's not the way President Biden chose to do it. He did it in a very expedient way, which is he tacked it on to what are called the Section 301 tariffs, basically the China tariffs that President Trump levied first in 2018 and 2019. So he took the easy way because he saw a need to do it sooner rather than later. Europe had a pretty expedited process, but they did it under their own anti-subsidy rules. And what that does, I think, some people will be surprised to learn is that you come out with a different tariff based on different companies. 

MONICA: Yeah. 

MARY: So some companies are facing tariffs that are pretty low, 10, 12%. 

MONICA: BYD is facing, I think, 17%. And then you have other Chinese companies that are facing double that amount, 38%. Or higher. 

MARY: Or higher. And there are especially companies that did not so-called comply with the investigation. So they are saying to the rest of the world, we do see the need to counteract what we see as unfair subsidies and protect our own sector, which is very important to Europe, particularly France and Germany. But we're going to do it in a way that's consistent with our values, which are upholding the global trading system. So I think that's vitally different when people say, is Europe with us or against us? I mean, it's neither. They're doing something different that I think we need to take note of.

And they are going to, they already have and they will continue to get more Chinese investment into their industry. They are worried about jobs in the sector and they're willing to have investment just as we welcome Japanese investment beginning in the 1980s and into the 90s. They're going to have BYD, XPeng, and other companies investing in creating jobs in Europe. And they see that as important to keeping a healthy sector, both in terms of employment, but also competition and innovation. So it's definitely an area where we're going to see some tension between the Europeans and the Americans. 

Some Americans say, are they blind to the national security concerns? Because of course, as we've all heard, EVs are information vacuums, right? They're sucking up information, especially as we look forward perhaps to autonomous driving, which many of us think is coming. The Europeans say, you know, there's a way to handle that that's not a total ban. You can have data localization. We have data privacy rules. And we think we can handle those national security concerns in different ways. 

So there definitely is quite a bit of daylight between the US and the European position on how the EV industry is going to grow in the context of China having a dominant role in the globe right now. 

MONICA: And given that they're not shutting out the Chinese automakers in the same way that the US is doing, they get the benefits from having these companies in Europe in terms of, you already said it, but in terms of innovation, technological transfers and things like that. So as you put it before, the Chinese learned a lot from us, us being the US, the European Union.

And now what the EU seems to be doing is, okay, controlling for various things. We also want to be able to learn from them. And therefore, you know, we will take action, but our actions are going to be limited and according to our trade rules, according to the WTO and so on and so forth, which is a totally different approach, which begs the question, you know, why does the US want to keep the Chinese EVs out? 

MARY: Well. I think is a totally different political economy. I mean, in Europe, the European Commission trade policy is a competency for them. So this is made region-wide. But individual countries control whether China can invest. So I think that there wasn't the ability of say some federal thing to say, no, this is not going to happen. The US has taken a different approach because of our growing belief that China poses a national security risk, that China doesn't play fair. I think we have more extreme views on those things than the Europeans, not that the Europeans don't share many of our concerns. And so the US has taken this approach. I think I would like to make a blanket statement or say the US wants to de-risk, decouple, but the US has not been very clear on exactly what it's going to do with China. For example, the Secretary of the Treasury,

Janet Yellen, someone both you and I admire very much as a path-breaking, you know, woman economist and an incredible public servant. No, but she said, you know, we can't decouple from China. That's ridiculous. It's globally destabilizing. It's impossible. And yet, you know, there has been no way no articulation of exactly how we're going to remain in communion and sometimes symbiotic relationship. Right. The Trump tariffs hit all kinds of things, you know, from toys to, you know, advanced products. So which ones are which ones are national security risks and which isn't? Is my kids toy a national security risk? I don't think so. What about the other stuff? So we I think the US is gradually coming to a reckoning in some sense of what's its vision for the US and China in the same global economy, not in different global economies.

Europe doesn't see itself as having the luxury of trying to dominate in such a way. And the US also, I think, is quite myopic. We see ourselves. We often don't see the rest of the world. And that's the benefit of having been not only the dominant economy, but we're such a large continental economy. Trade as a share of GDP is low here. And so we basically are a self-sufficient continental power. And that has shaped our view.

MONICA: I think this is a fascinating topic to think about because precisely, you know, the questions that we posed in the beginning and the issues that you brought up in the beginning of this conversation about how the US is currently lagging. And yet, you know, there seems to be a gap in terms of looking forward, right? What comes next? How do you then move? What is it that you do? In a sense, there isn't really a strategy that's been laid out for the EV industry in particular. And that's a big contrast, I guess, with China, where the strategy was clear from the beginning and they followed it. 

MARY: Well, I guess I take a little exception. I think we are forming a strategy for EV. It's more extreme than the Europeans in the sense that we've been clear that we're not integrating with China in this area. have a strategy. we have mandates on critical minerals if you want to get the subsidy.

We're bringing battery investments, enormous amount of investment going into the EU and Canada. The automakers and the unions understand they have to make the transition and they're dancing around each other, how they're going to do that. They've made enormous progress. Well, we haven't figured out how we're going to keep this whole thing competitive and innovative. But really, when I'm talking about the bigger strategies, how does that fit into the overall relationship? Autos are super important, but the biggest part of the bundle that comes from China is electrical machinery, electronics.

There's a whole lot of other stuff, I guess, out there that we have to make decisions on, or at least have some overall vision of how we both coexist.

MONICA: So with all of that in mind, Mary, where do you see the future of the EV industry and what do you think we should be paying attention to looking forward?

MARY: That's a really good question. think if we look just at the United States, you know, as I've already said, I think 10 years from now, many, many more of us, not all, many more of us will be driving electric vehicles. And, you know, we should be looking at whether the government can really help solve these network problems so that we can get that adoption in ways that don't make this just a coastal thing or a rich person thing or a techie thing, but it really can serve the needs of your sort of average American. So I would keep my eye on that. 

On the China side, of course, the big question is how are they going to go global? They're going global. What does that mean not just for Europe? I think that vision is getting clear, but what does it mean for the rest of the world? Which, as we saw with 95% of the vehicles today being in the big three, how is that going to roll out? These, a lot of particularly middle-income countries, they want to be in the manufacturing supply chains. They want to be in the critical mineral supply chains. 

The US, it says, not so fast. You have to have these high labor standards. You have to have these high environmental standards. Other countries are saying, are they pricing us out? Are they just trying to keep us out of markets by saying that we can't exploit our natural advantages? We have a lot of poor people want to work. And yes, they're not getting US wages. No one expects them to. But you guys don't want us to take advantage of that. So I think that how this plays out in the rest of the world is really important because you know policy for the planet this has to happen for carbon emissions while we look at the US and the US being a very heavy carbon emitter, these countries take India, they're growing much faster than the US. And so that's where the carbon emissions are gonna grow. And we need to be thinking, let's get them in on this track before they're, you know, have all the same baggage that we have, which is, you know, all these vehicles that, you know, we can last another 15 years. So I think those would be the two things that I would look at.

MONICA: What a great conversation. I want to thank Mary Lovely for joining us today — and for sharing her insights on the EV transition. 

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