[Music] I'm Charlotte cloud with investing news.com and here today with me is Adam rosenweg managing partner at ging and rosenweg thank you so much for joining and great to have you as usual great to speak with you as well it's been a little while it's been a little while and we're going to go into what I think is a really interesting topic today we've gone over various areas in the P past but this one is one that we haven't touched on before and that's EVS so EVS kind of take the spotlight in your
latest Market commentary and really EES I think they've become kind of a a given in the energy transition but you present some some interesting ideas suggesting that they're actually going to fail in a couple of different ways they are not as energy efficient as internal combustion enging vehicles and they're also perhaps not as good as we thought at reducing carbon emissions so interesting interesting topics to go into there and where I thought we could begin is Maybe by looking at that Energy Efficiency
claim that you've made there sure sure thing and you know we we could probably talk for hours and hours and hours on this one topic so I'll try to keep my my comments brief and to the point and um it's it's a really deep and and interesting and fruitful topic and I would highly recommend if people you know want to read more they can go and visit our website where we have our full commentary uh where where we go into quite a bit more depth and and I should point out you know our interest in the
EVS we're natural resource investors and so we do have quite a bit of oil and gas exposure but our mandate allows us to go in any different direction and we can own battery metals and um we can own uh all all different um areas and sub sectors within the natural resource market so several years ago when EVS started to get a leg of steam and you know driven primarily by the early adoption of of Teslas around the world uh we had a really interesting um debate and a really interesting question that
we had to answer for ourselves and that was will the electric vehicle ultimately succeed in displacing the internal combustion engine and there were some reasons to think you know that it might you know costs were coming down and because of scale and things like that there was hope that costs would continue to fall quite dramatically and so we needed to figure out a framework because if in fact EVS were going to be um you know very competitive with internal combustion engines then we would have to
really consider changing our outlook for oil demand and gasoline demand and Diesel demand and the framework that we took and and you can debate us on this or not but has to do with this concept of Energy Efficiency and the idea that if you go back and look over hundreds of years really over thousands of years all of human history has been a steady progress towards more and more efficient uses of energy and so you can go back and look at you know widespread adoption of the early steam engines uh which were
horribly inefficient when they began and then as things got more and more efficient we saw Mass proliferation of the steam engine to replace things like the water wheel and things of that nature and you know in more recent times you can look at the mass adoption of air travel over ocean liners which is dramatically more efficient and in that case what the way we're going to Define efficiency is how much energy gets consumed per passenger mile traveled and so when you look at that you know it as
recently as you know 1950 the vast majority of transatlantic travel was all taking place by ocean liner and Boeing introduced the original 707 jet uh it reduced that efficent or increased that efficiency reduced the energy intensity per passenger mile traveled by a dramatic margin I don't have the numbers in front of me but about 50 or 60% and and we saw huge huge huge switch very very quickly between ocean line transport and then eventually into into jet travel and you know that I think also addresses this other common
refrain that we hear all the time which is that energy transitions take a long time and and actually if you look over history we don't think that that's the case at all you know the huge adoption of the steam engine or the jet travel really points towards the suggestion that if you have very efficient means uh of energy harnessing then you're going to see widespread adoption very very quickly and so um that became the framework and frankly the obsession with which we looked at the electric vehicle
so the question is is the electric vehicle more efficient than the internal combustion engine and here again I think it's really important to try to frame it with what are we actually talking about because I'll talk about some of the misconceptions so what we're talking about is the amount of energy as measured in kilowatt hours to move someone 100 miles in uh a car either an internal combustion engine car or in a uh electric vehicle and one of the things that we heard over and over and
over again was that the EV is hugely efficient it's somewhere like 90% efficient those numbers are really debatable but let's go with 90% efficient and what people are really talking about there is the electrons once they're in the battery of the car 90% of that energy gets translated in to the wheels to move that car forward compared with an internal combustion engine that at the very very best is somewhere in the range of 30% efficient right with the rest of that energy being dissipated in the form of heat you know
you touch the the hood of your car you see how much heat is being generated and quite frankly even most of the heat is coming out the exhaust pipe at the end that's all just wasted energy and only you know 30% of the uh energy as measured in kilowatt hours or megga stored in the gasoline is making its way through the transmission and ultimately to the wheel so on that metric you'd say yeah the EV is going to have a huge ability to displace the internal combustion engine but it's a really
faulty analysis and the reason it's so faulty is the idea of how on Earth do you get those electrons into the car and how more importantly do you keep them in the car and that of course deals with the battery and it deals with the idea of how much energy is required to mine all the materials process all the materials both the lithium the Cobalt the nickel the copper uh and then to assemble and manufacture the battery which is also incredibly energy intensive people don't realize but you
know and I'm going to really probably upset the the chemists and Engineers out there but but what you're ultimately doing is you're creating a solution with all these different chemicals in it and then you're drawing that solution out to turn it from you know an aquous solution into a into a paste into the jelly rolls and the battery forms that we know and there's really only one way to remove the liquid from a you know solution into a paste and that's through creating a
lot of heat and so the energy that's required in the manufacturing is also a tremendous amount as well and conveniently most people just completely disregard that huge amount of energy that goes into actually assembling and Manufacturing and Mining the materials that go into the electric vehicle notably the battery and so that that was the kind of the first place that we started and we said well how can we begin to to try to quantify that and so we added up all the energy that was needed to make those materials we
divided it by the useful life of the battery which is another big debate but you know we think that we got into a fairly good range about 150,000 miles on the battery pack and and notably Tesla only guarantees their batteries to about 880,000 miles so I think that's probably a good indication of where they think that battery that lithium iion battery begins to Peter out and what we noticed was that the total energy consumed in an electric vehicle icle about half of that was being consumed with the actual
electricity going into the car and half of it was embedded in the battery itself and that was just a number that no one felt comfortable including in their total tally of how much energy gets consumed and and that's just so different from an internal combustion engine right in an internal combustion engine 90% of the total energy in life of that vehicle comes in the form of the gasoline that goes in the car with an EV about half of it comes from actually making the battery itself and so right
off the that we we felt that people were not making that proper comparison and we had to make that adjustment the next thing that became really really clear to us was what matters ultimately is what the source of the electricity is right because that and and of itself is going to require a lot of materials we've talked a lot in the past about the the shortfalls and shortcomings of wind and solar and how much steel and concrete and cement go into making those huge pieces of infrastructure compared to
let's say you know a natural gas turbine which is actually quite efficient and what we were realizing there is that again people weren't properly capturing the huge Upstream energetic um or efficiencies of going towards a wind solar EV ecosystem when you put it all together there was really very little doubt in our mind that the total energy I'm talking Cradle to grave of an electric vehicle was far greater than an internal combustion engine and I think that's ultimately why we're starting to
see these EVS begin to pile up on that's why we're ultimately beginning to see subsidies or continuing to see subsidies be necessary in order to incentivize people to switch from EV and and things of that nature and so that became a really really important thrust in our research and in our investing process and ultimately in the companies that we chose and the sectors that we chose to put our clients Capital to work at and and that's something that I think is playing out every day okay really really good explanation
there helps me understand very well what you thinking and I do recommend though that people people actually read the report we can link to it in the video description in case they want to learn more so that's the Energy Efficiency side and then we also have the carbon emissions side so I'm hoping you can go into that as well where EVS are not bringing us the reduction in carbon emissions that we might have hoped for I know in the report you have an interesting case study where you talk about Norway because that's a country
where there has been a lot of uptake of EVS although of course you mentioned how that's all related to subsidies and things like that so maybe we can take a look at that carbon emission side yeah absolutely so you know there there there two sides of the same coin in a lot of ways but in some ways they're also a little bit different so we have to make I think one key distinction here we can talk about the potential for an EV to reduce CO2 emissions by simply saying okay how much CO2 does a internal
combustion engine generate assuming we drive it what 20,000 Mi a year 15 20 ,000 m a year um versus if you ran that same electric vehicle on um a clean source of power in Norway's case it's it's Hydro power they have I think 90 80 something 90% of their electricity gets generated by Hydro power and what and so you can make those calculations and very clearly you know even with the additional energy that's needed to um manufacture the electric vehicle battery and things like that what you quickly
see is that yeah you know in theory on paper an electric vehicle does manage to reduce CO2 if if every electric vehicle that gets rolled out onto the highways displaces an internal combustion engine uh one for one but what we noticed with Norway switching to a real world example is that's far from the case so what we saw in Norway was that over the last 15 years or so EV penetration has gotten up to the 80% of new car sales and so you're now talking about having displaced 25 2025 5% of the entire
Norwegian Automotive Fleet so these are Big Numbers there's nowhere that's really managed to have such a high inroad uh penetration for new electric vehicles as in uh Norway and and also what's kind of interesting about that is that all of the electricity that powers that or the the vast preponderance comes from hydro which you know we talk about ERI and clean energy and hydrocarbons Hydro is great if you have hydro you should be using hydro that's really energy efficient it has the highest Roi
or energy return on investment of any source of energy in the world basically except for nuclear um and it's completely clean obviously some environmentalists get upset about damning and and destruction to watersheds and things of that nature but as far as CO2 there's absolutely no CO2 that gets emitted in the life of that uh project or very minimal for the concrete and cement needed for the dams so Norway should be a wonderful utopian example of how CO2 levels plummeted but in fact what we saw is that CO2 in
Norway only decreased by about 10 to 15% now at first blush you might say okay 10 to 15% that sounds great you you went up to 80% penetration in your EV sales of new cars you displaced about 20% of the fleet and so you got 15% CO2 savings by that logic if we continue to go down that path then we'll actually start to see um you know if we get to 100% EBS maybe we could reduce it 100% but you know the devil's in the details and what Norway has been very very good at doing over the last 10 or 15 years is
switching out a tremendous amount of fuel oil and residual fuel used mainly for heating and some power as well away from hydrocarbons towards electric and towards um mostly from Hydro so that actually explains 2/3 or 3/4 something you a huge number uh of the reduction in CO2 in Norway over the last 15 years and if actually you look at Gasoline and oil demand that hasn't budged at all you know I think it's down something like and again don't hold me to these numbers it's down 3,000 barrels a day over the
last 15 years and and when we first ran those numbers we said well we must be off it must be like three million or something like that you know when no it first of all Norway is a small country so it doesn't have a large population but it's actually 3,000 barrels of oil a day has been saved in passenger transportation in the last 15 years or so now on the other hand right you've had to put 500 ,000 EVS on the road in Norway and that's created a huge amount of CO2 because of all the energy that
goes in to making the battery like I like I talked about in before and still today you know most EVS most EV batteries are manufactured in China where a lot of that power the mo the majority of that power comes from coal which is actually quite dirty so when you start to look at how much CO2 was actually released in building 500,000 Vehicles every year in total and you compare that to the amount of annual Savings of having reduced your gasoline and oil demand for transportation by 3,000 barrels and you realize that that
will pay for itself in CO2 terms in about 45 years now of course the batteries won't last 45 years so you have a huge net negative you know youve released more life cycle CO2 by moving 500,000 EVS uh or by adding 500,000 EVS in Norway uh and reducing your oil Demand by 3,000 barrels a day and what we're starting to see and this is really more a question of consumer Behavior than it is a question of you know straight physics is that when people buy EVS particularly in wealthy countries and
particularly when they are massively subsidized by the government such as they are in Norway both in the form of tax credits in the form of waved um sales tax in the form of waved import duties and in uh ancillary benefits including free charging free parking and free use of bus lanes and fairies and things like that what you see is that people add an EV to their Fleet they don't necessarily replace the internal combustion engine with an electric vehicle but rather instead they add a second car and you can see that in in
Norway and you can see it very clearly by looking at the number of cars per household for internal combustion Vehicles which is like 7 you know for if you just look at all the the the the um internal combustion Vehicles families out there basically one call it and then you look at the number of cars per average family where they have an EV and I think 65 or 70% of those households have two cars so they've added a second car and that second car that they have added is an electric vehicle now again
the reason that this is so important is that if you look at an internal combustion engine all of the CO2 gets generated out of the tail bite and so if you add a second car but you only drive each of your cars 50% of the time there's not going to be much in the way of net increase in CO2 but if you add an EV as your second car where you've spent all this CO2 up front in the form of manufacturing the battery and then all of a sudden what you do is just drive it you know 25% of the time on short commutes and things like
that you've spent all that CO2 and you're not getting any of the incremental savings over time and that's the big difference and so that's why the net effect and people talk about Norway as this wonderful case study of how EVS are positive but it's because they don't have to include any of the carbon that gets released in China um and other dirty countries that burn coal to manufacture the materials that go into these things they're only counting what comes out of the tailpipe so when you
looked at that is really quite shocking and what it told us was that yes you know if we're going to go down this path um the fact that they are less energy efficient I think really speaks to why they need subsidies in order to coerce for lack of a better word consumers into uh purchasing them you know no one had to subsidize jet travel to get people off the ocean liners uh but then also the fact that the uh ongoing uh Energy Efficiency is so poor is that is that people will still have this preference
towards their internal combustion engine and they'll simply add on an EV with all of this upfront uh cost of carbon that goes along with it and and to us that's just a really foolish way of going about things this says this is very eye openening when you lay it all out like that so thanks for taking the time to go through it I promise we're we're going to get down to the commodity level later on in the conversation but for now I want to ask you given all that you've said what do you see as the future of EV
penetration I know in the report how you talk about maybe uh battery breakthrough could be something that pushes it in the right direction so maybe we could hear a little bit about that yeah and and in a lot of ways you know our view of needing a battery breakthrough it comes as much from necessity as it does from you know optimism let's say when you look at the flow sheet of the electric vehicle absent a battery breakthrough there's just really no hope you know there's not a lot of room for improvement on the
electric motors as we discussed before the electric motor is actually quite efficient you know that that's not where you lose lose it where you lose it it's in the battery and so when you just kind of you know it's I suppose like looking at a home renovation you say where we going to cut costs well you know you look at the roof or whatever like there's only a few huge line items that you could conceivably try to get costs down so absent of battery breakthrough I don't think that there's really much
hope for for large scale EV penetrations absent huge government subsidies or eventual IC ban stuff that everyone's talking about but the question is how much will the consumer ultimately be willing to accept going down that path and even in Norway there's huge cracks in the foundation now and what the way they're coming is the idea that EV subsidies now take up more Norwegian spending than all of their infrastructure on the roads and feries and bridges and things like that and so there's been a big backlash throughout
Norway particularly from people outside of the major cities that say well hey wait a second this is totally elitist and this is incredibly incredibly regressive because all of the you know Cosmopolitan people living in the big cities uh are availing themselves of free charging and of free parking and of free fairy terminal service and stuff like that by getting these EVS but people out in the countryside that need range and and don't have as much money to buy the more expensive electric vehicles are left with crumbling
infrastructure because the money is being routed to you know these wealthy Elites now I'm I'm editorializing a little bit but that but that's a lot of the sentiment that's taking place through Norway uh as as we we speak and there's been big push back there so you know like my partner Lee likes to say well you know this will go this can continue longer than we think because the government can be more foolish but you know eventually uh the consumer I think wins out eventually you know the
the the um you know Freedom of Choice takes takes over and and I think that um the idea that the governments know best and that the governments can legislate this into existence uh will probably force them to come apart at the seems and we've seen examples of that over over time so you know where where does that leave uh EV penetration ultimately it's really anyone's guess because you know how foolish can governments get and they can probably go quite quite a ways uh do we see a battery breakthrough on
the horizon I don't think anything that has um made us willing to change our view on you know certainly medium uh term oil demand uh there is a few things there are a few things and a few technologies that I think hold promise you know every talks about the idea of solid state batteries and the idea there uh is that by moving away um from the current lithium ion technology to a straight uh solid state or lithium metal uh type of a framework you could really increase energy density the problem of
course is maybe not of course but the problem has so far been in the manufacturing of those batteries and there's not really a clear indication that that's been overcome we're actually invested in a private company in Boston that I think is probably at the Forefront uh of a quasi solid state lithium metal battery it's called Pure lithium uh we're disclosed as an investor there so I'm happy to um to talk about that uh the technical team there is is unbelievable and excellent
and what they're working on uh is I think very very revolutionary but it's very very early and and I don't think that it poses a near-term risk to energy so or to to oil demand so I think that you know if you can crack that nut um then in theory the efficiency of the electric motor can begin to do its thing the problem though is in what you have to spend in the battery and you know I I would recommend there's a couple really good books on the battery industry and what should be kind of a dull boring
dumb you know Energizer Bunny enduracell type of an industry is actually you know filled with characters and charlatans and double crosses and back room deals and all kinds of fun stuff so it's great for anyone who likes to read Financial history uh but it's a tough industry and you know I've seen really good companies Fall by the wayside I've seen really really bad companies um promote a lot of nonsense and so I would be you know very skeptical before counting on a new battery breakthrough anytime
soon okay and you know you mentioned the The Upfront carbon cost associated with the batteries with electric vehicles so I'm wondering what you think i' I've started to see a little bit more often uh battery Metals companies starting to talk about zeroc carbon mining operations I don't know if any of them have actually met managed to do this but it seems to be a concept that they are are toying with that involvement so do you think that helps at all what are your thoughts well I think you end up in
a really bad feedback loop there because what ends up happening is you know again if if you look at the Energy Efficiency of oil and gas and so you drill a single oil well and the amount of energy that you get back at the well head for the amount of energy that goes into the ground is is pretty astounding it's it's very very high then of course you lose a whole bunch of that in transportation and refining and taking the oil down to um gasoline and Diesel but by the time it hits the consumer it's still really
really high and you know for the initial unit of energy you put in you're probably getting 30 units out something like that out the other side in the form of your gas tank then that gets converted in miles per gallon and stuff like that and the car can go forward a certain amount of distance right for every unit you put in we can calculate how far that car is going to go so if you start to then say okay fine an electric vehicle because of all the energy that's needed let's leave the CO2
out for a second just the energy that's needed to propel that you know you're good and efficient in the electric motor you're terrible in the battery manufacturing you you better darn well have a really efficient source of upfront energy in which to consume all that energy in the battery manufacturing and so if you start to say okay we're going to power the EV with wind and solar which in of itself is really inefficient that's a problem but then if you saying we're also going to consume
all the energy that goes into the battery manufacturing and the for form of a really inefficient wind and solar now you're just putting problems on top of problems and so now the total amount of energy to move that person a mile down the road goes up even more right so the more you know if you like the most energy efficient vehicle that you could possibly make um would be with the battery powered by you know a Coal Fired plant somewhere in China really cheap with no scrubbers and no you know
attempt at CO2 remediation uh and like electricity generated by hyper efficient ccgt combined cycle gas turbine natural gas plants but you know you're not doing much on the carbon side and still that would be more energy intensive than a simple IC with um with a uh that uses gasoline um now all of a sudden if you say well I don't want the coal and I don't want the gas natural gas to power those different sources of Upstream power which are not currently being really included in people's calculation
because they kind of happen offstage to the left not coming out of the tailpipe now all of a sudden your total Energy Efficiency drops even farther and you become even more out of the money so unfortunately you know it's all a bit of a vicious cycle and I will say one thing you know if we as a society and and we've talked a lot about nuclear power and nuclear power is in a lot of ways the holy Grill because it's hyper efficient the most efficient energy that Humanity's ever harnessed and it emits
no CO2 so if we decided that we wanted to go to an entirely nuclear backed battery manufacturing uh electric mine Fleet powered by um by nuclear energy uh and then and then powered all of the consumer residential electricity base through nuclear you know you would probably have a car that was as efficient as an IC you might even have one that's even more efficient so if we were willing to do that then all bets are off but I don't think that we are uh I wish that we would and if if we go down that path
then you know I'll I'll agree to um conceivably lessen our oil and gas Investments okay I think that that's good to go into that that again helps me understand so I I said we go back to the commodity level and I'm wondering what all of your thoughts here mean for battery metals like lithium Cobalt graphite you know I've become very used to hearing that you know in the short term maybe there may be difficulties there I know lithium is in a tough period right now but for the long term
because we have this electric vehicle transition green energy the prospects look great for these battery Metals so so what are your thoughts broadly there so I think that lithium people should just stay away and and you know your listeners and viewers um hopefully they they know me a little bit by now um you know we're not Traders and so could lithium stocks be a trade yeah I I have no idea there's a lot of people that are smarter about how to trade a stock in the short term than I am but in the
medium and the long term there's absolutely no shortage of lithium um on planet Earth and the only thing needed to bring on more lithium is capital that's kind of true in all commodity areas but it's even more true in the lithium space because there's not a huge supply shortage so the question then becomes well do we have a a dir of capital or or a lack of capital uh for lithium projects and the answer is of right now is certainly not you know there's been a ton of investment in the
lithium space there's a ton of money sloshing around it seems like there's new lithium deposits and projects being put forward uh every day so I think you know if you look at Copper if you look at oil and gas if you look at coal is probably the most severe example uranium too you know you went through a 10year bare Market where Capital got sucked out of that space because of the boom that happened in that early 2000s we had overinvestment then you had to work that off you know you're nowhere through that
cycle in lithium in fact you know you're you're still seeing new projects be sanctioned left right and Center so I think there has to be a ton of pain even if demand is really strong demand demand honestly when there's big investment booms demand is never really enough to overcome it just look at iron ore um you know 15 years ago you you you built China and urbanized a billion people but because of so much money that you put into Western Australia that was enough to overcome it and I think lithium is
going to be a similar story as far as some of the other medals go you know there's you really have to go kind of commodity by commodity and and Cobalt you know is an interesting one because Cobalt there is quite a shortage you know there's not a lot of primary Cobalt deposits in the world there's 10K fugami and the Congo and that's really kind of honestly almost it everything else that come comes as a byproduct um and so you know if I had to bet on battery Metals um I would probably prefer Cobalt over
lithium because uh while there's been you know a huge demand for battery Metals investment demand across this the the space um there's just more of a supply tightness in that market uh it's harder to find um than lithium which is relatively abundant um if you look at nickel that's kind of an interesting one too because Nickel in particularly high-grade nickel for Batteries using batteries um that that's relatively rare uh particularly since um the problems began uh with Russia invading Ukraine in
2022 neuros is a huge nickel producer uh the problem there though is is twofold one on the supply side you know Indonesia is doing the unthinkable they're cutting down huge swats of their rainforest and mangroves to access really dirty nickel you know there's grade battery nickel and there's nickel laterites and the nickel laterites require huge amounts of um carbon Laden processing to bring that material into battery grade technology doesn't make any sense at all you know you're
literally you know the most efficient form of carbon sequestration or probably mangroves and rainforest and you're cutting them down releasing all that CO2 to then get at terribly dirty nickel deposits which required then a ton of cold fired CO2 power and heat uh to process them into battery materials so that you could go go and send them to Norway and replace three whopping 3,000 barrels a day of gasoline and oil demand and gasoline and Diesel demand so doesn't make any sense but they're doing
it and there's a market for it unfortunately um so environmentally doesn't make any sense energetically doesn't make any sense but it is a lot of new Supply that's come online on the demand side then you have to remember that while batteries are growing um we would be cautious as to the rate of growth in a long-term basis because of everything we've talked about and a lot of nickel still goes into the steel market and so it it it you have to have an informed view on steel demand uh
which a lot of people feel is probably you know at least if not peing in the process of peing uh certainly not as much growth going forward so if if all of a sudden you know you've been building out nickel Supply to feed an Ever growing stainless steel Market which then begins to Plateau you know will batteries be enough I don't know so every Market's a little bit different uh we we stay away from all the batteries metals because I don't really think that there's you know if there's a good
highquality Cobalt project somewhere we might consider that but out outside of that we we try to stay away from them okay I think that's a good overview of your thoughts and you're right of course all the medals do remain their own thing so it's important to know but the other Dynamics there as well so you you've acknowledged I think that you know the claims that you've made about EVS are pretty controversial so I'm curious this report that we've been talking about uh we're talking about it
just now this is when we've had the chance to talk about it but it's been out for a little while so what response have you gotten there and I'm curious as well because I think I was excited to talk about this whole EV angle because I've had this in the back of my mind for a while we've gotten questions from our audience over the years about how green exactly are electric vehicles so I think it it might be something people have in the back of their mind but it just hasn't come out uh yet yeah listen you
know we we we put on our helmets and got ready you know for for the onslaught and the tomatoes and everything like that and honestly we haven't really had too much push back in fact we we get always get a lot of people from the industry that reach out to us when we write our letters um and I'm happy and thankful to say that uh most often the comments that we do get from the industry and from people that are you know engineers and scientists are largely um if not always uh in agreement with us and the reason I
say almost always is because quite frankly I could care less with Bay Street or Wall Street tells me but if the engineers that are working on these projects well no I think you missed something here then we'll we'll hopefully change our tune pretty quickly so we're usually in sync with what's actually happening out in the world um you know and then it's one of two things you know it's either that the people um you know the the the the True Believers and Eevees and stuff like that just have
no interest and don't read our stuff which is entirely possible you know we're not we're not um Warren Buffett or anything like that uh or or they just you can articulate a good response um and I'm frankly not sure which but we have not seen widespread push back uh I'm sure in some circles people call us idiots and things like that uh but largely the reception has been uh very very positive and and and mostly in in agreement and and quite frankly you know when you start to really dig in and you
start to look at the numbers um it's all very clear the the discrepancy comes in how people begin to Define the question I know it's kind of a vague term but I'll give you a really good example okay so an electric vehicle as I said takes 80 to 90% of the energy that's in the battery and puts it to the wheels an internal combustion engine 70% is lost to heat so it's only 20 to 30% efficient so we've seen a lot of people that say an an electric vehicle is three times more energy
efficient than an internal combustion engine and and like in some ways I I do understand what they're trying to say that that's not incorrect you do lose a lot of exhaust heat coming out of the tailpipe that doesn't get lost in the electric vehicle however uh I think it what becomes really important is to just frame it and say well what is it that you really want to know and I think ultimately what people really want to know is if you have a unit of scarce energy and energy today is becoming
scarcer and scarcer and scarcer and you have one unit of scarce energy at the complete Upstream of the whole process how far can you move someone you know to me that's the measure of efficiency it's not whether or not in the vehicle itself the the efficiency of a motor is different from an internal combustion engine it's starting with a scarce resource what can you get out of it to me that's the definition of efficiency and when you put it in those terms you can agree or disagree with me whether
that's the right definition of efficiency but it's hard to disagree with the physics if you do begin to look as far Upstream as we do and I think that's really what scientists and and physicists call it the boundary condition which I think just makes it unnecessarily complicated that's what we're really trying to get at you know with the scarce resource how can we maximize it and I think that's what we should all be asking ourselves in every every um use case that that we're
looking at okay and I I'll try not to keep you too long I have a couple more questions and one is you know EVS are part of this larger shift toward clean energy that it seems like around the world we have agreed that we've we've got to do this and it sounds like in your opinion on the Eevee side we've gotten it kind of wrong in a number of ways so I'm almost afraid to ask but are there other elements of this this clean energy transition that are being gotten wrong well again I think I think wind and
solar are just completely wrong you know I think that the energy density in wind and solar are so low that to harness the same quantities of usable energy you have to make it bigger you know I'm trying to make this really simple and stay away from the complicated you know theories or whatever but if your energy density which is to say the amount of energy per unit of volume is orders of magnitude lower and and wind and solar clearly are you know put your hand outside on a hot day versus put it over
your gas stove I promise you the density is not the same um then in order to harness the same quantity it has to be a bigger size and that's why um you know an oil well uh takes up as much space as it does a natural gas well as much space as it does uh and and a windmill stands 30 stories high and you have to have you know a fleet of 20 of them to get the same energy that comes it's just not the same Den and so if all of that stuff didn't require energy to build and didn't require CO2 uh to construct um then it
wouldn't matter but it does and so your total efficiency just drops and drops and drops so I think wind and solar I think we've beaten that to death over the years I think that we're starting to see it really come through in some of the performance and some of the write-offs that these companies are not able to now go forward now that energy costs are higher and steel costs are higher and capital costs are higher um but EVS are definitely another but where I think people are also getting it wrong
and I'll be kind of optimistic on this uh is they are underestimating some of the other sources of potential CO2 mitigation and savings that we do have at our disposal um and one of them again we are invested in this as well uh is a company out of Boston called Boston metal and what they're doing is they're coming up with a technology or they have it and they're and they're rolling it out now uh to create steel uh with no coal now another company or another set of companies are looking to do this um
using hydrogen unfortunately when you go through the total energy requirement of the hydrogen path it's quite High uh higher than bosted Metals for sure and bosted metals is using molten oxide electrolysis it's using electricity and high temperatures in order to you know what you basically want to do when you're making steel is you take iron ore which is iron oxide iron and oxygen and you need to separate the oxygen from the Iron and Steel is then the pure iron mixed with some additives afterwards and
in order to split that apart what we've done for thousands of years is that we've heated up iron oxide in the presence of coal which is pure carbon and what that does is it heats up the iron oxide that Bond breaks apart between the iron and the oxygen and the oxygen is sequestered with the carbon now the downside is that when you put oxygen and carbon together what do you get you get CO2 and so CO2 is a natural byproduct of making steel using coal you could also reduce iron oxide with hydrogen uh it's more complicated and
costly or you can try to do it with electrons and that's what Boston Metal's trying to do but what people don't fully appreciate and you know we I'll leave the debate aside as to whether hydrogen or electricity is the way to go we obviously think it's electricity but what people fail to appreciate um is that Global CO2 from steel making is about 9% and that's not far from what the entire passenger commercial automotive Fleet globally is so if you looked at Tesla and you looked at byd
and you you looked at you know rivan and you looked at every single company which is now you know at the best in in Norway getting to 15% total Fleet penetration if you could snap your fingers and replace every car in the world tomorrow right with all of the charging infrastructure that requires leaving aside the fact that you can't have enough Cobalt and you don't have enough you know at that point if you were to do everything probably even then lithium might even be a buy um you you you would
only be at the same level as steel if you could get this one process right and you could see Mass proliferation of new steel making Technologies we think using electricity uh which could have huge impacts on a global global basis so I think that's really good the other one that I think is is really interesting which you know people will probably roll their eyes I don't know why but everyone wants like a whizbang kind of new fancy answer uh I think reforestation uh is is a huge simple easy cheap way uh to mitigate CO2 or to
capture more Co CO2 and sequester it in the root structures of the of the trees and plants and we seem to be going the opposite direction you know it's like we're burning wood chips and wood pellets and somehow you know cutting down old growth forest and in the Carolinas and shipping it to Germany gets you a green credit um cutting down mangroves and and brainforest in Indonesia to get nickel to make EVS gets you green credit uh but but those are the things that really work they're they're not intrusive they're extremely
cheap um and they do a really good job so I think that that's kind of the way um you know if we could if we could get rid of Steel making if we could improve cement making and that's a really tricky one if we could move towards nuclear or even just move away from coal towards natural gas we could go a long way at addressing our CO2 issues while maintaining or even improving um our Energy Efficiency and that's before we we bring in nuclear which which solves really all of the world's problems I hate to
say Okay I I will let you go in just a moment this was a really good overview of what's going on and I think throughout this interview you've given a lot of ideas on what investors should or should not do things they should consider but as we tie it up any any final thoughts you would leave investors with on how to approach this because it is it's pretty complicated you know I I think that that the one thing that I would leave everybody with is that for several years we have existed in this era of really
cheap energy and really cheap capital and that's distorted a lot of things and for the last you know six seven years since we first T started talking about this a lot of these debates were academic you know you did them on the back of a napkin and you tallied up all the energy but just like a household that has a huge amount of savings doesn't really matter where you invest or how you spend it you know it only matters when you start running out of money uh in the same way and that's not
Financial advice that's just kind of an anecdotal piece of advice investing in matters no matter how much money you have but um you know it this in the same way when we had cheap abundant energy and cheap abundant Capital we could make mistakes and it didn't really come to the surface and so we went down these huge paths and you know I want to avoid the cliche but we went chasing windmills literally and um that's now changing you know we now have a much more precarious energy situation on a global basis uh we
have a much more precarious situation certainly in Europe North America has been blessed with pretty abundant natural resources um but we underinvested for too long and is starting to come to the four and so now these questions have gone from being academic to actually being quite important almost you know overnight it seems like and so you're seeing political unrest in countries uh where new political parties are coming up opposing these types of things you're starting to see uh the de-industrialization of Germany that's
gone down this huge path towards uh wind solar and electric vehicles um you're starting to see countries that have really pushed the nuclear strategy do much better you know you look at France versus looking at Germany for instance uh and so I think that it's really starting to have ramifications and it really can't be ignored anymore so I think we've had a couple years to rush up and read the different books and get smart on the topic but now is where the um you know rubber meets the road so to
speak and I think that it's going to have a huge impact in the next five to 10 years okay I think we'll wrap it up there thank you so much for coming on today to take the time to go through all these things to do with electric vehicles it very valuable I think for me and and for the audience well thank you so much I always like our conversations I hope to see again soon of course hope to do it again soon once again I'm Charlotte McLoud with investing.com and this is B Rosen swag with Garing and Rosen swag thank you for
watching if you like this video make sure you subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below we'll see you next time [Music]
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