The Inflation Reduction Act legislation making its way in Congress looks to incentivize climate-friendly technology shopping. George Gianarikas, a senior research analyst at the financial services firm Canaccord Genuity, joined Cheddar News to explain how the new law could work and why the supply chain is such an essential piece of the puzzle to expanding the electric vehicle market. "It has the potential to be the most important piece of us climate legislation and history if it passes with $369 billion dollars of incentives," he said.

Opening Bell

What the Inflation Reduction Act Could Mean for EV Shoppers

So here to discuss more about this is George G N E R. Marcus, making sure I get your name right. Sorry about that. There's George senior research analyst at Canaccord genuity, thank you so much for being here. Now. Can you start off by um, I guess tell us a little bit more about how could this bill benefit us climate change initiatives and what is the likelihood that it will actually pass? So first I'd like to say thank you for having us on me and Canaccord genuity. We're really excited about this bill. It has the potential to be the most important piece of us climate legislation and history if it passes, like you said with $369 billion dollars of incentives. And it's important because it actually incentivizes a broad range of technologies, they go arranges from solar and wind all the way down to battery storage and nuclear and it's very important for some of the companies in our coverage like fluency and Moresco E. S. S Technologies, Rivian Tesla, you name it, it's incredibly broad And scope and important for our entire coverage universe. And the us just because you alluded to it earlier hopes to reduce carbon emissions by 40% to 2030, which is, is a huge ask and an incredible accomplishment if we can get there. It's definitely hopeful for a lot of people out there wanting to buy some of these vehicles. But the, the E. V. S upfront cost is still really too high for many to actually be able to afford. So what incentives could this bill introduced for people looking to buy an electric vehicle? But first I'd like to say that demand for E. V. S is not a problem. I mean, just look at some of the data, it takes close to six months or maybe longer than that to get a Tesla model. Y it takes a lot longer than that to get Arabian. Gm has said very recently that they plan to make a million E. V. S by 2025 ford wants to make two million E. V. S not to be outdone by 2026. So it's not a demand problem that we have. It's actually a supply problem. We can't get the stuff to make the vehicles that people want. I mean, there happened to be a change in public consciousness, I'd say probably around 2020 2021 where the demand curve just came upward for electric vehicles. They're superior to their ice equivalents and despite the price disparity which you alluded to, people want them because of the superior performance. And also they look at the whole holistic view of ownership over a 5 to 10 year period. It's much more, much easier and much less costly to own an E. V relative to ice B list. Yeah. And I know a lot of people that do want them. They are concerned about some of the infrastructure challenges. What are some of the challenges that they're currently facing with making sure there's enough charging stations, for example all over the country, especially for long distance trips. And do they plan on addressing those? And how soon do you think The good news is that technology keeps getting better? So faster charging times will be attained through improvements in battery technology and in technology underlying the semiconductors that we use in TVs. And also, you know, several months ago the Biden administration passed a $1 trillion dollar infrastructure bill. And within that it has $7.5 billion. The Navy program dedicated to building up 500,000 E. V. Chargers across the country. We cover a company named wall box that we think is in a very good position to win a reasonable amount of the deal. So, you know, just a little bit of patience and we'll be we'll be building out as a country infrastructure that's nationwide that strengthens our backbone with charging mm And the bill also requires automakers to use critical materials, minerals for their batteries. These are essential things that only use materials extracted and processed in north America or a country in the U. S. For that matter as a trade agreement? Um, you know, how does this build impact costs for manufacturers like GM ford Tesla? I mean they're not importing a lot but does that increase the cost to actually be able to make these batteries and vehicles here? Well, let's actually take a step back and talk about something that we're allude to in a recent report we wrote, we call it the great resource irony. So it's not just TVs transitioning the world to more sustainable technologies will require new materials or greater amounts of materials that we already extract to make. These technologies happen. These include lithium, they include rare earth materials are important because they go into magnets that go into tv motors That have proliferated, probably 90% plus of the designs that we've seen from OPM across the world. So, costs unfortunately, will go up for several of the technologies that we're using. But through the incentives in this bill and through the incentives in uh, in legislation across the world, we're hoping to spur innovation and to spur additional extraction to make the sustainable technologies happen. Definitely sounds like it's one of those things that's in the process of happening. So where do you see the electric vehicle industry in the next maybe two years in terms of demand and sustainability? Look, we're the very, very strong opinion that in five, maybe 10 years it's going to be hard not to buy an E V. I mean, look at what some of the traditional automakers are doing, whether it's B W, whether it's ford, whether it's gm, they're transitioning their entire portfolios, TVs and then you have upstarts like Tesla like Rivian like lucid that makes superior vehicles to the ones that are on the road today. So we're of the strong opinion, the same way the smartphone industry transition from regular clamshell phones to smartphones. And now it's almost impossible to buy a clamshell fast forward 5 to 10 years. It's going to be virtually impossible to buy a traditional ice vehicles. So stay tuned. We're going to see rapid adoption of E V. S over the next several years. The same thing that's happening in countries like china and Norway that have seen their adoption rates skyrocket. We're definitely staying too. And I know a lot of people are excited about where the future of VVS is headed. So we'll be here to tell everybody about it. Thank you, George, senior research analyst at Canaccord ingenuity.