Better Place: a ten year post-mortem

Meir: Hi, everyone. I'm here today with Mike Murphy. Mike is a bit of a different guest than we usually have. I don't try to paint our podcast into a corner, but usually, there's some inherent mobility or automotive connection just from the job title. Mike, your mobility connection is earned, not given. I'd love to hear a little bit about how you would describe your background, how you entered this world, and what you've been up to in the world of mobility.

Mike: It's great to be here, Meir. I'm a big listener of this podcast, so I'm very happy to be here. I grew up in Detroit around the car business, but I went off to Georgetown to fight the Cold War in the early '80s. I took a leave of absence — to use the right euphemism — from college in my senior year to help a congressman who no one thought could win. No one wanted to work for him, thinking they'd put a loser on their record, but we won. That led me to becoming a political media consultant, doing advertising and strategy for campaigns. I worked for a lot of governors in the industrial Midwest, like John Engler in Michigan, Tommy Thompson in Wisconsin, Jeb Bush in Florida, Mitt Romney in Massachusetts, Arnold Schwarzenegger in California, and the Bush presidential campaigns.

I also did a lot of corporate communication work. So, I’ve always cared about the auto industry. I went from owning vehicles that averaged about five miles per gallon to becoming an EV nut. It all started when I got an electric vehicle. I love the instant torque, not paying for gas, the quiet, and not going to gas stations. So, I became an EV enthusiast. At the same time, I’ve been frustrated with how Republican politicians — and I’m an anti-Trump Republican — are constantly and unthinkingly bashing EVs.

Meanwhile, I’d really like to still have a North American auto manufacturing industry in 10 years. I don’t want to see the Chinese wipe out everything. So, filled with rage, I started evpolitics.org or evrepublicans.org at the end of last year. The first thing I did was call my old pollster buddy, Dr. David Hill, a big Republican pollster and strategist. We did a poll that looked at the new car market in the U.S. and asked a lot of political questions about automotive choice as a political statement. We learned a ton and shared the data.

Meir: Can we start with what you found? When you pull or look at sales data, how significant is the gap in actual sales between Republicans and Democrats?

Mike: Absolutely. We asked people in a national survey — 600 people — to self-report. Fifteen percent of Democrats said they either bought or were planning to buy a battery electric vehicle (BEV) or a plug-in hybrid. Nine percent of Independents said the same, but only three percent of Republicans did. We did a little thought experiment and extrapolated this data to the administration's EV goals for 2032. To meet Biden's best-case scenario, you'd need 129% of Democrats, 77% of Independents, and 26% of Republicans to buy an EV. If Republicans don’t start choosing EVs, you’re never going to hit those targets.

The big divergence on EV attributes is the environmental statement. That's what politicizes it. Many car brands are perceived as environmental, which turns off a lot of Republican voters. For instance, 42% of the people we surveyed said climate change is overhyped. These people are much more negative on EVs. The only thing they like about EVs is Elon Musk.

Meir: Is Elon Musk’s popularity enough to convince Republicans to switch to EVs?

Mike: No, not by itself. He’s simultaneously a nightmare for Tesla’s CMO and a potential game-changer. You’ll see bumper stickers in places like LA that say, “I bought this before Elon went crazy,” but he still has a strong standing with the Republican crowd because they know he’s anti-Biden. He could actually help move the needle for Republicans if he wanted to.

Meir: What if it’s not just a messaging problem, but also a hardware problem? What if the EVs on the market just aren’t attractive to Republicans?

Mike: It’s both. Many Republicans live in rural areas where EVs aren’t practical for towing or long distances. However, that’s not the whole market. The exurban population has a use case for EVs. We also found that when people hear “electric-only car brands,” there’s a massive difference between how Republicans and Democrats feel. Among Republicans, 49% view these brands unfavourably, compared to just 19% of Democrats. EVs have become a political statement for Republicans, and that’s a communications problem, which turns into a sales problem.

Meir: To what extent is this lag in commercial vehicle electrification a result of fleet managers not having considered these issues before? Are they saying, “This isn’t my job”?

Mike: Yes, absolutely. It’s a change management issue. Fleet professionals want information and a roadmap to make these changes seamlessly. That’s a big part of why we’re lagging in commercial EV adoption. Additionally, Republicans in more rural areas are less likely to make that switch due to practical concerns like range and charging infrastructure.

Meir: I want to talk about the intersection between EVs and policy. Could you talk about the political economy of EVs? Why is it a bad idea for politicians to bash EVs?

Mike: This is my favourite question. The two things we’re doing at EV Politics are helping companies market better and bending political incentives to stop bashing EVs. We did an analysis of where EV manufacturing and battery investment is happening. In the six key states that will likely determine the next U.S. president — Michigan, Wisconsin, Georgia, Pennsylvania, Nevada, and Arizona — there’s a massive amount of EV-related investment. For example, Georgia is now the number one state for EV manufacturing investment.

Governors in these states, like Brian Kemp in Georgia, understand the economic benefits, even if they’re conservative Republicans. Politicians in these states need to be careful about bashing EVs because these jobs are real, well-paying manufacturing jobs. We’re raising money for an advocacy campaign to make sure voters understand that. We want to push back on the narrative that bashing EVs wins elections, because it could be disastrous for the U.S. auto industry.

Mike: So, what we’re really trying to do is change the conversation around EVs, especially in those key states where EV investment is critical. If voters understand that there are tens of thousands of good new jobs thanks to EVs, it changes the political dynamic. For example, Brian Kemp has been less critical of EVs than some other Republican politicians because he knows how important those jobs are to Georgia.

One interesting thing we found is that, despite all the rhetoric about Republicans hating subsidies, Republican voters actually like the EV subsidies just as much as Democrats do. When we tested the idea of EV subsidies in our polling, Republican voters were slightly more supportive than Democrats. It’s because they feel like, “Hey, I pay all this tax money, and now I’m getting some of it back.” So, a lot of these politicians are assuming their voters hate subsidies when, in fact, they don’t. That’s something we’re working to communicate as well.

Meir: That’s fascinating. So, you’re essentially saying there’s a disconnect between the messaging politicians are using and what their voters actually think?

Mike: Exactly. The messaging is lagging behind what people actually believe. What we want to avoid is the Harris Wofford problem, where anecdotal political reasoning leads to bad policy. If Trump or another politician wins by bashing EVs, it could create this false narrative that attacking EVs is a winning strategy. That could harm the entire auto industry, including American and European automakers who are investing heavily in EVs in the U.S.

Meir: So, your goal is to change the political incentives so that bashing EVs isn’t seen as a winning move?

Mike: Exactly. We want to show that supporting EVs is actually in the best economic interest of these key states. We’re seeing massive investment in places like Georgia, Michigan, and Arizona, and we need to make sure voters understand that these are good jobs — the kind of jobs people can really identify with. If we can do that, we can shift the political conversation.

Meir: You mentioned earlier that U.S. automakers are trying to balance their short-term profits from ICE vehicles with the long-term need to invest in EVs. How are they thinking about the possibility that EV subsidies might be cut off in the future?

Mike: That’s a great question. In the short term, the automakers are locked in, and they’re relying on those subsidies to help them make the transition to EVs. They’re using the subsidies to soften the costs of moving to electric while still making money on their ICE vehicles. But in the long term, they know subsidies are unreliable. They’re not planning on sticking around forever, and they’re frustrated with how slowly the infrastructure is being built. There’s a lot of NEVI (National Electric Vehicle Infrastructure) money, but only a handful of stations have been opened so far.

Meir: It’s interesting that the subsidies are helping in the short term, but they’re not a long-term solution.

Mike: Exactly. The automakers know they need to be able to compete without subsidies eventually. And if we don’t get the infrastructure right in the next three to four years, especially with the Chinese EVs coming into the market, it could be a huge problem. The Chinese are investing heavily in EV manufacturing, and they have a price advantage. If we don’t get our act together, the U.S. could lose out in a big way.

Meir: How realistic is it that Chinese EVs will start competing in the U.S. market, especially if they start building factories in Mexico?

Mike: I think it’s very realistic. They might not come in right away, but it’s only a matter of time. The Chinese are already making a massive move in Europe, and they’ve been investing in EVs for decades. They have a huge price advantage because their labor costs are lower, and they’ve also been investing in battery technology. The Japanese fuel-efficient car invasion of the 1970s will look like a blip compared to what the Chinese could do with EVs.

The only thing that might slow them down is that the U.S. market is a bit more complicated for them. Our regulatory environment, tort laws, and other factors make it a little trickier for them to enter, but they’re patient. They’re more than happy to take over Europe and other markets before they get to us.

Meir: So, what you’re saying is that U.S. automakers have a limited window to get ahead of the Chinese competition?

Mike: Exactly. The Chinese are coming, and if we don’t get our infrastructure and EV production scaled up quickly, we’re going to be in trouble. U.S. automakers need to use this time to get their EVs to a price point where they can compete. The Chinese are making good EVs, and they’re coming in at a lower price point. If we don’t compete on price, they’ll take over the market.

Meir: One thing I’ve been wondering about is whether U.S. fleets are going to drive that change. Commercial EV adoption should be ahead of passenger adoption because fleets are all about Total Cost of Ownership (TCO). But we’re not seeing that yet. Why do you think commercial fleets are lagging in EV adoption?

Mike: That’s a really interesting point. I think a big part of it is the same issue we’re seeing with consumers — range anxiety and infrastructure concerns. Commercial fleet managers are rational actors, so they should be adopting EVs more quickly. But the infrastructure just isn’t there yet, and the vehicles aren’t always practical for certain use cases, like towing or long-distance driving.

One of the things we’re going to see is that when commercial fleets start adopting EVs en masse, they’ll lead the way in right-sizing the batteries for the use case. Right now, a lot of EVs are overselling battery capacity because consumers want more range than they actually need. But fleet managers will be more pragmatic, and that could help push the technology forward.

Meir: It seems like there’s a lot of opportunity for innovation in that space. Do you think we’ll see a shift toward smaller, more efficient batteries once commercial fleets start adopting EVs?

Mike: Absolutely. As fleets adopt EVs, they’re going to demand more efficient solutions. They don’t need the oversized batteries that consumers think they need for long road trips. Fleets will right-size the technology for their specific needs, and that’s going to drive innovation. We’ll see smaller, cheaper batteries that still get the job done.

Meir: That’s a great point. Mike, this has been a fascinating conversation. Thank you so much for sharing your insights with us today.

Mike: Thank you, Meir. I really enjoyed it.

Meir: And thanks to our producer, Naomi Lazaroff, for making this episode happen. If you enjoyed this episode and are willing to put up with my hosting, please rate and subscribe to Anything That Moves wherever you find your podcasts. Once again, for feedback or to reach out to us for investment, please visit maniv.com and click "Contact Us." You can also find us on LinkedIn or Twitter at Maniv Mobility. Thanks for listening.

‍