25 Nov 2021
25 Nov 2021
In this episode of One Step Ahead, our host Libby Potter takes a deep dive on a key component of the future mobility value chain – electric batteries.
With close to a quarter of global carbon emissions coming from the transport sector,1 phasing out internal combustion engines (ICE) in favour of electric vehicles (EV) will be essential in the race to Net Zero. Benoit Lemaignan, Co-founder and CEO of French battery maker Verkor, and Diego Pavia, CEO of EIT InnoEnergy, an EU-backed investor in sustainable energy projects, talk us through the challenges and opportunities in electrifying transport.
They explain why a rapid scaling up of battery production is needed to meet the growing demand for EVs, how battery recycling contributes to the circular economy, and why the new mobility business segment could be up to seven times bigger over the next decade.
Co-founder and CEO Verkor
CEO EIT InnoEnergy
Below are a few edited highlights from the episode. You can listen to the full episode on your favourite podcast platform (including Spotify, Apple Podcasts, Google Podcasts, Stitcher) or right here on the Lyxor ETF website:
Libby: In terms of energy for transport and mobility, can you explain why there is a need for innovation in this space, particularly in the context of reaching Net Zero emissions?
Diego: Well, CO2 emissions at a worldwide scale are, as we all know, around 33 gigatonnes (Gt) per year; in Europe it’s around 5 Gt per year. There are three big contributors. The first is industry – steel, fertilisers, cement and so on. The second one is transport. And the third one is energy and electricity generation. All of them contribute more or less to a quarter of all CO2 emissions. So transport is something that is at our hand to transform into what we call the electrification of transport and mobility activities.
If we look at the main contributor in the transport area today, it is no doubt the burning of the fossil fuels that power our engines, be it in passenger cars or lorries. Tesla showed us the way, and that it can be done differently. For Europe it took three or four years to understand that electrifying the transport sector not only makes sense from an environmental point of view, but it also makes a lot of sense from a business point of view. (…)
Libby: Benoit, coming to you but staying with the topic of mobility and transport, what was your vision for Verkor when you set up the business?
Benoit: At the very beginning, I was personally deeply involved in how to decarbonise our economic system since 2007, when I left Airbus to join a consultancy. At that period in time I was struggling to find very impactful projects that could scale and transform our economy. When it comes to mobility, there is no limit to electrifying everything as much as possible and as fast as we can.
And to electrify, it requires two or three different things. The first one is that car manufacturers move to electric vehicles. The second need is to have important local production of batteries, because it’s useless to move to EVs to decarbonise the mobility system if we have to import batteries from elsewhere, and particularly from Asia. And the third reason is that we need to have companies and industries capable of producing those batteries locally in the right timeline.
All of that was clearly also started a few years ago now by Northvolt in Sweden and the Northern countries of Europe. There is an obvious need for more Northvolts, and more similar projects in other parts of Europe. So at the beginning of that, an encounter between myself as an entrepreneur and InnoEnergy led to a willingness to accelerate that sphere all over Europe. And being a former entrepreneur in the field of clean energy, I was willing to have more impact, and try to be faster in the industrialisation of those activities. (…)
Libby: Looking at the opportunities ahead, what kind of tailwinds are helping drive the adoption of electric vehicles?
Benoit: I think the first one, if you haven’t driven an EV, is that you need to drive one. An EV is such a cool thing – it’s exactly like when the iPhone came out. Everyone still had a Nokia 3310 and found out that the iPhone was more exciting. Nobody will come back to a simple touch phone again. I think it’s the same with an EV. Once you’ve jumped into using an EV on a daily basis, you can never come back to an ICE (Internal Combustion Engine). It’s just not possible, simply because you don’t want to have your hands full of gasoline when you fill the tank, you don’t want to change the oil, and so on and so forth. (…)
It’s of course also much more cost-efficient, because again you don’t need to have that heavy maintenance, and you probably know that any EV today has a lifetime that is much more important than the lifetime of an ICE car. We have seen that a few Tesla cars – probably because they’re the oldest – have reached more than one million kilometres without any difficulties. (…)
Libby: Diego, a question on battery powered airplanes – surely we’re not far away from being able to replace short haul flights with electric flights?
Diego: Well, today there are already 19 seaters that do 500 kilometres offering that service. Again, the speed of innovation that Benoit mentioned before, is incredible. A full electric plane, a 19 seater – which is quite a lot – that is autonomous to make that journey, today is commercial. And a few years ago, it was maybe not even in anybody’s dream.
Catch up on the rest of the conversation – including topics from last mile deliveries to hyperloops – in the full episode of One Step Ahead.
At the time of this podcast recording, the following companies in the new mobility value chain mentioned by our guests were held in our SFDR 8 compliant Lyxor MSCI Future Mobility ESG Filtered (DR) UCITS ETF (Bloomberg ticker: MOBI):
Equally, our SFDR 8 compliant Lyxor MSCI New Energy ESG Filtered (DR) UCITS ETF (ticker: NRJ), Lyxor MSCI Smart Cities ESG Filtered (DR) UCITS ETF (ticker: IQCT), and Lyxor MSCI Disruptive Technology ESG Filtered (DR) UCITS ETF (ticker: UNIC) hold Schneider Electric, a French provider of energy and digital solutions for efficiency and sustainability.
Our SDFR 9 compliant Lyxor Net Zero 2050 S&P Eurozone Climate PAB (DR) UCITS ETF, Lyxor Net Zero 2050 S&P Europe PAB (DR) UCITS ETF, and Lyxor Net Zero 2050 S&P World Climate PAB (DR) UCITS ETF whose holdings are selected and weighted to be collectively compatible with a 1.5°C global warming climate scenario hold multinational automotive manufacturer Stellantis who announced in July 2021 a €30bn+ commitment to its electric vehicle lineup through 2025.
Finally, our SFDR 9 compliant Lyxor Green Bond (DR) UCITS ETF (ticker: CLIM) and Lyxor Corporate Green Bond (DR) UCITS ETF (ticker: PLAN) hold green bonds issued by Volkswagen, the proceeds of which are earmarked to help finance their electric vehicle programme.
This document is for the exclusive use of investors acting on their own account and categorised either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets in Financial Instruments Directive 2014/65/EU. These products comply with the UCITS Directive (2009/65/EC). Société Générale and Lyxor International Asset Management (LIAM) recommend that investors read carefully the “investment risks” section of the product’s documentation (prospectus and KIID). The prospectus and KIID are available free of charge on www.lyxoretf.com, and upon request to firstname.lastname@example.org.
Except for the United-Kingdom, where this communication is issued in the UK by Lyxor Asset Management UK LLP, which is authorized and regulated by the Financial Conduct Authority in the UK under Registration Number 435658, this communication is issued by Lyxor International Asset Management (LIAM), a French management company authorized by the Autorité des marchés financiers and placed under the regulations of the UCITS (2014/91/EU) and AIFM (2011/61/EU) Directives. Société Générale is a French credit institution (bank) authorised by the Autorité de contrôle prudentiel et de résolution (the French Prudential Control Authority). Lyxor International Asset Management (LIAM) is registered in the public register of the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) as a manager (beheerder) of a UCITS.
The products mentioned are the object of market-making contracts, the purpose of which is to ensure the liquidity of the products on the London Stock Exchange, assuming normal market conditions and normally functioning computer systems.
The funds are registered in the UK Temporary Marketing Permissions Regime ("TMPR") and shares/units in the funds may upon such registration be promoted and sold to the general public in the United Kingdom subject to compliance with the TMPR and applicable regulations under TMPR. Potential investors in the United Kingdom should be aware that most of the protections afforded by the United Kingdom regulatory system will not apply to an investment in the fund and that compensation will not be available under the United Kingdom Financial Services Compensation Scheme.
Units of a specific UCITS ETF managed by an asset manager and purchased on the secondary market cannot usually be sold directly back to the asset manager itself. Investors must buy and sell units on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units and may receive less than the current net asset value when selling them. Updated composition of the product’s investment portfolio is available on www.lyxoretf.com. In addition, the indicative net asset value is published on the Reuters and Bloomberg pages of the product, and might also be mentioned on the websites of the stock exchanges where the product is listed.
Prior to investing in the product, investors should seek independent financial, tax, accounting and legal advice. It is each investor’s responsibility to ascertain that it is authorised to subscribe, or invest into this product. This document is of a commercial nature and not of a regulatory nature. This material is of a commercial nature and not a regulatory nature. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor Asset Management (together with its affiliates, Lyxor AM) or any of their respective subsidiaries to purchase or sell the product referred to herein.
A summary of your Investors’ Rights is available at https://www.lyxor.com/en/investors-rights-2021-en.