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The EV Whisperer

Full transcript from Episode 7 of CDG Podcast feat. Scott Case, Co-Founder & CEO of Recurrent.

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Transcript

This transcript has been edited for brevity and clarity.

(00:56) EV battery reports? Recurrent's story

CarDealershipGuy: Alright, Scott. Let's get this going. So, you wake up one day, you decide that people need EV battery reports. What does this even mean? Explain this to us in very simple terms what you're working on nowadays.

Scott Case: All right, so Recurrent is basically a shopper. You could think of it as like a service for an EV shopper first and foremost. We realized when we started the company three years ago, that people were asking fundamentally different questions when they went to buy a used EV than they ever did for a used combustion engine car. It's sort of informed by–everybody's had a series of iPhones and they know the battery wears down. So they're trained to ask that question. They're like, oh, an EV is a giant battery with wheels on it. I'm going to start asking questions when it comes to buying one of those used. What we do at the fundamental level is help the buyer of a used EV understand what they're getting in the battery, how far is it going to take them? How is that changing different weather conditions and how will that change over the life of the vehicle as they own it?

CarDealershipGuy: So, not to oversimplify this, but are we talking like a form of Carfax for EV batteries? Is that how I should think about this?

Scott Case: I would not describe our company as Carfax. I think Carfax's lawyers would probably have an issue with that. I would say that the battery state is probably the most important thing about these cars. It's by far the biggest cost item and it's literally a black box when it comes to buying a used EV. So basically, that's the function we're serving.

(02:37) What happens when your EV's warranty expires

CarDealershipGuy: Look, I'm a dealer. One of the things I think about is what does that price elasticity look like for EVs? Let me explain this, specifically. The Tesla, correct me if I'm wrong, the Tesla battery EV warranty is 10 years, right?

Scott Case: It depends on the model. Most of them are 8 to 10 years, 100,000. Some of them up to 120,000 miles on the warranty

CarDealershipGuy: How are you predicting those valuations of cars? If I buy a Tesla, let's just say. And I get to 10 years with that car. What happens to the value of my car when that warranty eclipses? Prices are all time highs. Interest rates are all time highs. Everyone is becoming more efficient. And they're being more thoughtful about their purchases, right? We're no longer in this like monopoly money era. So how should consumers think about that when their warranty eclipses and how do you play into that?

Scott Case: Yeah. So, first of all, I'll say a couple of things. One is there's not that many of these cars on the road that actually have expired warranties. The entire EV industry basically has been the last like 10 years, really like at volume, 5 years. There's a lot of unknown territory out there. Most of what we're doing is not: is this car going to just straight up die? It's three, four, five years in. How much battery is left and therefore what utility are you going to get out of the car over the next three years. Let me explain what I mean by that. A car with an original EPA range, which is wrong, by the way, right on day one for a bunch of reasons, but a car with an original EPA range–

CarDealershipGuy: Why is it wrong?

Scott Case: Oh, boy. So, we want to go on this sidebar?

CarDealershipGuy: I want to go into this.

Scott Case: Yeah, it doesn't account for weather variance. So, there's no heating tests. The cars with heat pumps do way better in winter than cars with resistive heat. The difference between losing 40% of your range in the winter versus 10%, not at all apparent from EPA numbers. That's thing number one. Thing number two is that manufacturers can just put adjustments onto the EPA range number based on how they feel. That's literally how the test works. All the time, there's a bunch of Material and Consumer Reports and Edmonds that have done real-world tests that [show] most of the time, Tesla's don't get their EPA range even on day one versus most other EVs do actually, and exceed it in real-world conditions. That's backed up in our data. Then, once the car ages and the battery begins to lose capacity, which is a natural thing that happens to all lithium-ion batteries, then the range is lower over time.

CarDealershipGuy: It's like an iPhone battery.

Scott Case: Just like that. Now, the chemistry and the pack size, everything is different about the car versus the iPhone, but you cannot violate the laws of physics. These are still lithium-ion batteries that do wear down over time.

CarDealershipGuy: Okay, so how wrong are these ranges? If they're saying the range is 100 miles, which I'm just making up, I know it's more than that. But, how wrong are these ranges?

Scott Case: Okay, so let's just take new cars. So, this is a car on day one, EPA range of 100 miles. You could have in the very best of conditions, if you drive it carefully in warm weather, you could get 140 miles. You wouldn't be crazy. On the opposite side of that, a car with resistive heat (the traditional kind of heating system), in the dead of winter you might get 60 miles. So as your max range, that's a big difference just based on weather and the EPA test does not take that into account.

(06:15) The truth behind EV battery range

CarDealershipGuy: Wow. Okay. Let's take the opposite side of this. Let's talk about ICE (internal combustion engines). A regular gas car – that range can't be perfect either. How wrong is the publicized range on an internal combustion vehicle? Do you have any idea?

Scott Case: That's an interesting question. So, as you know, when you use the AC or, it's probably less noticeable in the winter when you use the heat in a combustion engine car – its efficiency is reduced somewhat. I think it's particularly noticeable with AC in the summer. I guess the problem is, internal combustion engine vehicles are so inefficient with their ability to turn energy into forward motion, they just create a lot of waste heat. So, over the decades, engineers have figured out how to turn that waste heat into essentially almost free heat for the cabin.

CarDealershipGuy: That's why it dries your skin when you turn on the heat in the car.

Scott Case: Yeah, I guess that's right. Now, contrast that with electric vehicles. Something like 96% of energy from a battery is translated into forward propulsion. They're very, very efficient. There's almost no waste heat. So when you turn the heat on, you have to just straight-up pull extra energy from the battery. It's a great thing that they're so efficient, but the downside to it is that with traditional resistive heat systems where you have to heat some coils and blow air through it, it takes a lot of extra energy. Now, some of the more modern EVs, every Tesla Model Y, pretty much every Hyundai at this point. I think the new Tesla Model 3s have a different technology in there called a heat pump, which is not brand new technology. I'm in a hotel room right now and there's a heat pump up in the ceiling. They are much more efficient in translating energy into hot and cold air. So, cars with a heat pump in them lose on average 10 to 15% of range in winter. They're just that more efficient. And so, honestly, I'm an EV guy, right? I'm like a fanboy, the whole deal. I would say to my friends who live in northern places and places where it's super cold in the winter: Unless you're only using the car to drive around the city, I wouldn't buy an EV that didn't have a heat pump in it.

(08:52) Scott's take on EV % of market share by 2030

CarDealershipGuy: I respect your intellectual honesty. So, on that note, I have so many question. First things first, if that's your belief, what percentage market share do EVs hold by 2030 or say 2035?

Scott Case: All right, so I heard Steve Greenfield on your podcast last week. And here's what I'll say about Steve. Great, incredibly knowledgeable. He and I actually agree on the next about five years of EV adoption. We both think five years from now, 30% of the market. And then we'd start to diverge. Right now, here's my theory of the case. First of all, I look at all these different expert forecasts. Boston Consulting Group has been one in particular that reruns this very sophisticated model to figure out adoption globally and in the US. Here's what their numbers have said. The first time they ran this forecast was 2018. And they said they were using 2030 as their projection year. In 2018, they said 12 years from now, 21% of the market is EV. So, these are new sales, right? They reran it the next year and said it's going to be 26%. They reran it in 2021 and said it's going to be 42%. They reran it just nine months ago, middle of 2022. They said, now they're only eight years away. 2030, they think now it's over half, 53%. Then that projection, you draw that forward to 2035. This was before any of the federal tailpipe regulations and all the new stuff, the Inflation Reduction Act. They were saying 72% in the US by 2035, so I probably think it's somewhere in between those, where Steve's estimates and Boston Consulting Group is. But, I think it's notable that every time they've rerun that analysis, it leaps up for the same year. So I think there's something systematically that's happening faster than the underlying data would show.

CarDealershipGuy: So, to be clear, so you're saying at least 50% by 2030?

Scott Case: I would lay down a $100 bet with Steve right now that over 50% of new car sales are electric vehicles by 2030. I would probably even go 60-40.

CarDealershipGuy: Wow.

Scott Case: Steve, if you're listening, 200 bucks on that? I don't know. It's great. It's going to be so long before I have to pay out or he has to pay out. He'll probably take that bet.

(11:20) How changing Tesla prices are impacting dealerships

CarDealershipGuy: I mean, I talk to dealers all the time. I'm a dealer. There are a lot more dealers that sell more Teslas than us. One of the concerns lately has been the price risk. Just to give you an example, Tesla has dropped roughly 15% in their values since the beginning of Q1. As dealers, you hold this inventory on your balance sheet. If you don't sell that car relatively quickly, 30, 60 days, you're stuck with serious depreciation and you're taking a big L. At Recurrent, you're clearly working on battery transparency and it directly impacts the value. How can you fix that? How can you help ease dealers and ease the apprehension of buying an EV now that, in a way, there's this new risk added to the market. It's no longer just, Hey, I'm going to buy an EV and hopefully it's great, and I'll sell it and it's nice and dandy, and it's going to follow a normal depreciation schedule. Now, as a dealer, there's another risk added into my calculus, which is: Well, what happens if the OEMs change the prices? It's not only Tesla, right? Ford changed some prices of its new EVs. How do you get around that, and how does recurrent help mitigate that apprehension?

Scott Case: We are a company full of battery nerds, so I can't tweet at Elon and tell him to stop changing prices. Some of this is out of our control. I think for dealers who are thinking about, do I go and play the used Tesla roulette game, because I mean, the Model Y is the most popular car in the world now, like this year. Model 3s are flooding the used market. There's an incredible number of opportunities if you want to go in on this. But, I think there's a couple of keys to this. I'll say three things for a dealership thinking about, do I go used Teslas or not? One is, I think you're gonna find, you're probably not gonna want to carry a lot of inventory and you're gonna want to know when to downsize and know when to upshift and watch the tea leaves of what the price changes are likely to do. To some extent, I think that's going to get muted as there are just more numbers out there.

CarDealershipGuy: Do you think that's practical? I mean, I'm a dealer. I want to sell cars. I don't want to follow the macro like CarDealershipGuy. Haha.

Scott Case: Okay, so then the easy way of doing it is just minimize your risk by not holding that many in inventory. Really think about what can we do to pick up and dispose units quickly so you're not holding the hundred cars at the same time, which I think is like a generally good practice you want to be thinking about with anything. I think the stakes are a little bit higher on the used Teslas because of that volatility right now. So that's one thing. Two, I'd say, make sure you know what you're getting. That's very true from a battery perspective. You wanna make sure. Dealers working with Recurrent, sorry, I know I'm not supposed to be plugging my own company, but dealers working with–

CarDealershipGuy: What do you mean? Of course. Plug it.

Scott Case: Okay, great. Then fine, I'll plug my own company.

CarDealershipGuy: Plug away!

Scott Case: So, dealers working with recurrent can use our tools to understand what they're getting. They know like, oh gosh, this battery is a... 92 or this one's an 80 and the 92 is gonna be better. I'm gonna be able to explain it and sell it for more and sell it faster.

CarDealershipGuy: What does that mean? Is this on a scale of 0 to 100?

Scott Case: Yeah, so we have a rating system that basically says, 92 means this car gets 92% of the range that it did when it was new, and that's pretty great. That's not uncommon. That happens all the time. We just use that number score, 0 to 100. But, knowing what you're getting as a dealer is just as important as the shopper knowing they're getting, so I think that's what we have realized and are helping our dealers with. By the way, really important on older vehicles that are coming up on that warranty cutoff and you want to make sure that you're not getting something that you're not gonna be able to sell because the range is just so degraded. But the other thing is, separate from batteries, you can't just look at a VIN anymore and know exactly what the car is and what it's equipped with. You need to be able to figure out how to identify the software and the hardware that's on there. Of the software subscription, what's transferable? Is full self-driving transferable on this car? Is free supercharging transferable? Like, there's all kinds of more complicated questions that are, if you can get good at it, it's an incredible opportunity because you're zigging where everybody else is zagging. So I think there's a big opportunity here from a dealer perspective.

(16:06) The Recurrent Flywheel

CarDealershipGuy: So let's piggyback off of that for a second. You mentioned other parts of the EV calculus. Like, is this transferable, the charging? I did some research into Recurrent. I was looking through your offerings and you're offering something for shoppers, for EV owners and for dealers. How do you balance that? Where's the asymmetrical opportunity here? Is it just having this kind of all-in-one bundled marketplace or service that is able to tackle every part of the market? I always think about, are we horizontally integrating? Are we vertically integrating? Where are we building that moat and how are we becoming a stronger company that's providing more value?

Scott Case: Yeah. Well, there's a flywheel here. I think that, yeah, we are trying to serve three different audiences, but let me just walk through why they're all connected. So, I already talked about what we do for a shopper. You show up at a used car dealer or interact on their website. Anyone who wants to take a look, as long as I'm in the plugging mode, you can go to Del Grand Automotive Group and see what Recurrent reports look like from a retail perspective. Those guys sell a lot of used EVs to everybody in Silicon Valley, and they're working with us. It answers those questions that shoppers have. From a dealer perspective, it's mostly the same offering, I will say. We've seen that dealers that use our reports and help in the retail side, they sell their cars faster. They set expectations for their buyers. To go back to what we talked about earlier, a car with an EPA range of 250 miles that gets 220 today is great. It's fine. Most people drive 30 miles a day. You don't need any of that. Now, however, if you were expecting 250 and what you get is 220, like you might be pretty mad. You might show up at the dealership and return the car. We've seen our dealers working with us, they walk customers through, this is what you're gonna get. You'd walk a customer through a Carfax report and all of a sudden customers having their expectations set, they're like, "Yeah, great, I understand what I'm getting" and they don't return the car. Then, from a dealer perspective also, how to value and price used EVs. The right way of thinking about this, don't price a car with high mileage lower because what if that car just had a battery replacement like every Chevy Bolt ever made. You have a Chevy Bolt with 75,000 miles on it with a battery that's brand new, higher capacity than what it had when it was new. And it gets more range than it did when it was new. So there's just this absolute disconnect of the value of a used EV compared to its odometer number at this point. Obviously, I think that the shopper questions and the dealer experience are pretty aligned. The last thing is the owner piece of this. Funny thing is, we started the company originally with an owner product. That's like, if you're an EV owner, you can come and sign up on our website for free to track your car's data, basically your battery data. That's really cool for us from a data perspective. We have 15,000 cars that are actively on our platform, that are feeding us data wirelessly, streaming data over the internet every day. And it allows us to get this really big comparison set of cars to compare to when we see a car show up at a used car dealer.

CarDealershipGuy: Yeah, you're like the ancestry.com of EV batteries.

Scott Case: Oh my gosh, that's our new motto right there. But yeah, it turns out from an owner perspective, when we've been tracking the data all the way along, when they go to sell their car, we have their car's permanent record. When they choose to sell it, they can share their recurrent reports and they're selling their car for hundreds of thousands of dollars more because there's no uncertainty about the battery. So it all kind of feeds together I think. What we're doing now with some of our dealers is we're doing a connection thing where from a dealer perspective, it looks like a for-sale by owner lead-gen business, where it's just like, "Hey, when we have people in our fleet who have been taking really good care of their batteries and we've got all the data" and they're like, "Yeah, I'm ready to sell," we're doing matchmaking and it looks like a new source for dealers to acquire great inventory. I think that ends up being the circular flywheel that we're doing across all those parties.

(20:45) When does an EV lose most of its value?

CarDealershipGuy: Where is the point with the most meaningful drop in valuation from a battery score? Is it 65? At that point, I would just not buy a car below that. It's highly likely you're going to have to replace the battery, right? As a dealer and a consumer, I would be curious to know at what point should I not touch that car? Obviously there's a price to everything, but I don't want to go and start replacing batteries. I don't want to do that.

Scott Case: So, what I'll say is most EVs that we see and we score, all the used EVs running through Odessa from an auction perspective are getting Recurrent scores on them, so we're seeing a lot of stuff that's pretty varied. Most of what we're seeing is in the 90s, a little bit in the 80s. All of that's fine, I would say. As a dealer and as a shopper, I would say, a car that's a couple years old: there's not too much of a difference that's going to happen there. As you get into three, four, five, six year old car, there's just more variants. So you could have two cars, EPA of 260. One of them is 180 and one of them is 210. They're both fine. You're not going to have to do a battery replacement on those, but like, you should pay more for the 210 because you're going to get more utility out of it, and that's what we're seeing.

CarDealershipGuy: Not to put words in your mouth, these are totally my words, but–

Scott Case: You already came up with the Ancestry.com thing, so I'm all ears.

CarDealershipGuy: I was going to say, it just feels to me like the EPA ratings are a scam, and I'm not even blaming the EPA. It's just like, how can you have any confidence in that?

Scott Case: No, they're not a scam. They run a standardized protocol and they are following that protocol. I just don't think that that protocol matches up with a real world rating. So, in the same way that miles per gallon differs in different sort of conditions, I think the EPA probably didn't start out that way. I actually don't really know, the highway number and the city street number. I think that it would be helpful to have EPA winter vs. EPA summer from a range perspective. I think that'd be really interesting because it would honestly cause more automakers to think about their winter range loss. You asked about the research that we've been doing. So one of the other things we do with all the data that's streaming off of these cars is we pull together aggregate research pieces and publish them. In December, we did a thing, model by model, what's the range loss for all these different EVs in the dead of winter. No one else is publishing that data, but we're sitting there looking at it and we're like, well, yeah, I'm gonna call a ball a ball and a strike a strike. When one car loses 40% in the winter because it has resistive heat and another car only loses 10%, that's valuable information. That's not just relevant to a used shopper, it's relevant to a new EV shopper.

(24:01) Investment opportunities in the EV space

CarDealershipGuy: You have this very intimate insight into the segment. It's very clear that what you're working on now is extremely necessary and the market needs it. So, where are the picks and shovels now within the space? You're so close to this. Where are the opportunities?

Scott Case: Let me throw two ideas out here. One is one for dealers. It's not an investor question, but it's an opportunity from the dealer perspective that I don't think people are thinking about yet. The second one I'll do is sort of, I think there's another company that probably needs to exist. I don't know that we do it. We got a lot going on. So, investors, entrepreneurs, go for the second idea that I'm going to say. From a dealer perspective, I'm going to talk about tax credits for a minute. I know dealers are not so excited about this, but bear with me for a second. Every single story I've ever read about the EV tax credit is all about the new side, right? Where's the battery made? What's qualifying for the full 7,500? All these questions. As a part of the last year's Inflation Reduction Act, the federal government has stuck a tax credit on used cars. The basics are, it's a $4,000 tax credit on a car up to a certain purchase price and there's income limits. There's no battery sourcing requirements. Doesn't matter. The only thing is a car can't be transferred more than once and get the [credit] again. But the key piece of that from a dealer perspective, which I think has an opportunity to transform and grow the dealership share of these car sales, is every car that gets one of these credits has to be sold by a dealer. It doesn't apply to private party sales. And so, that's half the market all of a sudden that, the dealership industry has a chance to pick up a whole bunch more cars. All of a sudden, there's a $4,000 cost advantage that a dealer has, basically. So, I think that if dealers can get past all the price volatility and the stuff like that, this is a 10 year long program that could double the size of the used car market for them. That's a big deal.

CarDealershipGuy: So you're basically saying that dealers have a cost advantage when it comes to selling used EVs because they qualify for a credit that a private party sale does not.

Scott Case: So it's the buyer from the dealership can get that $4,000 tax credit, and the buyer from a private party sale cannot get that, yes. So it translates to, right now in 2023, it's a tax form that the buyer has to fill out. Starting January 2024, I don't know the mechanism, but it's a cash in the hood point-of-sale rebate, income-qualified buyer, which actually is pretty generous. You can make up to $150,000 married filing jointly and still take this tax credit. And the dealer will be able to discount the price by $4,000 and get a check from the government for that $4,000. Now, we've got to figure out how exactly that works, but that all of a sudden makes it such that the whole dealer economics could work and have an advantage over a private party sale.

CarDealershipGuy: So again, being unbiased here. Why only dealers? Why can't you get this credit as a private party sale?

Scott Case: I think what the government did was they – you know, I'm like, "Hey, cousin, I'll sell you my car this year, you sell it back to me next year, we both get $4,000 tax credits." I think that the government was like, we need a business entity involved in this in order to make sure there's not just rampant fraud. So, I suspect that's why that happened.

CarDealershipGuy: Yeah. I mean, it's crazy because it sounds like there's some opportunity here as well. Almost like some officially licensed dealer as a middleman that facilitates these transactions for consumers, not for cheating the system, rather creating a platform specifically for people that want to sell private party legitimately. You have some verifications in place, but you still want that credit. It just sounds to me like there's some opportunity there.

Scott Case: All right, so you're right. So you took it to the second question of where's the investment, where's the startup opportunity? I think there is something there. The other thing is the research has generally shown that because EVs are still pretty new and the tech is brand new, that people are still more likely to wanna buy from a dealer because they feel like they have more recourse than meeting some guy in the Walmart parking lot and writing a cashier's check.

CarDealershipGuy: You're saying for EVs specifically.

Scott Case: For EVs, yeah, shoppers are more inclined to buy from a dealer. They're also more inclined compared to ICE cars to pick up an extended warranty on EVs than they are for ICE cars.

CarDealershipGuy: Oh, wow.

Scott Case: I think that there there are some dealerships that are working through this tech change and finding new opportunities here, and there are other dealerships that, in my opinion, are cutting off their nose to spite their face kind of thing and just be like, "Ah, EVs? Screw them," and not seeing the opportunities that I think some folks are out there that are going for them. That's what I would say.

CarDealershipGuy: Fascinating. Here's, here's another thing that comes to mind when I think about your company. I'm thinking about a healthcare company, like an insurance company. If you prove that doing XYZ lowers fatalities or, obviously, not smoking – you have less deaths or less sicknesses, etc. And so the healthcare company is incentivized for you not to smoke. It saves them money. So I'm trying to think like, is there a way for you to do some play like that? You're clearly providing value to dealers and others in helping them mitigate losses. I'll leave it at that and let you respond.

Scott Case: Coming into this industry, I did not appreciate how many different players would be needed to transform their businesses based on the physical change in cars. I thought, well, there's dealerships, there's shoppers, that's it. I didn't come from the auto industry. I came from climate tech, so the past three years have just been a very rapid learning experience. I've tried to surround myself with a lot of people that have been in the auto industry for a long time. Learning the applicability on the wholesale side, on the fleet side – we've got folks we're engaging with on both those fronts. We've now had a bunch of conversations with insurance companies that want to do what you're doing, price discriminate on risk and the value of the asset which, right now, the battery state is a really important piece of that. Extended warranty companies, financing companies, there's just so many different players. And JM&A actually is an investor of ours.

CarDealershipGuy: Oh, look at that. I didn't know that.

Scott Case: So, I think there's a lot of that happening right now.

CarDealershipGuy: So you're way ahead of me.

Scott Case: I don't think that there are any – there may be one nascent extended warranty offering for EVs that actually covers the battery, and there's all kinds of restrictions on that. But it's very, very early and no one feels like they have the data yet for that. I think that is absolutely an opportunity for us moving forward.

(31:48) Operational changes for dealerships

CarDealershipGuy: As a dealer, how does my workflow change over the next couple of years when it comes to buying EVs? Or is it something like Recurrent, plugged in natively to my workflow, to my systems, whether it be auction or buying from wherever. Does it just get plugged in, like there's a condition report on a car, then there's like an EV report. Is that what the future looks like?

Scott Case: Yeah, I think that is what the...

CarDealershipGuy: I'm gonna say one more thing.

Scott Case: Okay.

CarDealershipGuy: Is Mannheim capable of creating that type of experience built in natively to the point where it really de-risks the buying experience for dealers? What do you think?

Scott Case: I do think that this eventually does become one of the things you look at. You look at the auto check score, you look at the Carfax record, the Experian history adjusted, Black Book value, whatever. Then, also you look at the EV battery score. We're trying to not make it super complicated because it's one element. Electric vehicles are still vehicles, right? I think this is one element that is super important. That's absolutely gonna be, you know, something you're looking at from a dealer perspective. Right now, we're not really integrated everywhere, but it shows up in Odessa reports. It shows up in any car that any of our dealers buy. They have a little iPhone widget to check the battery just by looking at the dashboard and comparing it to all the cars we have. I think over time that finds its way into every different channel. I know we're the first mover here and the first to put points on the board. We've been doing this three years and have all this data to show for it. Hopefully we end up as the standard for this, but I don't know. The problem is real, right? I think we're a great solution and we're out there with points on the board everywhere, but we'll see what the market says.

(33:54) The bear case for EV adoption

CarDealershipGuy: In the spirit of having a balanced conversation, I think we clearly know the bull case for EVs. It's clear that adoption is increasing and market share is growing. What is the bear case about the EV world and adoption for the future?

Scott Case: Here's what I would say, and this is gonna change very quickly over the next couple of years, but right now, public charging, public fast-charging outside of the Tesla network kind of sucks. I drive a Volkswagen ID.4. It's a great car, super cool car.

CarDealershipGuy: I was going to ask you that question.

Scott Case: Let's skip to that, right? Interestingly, I didn't have that car when I started the company. My other car is a Subaru Outback, like any good Seattle customer of Subaru.

CarDealershipGuy: Yeah, I tweeted about that before. You fit the bill.

Scott Case: Oh my God, do I ever fit the bill. So, I have three free years of charging with Electrify America that I got with the car a year and a half ago. I've charged it publicly four times in a year and a half. Because I have a level two charger in my house, I don't even really need it, honestly. I could probably be on a level one. I always leave the house full. I almost never, the only time I've ever have to–

CarDealershipGuy: What's the difference from a level one to level two charger?

Scott Case: Sorry, yeah, so level one is you plug it into a wall outlet. That's it. Level two is like the kind where it's on a 220 volt circuit, and then you either have a 20, 30, 40, 50, 60 amp power going to it. I think ours is like a 30 amp circuit or whatever. Those are the level two. Then, level three, or DC fast charging, is what the Tesla supercharges, Electrify America, EVgo stations are. Actually, that's not most, but that's what's getting built out from a public charging perspective. The kind where you can stop at the highway rest stop or at the Walmart parking lot and charge your car from 30% to 80% in 15 minutes. That's DC fast charging. Right now, that infrastructure is not good. Even as an EV fanboy, I've had terrible experiences. The four times I've done that, it doesn't really work well. There's a lot that has to change with that. Here's my thing. In my opinion, the first 50% could basically happen now. One of every two cars. Everybody with a house, with a garage or a driveway, could be in an EV without any change to public charging. You can't get rid of your second car, your ICE car until then, but the average trip is 30 miles a day. That's pretty easy to get with the tech that's out there now and just plug it into your wall. No problem.

CarDealershipGuy: I think the biggest issue I see there, it seems like, unless there's some crazy disruption in the EV space and we really do get massive price cuts and it becomes more affordable, it seems like, to be able to drive an EV when there isn't ubiquitous fast charging everywhere, you're going to need to have a house with a charger that's readily available. I just don't know if that's the majority of the market today. And again, I have no horse in this race.

Scott Case: Yeah, no, I get it.

CarDealershipGuy: I'm more so curious. What happens next?

Scott Case: Yeah, some of the toughest part about EV adoption is going to be urban environments where parking is at a premium and getting new power threaded to parking lots and parking garages is more challenging. I think the first wave of this happens in the suburbs where everyone has a two-car garage and enough panel space to put in a charger. That's all that can happen today with the infrastructure we have and the driving distances are about right. I think that rural environments where there's plenty of space and you can just plug in, even though the distances are longer, I think that if you have your F-150, and then you have your car just to run errands in. The fact that you don't have to buy gas anymore for that car? That pencils to me, even in those areas.

CarDealershipGuy: Yeah, I hate filling up gas. I absolutely hate it. It's the worst.

Scott Case: It's the worst, yeah. And gas prices are down, right? Gas prices are down from where they were a year or so ago when it was $6 a gallon, but it's still four bucks a gallon where I live, so it's not pleasant.

CarDealershipGuy: No, but you know, it's funny. Not to sound pretentious, but I'm less sensitive to gas prices. For me, it's the inconvenience of [gas] not being on any of my routes. And, you're home, there's the kids, this one is crying, this one wants food or something. And it's like, "Oh shit, I'm low on gas, I'm going to run out." So I make the best out of it. It's a trip. But, but the time. That does bother me.

Scott Case: Yeah. Again, in a year and a half, the only four times that I've that I've had to charge my car on public charging is when I've forgotten to do it overnight. That's it. Other than that, I always leave my garage full. I just drive past the gas station and flip it off every time, you know what I mean?

CarDealershipGuy: Do we have wireless chargers yet? When is that gonna happen?

Scott Case: No, no, like honestly, there's some company that's doing little robotic arms to kind of seek and plug the thing in. I'm like, what the fuck's the big deal? You just take the thing and you just plug it in. How hard is that? Like, seriously, we need robots to do this?

CarDealershipGuy: It's going to happen though. It's going to happen. If you would have told me that it's same thing for the iPhone, I would have told you that it's not going to happen. It will happen. It will absolutely happen.

Scott Case: I guess. I feel like that's like one of those things when you don't own an EV yet, you're like, "I don't wanna have to remember to plug it in. I don't have to like go and do that every time." No, first of all, you don't do it every day. I like plug it in every four days or five days or something like that. It goes overnight and then I'm done in the morning. It's just not a thing, you know? It's easy to change that habit. And it's way nicer than going to the gas station.

CarDealershipGuy: So you jumped to the funny question, which was I was going to ask you what car you have. You clearly driving EV now. Now, let me understand. So, when you started Recurrent, did you have an EV, or not yet?

Scott Case: Yeah, no. I lived in Seattle at the time, so that coastal elite comment hit a little close to home. I lived in Seattle at the time, 1923 house, no driveway, no garage, no off-street parking on my side of the street. It was a single family home, and we had the Subaru Outback that we parked.

CarDealershipGuy: Okay, so that's the investor story. I'm kidding. I love it.

Scott Case: I moved to Tacoma, Washington a year and a half ago, and I have a garage for the first time since high school, so I can plug it in now. That's when I got one. I love it, absolutely love it.

CarDealershipGuy: I'm over here thinking about the cognitive dissonance of running a company like Recurrent and not driving an EV, in the beginning at least. It probably was a funny time period.

Scott Case: It was a funny story. You think like, this is a used EV company. He must've had this experience of buying a used EV and then had a bad experience. No, I didn't like it. I just saw how people were asking different questions and the industry wasn't answering them. That's going to hold back the used market. Somebody's got to fix that. And I'm like, okay, sure. I can do this.

CarDealershipGuy: You know, you're, you're absolutely right. I think that's one of the biggest apprehensions that dealers have. It's the battery. I think you're on the right track, man. I absolutely love what you're working on. You mentioned plug earlier. Tell us more. For consumers, for dealers, for owners. I think anyone that has any association with EVs whatsoever could benefit from the software that you guys have created. Can you tell us where they can find out more about it?

Scott Case: Yeah, for sure. Our website is recurrentauto.com. If you are an EV owner today and you're listening to this podcast, you should come and sign your car up. It's free. You get some nice battery metrics on a monthly basis, and then when you go to sell your car, you're going to be able to sell for hundreds or thousands of dollars more. That's our value prop right there. If you're a dealer, we can essentially help you both on the acquisition side and on the retail side. That's working really well and we're starting to scale that business. If you're a shopper, sorry dealers, but you should be asking your dealer, hey, you shouldn't buy one of these without looking at the Recurrent report. You're going to get those questions. A lot of leading dealers are working with us now. You can also see our stuff on Edmunds, so that's the first third-party listings aggregator marketplace to include that.

CarDealershipGuy: That's huge.

Scott Case: Yeah, so every used EV, SRP, and VDP on Edmunds now has recurrent range information. They actually have a really cool map visualization that shows how far you can go from your home one way and round trip. They've done a great job with it. So, my friends ask where I go to find used EV listings? I would send them there because they're doing it. They're doing really well. They're the first ones.

[break]

(43:57) Wrapping up

CarDealershipGuy: This is off the record, or Harlee, you can keep this part on the record. I've had a walnut stuck in my tooth this entire episode. And I didn't wanna stop Scott cause he just had the groove going, the flow going, and I'm trying to pick this fucking walnut out of my tooth. So that's what I've been dealing with this entire episode.

Scott Case: Leave it in, this is amazing. This is like the most entertaining part of the pod. I would actually lead with this. Could you do like the teaser where it's like, "I've had this fucking walnut in my mouth. By the way, here's Scott!"

CarDealershipGuy: Ha ha ha ha.

Scott Case: Ha ha ha ha. You absolutely have to leave this in.

CarDealershipGuy: Let's do it.

Scott Case: Maybe you should – do you have sponsorships on this podcast yet?

CarDealershipGuy: We have a pretty healthy wait list. Sponsorships are likely gonna start over the next couple of podcasts.

Scott Case: Yeah, first sponsor of the podcast, the Walnut Growers Association of America.

CarDealershipGuy: Yep. There we go. I love it.

Scott Case: Okay. So the question.

CarDealershipGuy: So, back to the question. What have you changed your mind on in the last couple of years?

Scott Case: This is EV related, right? It goes back to this charging thing. I thought that long distance travel was fine with EVs. I don't think it is today unless you're on the Tesla supercharger network. So, I would say, not only what I say to folks in northern climates – like don't buy an EV that doesn't have a heat pump – do Model Y, do any of those Hyundai models. There's a couple others that have heat pumps in there. I'd say that pretty freely right now.

CarDealershipGuy: That's some good alpha.

Scott Case: Yeah, and then the second thing is I would say, everybody out there should have one. If they've got two cars, they should have one car that's an EV, hands down. That's great, less gas, the whole thing. Before you go and replace your second car though, where you're gonna do road trips with it, I think either you gotta be on a long range Tesla with the supercharger or you gotta wait a couple of years until the rest of the charging network gets built out to really make it fast and reliable. I think there's a lot that's gonna change over the next couple of years, but that's sort of where I'm at.

CarDealershipGuy: That is absolutely a good nugget. That's another thing I didn't know, so that is great. Scott, thanks so much for coming on. This was awesome. Had a ton of fun and learned a lot. Appreciate it. I'm sure we'll do this again.

Scott Case: Thank you. Yeah, it was really fun. Good luck with that walnut. Haha.

CarDealershipGuy: Thanks.

⁠

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