Dead end for
Electric vehicles are the future, writes Ambrose Evans-Pritchard
No more petrol or diesel cars, buses, or trucks will be sold anywhere in the world within eight years. The entire market for land transport will switch to electrification, leading to a collapse of oil prices and the demise of the petroleum industry as we have known it for a century.
This is the futuristic forecast by Stanford University economist Tony Seba. His report, titled Rethinking Transportation 2020-2030, has gone viral in green circles and is causing spasms of anxiety in the established industries.
Seba’s premise is that people will stop driving altogether. They will switch en masse to self-driving electric vehicles (EVs) that are 10 times cheaper to run than fossil-based cars, with an expected lifespan of a million miles (1.6 million km).
Only nostalgics will cling to the old habit of car ownership. The rest will adapt to vehicles on demand. It will become harder to find a petrol station, spares, or anybody to fix the 2000 moving parts that bedevil the internal combustion engine. Dealers will disappear by 2024.
Cities will ban human drivers once the data confirms how dangerous they can be behind a wheel. This will spread to suburbs, and then beyond. There will be a “mass stranding of existing vehicles”. The value of second-hard cars will plunge. You will have to pay to dispose of your old vehicle.
The long-term price of crude will fall to US$25 a barrel. Most forms of shale and deep-water drilling will no longer be viable. Assets will be stranded. Scotland will forfeit any North Sea bonanza. Russia, Saudi Arabia, Nigeria and Venezuela will be in trouble.
It is an existential threat to Ford, General Motors, and the German car industry. They will face a choice between manufacturing EVs in a brutal l ow- profit market, or reinventing themselves as self-drive service companies.
The next generation of cars will be “computers on wheels”. Google, Apple and Foxconn have the disruptive edge, and are going in for the kill. Silicon Valley is where the auto action is, not Detroit, Wolfsburg or Toyota City.
The shift, according to Seba, is driven by technology, not climate policies. Market forces are bringing it about with a speed and ferocity that governments could never hope to achieve.
“We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history,” Seba says. “Internal combustion engine vehicles will enter a vicious cycle of increasing costs.”
The “tipping point” will arrive over the next two to three years as EV battery ranges surpass 200 miles and electric car prices in the US drop to US$30,000 ($43,570). By 2022 the lowend models will be down to US$20,000. After that, the avalanche will sweep all before it. By 2025, all new vehicles will be electric Users will switch to self-driving electric vehicles with running costs only 10% of those for petrol or diesel cars Silicon Valley will triumph over existing carmakers Cities will ban human drivers Long-term crude oil price will fall to US$25 a barrel Car dealers will disappear
“What the cost curve says is that by 2025 all new vehicles will be electric, all new buses, all new cars, all new tractors, all new vans, anything that moves on wheels will be electric, globally,” Seba says.
“Global oil demand will peak at 100 million barrels per day by 2020, dropping to 70 million by 2030.”
There will be oil demand from the chemical industries and for aviation, though Nasa and Boeing are working on hybrid-electric aircraft for short flights.
Seba says the residual stock of fossil-based vehicles will take time to clear but 95 per cent of the miles driven by 2030 in the US will be in autonomous EVs for reasons of costs, convenience and efficiency.
The cost per mile for EVs will be 6.8USc, rendering petrol cars obsolete. Insurance costs will fall by 90 per cent.
“Our research and modelling indicate that the US$10 trillion annual revenues in the existing vehicle and oil supply chains will shrink dramatically,” Seba says.
“Certain high-cost countries, companies and fields will see their oil production entirely wiped out,” the report says.
These are all large claims, though familiar to those on the cutting edge of energy technology. While the professor’s timing may be off by a few years, there is little doubt about the general direction.
India is drawing up plans to phase