Goodbye to petrol and diesel. Economist predicts all vehicles will be electric by 2025
All transport will be powered by electricity by 2025 according to the latest report by a leading economist.
That means no more petrol or diesel cars, buses or trucks being sold anywhere in the world within just eight years.
So are we really seeing the demise of the petroleum industry? If the global market for transport vehicles turns to electrification, this will most certainly lead to a collapse of oil prices and signal the end of fossil fuel consumption.
The futuristic forecast of the full transport electrification is by Stanford University economist Tony Seba.
The report is entitled, ‘Rethinking Transportation 2020-2030’ and it has gone viral within green circles. No doubt these predictions are creating panic in the automotive industry as many car manufacturers around the world are only starting to adapt to the prospect of full autonomous electric vehicle transportation.
Prof Seba's predicts that people will stop driving altogether and will switch en masse to self-drive electric vehicles (EVs).
Electric vehicles are 10 times cheaper to run than fossil-fueled cars. They have a near-zero marginal cost of fuel and an expected lifespan of 1 million miles.
There will obviously still be those who cling to their old combustion engine cars for nostalgic purposes but the rest will adapt to fully autonomous electric cars.
Petrol station will have to adapt to the new fuel types and many changes to their operations and infrastructure. There are 2,000 moving parts in the internal combustion engine so aftermarket spare parts will become fewer and far between. It will be a massive transition quite like moving from vinyl to compact disk. Regular combustion engine car dealerships will disappear by 2024.
Cities will ban human drivers once the data confirms how dangerous they can be behind a wheel. The ban on human driving will then spread beyond the main cities leading to a "mass stranding of existing vehicles". The value of second-hand cars will plunge and you will have to pay to dispose of your old vehicle.
Prof Seba predicts that it will be a huge "death spiral" for big oil and big autos, with massive economic implications for big car manufacturers unless they adapt in time. The long-term price of crude will fall to $25 (€23) a barrel and most forms of shale and deep-water drilling will no longer be a viable alternative.
Where will all the oil producing nation be then? Just think of it, Scotland will forfeit any North Sea oil bonanza. The biggest oil producers in the world such as Russia, Saudi Arabia, Nigeria and Venezuela will be in big trouble as the demand for oil plummets.
The prediction makes the point that it will be an existential threat to Ford, General Motors, and the German car industry because of EVs brutally low-profit market.
All the big companies must now begin to reinvent themselves and look to the example of self-drive service companies such as Uber and Lyft and all the major tech companies that are jumping on the fully autonomous EV technologies future. If the big car companies don’t adapt now, they will be in big trouble.
Next generation electric cars will be "computers on wheels". Google, Apple, and Foxconn have the disruptive edge, and are going in for the kill and the big car manufacturers have a huge fight on their hands.
According to Prof Seba, the shift towards the EV future is driven by technology and not climate policies. Market forces are bringing it about with a speed and ferocity that governments could never hope to achieve. Prof Seba said:
"We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history,"
"Internal combustion engine vehicles will enter a vicious cycle of increasing costs."
The "tipping point" is expected to arrive over the next two to three years as EV battery ranges surpass the 200 mile mark and when electric cars drop in price to below €28,000.
By 2022 the low-end models will be down to as low as €18,000 and second-hand EV’s will start to appear in the market in large numbers. It is at this stage that nothing will stop EV avalanche. Prof Seba said.
"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,"
"Global oil demand will peak at 100m barrels per day by 2020, dropping to 70m by 2030."
Oil demand will remain for use in the chemical industries, and for aviation, though Nasa and Boeing are working on hybrid-electric aircraft for short-haul passenger flights.
Prof Seba said the residual stock of fossil-based vehicles will take time to clear but 95pc of the miles driven by 2030 in the US will be in autonomous EVs for reasons of cost, convenience and efficiency. Oil use for road transport will crash from 8m barrels a day to 1m.
The cost per mile for an electric vehicle will be 6 cents which will inevitably render petrol cars obsolete.
With autonomous electric cars being far safer than traditional cars, insurance costs will fall by 90pc which means the average European household could save €5,000 per year by making the switch to electric.
The US government will lose $50bn (€45bn) a year in fuel taxes. Prof Seba said:
"Our research and modelling indicate that the $10 trillion (€9 trillion) annual revenues in the existing vehicle and oil supply chains will shrink dramatically,"
"Certain high-cost countries, companies, and fields will see their oil production entirely wiped out. Exxon-Mobil, Shell and BP could see 40pc to 50pc of their assets become stranded."
Many experts would say that 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 out all petrol and diesel cars by 2032, leap-frogging China in an electrification race across Asia.
China is moving in the same direction of India, pushing for 7m electric vehicles by 2025.
Along with these changes, global shipping rules will soon see a clamping down on dirty high-sulphur oil used in the cargo trade. This move, it is believed may lead to widespread use of liquefied natural gas for ship fuel.
All of these changing are happening a lot faster than Saudi Arabia and the other Opec countries had assumed.
The industry experts will argue over Prof Seba's claims but one thing is for sure, there are huge changes coming and coming fast. His broad point is that multiple technological trends are combining in a perfect storm.
When you consider that the Tesla S has 18 moving parts, 100 times fewer than a combustion engine car you can see why Tesla is offering infinite-mile warranties.
Electric vehicles are four times more efficient than petrol or diesel cars and can have the acceleration and performance of a Lamborghini but costing 10 times less to buy, and at least 10 times less to run.
Prof Seba said:
“You can drive it to the moon and back and they will still warranty it. Maintenance is essentially zero.
"The electric drive-train is so much more powerful. The gasoline and diesel cars cannot possibly compete,"
"You can't compete with zero marginal costs".