Collapse of Gasoline Vehicles by 2025 Will Transform Transportation, Crash Fossil Prices
Sales of new gasoline and diesel cars will end around 2025, oil prices and demand will collapse as a result, surface transportation will be quickly electrified, and cities, then suburbs will ban human drivers once they realize how dangerous they can be behind the wheel, Stanford University futurist Tony Seba predicts in a report that “has gone viral in green circles and is causing spasms of anxiety in the established industries,” The Telegraph reports.
“We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history,” Seba writes. “Internal combustion engine vehicles will enter a vicious cycle of increasing costs.”
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Once that cycle begins, writes Telegraph correspondent Ambrose Evans-Pritchard “Seba’s premise is that people will stop driving altogether. They will switch en masse to self-drive electric vehicles (EVs) that are 10 times cheaper to run than fossil-based cars, with a near-zero marginal cost of fuel and an expected lifespan of one million miles.” When that happens, “it will become harder to find a petrol station, spares, or anybody to fix the 2,000 moving parts that bedevil the internal combustion engine. Dealers will disappear by 2024.” And owners will face a “mass stranding of existing vehicles”, as second-hand cars plunge in value and people have to pay to dispose of their now-nearly-useless rides.
Meanwhile, ride-hailing services will become “four to 10 times cheaper per mile than buying a new car and two to four times cheaper than operating an existing vehicle,” the report states.
As a result of these rapid, profound changes, “global oil demand will drop from 100 million barrels per day in 2020 to around 70 million barrels per day in 2030. The price of oil will drop to around US$25 per barrel,” and “the impact of the collapse of oil prices throughout the oil industry value chain will be felt as soon as 2021.”
The report lists the Keystone and Dakota Access pipelines, along with 70% of potential 2030 production from the Bakken shale, as assets that will be stranded as a rapid transformation shakes the auto and fossil industries.
In Evans-Pritchard’s widely-circulated Telegraph report, Seba echoes other Silicon Valley thinkers who refer to modern vehicles as computers on wheels, rather than cars with some IT under the hood. Just as oil producers will be in severe jeopardy, companies like Ford, GM, and German automakers “will face a choice between manufacturing EVs in a brutal low-profit market, or reinventing themselves as self-drive service companies, variants of Uber and Lyft.”
Seba stressed that the transformation will be driven by technology and market forces, not climate change policies. He sees a tipping point hitting in two or three years when EV battery ranges exceed 200 miles, prices fall below US$30,000, then below $20,000 around 2022.“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,” he said.
About 15 months ago, Bloomberg New Energy Finance pointed to 2022 as the approximate year when the total cost of owning and operating an electric car will fall below the equivalent cost for an internal combustion vehicle, triggering the next oil price crash.