Will Petrol Cars Vanish in 2025?

There will be no more petrol or diesel vehicles anywhere in the world by 2025. This is the view of a Stanford Economist, Tony Seba. His premise is that people will stop driving altogether. They will switch en masse to self-drive electric vehicles (EVs), which are ten times cheaper to run, have near-zero marginal cost of fuel and a life span of 1.6 million kms.

The long-term price of crude will fall to USD25 per barrel. Ford, GM and others will either manufacture EVs or be service companies. The next generation of cars will be “computers on wheels”. Silicon Valley is where auto action is, not Detroit, Wolfsburg or Toyota City.

This disruption is driven by technology not climate policies. And market forces are bringing the rapid change. Once battery range is enhanced and price of EV drops significantly, the avalanche begins. “The cost-per-mile for EVs will be U.S. 6.8 cents, rendering petrol cars obsolete” (Tony Seba). The U.S. Government will lose USD50 billion per year in fuel taxes. Exxon-Mobil, Shell and BP could see 40-50% of assets become stranded.

World Oil Outlook in 2016, dismissed EVs. They predict consumption to rise to 109 million barrels by 2040. Fossils will still make up 77% of global energy use. And Paris agreement with its climate targets is just empty rhetoric.

The crunch may come sooner than thought. Whole countries will spin into crisis. The geopolitical order will be reshaped almost overnight. But humanity as a whole would make a tremendous welfare gain.

What about Malaysia?  The third national car has to be EV or it has no future.  Hopefully, common sense rather sentiment prevails.

Source: Financial Review – afr.com (updated 15 May 2017)