The future of transportation and the death of big oil and big auto

The future is so much more efficient than current systems, and for a world population moving to 8 billion and beyond, this evolution is coming just-in-time.

A new, must read, report from energy entrepreneur and teacher Tony Seba lays out the future of transportation and how it will drastically reduce the need for not just fossil fuels and their producers, but automobiles, along with all the associated financing costs and expenses.  The Telegraph’s Ambrose Evans-Pritchard summarizes key findings from the report here in:  All fossil-fuel vehicles will vanish in 8 years in twin ‘death spiral’ for big oil and big autos.

This is all creative distruction to existing models and thinking.  Pouring finite capital into old technologies and systems like pipelines, massive automobile showrooms and parking garages, is good money wasted.  Many high-cost oil producing countries, companies, and fields will see their production entirely wiped out. Exxon-Mobil, Shell and BP could see 40 to 50% of their assets become stranded.

The upside is a huge reduction in friction costs and waste, leading to an exponential s-cruve of adoption and productivity gains in the economy where today’s debt encumbered, cash-strapped consumers waste less, while benefiting from fewer expenses and an improved standard of living.  Also see:  Is Tesla’s lead bigger than we think? So-long planned obsolescence, hello million-mile, shared, autonomous vehicles:

“We already know that the operating cost of an EV platform is far lower than a gasoline vehicle. Fuel costs are way lower because electric motors are more efficient than combustion engines and electricity is cheaper than gasoline. Maintenance costs are way down – just 20 moving parts versus 2,000 means there’s much less to go wrong– and an operating environment that has little heat, friction or vibration – the scourges of gasoline vehicles. But the biggest cost is the depreciation cost – the way vehicle owners recover the upfront cost of the vehicle – and this is where A-EVs have a huge advantage.”

The full, 77 page report, with great graphics is available here: Rethinking Transportation 2020-2030: The disruption of transportation and the death of the internal combustion vehicle and oil industries. Here is the executive summary:

We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history. By 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call “transport-as-a-service” (TaaS). The TaaS disruption will have enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value — but also creating trillions of dollars in new business opportunities, consumer surplus and GDP growth.

The disruption will be driven by economics. Using TaaS, the average American family will save more than $5,600 per year in transportation costs, equivalent to a wage raise of 10%. This will keep an additional $1 trillion per year in Americans’ pockets by 2030, potentially generating the largest infusion of consumer spending in history.

We have reached this conclusion through exhaustive analysis of data, market, consumer and regulatory dynamics, using well-established cost curves and assuming only existing technology. This report presents overwhelming evidence that mainstream analysis is missing, yet again, the speed, scope and impact of technology disruption…These systems dynamics, unleashed as adoption of TaaS begins, will create a virtuous cycle of decreasing costs and increasing quality of service and convenience, which will in turn drive further adoption along an exponential S-curve. Conversely, individual vehicle ownership, especially of internal combustion engine (ICE) vehicles, will enter a vicious cycle of increasing costs, decreasing convenience and diminishing quality of service.

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