It is time for another ATOM AotM. This month, we return to the energy sector, for it is where the greatest size and scale of ATOM disruptions are currently underway.
We visited batteries briefly in August 2017's ATOM AotM. There are two exponentials here, battery cost per unit of energy, and battery energy density per unit volume. Hence, despite 40 years of apparent stagnation interspersed with angst about how electric vehicles failed to arrive in response to 1973 and 1981 oil spikes, the exponential trend quietly progressed towards the inflection point that we have arrived at. True to the exponential nature of technology, more progress happened in 2011-20 than 1970-2010, and we now have viable electric vehicles that are selling rapidly and are set to displace gasoline consumption in a matter of just a few short years. Electric vehicles are now 2% of all new vehicle sales in the US, and 3% worldwide, with a high annual growth rate. Due to the rapid cost improvements in EVs expected in the next three years, a substantial tipping point is perhaps no more than three years away.
This rapid rise is in the face of two major headwinds : the low price of oil (due to another ATOM disruption), and the high price of EVs (the top-seller in units is a $50,000 vehicle). It is now a certainty that once a high-quality EV becomes available at the $30,000 pricepoint, the speed of displacement will be startling.
A tracker that records monthly sales at both US and WW levels is here. The speed of advancement merits monthly visits to this tracker, at this point. Note that over time, the US is actually where total displacement of ICEs by EVs will be the slowest, since other countries are more suited for EVs than the US (they have higher gasoline prices, and often 220V electrical outlets that lead to faster charging). In fact, a suddenly popular home upgrade in the US is, ironically, the installation of 220V outlets in the garage, specifically for EV charging.
As an example of a true ATOM disruption, the transformation will be multi-layered. From oil import/export balances, to gasoline refinement and distribution networks, to the reduction of near-slave labor from the Subcontinent forced to find work in Gulf petrostates, to mechanics dependent on ICE vehicle malfunctions, to surplus used ICEs unable to sell and thus forced to slash prices, to power management and pricing by electric utilities, to prime land occupied by gas stations, a variety of status quos will end.
Don't underestimate how soon the domino effect will take place. Once EVs are sufficiently mainstreamed in the luxury car market (which is set to happen in 2019), then the entire range of urban commercial/government vehicles will swiftly transition to electric. The US has 800,000 police cars, 210,000 USPS vans, and a variety of other government vehicles. On top of that, private enterprises include 110,000 UPS vehicles, 60,000 FedEx vehicles, and perhaps over 300,000 pizza delivery vehicles. As these transition, observe how many gasoline stations shutter.
The much greater lifespan of EVs relative to ICE's will be one of the four factors that lead to the majority of automobile use migrating to an on-demand, autonomous vehicle model by 2032, as discussed before.
Related :
Why I Want Oil to be $120/Barrel
Related ATOM Chapters :
3. Technological Disruption is Pervasive and Deepening.
Very Impressive Aricle
Posted by: David Martin | September 05, 2019 at 10:34 PM