
Big oil will die when it becomes cheaper to hail an electric self-driving car - nlolks
https://shift.newco.co/this-is-how-big-oil-will-die-38b843bd4fe0
======
aresant
What could validate this article's hypothesis is if Tesla manages to roll out
a Class 8 Truck that meets the industry's needs.

Musk tweeted earlier this year "Tesla Semi truck unveil set for September.
Team has done an amazing job. Seriously next level."

I am involved in a logistics startup that leverages Class 8 trucks and the
specs are brutal.

Our trucks need a 500+ mile range and have to haul 40,000 - 50,000 pounds, and
do it 5 - 6 days a week reliably.

It's hard to conceive how an electric drive train & battery array could manage
to deliver on those basic specs.

But since 2000 heavy trucks have accounted for 40% of the TOTAL growth in oil
demand, and similar gains are projected over the next few decades.(2)

And capital on the fleet side is very organized and effecient.

EG if lifetime operating costs of electric are significantly lower w/a longer
useful equipment lifetime adoption will be rapid.

(1)
[https://twitter.com/elonmusk/status/852580027178696704](https://twitter.com/elonmusk/status/852580027178696704)

(2) [http://www.iea.org/newsroom/news/2017/july/iea-study-
unveils...](http://www.iea.org/newsroom/news/2017/july/iea-study-unveils-key-
role-for-trucks-in-global-oil-demand-growth.html)

~~~
epistasis
Trucking is one area where the per-mile costs are really important, unlike
most passenger cars. The cost of electricity is generally much much less than
the cost of fuel, so there's definitely the potential for a compelling offer
for hauling, even if its only a subset of all uses of semi trucks.

Electric drive trains are excellent at heavy loads; many huge haul trucks,
trains, etc. use diesel electric where the diesel is just a fuel source to
generate electricity for the real workhorse, the electric motor.

So it's really just the battery that's the hard part here.

Most EVs get ~3.3 mi/kWh. If the increased air resistance means only a third
of that efficiency, a 450 kWh battery would be sufficient for 500 mile range.
That's about 3 tons of weight, which is a _lot_ , and take up about 2 feet of
space behind the cab, perhaps. But since a diesel engine itself is going to
weigh about 1 ton more than the electric motors and inverters, it's not a
completely outrageous amount of overage.

Of course, the battery _alone_ for this would be about $100,000k, as much
typical tractor cabs these days. So clearly there would be some sort of swap
program, and battery usage would be charged.

This all becomes a ton easier if designed for just, say, 250 miles before
swapping batteries. But napkin math suggests that 500 miles isn't completely
implausible, if you can get over the up front capital costs, and the slightly
lower hauling capacity.

~~~
stannol
> Most EVs get ~3.3 mi/kWh.

Not even close. BMW runs electric trucks between production facilities and our
169kWh trucks (Terberg YT202-EV) which haul up to 34,000kg get at most 100km
out of that, often less. So you're looking at about 0.6km/kWh or 0.37mi/kWh.
It will be more with less stopping (although there isn't a lot of stopping on
our routes) but nowhere near your estimate.

~~~
epistasis
I appreciate your data! However I wasn't trying to say that trucks will get
3.3 mi/kWh, this was apparently quite confusingly phrased, as I meant
passenger vehicles.

My spitball of 1.1 mi/kWh was clearly way too high still.

------
amluto
There's a flaw in the argument that individual vehicles will go away: families
with kids.

Before I had a baby, ride sharing was fantastic. Now it's basically useless.
To transport my baby, I need a car seat of the appropriate size. It's really
handy if I can leave a stash of diapers and wipes in the car. A portable high
chair is nice, too. Sure, ride sharing is more convenient, but the car seat
issue is a show stopper, at least until the ride sharing services catch up or
autonomous car safety improves significantly _and_ legislation catches up.

All that being said, the car seat and diaper cache in question live in an EV,
and I'm quite happy that I am basically done with the gas station phase of my
life.

~~~
PNWChris
This is a really big point I've never considered!

I don't have kids, so I'm definitely coming from a place of ignorance. On
planes and trains I never see car seats used, which I assume is because
crashes are so unlikely on those modes of transit.

If self driving cars are as safe as, or safer than, a trip on a train, would
it still be a concern?

~~~
ohkaiby
^ Parent w/ a <1 yr old. Car seats aren't used on planes because a car seat
would take up a seat, which costs money. Kids under 2 yrs are free if they sit
on your lap at most/all US airlines, so parents would just swap lap-sitting
for their kid(s).

Not sure about trains.

I assume that if/when cars are as safe as a plane/train, adults wouldn't even
need seat belts but you'd still need a carseat for an infant/toddler because
it also stabilizes the child's position. Kids <6mo have no neck control. Kids
<10mo can't reliably sit up for long durations. An autodriving car might be
safe, but it'd probably still need to make emergency stops / turns. That'd be
real bad if there were no carseats.

------
rdtsc
> internal combustion engine has too many moving parts.

It does. But then the simple EVs aren't a that much cheaper than those
complicated ICE cars. Where is the $9k efficiency basic model that someone in
a lower income bracket could afford? Mention the government incentives and
credits and talk about the cheap recharge cost compared to a tank of gas, less
maintenance costs, and all of the sudden a lot of people will start listening.
Most EV cars start at $20k and up from what I remember. That's more than the
MSRP of a new Honda Civic. Few American consumers will choose a more expensive
model, with less range, and long recharge cycle. There'd have to be some
serious tax incentives/penalties or a huge jump in gas prices for people to
start seriously considering EVs as their next car.

I get the point of electric taxis about maintenance, but there are only so
many taxis around. Some are even regulated based on a medallion system. So I
am afraid just taxis might not be enough to revolutionize the car industry.

~~~
m_mueller
EV price will mainly depend on how well Li-Ion batteries scale up in a mass
market. I'd imagine at some point more and more of the price will go towards
the part that cannot be made cheaper (and will actually increase in price with
higher demand): Lithium. On the other hand, having efficient refurb/recycle
processes for older batteries may solve that, assuming that there's enough
Lithium to serve the global market once over in the first place. If not I
guess it's either time for a new battery technology or time to mine asteroids
or the moon.

------
peapicker
I love my combustion engine car and don't plan to go electric next time... but
this article made me think. And while perhaps a little too optimistic on
timeline, I have to concede that his premise regarding moving parts has merit.

~~~
dreamcompiler
I love my combustion cars too but the Tesla puts them all to shame. It's just
better in every way but two: Initial price and range. Economies of scale and
competition will fix the first and recharging stations have already mostly
fixed the second. I encourage skeptics to drive one. It's an astonishing
vehicle.

~~~
BoorishBears
Puts them to shame how? The Tesla standard of luxury is light years behind
that of cars like the S Class. The standard of performance is strictly limited
going from 0 to 60, and not sustaining it.

I've driven it, and I've driven other high end cars of it offers very little
that you can't find in other high end cars.

The novelty of instant acceleration is fine, but the insulation from wind
noise and road noise are still not on par with high end brands even though
there's no ICE (and it's not because there's no ICE noise to cover up, in a
modern S Class the cabin is almost whisper quiet), and if performance is you
goal.

You don't (knowledgeably) get a Tesla because you want the best car, you get
one because you want a Tesla. To me cars like the S Class shame the Model S
for trying to call itself a "luxury car", and cars like C63 AMGs shame it for
calling itself a "performance sedan"

~~~
kamaal
Why is accelerating from 0 - 60 in a few seconds so important for people when
their journey would largely be for minutes/hours?

Its not like going to office/supermarket/school/college/home is a race.

~~~
BoorishBears
That's kind of my point, it doesn't really matter in everyday driving, and if
you're interested in some "spirited driving", you want a car with more
wholistic performance.

Instantaneous acceleration is nice for stop and go traffic and city driving,
but that's inherent to all EVs (A base model Volt as fast from 0 to 30 as a
Model S 85)

------
MR4D
It would be interesting to see if lithium mining and production could be
scaled up fast enough to produce 15+ million cars per year (US only).

Something tells me that this could be an ecological disaster even greater than
coal.

The article may be correct on the rationale, but the timing seems fast given
everyone's concern about the planet.

Also consider that oil comes from a small hole in the ground, and already has
refineries in place to turn it into gasoline, while last year the whole world
only produced about 650,000 tons of lithium. Each Tesla uses about 65Kg of it.

~~~
sitkack
One car is going to be able to service 4-10 people, old cars will still exist.
Think of the transition from incandescent to fluorescent to LED, no one
expected that LED would take over so soon, that the efficiencies and bulb life
would surpass CFL as quickly. How many LED bulb assembly lines do we need?
Probably 1. For the whole world.

------
dsfyu404ed
That's a hell of a bubble the author is in. Good thing he's not talking
politics.

ICEs aren't going anywhere for a very long time. Their market share will
certainly be reduced for ground transportation but electric power isn't making
nearly as much progress in marine or aviation applications. Liquid field are
simply too convenient, especially in remote areas. I know city folk sometimes
like to forget that everyone else exists but gas/diesel off highway vehicles
aren't getting replaced very soon. The service life of a big piece of
equipment (e.g. a front end loader) is measured in decades. Even if a silver
bullet comes along it will take a long time for everything else to age out.
Secondly, standby generators are everywhere. Those aren't being replaced with
batteries anytime soon for obvious reasons. Oil is refined for use in
plastics, lubricants and a laundry list of other things that are indefensible
to modern civilization. Sure, transportation is a big slice of the market for
oil and it's going to get smaller but it's not the only slice. Finally, while
the first world may adopt electric power soon, other nations will be slower.
If the Keystone pipeline isn't carrying crude that will be refined and sold in
the US it will be carrying crude that will be refined and sold elsewhere.

This is wishful thinking, nothing more.

I don't have stock in an oil company or anything, the author's claims are just
a little too ridiculous for me to ignore.

~~~
flunhat
> Their market share will certainly be reduced for ground transportation

And that alone will be enough.

You're right that gas/diesel will never be _completely_ replaced, but it seems
that it doesn't need to be in order to suffer a serious decline in usage that
radically transforms the energy landscape.

Looking at this graphic [1], ground transportation is the biggest single use
case of oil in the United States.

67% of oil consumption in the U.S. goes to the transportation sector, and ~80%
of the transportation industry's oil use is for ground travel. A serious
decline in that could really hurt the industry and cause the kind of
disruption the author was talking about. (Granted, the graphic's from 2004 but
I don't have a reason to believe the proportions have fundamentally changed).

[1] [http://afstrinity.com/images/data/oil-
transportation.jpg](http://afstrinity.com/images/data/oil-transportation.jpg)

~~~
dsfyu404ed
Unless something comes along that halves domestic ground travel demand
overnight it's not going to hurt the industry too bad. They'll just sell crude
to China or whoever. Furthermore, if gas/diesel usage falls then other oil
products become cheaper so while lost demand from transportation would not be
close to fully compensated for elsewhere it will still be partially
compensated for.

It's not the change that hurts, it's how fast the change happens. Think about
the kinds of things that have hurt the industry in the past. They've all been
very quick.

~~~
woodandsteel
>They'll just sell crude to China or whoever.

So China will stick with gasoline even though it will be more expensive, has
to be imported, and the country has terrible air pollution problems?

------
chx
There are some, how to call, secondary effects which can avalanche real quick.
For example, if gas stations begin to close (or just give up regular gasoline
still selling diesel to trucks) that can become a self strengthening death
spiral incredibly fast.

------
spraak
> The costs of electric self-driving cars will be so low, it will be cheaper
> to hail a ride than to drive the car you already own.

Actually it's nearly to that point for me already. I moved to LA from Hawai'i.
In most places in Hawai'i having a car is essential if you want to go anywhere
(not so much in Honolulu) - on my island the bus only ran every 2 hours until
4pm on the weekends, and some of the stops were over 5 miles apart.

But now that I live in LA, so any of my needs to go out can be met with
Sprouts Amazon Prime Now, Uber and when I really need something coordinated
I'll rent a Turo car. And all this costs me less than a monthly car payment
would.

~~~
chx
Don't forget the part where Uber is selling the service below cost...

~~~
klipt
Subsidized Uber rides are proof that venture capitalists love us and want us
to be happy.

~~~
chx
Subsidized Uber rides are proof that venture capitalists ... are interested in
the spread of late stage capitalism and destroying the progress in worker
welfare that took a hundred plus years to make.

------
diafygi
There's a fantastic report from UK that studies what would happen to oil
companies if demand decreases at the rate needed to hit 2 and 3 degrees
warming.

In general, it see oil prices falling and sovereign oil selling the most since
they can undercut competition for a diminishing pie (basically a fire sale).
The private oil companies get super screwed, with something like 80%+ stranded
assets.

[https://en.wikipedia.org/wiki/Carbon_bubble](https://en.wikipedia.org/wiki/Carbon_bubble)

------
pkaye
However there are other uses for oil other than gasoline like jet fuel,
asphalt for roads, making plastics.

~~~
cpete
Your comment reminded me of the idea that "...crude oil is much too valuable
to be burned as a fuel."

[http://press.princeton.edu/chapters/s7121.html](http://press.princeton.edu/chapters/s7121.html)

------
FussyZeus
While the author makes a lot of interesting points that even I hadn't
considered before as an enthusiastic reader of EV news, there are a few
glaring holes I need to point out:

\- Pretty much every point the author makes about the rapid takeover of EVs,
from being cheaper to hail one instead of owning a gasoline powered car, to
the ones relating to owning cars at all, could (and should) be prefixed by "In
a city..." because speaking as someone who lives far from an urban sprawl, a
lot of this stuff just would not work. Sure EV's work ok out here, though the
self driving tech might need more help than most often, but who is buying all
of these self driving EV cabs and operating them, and why? The volume just
isn't here, you'd get tons of passengers clamoring for a ride between 7am and
9am, then again at 3pm to 5pm, and then it would be near dead the rest of the
time.

\- There are no EV technologies (to my knowledge) ready to replace anything
beyond a city runabout vehicle. The act of, for example, plowing snow would be
insanely taxing on an EV truck (running an electric motor under strain is the
best way to wear down the battery), and sure, the mechanical element is
definitely true but you'd need some sort of fast-charge system to make it
viable, otherwise your trucks are spending hours charging for every hour
plowing. And then that's a fairly easy one, electric combines, construction
equipment, cranes, tow trucks, I haven't heard of any of these and I look for
this sort of thing.

\- Societal inertia is going to be a big factor here, around here we have
people driving vehicles from the 70's, not as collector's items or anything
like that but as their daily driver. Come on out here and propose to our
average Joe the idea of buying a Tesla Model 3 for $37,000, a guy who barely
makes $30,000 a year, who buys and drives the cheapest thing on the lot until
the wheels fall off and goes and gets something else.

I could go on but it's bed time. Maybe ICE vehicles will be dearth from cities
within 10 years, maybe. But even then I kind of doubt it.

~~~
nopinsight
The US and most developed countries are highly urbanized. The US is 82% urban,
most of Europe about 80%, China was 57% in 2016 and increasing every year. [1]

Together, these countries account for over half of the world's oil demand and
the urban parts account for most of it. [2]

The impact on urban areas alone would be sufficient to disrupt the whole
industry. The disruption will unlikely to be as drastic as what happened to
Kodak and Nokia since most people cannot afford to change cars as quickly and
changing modes of transportation especially conditioned on self-driving
vehicles reaching broad acceptance might take some time. Your point regarding
rural areas may be applicable to several developing countries. The author's
key points remain valid, although the timeline looks too optimistic.

[1]
[http://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?year_h...](http://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?year_high_desc=true)

[2]
[https://en.wikipedia.org/wiki/List_of_countries_by_oil_consu...](https://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption)

~~~
cfmcdonald
This data lumps together suburban and true dense urban as 'urban'. Probably
over 50% of the U.S. population is suburban, and that population is not going
to be served economically by on-demand ride services.[1]

[1] [https://fivethirtyeight.com/features/how-suburban-are-big-
am...](https://fivethirtyeight.com/features/how-suburban-are-big-american-
cities/)

------
woodandsteel
It's important to understand that oil companies all over the world will be
going bankrupt if consumption falls 30%.

To start, they all have huge investments that they borrowed money for on the
calculation of making a certain level of revenue for 40 or so years.

A big drop in demand will mean less sales, but also that prices per barrel,
which are already low, will go down even further. The result would be maybe
half the total revenue, so they won't be able to pay off their loans and will
have to declare bankruptcy.

------
8rian
Gasoline is 100 times more energy dense than a battery. The Tesla roadster
adds 800 lbs to the lotus elise upon which it is built. Batteries have a long
way to go.

~~~
adrianN
And yet combustion vehicles don't have 2000 miles range. Energy density is
very important, but you can make up for it with better efficiency.

~~~
ams6110
Only because they don't need it. Most people are comfortable with a ~300 mile
range, knowing they can refill in 5 minutes. So most cars are built with
10-to-15 gallon tanks.

Build a car with a 30 gallon tank and you could easily be in the neighborhood
of 1000 miles range.

------
akamaka
Electric vehicles have not yet turned out to be more reliable or cheaper to
repair. Tesla vehicles are lower than average on both of those measures.

I used to be very optimistic because of how simple electric cars are in
theory, but in practice, a century of refinement of internal combustion
engines has not yet been beaten.

~~~
ensignavenger
The two Tesla models that are available right now are not 'average' cost
vehicles, though. How do the fair against similarly positioned vehicles?

I would expect Teslas to be a bit more expensive to maintain at this point, as
parts availability and third party after market parts manufacturers are about
non-existent for them. As electric vehicles get more popular and mainstream,
this problems (as far as EVs in general) will likely be resolved.

------
gozur88
He's wildly optimistic on the timeline to the point of delusion, but it's
probably true we'll transition to automated electric cars within a few
decades.

------
j7ake
This essay carries little weight if he hasn't put his own money on the Line by
betting against oil companies.

