London - It’s 10 years since
Apple unleashed a surge of innovation that upended the mobile phone
industry. Electric cars, with a little help from ride-hailing and
self-driving technology, could be about to pull the same trick on Big
The rise of
Tesla Inc. and its rivals could be turbo charged by complementary
services from Uber and
Alphabet’s Waymo unit, just as the iPhone rode the app economy and
fast mobile internet to decimate mobile phone giants like
The culmination of these technologies - autonomous electric cars
available on demand - could transform how people travel and confound
predictions that battery-powered vehicles will have a limited impact on
oil demand in the coming decades.
“Electric cars on their own may not add up to much,” David Eyton, head of technology at London-based oil giant
BP, said in an interview. “But when you add in car sharing, ride pooling, the numbers can get significantly greater.”
Most forecasters see the shift away from oil in transport as an
incremental process guided by slow improvements in the cost and capacity
of batteries and progressive tightening of emissions standards. But big
economic shifts are rarely that straightforward, said
Tim Harford, the economist behind a book and BBC radio series on
historic innovations that disrupted the economy.
“These things are a lot more complicated,” he said. Rather than
electric motors gradually replacing internal combustion engines within
the existing model, there’s probably going to be “some degree of
That’s what happened ten years ago. The iPhone didn’t just offer
people a new way to make phone calls; it created an entirely new economy
for multibillion-dollar companies like Angry Birds maker Rovio
Entertainment Oy or WhatsApp.
The fundamental nature of the mobile
phone business changed and incumbents like Nokia and BlackBerry Ltd.
were replaced by Apple and makers of Android handsets like Samsung.
Elon Musk’s Tesla and established automakers like
General Motors are striving to make their electric cars desirable
consumer products, companies like
Uber and Lyft are turning transport into an on-demand service and
Waymo is testing fully autonomous vehicles on the streets of California
Combine all three, for example through an
Alphabet investment in Lyft, and you have a new model of transport as a
service that would be a cheap compelling alternative to traditional car
ownership, according to RethinkX, a think tank that analyses
One key advantage of electric cars is the lack of mechanical
complexity, which makes them more suitable for the heavy use allowed by
Francesco Starace, chief executive officer of Enel, Italy’s largest
utility, said in an interview.
After disassembling General Motors’s Chevrolet Bolt, UBS
concluded it required almost no maintenance, with the electric motor
having just three moving parts compared with 133 in a four-cylinder
internal combustion engine.
“Competitiveness very much depends on the utilization of the car,”
Laszlo Varro, chief economist at the International Energy Agency, said
in an interview.
The average Uber vehicle covers a third more distance
than the typical middle-class family car in Europe, amplifying the
benefit of lower running costs to the point that “the oil price at which
it makes sense to switch to electric is $30 per barrel lower,” he said.
Uber on steroids
The total cost of ownership of electric and oil-fueled vehicles will
reach parity in 2020 for shared-mobility fleets, five years earlier than
for individually-owned vehicles, according to Bloomberg New Energy
Already in London, Uber plans for its UberX service to be
hybrid or fully electric by the end of 2019. Its rival Lyft aims to
provide at least 1 billion rides a year in autonomous electric vehicles
by 2025, saying they can be used much more efficiently than
This combination would be “the Uber model on steroids,” Steven
Martin, chief digital officer and vice president of
General Electric’s Energy Connections unit, said in an interview.
“Once you have complete autonomous operation of a vehicle, then my
desire to own one is going to go down and I’ll be more willing to sign
up to a subscription service.”
The transition to fully autonomous fleets may not match the speed of
the smartphone revolution because of the many regulatory, legal, ethical
and behavioral hurdles. Self-driving technology should become available
in the 2020s, but won’t be widely adopted until 2030, BNEF says.
Even so, the shift to electric cars could displace about 8 million
barrels a day of oil demand by 2040, more than the 7 million barrels a
day Saudi Arabia exports today, the London-based researcher says. That
could have a significant impact on oil prices - a drop of 1.7 million
barrels a day in global consumption during the 2008-2009 financial
crisis caused prices to slump from $146 a barrel to $36.
That doesn’t mean oil giants like BP or
Exxon Mobil are heading for an inevitable Nokia-style downfall.
While transport fuels account for the majority of their sales, they also
have huge businesses turning crude into chemicals used for everything
from plastics to fertiliser. They also pump large volumes of natural gas
and generate renewable energy, both of which could benefit from
increased electricity demand.
Even if electric vehicles do grow as rapidly as BNEF forecasts, the
world currently consumes 95 million barrels a day and other sources of
demand will keep growing, said
Spencer Dale, BP’s chief economist.
The London-based energy giant
expects battery-powered cars to reduce oil demand by just 1 million
barrels a day by 2035, while also acknowledging the potential for a much
larger impact if the industry
has an iPhone moment.
The sheer breadth of the potential disruption makes it hard to
predict what will happen. When Steve Jobs unveiled the iPhone, few
people anticipated that it meant trouble for makers of everything from
cameras to chewing gum.
“The smartphone and its apps made new business models possible,” said
Tony Seba, a Stanford University economist and one of the founders of
RethinkX. “The mix of sharing, electric and driverless cars could
disrupt everything from parking to insurance, oil demand and retail.”
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