With just one new technology, according to author and Silicon Valley investor Tony Seba, the world will undergo a disruption that will completely remake our cities, transportation – and thankfully, the world’s emission profile.
Speaking at the Robin Hood Investor’s Conference at the end of October, Seba identified the crucial technology as Level 4 autonomous vehicles (the five levels are described at Wikipedia).
His thesis is few people understand how fast disruptive technologies and business models are already converging: batteries, electric vehicles, autonomy, and the Uber model of transportation.
Three of these are very close to being disruptive now – it’s only Level 4 autonomy that’s missing. Once that arrives, Seba predicts a collapse in emissions, oil prices falling so far expensive extractions (oil sands, shale, and deepwater extraction) will end, and a construction boom that will completely reshape our cities.
Why is autonomy the linchpin of all this? Because, Seba explained, autonomy will tip a vital balance that destroys the economics of owning a car. Modelling how this plays out in America: with no driver required and a falling cost of electric vehicles, there’s no sense in borrowing $50,000 over five years to buy a car when people can have the transport they need for a $100 subscription and “10 cents a mile”.
The role of EVs in this transformation is crucial, because as a fleet purchase, the only reason the internal combustion engine still exists is that there aren’t enough EVs yet. But that can change very quickly: Seba said forecasters consistently forget technology adoption isn’t linear, it typically follows an S-curve.
That’s how it went with mobile phones: in 1985, McKinsey gave AT&T a prediction that there would be 900,000 mobiles in the year 2000, when in fact the number sold by that time was 100 million.
It also went that way for the car, which went from “essentially nothing” to 95% of the market in 20 years.
“From 11% to 80% happened in just ten years, while we built two new industries [cars and oil – editor], built a new road transportation system, and fought a major war”.
That’s how markets such as batteries, EVs, and autonomy will play out.
Seba reckons when a vehicle-maker can get a Level 4 autonomous EV past a regulator, the world will hit “peak car”. I have to agree with him and I’m going to blow my own horn a little, because writing for UK-founded technology site The Register in 2013, I reached a similar conclusion (even though my guesses back then were far more conservative than Seba’s). Since autonomous cars can trundle around 24 hours a day if needed, it scarcely makes sense to buy a car (and that’s going to be catastrophic for Detroit).
“On a per-mile basis, EVs are ten times cheaper to power than internal combustion engines. An EV has twenty-plus moving parts, versus two thousand-plus for the internal combustion engine.”
He said because there are so few moving parts, the EV is close to zero maintenance and makers are able to offer “infinite miles” warranties. However, even if prices fall to some degree, owning a vehicle with a 500,000 mile useful life won’t make sense, because autonomy will make the transport-as-a-service subscription model irresistible.
Especially for fleet owners. Cars operated by fleets rack up an average 100,000 miles per year, so
“over five years, you need one EV or three internal combustion engine automobiles”.
That’s where the disruption comes from, he said, with just a few examples of how much our lives and our world will be changed by the EV/batteries/autonomy and transport-as-a-service convergence.
He pointed to South Australia as an example of how battery technology is already causing “market trauma”: a battery with capacity just 2% of the state’s energy supply crashed the value of ancillary services (things like frequency stabilisation, which because of fast response means a battery is a natural supplier), and he predicts “peakers” (generators brought into service only at peaks) and baseload will follow soon enough.
Emissions Down, Disposable Income Up, Cities Reshaped
Seba believes within years of the arrival of Level 4 autonomy, oil prices will crash to between $20 and $25 (which is why so many extraction activities will cease), and the number of internal combustion engines will fall far enough to bring about a
“90% reduction in emissions” from transport by 2030, “not because of governments – in spite of them”.
And: flying in the face of eternal fretting (mostly from the conservative side of politics) that emissions reduction is too expensive, “we’ll get money back” – both as individuals and as societies.
The individual saving is simple: it costs around $6,000 a year (American figures) to own a car, so giving up ownership puts money directly into the consumer’s pocket. Seba reckons in America the end of private vehicle ownership will represent a “trillion dollar” increase in disposable income, a huge economic stimulus (which should help offset the harm coming from those industries that collapse).
At the societal level, there are savings everywhere you look – he believes there’s a trillion to save simply by people not driving (the road toll heading for zero).
And there’s a huge real estate opportunity coming, if the vehicle market shrinks by his predicted 80% (because cars are parked most of the time, a “useless use of space”). In Los Angeles alone, he said, the land freed from parking is bigger than three San Franciscos, which means a transformation in available green space, affordable housing, and potential business expansions.
Is there a downside to the disruption and transformation?
My natural pessimism says “yes” – but then again: excepting the climate impacts that weren’t considered in the 1910s, the radical transformation brought by “cars version 1-point-oh” was a huge benefit for both the economy and for peoples’ upwards mobility.
What do the thinkers among Solar Quotes’ readers think – are there alligators lurking below the surface of Seba’s vision?