August 10, 2017

Tomorrow's Motordom

It’s an industrial complex so big and so pervasive that it’s difficult to see it.  Motordom.
But technological convergence in motordom is upon us, and the changes are likely to be as inevitable as they are profound. People everywhere are prognosticating, planning, buying, selling, investing and teaming up in anticipation.  Something big is underway, and it involves more than engines.
But what will happen in motordom?  Prediction is always hard (if not impossible), but especially in times of disruptive tech change. Attributed to Niels Bohr and Yogi Berra:  “Prediction is very difficult, especially if it’s about the future”.  The best that we mortals might do is to track those who are creating the future.
HERE‘s a broad and long view from the Economist, from the starting point of the internal combustion engine, and it’s likely replacement by the electric engine.

IC.EngineTo gauge what lies ahead, think how the internal combustion engine has shaped modern life. The rich world was rebuilt for motor vehicles, with huge investments in road networks and the invention of suburbia, along with shopping malls and drive-through restaurants. Roughly 85% of American workers commute by car. . . .
. . .  Assuming, of course, that people want to own cars at all. Electric propulsion, along with ride-hailing and self-driving technology, could mean that ownership is largely replaced by “transport as a service”, in which fleets of cars offer rides on demand. On the most extreme estimates, that could shrink the industry by as much as 90%.
. . .  Driverless electric cars in the 21st century are likely to improve the world in profound and unexpected ways, just as vehicles powered by internal combustion engines did in the 20th. But it will be a bumpy road. Buckle up.

And then there’s THIS, from the CEO of that insignificant fringe player in motordom — Royal Dutch Shell plc. Thanks to Joe Romm at ThinkProgress.

“The next buy I do is my next car, which will be an electric vehicle,” was Van Beurden’s surprise answer. Shell is Europe’s biggest oil company — indeed, its biggest company of any kind — with $272 billion in revenues last year. . .
In a March speech, Van Beurden said the transition to a low-carbon economy built around renewable electricity and electric cars is “unstoppable.” That month, Shell sold off 90 percent of its Canadian tar sands assets, and in May it launched a new business unit focused on renewables.

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Leave a Reply to Jeff LeighCancel Reply

  1. Around 80M cars are sold annually (see here https://www.statista.com/statistics/200002/international-car-sales-since-1990/) plus trucks and motorcycles/scooters. Most of this growth is not US or EU but Asia, S-America and Africa. Over 1B are on the roads worldwide today. The world population is expected to grown from around 8B people today to over 10B.
    As such, it matters little if they are electric, fossil fuel or hybrid as the need for an individual transportation vehicle (be it a bike or a motorcycle or a 2 seater or a 7 seater minivan) is at the core of freedom and high on the list of people everywhere, right after owing your own home.
    Scaling battery production up to that level will be very very difficult and will take decades. Will lithium replace oil ? Not so fast as usually surmised. Scalability a huge issue https://www.arcenergyinstitute.com/commentary-is-lithium-the-new-oil/
    With Car2Go, Evo and/or Uber and the like and more and more AV capability (incl ZOVs) the demand for individually owned cars will drop somewhat as more than 1 or 2 people now can share a car. But like renting vs owning a home/condo, ownership will be desired by a large share if not the the majority, not mere renting/sharing.
    It will indeed be a bumpy road but individual freedom of movement, freedom of expression and scalability issues have to be considered as “cars” & technology evolve.

    1. When a car can self drive to you, why would you want to invest in the time and money in a garage and parking. This is why we will see dramatic private vehicle ownership.

      1. Short answer: because that is a long LONG time away.
        Longer answer: Because sharing does not appeal to everyone ! It is not preferred by everybody to rent a car that is potentially dirty, smelly or not exactly their style. I’d say 50% will always always OWN and not rent.
        Even longer answer: It is human to OWN, to CONTROL, to have it when they need it.
        Why do people buy a $120,000 or even a $50,000 vehicle if they can get just as fast and almost as comfortable in a $20,000 vehicle with better gas mileage ?
        Why do people buy a tux or a wedding dress or a motorboat or a convertible car that they use very little ?
        Why do people own a house worth $3M is they could rent one for $4000/month ?
        Why do folks rent life long rather than buying a TH for $250,000 ?
        Why do people eat at home instead of going out ?
        Why do some people prefer meat over vegetarian meals ?
        Why do people buy a house with a yard if a condo can be had at 1/2 the price ?

  2. Predictions based on ideological underpinnings aren’t very valuable. Here’s what’s more likely to happen rather than a long roll-out of autonomous vehicles.
    A jurisdiction with no real predilection for car ownership (a belief created through marketing rather than an innate human need) and a strong central government will allow AVs based upon economic reasons (massive savings on healthcare and congestion). Probably Singapore or one of the Scandinavian countries. They will save money hand over fist. Everyone else will jump on board. Total dominance of our major roadways within 20 years. Human-controlled cars essentially the purview of hobbyists on closed courses within 50 years. Anyone who buys a car to drive themselves will seen as a rube, not one of the cool kids. Talk to some teens. This mindset shift is already under way. They see having to drive themselves places as a nuisance to be avoided, not a rite of passage.

    1. Do you drive a car ? Do you leave the city sometimes, by car ? Do you know what mobility looks like ? Do you knwo the severe limitations on humans’ mobility outside of cities without a car ?
      One cannot extrapolate what works for Singapore or downtown Vancouver for MetroVan o even BC !
      Your vision may be true IN SOME CITIES but not on a country-wide scale. Singapore, for example, already has very high road tolls and a superb subway system, thus a very low car ownership per 100,000 people. This is NOT like USA or Canada or even EU.
      Tough to predict what happens anyway due to unknown technology leaps and legal, union, government and human limitations. Who predicted smart phones & internet impact on travel, car sharing, maps, books, university registration, newspapers, TV or car dealerships ie society as a whole in the 1950s or 1960s .. before anyone knew what the internet or a cell phone is ?
      Car related accidents are a tiny fraction of healthcare costs so the societal healthcare savings won’t be all that massive most likely, btw.
      Human psychology matters. It is not ideological underpinning. I was told 30+ years ago we’d have speech recognition and look where Siria or car or telephone based speech recognition is today. Very very weak as the merest hint of an accent or innuendo or a complicated word throws off the machine. AVs will be similar. They work in 99% of the cases but with a billion people on the road daily the 1% will create so many nuanced exceptions that a machine cannot handle.
      btw: I am the first to buy an AV as I do not like driving in cities. Can’t wait to have a machine drive me around. Likely will OWN one though but share one too !

    1. $8B in the US per year .. peanuts. yes there will be some minor savings overall .. maybe a few % points, but nothing massive.

    1. Unlike internet or cell phone revolutions a gradual change to EVs and/or AV features (in EVs or ICE cars) is coming, of course, but it is NOT a revolution. The business case is far too weak as prices are far too high, profit margins for car manufacturers too slim to non-existent AND ranges far too short. Physics 101 dictates an energy density of gasoline that is several times that of batteries. Ditto with AV features: they will all come gradually, bit by bit.
      Like speech recognition or auto-language-translation, hyped 30+ years ago as “imminent” or “soon” we are still waiting for the revolution here.
      It will come slower than you think.
      The only benefit to EVs is its quiet operation and less pollution / exhaust in dense cities. AVs too will eventually allow auto-driving in limited areas but the auto-drive / hail an AV anywhere, much like Uber, will be held up in courts, by unions, by regulations for years and years. How long will an AV be allowed to wait at the cub, for example ? 10 seconds ? 1 minute ? 10 minutes ? 60 minutes ? What happens if 300 theatre or 5000 hockey game visitors hail their AV .. how will traffic be managed? Many very complex issues yet to be solved that will take decades even if the technology to drive handsfree from Deep Cove to Kelowna in principle exists today. Just like speech recognition that in principle exists today yet is not widely used. My car system often still says after I say “turn up temperature 2 degrees” : “pardon?” !

      1. You’ve mashed up ICE, electric cars, and autonomous vehicles, with a dash of speech recognition as your argument against self-driving cars, and yet none of these capabilities requires the others. It’s a weak argument. As for how we will handle AV’s — there are existing parking and idling/loading zone rules that will suffice until something better comes along. No one is going to hold up billions of dollars in savings to the public purse because the parking regulations are imperfect.

  3. Jeff points to a writer that suggests a revolution is going on. The same writer last month wrote that this is a gradual revolution. Some might say a slow one. Also in the Star, “the IEA, BP expects oil demand to increase over the next 18 years, albeit at gradually lower rates.
    Over that time, world GDP will almost double. And rising prosperity in the emerging economies — which will drive all of the additional demand — will see an estimated two billion people lifted from poverty to relative affluence.
    But that market won’t be buying costly EVs. Purchases will consist mostly of locally made, affordable Chinese and Indian econoboxes and cube vans that don’t meet Western fuel or safety standards.
    “It’s the fact that two billion people, much of that in Asia, are moving to middle incomes,” says BP chief economist Spencer Dale on why oil will remain indispensable for longer than most Westerners think. In increasingly prosperous emerging economies, “people can buy their first motor car, and that drives up oil demand.”
    And producers are poised to fill that demand. Oil production is expected to increase by 9 per cent by 2035 to 3.6 million tonnes per year.”
    We’ll all be a hundred years old before oil starts to decline.

    1. As several independent fossil fuel analysts (Berman, Hughes, Aleklett etc.) have repeatedly demonstrated, it all depends on the price and the actual production data. Hype over demand and resource size is never to be taken at face value because it’s invariably flogged by investment bankers to grab your money and direct it into certain companies actively raising capital to drill, often in questionable plays. The hype invariably makes it into the IEA’s predictions.
      Conventional cheap oil peaked last decade and expensive resources were then tapped when the price invariably went up and made returns possible. The all-time world price peaked at almost $150 / barrel in 2008, and that precipitated a massive recession simply by being the straw that broke the back of grossly overstretched and insider-manipulated financial markets. The price dropped precipitously. The low prices eventually stimulated demand, and the price started upward again. But over-production primarily by overstretched US shale drillers (who couldn’t afford to not make their debt payments) continued throughout the recovery and, accompanied by matching overproduction by Saudi Arabia, caused the price to drop again. The resulting low prices caused big investments in expensive unconventionals to break apart (oil sands, deep sea) or more record debt to pile up (shale). The huge inertia of the largest big oil and gas projects always lags the demand and price curves. These projects must be budgeted over longer periods of time regardless of losses incurred with suddenly lower prices. That is very problematic. Today the price trend is on a wavering plateau and may trend either way, but likely up.
      Meanwhile, production in the biggest US shale plays has plateaued and is starting to decline, which will cause another shortage and probably much higher prices in the early 2020s. Therein the risk of another big recession is formulating, like the mid-ocean low pressure cells that are the beginnings of a hurricane. In addition, worldwide vehicle km travelled (VKT) plateaued in 2014 and is starting to decline and this is greatly aided by the significant increase in urban mass transit, especially rail. Demand for oil as a fuel will not be quite as predictable as you portray, even in Chinese and Indian cities where mass transit is also coming on stream at a record pace (Newman & Kenworthy, 2015).
      Recession by low prices. Recession by high prices. Record worldwide debt to mitigate recessions, with limited capacity to continue the ‘quantitative easing’ trend. Misinformation and confusion disseminated on overall resources vs. technically and financially viable reserves. Hugely inflated potential production numbers vs. actual production, and cloaked high production decline data. The evidence is clear: Like investment banks, the fossil fuel industry cannot be trusted; they have bought too many lawmakers with their Dark Money in order to maintain the charade.
      Can you please tell us how this price and demand volatility is good for a mature economy? And how the overly-optimistic oil industry prognosticators have gotten it so wrong for so many years? And why the largest five oil corps are now publicly admitting to the reality of climate change and are actively pursuing renewables?

      1. You seem to be suggesting that the writer, David Olive of the Toronto Star, that Jeff Leigh introduced us to doesn’t know what he’s talking about.
        I suppose that could easily be possible.

        1. Ed, you seem to be suggesting that if one finds an article by a person interesting, that one must therefore agree with everything that writer ever says. Some of us prefer not to be sheeple.

      2. Good to see that you agree with me, Jeff. You are right. Anyone that swallows everything published by The Star is quite likely a sheep.

        1. “Honest” Ed posted: “Also in the Star, “the IEA, BP expects oil demand to increase over the next 18 years, albeit at gradually lower rates.”” Apparently seriously.
          And then is a subsequent post tells us not to believe everything published by the Star.
          Classic.

        2. Right again Jeff. I guess we all agree that just about everything David Olive writes in The Star, including that silly guess about a revolution going on with electric vehicles, should all be taken very lightly because what he writes is so contradictory and just stabs at possibles.
          As you say; a classic case of a journalistic hack just sensationalizing anything he comes across to try and sell papers. No wonder readership is crashing. In less than 15 years The Star (Torstar) stock has gone from over $30 to less than $2. Perhaps the greatest loss of value in the history of Canadian newspaper publishing.

        3. No comment on the Star, Ed, I have never read it. I made none of the statements that you are trying to attribute to me. You seem to be making stuff up as you go along.
          I read an EV article elsewhere, which they hosted, so I provided a convenient link to it. I think the writer made some good points. The key one is that there are many reasons for the EV shift, not one, and the demand is already there. So any comparison to previous technology adoption rates needs to consider those distinctions.
          Your comments are confusing. What exactly are you trying to say? You keep contradicting yourself.

        4. Hey Jeff, when you write “Another view, from the Star. ” it is assumed that you read it. Then you write, “No comment on the Star, Ed, I have never read it. “.
          I guess we should remember this for next time. No rush.

        5. Did you miss the part where I read an article from the Star that was reprinted elsewhere, but at a site you can’t access?
          Still no comments on the article itself?
          With comments like this, it might be time to change your posting pseudonym again.

        6. So now you say say you did read The Star article and you’ve never read it, but it’s on a site we can’t access, yet you posted a link to the article.
          You must be a lawyer that specializes in writing fine print with talk like that.
          Is this what they call Pretzel Logic?

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  4. “We’ll all be a hundred years old before oil starts to decline.”
    The article was about changes underway to vehicles, not about oil production.
    If you want to put all your retirement savings into oil stocks, go for it. You may be a lot closer to 100 than some of us.

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