Auto industry Tony Seba on auto industry

Published on May 11th, 2017 | by Steve Hanley


Death Spiral For Oil And Auto Industry Will Be Complete By 2030, Predicts Futurist

May 11th, 2017 by  

Futurists make predictions. That’s what they do. Sometimes they are right; sometimes they are wrong. As futurists go, Stanford economist and RetinkX founder Tony Seba has a pretty good track record. He predicted the solar energy boom at a time when prices for solar power were 10 times what they are today. His latest report predicts two things. One, he says that by 2030, 95% of people won’t own a private car, killing off the auto industry. Two, he predicts electric vehicles will devastate the global oil industry by the same date.

Tony Seba on auto industry

Death Of The Auto Industry

“By 2030, you probably won’t own a car, but you may get a free trip with your morning coffee. Transport-As-A-Service (TaaS) will use only electric vehicles and will upend two trillion dollar industries. It’s the death spiral for cars (and the oil industry), he says. “We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history. But there is nothing magical about it. This is driven by the economics.”

“A-EVs (autonomous electric vehicles) engaged in TaaS will make up 60 per cent of U.S vehicle stock. As fewer cars travel more miles, the number of passenger vehicles on American roads will drop from 247 million in 2020 to 44 million in 2030. Using TaaS will be four to 10 times cheaper per mile than buying a new car, and two to four times cheaper than operating an existing paid-off vehicle, by 2021.

“The cost of TaaS will be driven down by several factors, including utilization rates that are 10 times higher; electric vehicle lifetimes exceeding 500,000 miles; and far lower maintenance, energy, finance and insurance costs. The average American household will save $5,600 per year by giving up its gas powered car and traveling by autonomous, electric TaaS vehicles.”

If 70 percent fewer passenger cars and trucks are manufactured each year, global automaker supply chains will shrink to a fraction of their current size. Seba believes the auto industry, including car dealers, service providers, and insurance companies, will suffer “almost complete destruction.” Traditional auto industry leaders like Ford and General Motors will either become assemblers of A-EVs or make the transition to being TaaS providers. Many car makers are already preparing for the transition by investing in ride hailing and car sharing services like Lyft.

Death Of The Oil Industry

Seba says the impact on the oil industry will be “catastrophic.” He predicts, “Global oil demand will peak at 100 million barrels per day by 2020, dropping to 70 million barrels per day by 2030. This will impact different companies and countries disproportionately — and in many cases, dramatically — depending on their exposure to high cost oil,” reports North American Energy News.

Seba’s vision has implications beyond the auto and oil industries. There is an active and growing movement to pressure institutional investors to divest themselves of their fossil fuel holdings. Many of those institutions are pension fund managers who are charged with maximizing the return on investment realized by the fund’s holdings. Professional managers are reluctant to mix politics with economics, but now they may have a purely economic reason to dump their fossil fuel holdings — they are about to become worthless, which will cost the beneficiaries dearly.

Predicting The Future Is Hard

Hindsight is always 20/20 but foresight is fraught with danger. If predicting the future was easy, we would have all bought Tesla at $31 and loaded up on Apple 20 years ago. Seba does not offer any guarantees with his prognostications, but his projections have to be given some weight. Right now, a cold breeze is beginning to blow through many board rooms around the world. Political pressure to do the right thing for the environment may have only limited success, but economics could destroy both the automotive and fossil fuel industries in a relatively short period of time.

Source: RenewEconomy

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About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.

  • Eco Logical

    Good article Steve, I divested from the oil industry over 20 years ago and reinvested in renewable energy and EVs … no, unfortunately not Tesla at $31 🙁

    • Steve Hanley

      Care to share your investment strategy? I started tracking solar stocks a few years ago but their performance was very disappointing. Might be interested in doing a regular (quarterly?) article on investing in green tech.

      • Eco Logical

        Early on in I invested in manufacturing, first hydrogen fuel cells back in 2001 (which of course were a disaster), then direct-drive generators for Wind / Marine Hydrokinetic Turbines, and finally high-torque direct-drive traction motors for truck propulsion. Still haven’t profited from the generators and motors … yet!

        Now that I’m retired my strategy has shifted to renewable energy ‘production’, currently in the form of a revenue sharing agreement (royalty) on gross Wind Farm production. I’ve currently invested in three Wind Farms which are still in the permitting stage but (hopefully) will be in production by 2019. At that time I’ll have a residual income that is a percentage of gross electricity sales to the utility. For example, a 100 MW wind farm produces ~300,000 MWh (300 GWh) of electricity per year. At $100/MWh or $0.10/kWh the gross revenue is $30Million/year. Every 1% of revenue share (royalty) earns $300K/year!!!

        It’s worth pointing out that startup (Wind/Solar/Hydrokinetic) developers have difficulty attracting investors until their project(s) are permitted. That’s an opportunity for savvy investors to get in early, albeit at greater risk!

        Note that I previously worked in ‘Planning & Approvals’ for an established wind farm developer.

        • Epicurus


          I thought PPAs between utilities and wind farms were going for $.03-$.04 per kWh.

          I have toyed with the idea of finding 6 acre (or so) tracts within cities for “community solar” type installations. I did the same thing as a petroleum landman for urban drilling projects, but it’s not easy (either finding that much open land or convincing the landowners). Solar doesn’t offer the same possibility of a financial windfall as do oil and gas unfortunately. Aside from that, I don’t have any contacts in the solar biz (like engineers) like I do in the oil and gas biz. I don’t know what the economics of these projects are.

          It seems to me that the “big money” is still mostly in filth, poison and death. I call it the devil’s economy.

          • Eco Logical

            $0.10/kWh is an example, depending on where since the $/kWh vary. BC Hydro (British Columbia, Canada) offers PPAs up to $0.11/kWh for wind farms (or solar, hydro, or other renewable energy). Alberta doesn’t offer PPAs but wind is getting $0.035/kWh on the open market + carbon levy rebate of $0.013/kWh increasing to $0.033/kWh by 2022 and perhaps higher later next decade. At $0.068/kWh we can make a profit with wind.

            Some of Alberta’s oil & gas companies have stopped investing in the tar sands and are moving that to renewables. For example, Suncor (a tar sands producer) has 287 MW of Wind Farms and is building another 440 MW of wind plus 240 MW of solar in Alberta.

            I suggest you talk to your oil & gas contacts, make the case that renewables have become a better investment both economically and in the future of our planet.

          • Epicurus

            So you are Canadian? The U.S. doesn’t have a carbon levy.

            I wonder how Canadian and U.S. solar and wind incentives compare. Anyone know?

          • Eco Logical

            Yes, I’m Canadian 🙂 and the Carbon Levy currently varies by province (BC is $30/ton = $0.02/kWh, Alberta is $20/ton now increasing to $30/ton in January 2018) but when we finally booted (voted) out Steven Harper and his regime of climate deniers we elected Justin Trudeau who supports the Paris Agreement and legislated a minimum Canada-wide Carbon Levy of $10/ton in 2018 incrementing by $10/year to $50/ton by 2022. The provinces can either rebate it to taxpayers (BC) or to develop clean energy (Alberta). Ontario uses a cap and trade system which is Ok with the feds as long as it’s equivalent to the legislated minimums.

    • Epicurus

      Have you been able to make money in renewable energy and EV investments? Tough to do unless you bought Tesla early (wish I had).

      • Eco Logical

        See my reply to Steve above.

  • Ed

    Hats off for having the courage to make a prediction…and I hope he is right. However, the famous Yogi Berra quote applies: “It’s tough to make predictions, especially about the future.” I include an example from my own company’s history:

    • The problem Ed is that Seba and a handful of experts are a tiny minority who are independent and not bogged down in details. They can see the broad strokes and find the data to confirm the trends. Other s-called experts are bogged down in details and don’t really check the bigger picture. What Seba says is not difficult to predict. What he does brilliantly well is to give data to back it up. And so far, he’s had a good track record.

      • Ed

        I can concur. In fairness, the execs at my company were all nose-to-the-grindstone-make-your-numbers guys and gals who were suddenly asked to put their head up and take a long view, so not surprised that they were not grounded in anything but “popular facts.”

        • Yes, that’s so true. It’s even more difficult when we meet with them and it turns out they are not car people but lawyers or accountants 🙂

          • Ed

            We did not allow attorneys to run companies

          • Huh?

    • Steve Hanley

      Gotta love Yogi Berra!

  • There are few experts I trust, Tony Seba and Robert Shiller both of whom have stellar track records. Everything he says not only makes sense but is something most independent journalists like us have been saying for years. I just can’t believe how many people still don’t see the bigger picture. But I guess that is why we have mainstream news and the cheerleaders they pay on those outlets 🙂

  • bioburner

    Some interesting points. Just switching to electric cars will shrink the supply train and reduce the volume of money the oil industry makes. I understand the thinking but all this in just 15 short years is pretty optimistic thinking.

  • Leeper

    I could see this for city’s and near city suburbs, but out in the county I’d give it much longer.

    • neroden

      Electric cars are perfect for the countryside, actually. In the city they still get caught in traffic (so take the subway).

      For reference I often drive 60 miles past farmland to go to the drive-in. In my Tesla.

      • Leeper

        I referring to autonomous rental cars. More difficult route with Amish buggies, animals, and little to no markings. Throw in a dash of snow, gravel, and small population density I don’t see this happening soon.
        I do enjoy electric though, just need more range. Imiev womp womp.

        • Carl Raymond S

          Tesla model 3, whoosh whoosh.

  • neroden

    I have predicted the bankruptcy of ExxonMobil before 2030 ended. I predicted this a couple of years ago. We’ll see.

  • Carl Raymond S

    It will be interesting to see which nation states are the first to legalise driverless services. I don’t think it will be a place with an ICEV industry – they will attempt to delay it. Pressure will mount however as people travel and post Facebook updates of their fabulous $2 20km driverless taxi ride in .

    • Floridared

      Dubai. Followed by another city state, or a Scandinavian country.

  • bcmorrison

    Good article, thanks for sharing. Could happen. Also, China, India, South American economies could boom and the few automakers that secure a beach-head could have huge payoffs. Also, electric technology could become very inexpensive and all the car most people need could be had for less than $7,500. Death of the $30k+ automobile. The sun could enter a cycle of lower activity for a hundred years causing the planet to drastically cool and people lose interest in global warming trends and free energy from fossil fuels ramps back up. Best to stick with profitable companies that have low debt, a track record of adapting, and committed to investing in new technologies.

  • Buckage

    If something’s cheap, easy, safe and convenient compared to the alternative, it will take over fast. In general people don’t enjoy buying, storing, driving, servicing or parking their own cars. Maybe 95% number suggested by Tony Seba isn’t the right number but it will be close.

    Also over time this will just keep getting better and better. The existing private ownership model hasn’t changed much or gotten better in the last 50 years….actually it continues to get worse based on parking and traffic.

    How cool would it be to have all that garage space back for other uses.

    If you need a pickup or minivan for a weekend or week you can still easily use this shared ownership model. Cars/trucks/minivans in general are pretty expensive when it comes to total cost ownership for the average Joe. This will be a much better alternative for most people. Especially older folks and younger folks who would rather spend their money on something other then a car or do something other then drive like be on a social network.

    Business owners who drive all the time or who use their vehicle for much of their work stuff will still want their private vehicle.

  • Edith Roberts

    And what about auto tech’s did you factor in jobs!!!!!!!!!!!!!!!!!

  • Edith Roberts

    For ever I have been taking the hit from the auto industry no health insurance, no pay raises, closed dealership ships because they call the floor plan and dealerships had to buy the cars on lot or shut down.
    My family has had the shaft every time the Auto Industry does anything,
    my husband is a GREAT man who does fix every mistake auto industry makes.
    We have sold everything we own because auto industry did not factor in the EMPLOYEE!!!!
    We have raised our children now when we just went in debt for a home to call our own YOU THE AUTO INDUSTRY changed how will we be able to pay for the loan ???
    How will we grow when schooling cost so much??
    How will we survive ?
    2030 is 23 years from now …. 23 years a home loan is 30 years
    Yea well pardon me sirs, but a bridge is not where he should be after years of service to GREATNESS !!!

    you will not shift a training job for them I did not see that “PLAN” to send “ALL”auto works to school !!!!!!!!!!!!!!!!!!!!!!

  • Edith Roberts

    What about the auto tech ? For ever I have been taking the hit from the auto industry no health insurance, no pay raises, closed dealership ships because they call the floor plan and dealerships had to buy the cars on lot or shut down.
    My family has had the shaft every time the Auto Industry does anything,
    my husband is a GREAT man who does fix every mistake auto industry makes.
    We have sold everything we own because auto industry did not factor in the EMPLOYEE!!!!
    We have raised our children now when we just went in debt for a home to call our own YOU THE AUTO INDUSTRY changed how will we be able to pay for the loan ???
    How will we grow when schooling cost so much??
    How will we survive ?
    2030 is 13 years from now …. 13 years a home loan is 30 years
    Yea well pardon me sirs, but a bridge is not where he should be after years of service to GREATNESS !!!
    you will not shift a training job for them I did not see that “PLAN” to send “ALL”auto works to school !!!!

  • Seba is making a number of bad assumptions. Autonomous electric cars will likely lead to more use of cars, not less, for the following reasons:
    1) it is more convenient to call an autonomous vehicle from a ride service like Uber or Lyft than use public transport, so there will probably be more cars on the road,
    2) autonomy people can do other things while in the car (internet, watch movies, rest, work, etc), so they won’t be as bothered by more traffic and long commutes,
    3) electric cars means that the air will be cleaner and there will be less noise, so people will be willing to spend more time in the car, not less,
    4) cars will remain a status symbol and people will still want to own them. Look at the status of owning a car in Singapore, despite the fact that it can cost over $100,000 just to get a license to own a private car in Singapore for 10 years.

    Seba may be right that the demand for private cars will decrease in some countries like the US and Germany which already have high ownership rates, but it is likely to be a gradual dropoff and not a collapse as he foresees. Seba ignores the increasing demand in developing countries which represent 80% of the global population, which will more than make up for any decrease in demand among the 20% who live in the developed world. Almost all the auto companies are global companies, so they are not likely to go bankrupt if demand slackens in 20% of their market. I find it highly unlikely that the auto industry will be producing less than its current output of 90 million vehicles per year in 2030. At worst I would predict flat growth rather than the current 4% annual growth.

    Seba assumes that the auto industry will function like the silicon industry, but there are number of reasons to believe that the transition will be much slower than predicted to autonomous electrics. First of all, only Telsa, BYD and Nissan have laid the groundwork to produce electric vehicles on a massive scale. We will need a 100 gigafactories producing batteries to make the full transition and it will take at least two decades to ramp up all that battery production. There will have to be a massive increase in lithium, nickel, cobalt, copper and manganese mining worldwide, which will also take at least two decades to ramp up. There will be a huge spike in demand for these 5 metals and supply problems, which will jack up the prices of batteries and will slow down the transition.

    Remember that it can take years to open a new mine and there aren’t that many places in the world with high concentrations of nickel, cobalt and lithium. Currently the battery in a long range electric car needs roughly a thousand pounds of metals. By 2030, we might be able to get that down to 600 pounds of metals. Multiply 600 lbs by 100 million cars per year in 2030 and you start to see the scale of the metal supply problem. Even if we discover a new battery chemistry based only on common metals like iron and aluminum, it will still take decades to do the R&D and ramp up production.

    Another thing that Seba doesn’t include in his predictions is how electric cars will lower the value of used gasoline cars. The resale value of gasoline cars will collapse, so it will be possible to pick up a used gasoline car for a couple thousand dollars, compared to buying a $30K+ electric car. People who want to save money will choose a used gasoline car, because the cost of buying a vehicle far outweighs the price of the fuel (electricity vs gasoline/diesel). At the same time, falling demand for petroleum will decrease gasoline
    prices, so there probably won’t be as large of a price gap between electricity and gasoline as Seba predicts. Electric cars might be cheaper over the entire lifetime of a car, but their high upfront costs make that less important for the average consumer.

    Most of the traditional auto companies want to protect their existing investments, so they will drag their feet as long as possible. Some of them may go bankrupt because they are unwilling to change, but they are also going to slow down the transition. The big three auto companies that each produce 10 million cars a year, VW, GM and Toyota, will take at least 15 years before they are ready to start producing the majority electric.

    At best, I can’t see the world producing more than 2.5 million electric vehicles in 2020 and 15 million in 2025 due to global limits on battery production. By 2030, we might have enough battery factories and metal mining so that the majority of the cars in the world are electrics, so that would mean the majority of the cars on the road would be electric by 2040.

    I say all of this with great sadness, because the world needs to transition as fast as possible to confront climate change. I have never owned a car in my life and I have lived in Bloomington IN, Colorado Springs CO, Austin TX, Cuidad Juarez, Mexico and La Paz, Bolivia over the last 20 years, so I know that it is possible, but I also know the hassles in not owning a car and I suspect that the majority of North Americans will not be willing to give up their personal vehicles as Seba predicts.

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