Report: Major Shift Away From Gas-Powered Cars on Horizon

Press enter to search
Close search
Open Menu

Report: Major Shift Away From Gas-Powered Cars on Horizon


SAN FRANCISCO — A new research report from RethinkX, an independent research group, has found that gas-powered cars may become a thing of the past.

According to Rethinking Transportation 2020-2030: The Disruption of Transportation and the Collapse of the ICE Vehicle and Oil Industries, found that within 10 years of regulatory approval of driverless vehicles, 95 percent of U.S. passenger miles traveled will be served by on-demand Autonomous Electric Vehicles (A-EVs) owned by companies providing Transport as a Service (TaaS).

Global demand will peak at 100 million barrels per day by 2020, dropping to 70 million barrels per day by 2030, according to the report.

“We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history,” said co-author Tony Seba, RethinkX co-founder, author of Clean Disruption of Energy and Transportation and instructor at Stanford Continuing Studies. “But there is nothing magical about it. This is driven by the economics.”  

Transportation projects' disruption will send oil prices plummeting to approximately $25 per barrel as soon as 2021, according to the report.

Other impacts the report found include:

  • In the U.S., an estimated 65 percent of shale oil and tight oil — which under a “business as usual” scenario could make up over 70 percent of the U.S. supply in 2030 — would no longer be commercially viable.
  • Approximately 70 percent of the potential 2030 production of Bakken shale oil would be stranded under a 70 million barrel-per-day demand assumption.
  • Infrastructure such as the Keystone XL and Dakota Access pipelines would be stranded.
  • Other areas facing large-scale volume disruption include offshore sites in the United Kingdom, Norway and Nigeria; Venezuelan heavy-crude fields; and the Canadian tar sands.

Rethinking Transportation also details how the approval of autonomous vehicles will create a market grab by existing and new ride-share companies, who will abandon internal combustion engines (ICE) for A-EVs for purely cost reasons. As a result:

  • 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 at least $5,600 per year by giving up its gas-powered car and traveling by autonomous, electric TaaS vehicles.
  • These cost savings will drive both potential new car buyers and existing owners to abandon vehicle ownership and move to TaaS.

“While these projections may seem radical because they differ from mainstream and incumbent industry projections, they are really quite conservative because they are based on assumptions that in some cases have already been bested by new technologies and plummeting prices,” said Bryan Hansel, CEO of Chanje Energy (formerly Nohm Technologies).

In regards to the gradual move toward electric vehicles, the advent of driverless cars and trucks, and the growth of shared transportation, James Arbib, technology investor, philanthropist and co-author of the report, said: “Mainstream analyses fail to account for the impacts of technology convergence, and a new business model born in response. This results in a far greater cost differential between individual ownership and Transportation as a Service, leading to far faster and more extensive adoption as people choose cheaper, better transportation provided as a service.”

Rethinking Transportation incorporates systems dynamics, including technology convergence, demand-side scale economies, increasing returns, network effects, feedback loops and market forces that better reflect the reality of fast-paced technology adoption S-curves. 

“Systems dynamics will be unleashed as adoption begins, creating a virtuous cycle of increased investments in technology and market development leading to decreasing cost and increasing quality and convenience of transportation as a service, which will in turn drive further adoption along an exponential S-curve,” said Seba. “Conversely, individual ownership, especially of internal combustion engine vehicles, will enter a vicious cycle of increasing costs, and diminishing quality of service and convenience.”

According to the report, the impact of TaaS are far-reaching:

  • Savings on transportation costs will result in a boost in annual disposable income for U.S. households totaling $1 trillion by 2030.
  • Consumer spending — America’s largest economic driver — will drive business and job growth.
  • Productivity gains will boost GDP by an additional $1 trillion.

As fewer cars travel more miles, the number of passenger vehicles on American roads will drop from 247 million to 44 million, opening up vast tracts of land for other uses.

Demand for new vehicles will plummet; 70 percent fewer passenger cars and trucks will be manufactured each year. This will result in total disruption of the car value chain, with car dealers, maintenance and insurance companies suffering almost complete destruction. Car manufacturers will have options to adapt, either as low-margin, high-volume assemblers of A-EVs, or by transitioning to become TaaS providers.

“As with any market disruption, there will be winners as well as losers. Job losses in the driving, manufacturing and oil and gas sectors will be a key concern. But huge opportunities will open up as well — from broad economic growth stimulated by consumer saving and spending, to more focused growth in vehicle operating systems, computing platforms and TaaS, fleet providers,” Arbib said. “Travelers will have more time available since they will not be driving, and that opens a wide array of business opportunities, such as cafes on wheels, mobile entertainment or workspaces. The ability to monetize TaaS platforms as companies have monetized the internet platform opens the road to free transportation in some areas.”

Policymakers will face several critical junctures where their decisions will either help accelerate or slow down the transition to TaaS, the report found. The first and the most crucial decision is when to remove barriers to autonomous vehicles (AVs). One indicator that American policymakers are inclined to move forward quickly is the rare bipartisan legislation to approve AVs, introduced by Senators John Thune (R-N.D.) and Gary Peters (D-Mich.). At the state level, California has approved 30 companies to test their self-driving cars on public roads and has proposed rules to allow fully (level 5) autonomous vehicles as soon as 2017.