Will Self-Driving Electric Cars Revolutionize and Decarbonize The Transport Sector By 2030?

There have been a slew of reports recently about the promise of self-driving electric vehicles to revolutionize the transport sector while massively reducing transport-related carbon emissions. One of the most bullish of these reports[1] is from the Silicon Valley think tank RethinkX, founded by entrepreneur and futurist Tony Seba. The breathless prose is evident from the first paragraph of the executive summary:

We are on the cusp of one of the fastest, deepest, most consequential disruptions of transportation in history. By 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call “transport-as-a-service” (TaaS). The TaaS disruption will have enormous implications across the transportation and oil industries, decimating entire portions of their value chains, causing oil demand and prices to plummet, and destroying trillions of dollars in investor value — but also creating trillions of dollars in new business opportunities, consumer surplus and GDP growth.”

McKinsey, a consultancy not known for its breathless prose, takes a much more conservative view of the future. They note that social factors such as the need for extensive new regulations and consumer acceptance may significantly slow down a move to self-driving vehicles. As one of their consultants notes, many people actually like to drive and they may not see giving up that task as a positive move. One’s own car is also entwined with issues of social status and self-image. In addition, there is the reality that many things that humans find relatively straightforward to do are extremely difficult for computers to do (and visa versa of course!). Driving a car is one of them, especially in the very busy and highly unpredictable environment of major city streets. McKinsey’s prediction is that “up to 15 percent of new cars sold in 2030 could be fully autonomous[2] and “In 2030, the share of electrified vehicles could range from 10 percent to 50 percent of new-vehicle sales …  it is important to note that electrified vehicles include a large portion of hybrid electrics, which means that even beyond 2030, the internal-combustion engine will remain very relevant.”

The RethinkX forecast is based on a view that fully autonomous vehicles will gain regulatory approval by 2020, and that they will provide a vastly less-expensive alternative to privately owned cars. The lower costs come from the ability to utilize the shared autonomous vehicles at a 40% rate when compared to the 4% for privately owned cars. They also propose that fleet operators will prefer electric vehicles, as they have much lower maintenance costs. So there will be a double impact, fewer cars on the road and those cars will tend to be electric. Reducing the energy and materials required for production, as well as the oil used for propelling vehicles.

A striking omission from either of the reports is any explicit mention of the need to drastically reduce carbon emissions to combat climate change as the main driver of change, and the central need for government policies to achieve that. The core of both of their narratives is one of technology and market forces, the classic eco-modernist approach. McKinsey gives a passing mention of the vague notion of “sustainability policies” as if the words “climate change” and “government action” have become socially unacceptable at some level. The need to dramatically reduce transport emissions by 2030 to forestall catastrophic climate change seems to be completely absent from the report.

RethinkX assumes that technology and market forces, given their chance, will massively reduce carbon emissions with little help (apart from the regulatory approval of self-driving vehicles) from government policies. This is the neoliberal view of government, provide the right supportive environment of rules and regulations and then get the hell out of the way of market forces. Forget realistically high carbon taxes, a functioning and integrated train and local mass transit network and a myriad of other climate-positive policies. The market will take care of things.

To fight climate change effectively, extensive government action will be required. The longer a society waits to act, the greater the level of government intervention that will be required. This is the core conundrum; those that have benefitted greatly from the move to neoliberalism have the greatest to lose from a newly activist and interventionist government. Hence the continuous falling back on eco-modernist alternatives rather than a realistic assessment of what is required. The assumptions of truly massive future applications of carbon capture and sequestration technologies are the other leg of the currently successful elite attempt to forestall the drastic government actions that are required. The neoliberal hobbling of activist and interventionist government could not have been timed more badly for the longer-term survival of our complex societies.

The reality of the transport sector between now and 2030 will most probably be much messier and obstacle-ridden than RethinkX assumes, but also more transformational than that forecast by McKinsey. The biggest variable will be that of government policy, with one of the biggest contrasts being between China and the United States. The former has a much greater level of government activism, across all parts of the transport sector[3]. The latter is doubling down on neoliberalism, with the planned gutting of many of the regulatory agencies of the government and an outright rejection of the need to act on climate change[4] [5]. It will be instructive to view the growth of electric and self-driving vehicles in both countries. In the absence of carbon taxes high enough to disincetivize internal combustion engines, together with many other explicit government actions, the reduction in transport-related carbon emissions will not be anywhere near what is required.

The probability is for oil demand forecasts to be continually revised downwards as the effect of vehicle electrification, autonomous vehicle services, and government regulations to reduce carbon emissions exert an increasing pressure to reduce oil consumption. Electrification of, or a forced reduction in, the long-distance trucking industry would add to that pressure; that is a topic for another post. With government policies, technology and market forces seeming to point to a lower oil consumption future, investments in new oil-dependent infrastructure would seem to be a losing proposition. Perhaps that it why the U.S. oil majors are pulling out of Alberta Tar Sands and focusing on the much shorter-term investments required for Shale Oil?

References

[1] RethinkX (2017), Rethinking Transportation 2020-2030, RethinkX. Accessible at https://static1.squarespace.com/static/585c3439be65942f022bbf9b/t/591a2e4be6f2e1c13df930c5/1494888038959/RethinkX+Report_051517.pdf

[2] Paul Gao et. al. (2016), Disruptive trends that will transform the auto industry, McKinsey. Accessible at http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/disruptive-trends-that-will-transform-the-auto-industry

[3] Michael J. Dunn (2016), China Aims To Be No. 1 Globally In EVs, Autonomous Cars By 2030, Forbes. Accessible at https://www.forbes.com/sites/michaeldunne/2016/12/14/chinas-automotive-2030-blueprint-no-1-globally-in-evs-autonomous-cars/#6db7dfa01c6e

[4] Oliver Milman (2017), Trump budget would gut EPA programs tackling climate change and pollution, The Guardian. Accessible at https://www.theguardian.com/environment/2017/mar/16/trump-budget-cuts-climate-change-clean-up-programs-epa

[5] Clare Foran (2016), Donald Trump and the Triumph of Climate-Change Denial, The Atlantic. Accessible at https://www.theatlantic.com/politics/archive/2016/12/donald-trump-climate-change-skeptic-denial/510359/

 

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