Is Peter Diamandis, the Serial Entrepreneur and Futurist, Right That the Era of Internal Combustion Engines is Ending?

July 7, 2019 – In a recent email blast, Peter Diamandis predicted that internal combustion engine automobiles reached peak production in 2018 and will begin to decline going forward. He is convinced that going forward it will be all about electric vehicles (EVs) and autonomous ride-sharing. To support his contention Diamandis cites a forecasted oil demand peak coming as early as 2021 based on Bloomberg New Energy Finance predictions. How Diamandis sees the switch to EVs happening is an interesting discussion which I have edited to share with readers here.

Currently, EVs displace the need for 350,000 barrels of oil each day. But over the long term, EVs are projected to disrupt demand by as much as 58,000,000 barrels per day— a figure that will steadily rise as EV costs plummet. EVs are set to win by sheer economic advantage, becoming the foundation for autonomous ride-sharing fleets in the future. As this happens, it will become uneconomical and societally unacceptable to continue to drive a gas-guzzling car.

The EV Competitive Advantage

This year, EVs are expected to surpass a 2.73% market share in the United States. They have already reached 5.4% in China. While this might seem small, growth is accelerating at an unprecedented rate, as the American EV market share projects to double every two years until 2025 and beyond. As explained by energy expert, science fiction writer, and engineer Ramez Naam, “Their growth rate is phenomenal. It took 20 years to sell the first million electric cars. It took 18 months to sell the next million. It took 4 months to sell the fifth million. That is the pace of this change. This is growing twice as fast as solar.” Stumping forecasters again, the surge is being driven by pure economics. While personal vehicles currently cost $0.80 US per mile, autonomous electric vehicles are expected to undercut this to only $0.35 per mile.

And even though EVs have been more expensive than gas and diesel-powered cars, EVs are turning out to be far cheaper to operate and maintain. The yearly cost to operate an EV today in the U.S. stands at about $485, less than half the $1,117 cost to operate a gas-powered vehicle. As battery prices continue to plummet, the upfront costs of EVs will decline until purchasing one will be a foregone conclusion.

The Growing Worldwide EV Race

Investment in EVs is booming today with auto manufacturers worldwide locked in an EV race.

Volkswagen is set to spend $50 billion on EVs in the next five years. Nissan is charging ahead with a vision to integrate its EVs into a broader consumer ecosystem through the company’s Intelligent Mobility strategy. And GM has pledged to go all-electric in the near future as it strives to release 20 new electric models in the next 4 years.

Beyond the car, EVs are disrupting large-scale shipping operations.

Last year, UPS ordered 950 N-GEN electric Workhorse Group vans, which can travel up to 100 miles on a single charge. At a cost of just $6 per 100 miles traveled, this trucking alternative promises astounding economic savings. While UPS currently operates 300 electric and 700 hybrid-electric vehicles, it aims to have 25% of its vehicles operating on alternative fuel by 2020. The company’s recent pre-order of 125 Tesla electric semi-trucks demonstrates yet another step towards this ambitious goal. The Tesla Semi today is expected to be 20% cheaper on a per mile basis to operate than fossil fuel-powered trucks and points to the extraordinary scale of the EV takeover, from compact cars to large-scale transit.

Electric Autonomy

Over the coming decade, market and environmental forces will lead to consumer adoption of EVs. And likely, the adoption of EVs will heavily feature autonomous fleets. And while personal EV adoption will continue to proliferate, the aggregate mileage of EVs will rise exponentially faster as autonomous electric ride-sharing fleets become commonplace.

McKinsey & Company, the global management consulting firm, predicts that one in ten cars sold could be a shared vehicle by 2030. Numerous leading car-share operators already employ EVs, such as Daimler’s Car2Go and BMW’s DriveNow programs. Meanwhile, most autonomous vehicle developers have included EV models in various of their testing phases.

A University of Texas study looked at autonomous taxis and determined at a cost of $0.75 per mile, over 39% of miles would be covered by these vehicles. And at half that price, $0.375 per mile, autonomous taxis would see coverage grow to 75% of total miles. Explains Ramez Naam, “the way that most people will first encounter an electric vehicle [won’t be a result of] buying one for themselves. These vehicles are [going to be] rapidly deployed mostly as electric taxis.”

Apple recently hired Tesla’s VP of Engineering, Michael Schwekutsch, indicating Apple’s intentions to wholly integrate EVs into its plans to develop autonomous vehicle technology. Just last year, Apple cars drove in autonomous mode for 80,000 miles, while drivers took back control of the vehicle for 1.1 miles driven on average. Increasingly competitive, driver intervention rates now stand nearly neck and neck with Mercedes-Benz’s human intervention rate of 1.5 miles, and Toyota’s somewhat higher reported average of 2.5 miles.

Another competitor, GM, covered 450,000 miles in the U.S. last year with its cutting-edge fleet of third-generation all-electric Chevrolet Bolt vehicles. The company currently operates Cruise Anywhere, an employee-only ride-hailing service in San Francisco, and has even partnered with DoorDash to leverage its vehicles for food delivery in the future.

One of the more salient figures in today’s EV surge, Tesla’s Elon Musk recently announced the company’s aspiration to release a fully autonomous robo-taxi fleet next year.

And one of the earliest players, Alphabet subsidiary Waymo, has risen far above any competitors in terms of miles driven and low human intervention rates. With 600 Waymo vehicles on the road, the company has driven over 16 million kilometers (10 million miles) in the U.S., not to mention an additional 12.8 million simulated kilometers (8 million miles) driven each day. Waymo vehicles at current rates require manual intervention only once every 17,700 kilometers (11,000 miles), vastly superior to the competition.

In December 2018, the company launched its Waymo One service, transporting more than 1,000 pre-vetted riders in the Phoenix area. Earlier this year, Waymo announced a strategic partnership with Jaguar Land Rover to release the I-Pace, a fully electric autonomous SUV. The plan is to release 20,000 vehicles by 2020.

Final Thoughts

As electric vehicles improve in performance and witness a drop in overall operating costs, forward-thinking individuals, companies, and investors are rapidly transitioning to all-electric transport. With the help of increased battery technology efficiency, tomorrow’s EVs will see a unit price drop that will make these vehicles more affordable while providing huge environmental benefits.

As 5G and next-generation cellular networks make autonomous vehicles a reality, it will lead to a growth in driverless EV fleets, with partnerships between EV manufacturers, autonomous driving companies, and ride-sharing services becoming increasingly vital.

The disruption to our existing car world will be significant as plummeting prices, and increasing convenience will tip in favor of EVs and cars-as-a-service. Private ownership of internal combustion engine cars will become a thing of the past.

Editor’s Note

The lack of mention of hydrogen as a fuel, and hydrogen-fuel-cell technology and their use to power vehicles seems to be an oversight on the part of Diamandis. Particularly in rural areas, where a minimal charging infrastructure and long-distance commutes will require alternatives to EVs, there will remain a need for hydrogen zero-emission technology or even a few diesel and gasoline-powered vehicles.