An Australia-based futurist has predicted that by 2026, all vehicles produced globally will be electric. Tesla also frequently mocks gasoline cars and sees them as a thing of the past.
Tesla and gasoline cars
An Australia-based futurist has made a bold prediction about electric vehicles. Professor Ray Wills, managing director of advisory company Future Smart Strategies, expects that by 2026, all vehicles sold will be electric. Speaking with the Sydney Morning Herald, Wills said, “Electrification as I see it will be virtually complete by 2026, the only cars built in my opinion will be electric, with the exception of some specialist bespoke vehicles.” He added, “Nobody will ever be exactly right. But I have been labelled as a futurist and the art of a futurist is to be the least wrong.”
Automakers are investing heavily in electric vehicles
Legacy automakers such as Ford (F) and General Motors (GM) are investing heavily in electric vehicles. Currently, Tesla is the dominant player in the US electric vehicle market. Despite new launches, legacy automakers haven’t been able to crack the electric vehicle market. Legacy automakers are also collaborating among themselves to pool resources. Ford has a partnership with Volkswagen, while General Motors has tied up with Honda. Luxury carmakers such as Audi and Jaguar have also launched all-electric vehicles. However, they haven’t seen much success, at least in the US market.
The Tesla effect?
Tesla cars are synonymous with electric vehicles. To begin with, legacy automakers dismissed electric vehicles’ disruptive power. However, automakers were forced to rethink their strategies as Tesla’s market cap soared. Based on yesterday’s closing prices, Tesla’s market cap was $38.5 billion. Ford and General Motors have market caps of $35.2 billion and $51.7 billion, respectively. It’s worth noting that Tesla’s vehicle sales are only a fraction of what legacy automakers sell.
Can Tesla and electric vehicles really kill ICE cars that early?
Wills’ projection of electric cars killing ICE (internal combustion engine) cars by 2026 appears quite aggressive. JPMorgan Chase expects all-electric and hybrid electric cars to account for 30% of total vehicle sales by 2030. Oil companies are also factoring electric vehicle adoption rates into their business plans. Total expects electric vehicles to account for half of total vehicle sales by 2040. BHP Billiton, the metals and mining giant, expects electric vehicles to account for 50% of total vehicle sales in 2030. BHP expects that by 2050, all vehicles sold globally will be electric.
What could hold back electric vehicle adoption rates?
Electric vehicle sales depend on government subsidies in many countries. China’s electric vehicle sales fell on a yearly basis in July for the first time in two years. Chinese electric vehicle maker NIO (NIO) blamed it on a subsidy rollback. Tesla cars will also not be eligible for subsidies in the US next year. India was previously planning stringent laws to promote electric vehicle adoption rates. These measures included a levy on ICE cars. However, falling car sales have prompted the Indian government to reconsider its focus on electric vehicles. India also charges high duties for electric vehicle imports. Tesla cars aren’t available in India, and CEO Elon Musk attributes this absence to India’s high import duties.
Even in the US, President Donald Trump has proposed the easing of emission standards. However, automakers such as Ford and GM haven’t been amenable to Trump’s proposal.
Tesla and other electric cars are costly
Tesla and other electric vehicles are quite costly compared to ICE cars. This difference is mainly attributable to the high cost of batteries. Tesla bulls would argue that Tesla cars will pay for the price differential due to lower fuel and maintenance costs. It’s cheaper to run an electric car than an ICE car, and this holds for both fuel and recurring maintenance. However, we also need to take into account battery replacement costs. Furthermore, with oil prices at relatively modest levels, the appeal of electric vehicles is somewhat diminished from an affordability standpoint.
Miners have been focusing on electric vehicle–grade metals
Metals and mining companies are currently focusing on electric vehicle–grade metals. On average, an electric vehicle uses twice the amount of copper that an ICE car uses. Nickel and cobalt are also electric vehicle–grade metals. However, electric vehicle–grade metals have also sagged amid the metals meltdown. The recent plunge in cobalt prices reflects the overoptimism related to electric vehicles.