Tuesday, November 15, 2016

2016: A View from the Past

I was listening to a lecture on YouTube by a fellow named Tony Seba, who talks about major disruptions in society, and what happens to the market of what the disruptions displace.

He showed a picture of Easter Sunday, 1900 on Fifth Avenue in New York City. There are dozens, even hundreds of horse-drawn carriages parading up and down the street -- and in the middle of all these equine-powered vehicles, there's a solitary gasoline fueled automobile.

NYC-Easter Sunday 1900

Fast-forward a dozen or so years. Same street, another Easter Sunday, but now it's 1913. Dozens, perhaps hundreds of gasoline-powered automobiles fill the street. There is exactly one horse in this photo.

NYC - Easter Sunday 1913

It's likely that none of the people in the 1900 picture would guess what the ratio of horses to cars would be in the following decade, but I think it would be safe to assume they'd never think horses would become rarities.

Yes, there are still horses more than a century later in Manhattan, but they're remanded to pulling a few tourist carts through Central Park. They're novelties, not relied-upon forms of transportation.

Here in the 21st Century, we're at another disruption point: the end of the internal combustion engine. From the vantage point of when the essay you're reading was written (late fall of 2016), mostly it seems impossible. Right now there are 253 million cars on the road in the United States. Less than a half million are electric vehicles, and most of them cost in excess of $60,000.

All that's about to change in 2017  with the arrival of two major fleets: the Chevy Bolt, and the Tesla Model 3. Within the first year of production, nearly one million new electric vehicles are expected to wind up in the garages of the non-rich and non-famous. This surge of new cars not powered by gasoline is the first wave of what will be a fundamental overthrow of the reign of internal combustion.

If you've not experienced driving an electric vehicle, this disruption may seem impossible. There's an entire culture of internal combustion, firmly established in gas stations, Jiffy Lubes, service centers, and transmission shops. All these businesses will soon be as outmoded as typewriter repair stores and Blockbuster video rental centers. The change will be so elemental that it's difficult to picture what the new landscape of transportation will look like.

Imagine never needing to visit a gas station again. The "gas station" is now your own home, where you'll plug your car in at night pretty much the same way you plug in your smartphone to its charger. There will be no more oil changes, spark plug tune-ups, broken alternators, radiator flushes, muffler shops, replacement fuel pumps, blown head gaskets, or worries about what kind of octane gas to use. You won't have to pay for emissions testing because your car won't emit anything. Every morning, your car will have a "full tank" thanks to an overnight charge.

Moore's Law, the computer marketing concept that the density of memory storage increases while the price of memory decreases will have a codicil in battery power. We are currently capable of a 100 kWh battery, but that density will increase to 130 kWh within a year's time. As battery density increases, batteries to cover the same distance will decrease in size, allowing for weight savings in a car and further increasing range. The idea of having a 400-mile single charge car battery by 2020 isn't a fantasy - - it's a conservative estimate of the future.

This may sound unlikely, but I believe electric vehicles will comprise more than 90% of the country's active vehicle fleet by 2023. As adoption of electric cars becomes a standard, the pace of replacement will become as rapid as the replacement of CRTs with flat screen TVs was just a decade ago. Over 98% of electric production is produced from domestic sources, and the demand for gasoline will fade as suddenly as the demand for cassette tapes did 20 years ago. We will look back on 2016 as the end of a strange era, when people carted tanks of flammable fluid around in their vehicles just to propel themselves on the highways. Babies born this year will look at pictures from 2016 and think how strange the whole concept of running gas engines on wheels directly in front of the passenger compartment was. Since I've test driven an electric car, I can grasp that idea clearly - - it's like seeing pictures of steam engines chuffing into train stations half a century ago.

My advice? Don't buy a new car with an internal combustion engine. You'll regret it within the next 1000 days. I'm serious. Gasoline engines are going the way of DOS, floppy disks, ditto machines, and slide rules.