Risk & Business Magazine Spectrum Insurance Spring 2020 | Page 17

CAR-AS-A-SERVICE
T
he era of the internal
combustion engine (ICE)
car is ending. We may
have reached “peak ICE”
production this past year.
From here on out, it’s all about electric
vehicles and autonomous ridesharing,
and the implications for society and
the automotive industry are HUGE.
Don’t believe me? Oil demand is
predicted to peak as early as 2021,
according to Bloomberg New Energy
Finance, a nd some experts suggest it
may have already peaked.
Currently, electric vehicles displace
the need for 350,000 barrels of oil each
day. And long term, EVs are projected
to disrupt demand of over 58,000,000
barrels of oil per day — a figure steadily
on the rise as EV costs plummet.
Speeding to first place in today’s
transit race, EVs are set to win by
sheer economic advantage, fast
becoming the foundation for
autonomous ride-sharing fleets of the
future. As that happens, it will soon
become un-economical and societally
unacceptable for you to hold on to
that old gasguzzling car.
Let’s dive in…
ELECTRIC VEHICLES’ COMPETITIVE
ADVANTAGE
EVs are expected to surpass a 2.73
percent market share in the U.S. and
have already reached a 5.4 percent
market share in China. While this
might seem negligible, growth is
accelerating at an unprecedented rate,
as U.S. EV market share is projected
to double every two years into 2025
and well beyond.
As explained by energy expert
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 four months to sell the fifth
million. That is the pace of this
change. This is growing twice as fast
as solar.”
Stumping forecasters again and
again, this surge is driven by pure
economic advantage. While personal
vehicles currently cost $0.80 per
mile, autonomous electric vehicles
are expected to vastly undercut this
threshold at only $0.35 per mile.
And even though EVs have historically
been more expensive than ICE-powered
cars, EVs are far cheaper to operate and
maintain. The yearly cost to operate
an EV in the U.S. stands at about $485,
lower than half the $1,117 cost to
operate a gas-powered vehicle.
"PLUMMETING PRICES
AND INCREASED
CONVENIENCE WILL
SOON TIP THE FAVOR
TOWARDS ELECTRIC
CAR-AS-A-SERVICE
OPTIONS, AND
PRIVATE OWNERSHIP
OF INTERNAL
COMBUSTION ENGINE
CARS WILL BECOME A
THING OF THE PAST."
As battery prices continue to plummet,
the upfront costs of EVs will decline
accordingly until an EV purchase is
so obvious that no long-term payoff
calculation is even needed. Going
electric will be a foregone conclusion.
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 four years.
Beyond passenger transportation, EVs
are even 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 percent of its vehicles
operating on alternative fuel this year.
The company’s recent pre-order of 125
Tesla electric semi-trucks demonstrates
yet another step towards this ambitious
goal. The Tesla Semi — today 20
percent cheaper on a per mile basis
than gasoline-powered trucks — is just
one of many vanguards showcasing the
extraordinary scale of electric takeover,
from compact cars to large-scale transit.
Over the coming decade, sheer market
forces will catalyze consumer adoption
of EVs, likely in the form of autonomous
fleets, at an astounding rate.
ELECTRIC AUTONOMOUS FLEETS
While personal EVs continue to
proliferate, the aggregate mileage of
EVs will rise exponentially faster as
autonomous electric ride-sharing fleets
gradually become commonplace.
But beyond plunging costs, investment
is booming, and auto manufacturers are
locked in an EV race with contenders
worldwide. McKinsey predicts that one in 10 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 also included electric
vehicle models in various testing phases.
Volkswagen is set to spend $50 billion
on EVs over the next five years. Nissan is
charging ahead with a vision to integrate
its EVs into a broader consumer
ecosystem through the company’s As found by a University of Texas study, if
autonomous taxis stood at a cost of $0.75
per mile, over 39 percent of miles would
be covered by these services. And at half
that price ($0.375 per mile), autonomous
17