Changes in personal transportation
Changes in personal transportation
We are living in a world which is becoming richer and richer. During the past decades, we got spoiled. A few examples: healthcare became affordable for lots of people and nowadays most teens will have the ability, and the money, to travel outside of their country on their own. The prosperity we have achieved however, might have some consequences, maybe even in the near future. Flying by airplanes became less expensive, ordering packages became less expensive and buying a car and driving it became less expensive. The lower the costs of these transportation expenses, in combination with our increasing prosperity, the more we tend to make use of them, which is an issue.
Lots of people will immediately think about the environment and the atmosphere when one starts to talk about the issue of using transportation as much as we as society do. While both the environment and the atmosphere are quite important to most of us, there is a much ‘easier to understand’ issue; we will run out of oil. This will happen in around 30 to 40 years’ time if we keep using it like we are using it today, and no other sources are found.
What are we going to do about it?
Whilst a lot of people are simply not aware of this relatively short time-span, some are. These individuals try to change their own oil consumption, but sometimes also the consumption of others. There is also quite a bunch of these people who have an influence on others, think about people in your government, inventors and initiators. The government tries to get you to change, by setting an example, creating new rules, regulations and legislation. The intention of these actions is to inspire you, but also to set some limits. In this article, we will be talking about the effect of these rules on the automotive industry.
Legislation in the automotive industry
For every country there are different rules about car sales and its prices. Because we as a blog are based in the Netherlands, we will take this country as example.
Every automotive manufacturer has to do some tests in order to put their product on the market, think about crash testing, durability testing, test-driving, rain testing, but also the testing of fuel consumption. Some of these tests are mostly done because the manufacturers want to sell a proper finished product to the customer, and the customer wants the car to be safe, durable, waterproof, and most of the times also fuel-efficient.
Fuel-efficiency however, is measured most of the time by a NEDC (New European Driving Cycle) test. This test includes city-driving as well as highway-driving over a period of about 20 minutes. It might seem quite trustworthy written like this, but you couldn’t be more wrong. Most of these tests are conducted in a laboratory by the manufacturers themselves.. The vehicles being tested are not exactly like the ones you will buy from a dealership. For example, here is a list of some of the ‘modifications’ they will make to the car:
- Get rid of the air condition,
- Get rid of the radio,
- Get rid of the mirrors,
- Making the car more aerodynamic by taping the tiny gaps between the bodywork,
- Filling up the tyres with far more air than recommended for daily use in order to create lower amounts of friction between the tire and the surface.
These are just some of the adjustments manufacturers might do in order to get a lower fuel consumption. There are in fact two main reasons why manufacturers test fuel usage in this way. The first reason is that it is simply allowed, which also refers to the second reason; everybody does it. If all of the manufacturers test it this way, a company is simply obliged to do the same, because a car-buyer has no clue about this way of testing. If the buyer sees that one car, with the same price as another one, will use 2 litres more for every 100 kilometres, he will buy the most ‘efficient’ one. The third reason is the government, its knowledge and its legislation. The standards which are set by the government, are simply too high to be achieved by testing fuel economy in a more normal environment. In the Netherlands, for example, companies with cars which have low levels of carbon dioxide emissions will have to pay less taxes. These low levels of emissions can in most cases only be obtained by testing their cars in an environment which we just discussed, in a laboratory.
Change in the automotive industry
Besides the debatable emissions and their regulations there are of course also other ways of ‘fixing’ the oil shortage! Most of you will probably have noticed it by now; there are more and more fully electric cars on the road.
Because of government regulations, buying an electric car might sometimes be a very good idea. In the Netherlands, you won’t have to pay as much (company) taxes and in Norway the amount of advantages is quite astonishing:
- No purchase/import taxes,
- Exemption from 25% VAT on purchase and leasing,
- Free municipal parking, access to bus lanes and free access to toll roads and ferries.
For Norway, this results in a 22% market share for electric vehicles in 2015. Norway’s current target is to have completely banned petrol powered cars by 2025. Regulations and goals like these have a huge influence on the sales of cars.
More and more companies are trying, and sometimes succeeding, in making a successful, fully electric vehicle. Tesla succeeded, and other big brands are now trying it as well. At every auto show, lots of fully electric concepts are shown from manufacturers such as Porsche, Volkswagen, Audi, Mercedes-Benz, Hyundai and so on.
Some of the reasons why not all of the electric vehicles which are currently for sale are successful are:
- Battery packs are expensive, which makes the entire car sometimes much more expensive than a similar petrol-fuelled car,
- Batteries do not have the expected range for long distances yet; some cars will run out of energy after just 100 kilometres,
- Range anxiety, what happens when you run out of energy? You are not yet able to charge your car everywhere you go,
- Uncertainty about reliability and servicing, most electric vehicles need new battery packs before the 100,000 kilometres mark.
Sadly, as the effect of this, the global market share of electric cars is still far below 1%. This is mainly caused by less prosperous countries in for example South-America. In these regions they will just buy the most durable, cheapest car. The expectations however, suggest that a fully electric car, which is just as capable as a car with an internal combustion engine, will have the same price around 2022.
(BEV = entirely electric vehicle, PHEV = entirely electric vehicle with an engine as back-up, ICE = internal combustion engine, HEV = hybrid electric vehicle)
As can be seen in the graph, even though the sales of electric cars will take off after 2022, it will take quite a long while before it has a significant worldwide market share. Bloomberg however, assumed that the annual growth would be around 30%, but if we take a look at the current annual growth, it is about 60% a year. The expectations are that most of the EV’s sales will be sold in Northern-America, Europe and China, hence why the bigger part of the premium companies is slowly but steady trying to make an electric vehicle.
Change in the oil industry
Oil is not just used for making gasoline, it is also being used for other purposes such as jet fuel and lubricants. The bigger part however, about 50%, is used to make gasoline which is mainly used for transportation. This means that the rise of electric cars will have some influence on the sales of gasoline/oil.
In the graph, you can see what will happen if the sales of electric vehicles keep rising with aggressive, 60% rate in the upcoming years. However, a 30% growth rate on average is a better estimation. With this growth rate, another oil crisis, similar to the one in 2014, will most likely be triggered around 2028.
With a slight decrease in demand for oil in the upcoming years, and the fact that we will eventually run out of oil, big fossil fuel companies will have to start looking at new kinds of energy. Some major companies in this energy business have already started with some new initiatives, for example placing wind turbines and solar panels. These companies expect that by 2060, up to 40% of the global energy usage could be green.
Are you surprised by the facts you read in this article? Also, would you be willing to trade in your gasoline-fuelled car for an electric subsidiary? Let us know in the comments!