According to Tony Seba, an economist at Stanford University in the US and author of Amazon bestseller "Clean Disruption", the industrial age of energy and transportation will be over by 2030 or maybe before. Exponentially improving technologies such as solar, electric vehicles, and autonomous cars will disrupt and sweep away the energy and transportation industries as we know it. How and why will this happen? Prof. Seba answers these and other questions in an exclusive interview for Infrastructure Channel.
1. Prof. Seba, your research has led you to forecast a "clean disruption of energy and transportation". What does this mean?
It means, essentially, that exponentially improving technologies such as solar, electric vehicles and autonomous (self-driving) cars will disrupt and sweep away the energy and transportation industries as we know it. The same Silicon Valley ecosystem that created bit-based technologies that have disrupted atom-based industries is now creating bit- and electron-based technologies that will disrupt atom-based energy industries. Moreover, there are new business models, such as on-demand driving, that are revolutionising the way in which we travel and deliver goods and services. If you combine the technological changes with these new business models, you can only come to the conclusion that there will be a massive destruction of current paradigms already in 2020-2021 that will tip-over in 2030.
2. And what will happen in 2030?
By that year, 95% of passenger miles travelled will be served by on-demand autonomous electric vehicles (A-EVs) owned by companies providing transport as a service (TaaS) and most energy will be produced by solar panels and stored thanks to extremely efficient batteries. The disruption will happen essentially for economic reasons, not for environmental or ethical reasons.
3. Let's focus on electric cars. If you recharge an electric car, let's say, in Germany today, 87.1% of electricity you tap from the electrical grid is produced with fossil fuels. How can we avoid that the electric cars revolution will be actually powered by fossil fuels?
On-demand autonomous electric vehicles will be more efficient and will consume 80% less energy and produce 90% less Co2 even within the existing energy mix and grid. Because electric vehicles are 4-5 times more efficient than internal combustion engines. With internal combustion engines (ICE), only 17%-21% of energy is kept, while the rest is dispersed. On the contrary, electric vehicles disperse only 5% of the energy they produce. Moreover, electric cars last 1.5 times longer than ICE cars. And electric cars managed by companies providing transportation as a service (TaaS) will also be used more efficiently. Now, if you own a car you use for just 4% of the time. Thanks to TaaS companies, cars can be used 40% to 60% of the time. This will happen also in absence of a grid disruption. But I am pretty sure that also the grid will be disrupted by new technologies.
4. Natural gas is often presented as a fuel for the transition to a 100% renewables world. Do you agree with this?
Batteries providing energy storage are already making natural gas plants turning on at peak times obsolete. Given the current cost-efficiency ratio of batteries there is already no reason to build natural gas peakers in many markets and certainly no reason to build them anywhere after 2020. As storage is adopted by residential, commercial, and industrial customers, as well as grid storage, supply of energy will be distributed and closer to the load. The need for existing gas power generation will mostly disappear. Certainly by 2030.
5. How will a highway look like in the future?
Today 95% of the highway space is not even used because humans are distracted, use roads inefficiently, meaning that they leave too much space between cars both in front and to the sides. Our data indicates that the size of the car fleet will be at least 80% smaller by 2030, because of the expansion of on-demand driving services that will use electric cars more efficiently.
Moreover, electric vehicles don’t break down like ICE vehicles. If you add this to the combination of data that EVs generate, the intelligent sensors and AI, this means that the car can anticipate maintenance needs, i.e. they will not break down the way human-drive ICE cars do. So there will be vast amounts of shoulder space that will be unneeded when you have no accidents and no breakdowns. Add 3D high definition mapping and localisation and cars will have the maps and the ability to drive with centimetre-level accuracy – without the need for GPS. You will have 80% fewer vehicles that are intelligent driving closer together, having fewer or no accidents, essentially no traffic congestion. These fewer vehicles will be used more efficiently – each car will travel at least 10 times more miles. So the total travel miles travelled will go up but they will be covered by 80% fewer vehicles. Put all these numbers together and the highway of the future will look vastly different than the highway of today.
6. How will road haulage change?
Same dynamics apply: trucks will be on-demand, autonomous and electric. In fact, the electrification of trucks may happen faster than light-duty vehicles. That’s because trucking is mainly a B2B market. Businesses need to make faster decisions to stay competitive. Energy is a huge component of the cost of trucking. More than half the freight (by weight) in the U.S. is driven less than 100 miles, while 71% travels less than 250 miles, so it can be served with existing technology. Once electric trucks start saving businesses money over diesel trucks, these companies will make the switch. Once one major company makes the switch to electric trucks, everyone else will have to adopt electric trucks, just to stay competitive. So the disruption of diesel trucks will be fast once it hits the tipping point. Labour and fuel are about 69% of operating costs of a truck in the U.S. and 71% in China. So when we add autonomous technology to electric trucks we'll see an acceleration of the disruption S-curve.
7. What will happen in the highway market in such a rapidly changing scenario?
Transportation in 2030 will be nothing like 2017. Basic assumptions that one made in the past in terms of individual ownership of automobiles, highway throughput, numbers of vehicles, and so on, will be turned upside down. Imagine it’s the early 1900 and the Ford Model-T is about to make the horse barn infrastructure obsolete. Highway concessionaries should pay attention to the disruption of transportation and build highways to serve a completely new market. They should think of new business models that can generate more money. Infrastructures should actively communicate and exchange data with the smart vehicles running through them. What other business models could they build with the data they gain from being an highway concessionaire? For instance, I would think of providing 3D high definition mapping and localization data and software to the vehicles running through their networks. The telecom infrastructure providers should have done that, but they have mainly become dumb pipe providers and allowed the Googles, Facebooks and Apples to create most of the new wealth that emanates from the Internet infrastructure.
So in Tony Seba’s mind highway concessionaires need to move from being asset managers to being technology providers. Google, Facebook, Apple, Baidu, and so on make money from the data and insights they get from their users. Concessionaries should use the data they already have to start thinking about new business models that will allow them to create innovative products and services that serve customers in new ways and make them additional revenues.