Don’t Believe the Hype: Tesla’s Model 3 Doesn’t Mean Gasoline is Dead. Yet
So…Elon Musk stands on a stage in front of a $35,000 Tesla Model 3, and people lose their damn minds.
You’ve read about Model 3-mania. How 276,000 pre orders (after 4 days) mean billions in sales for the new kid on the block. How the number of pre-orders is confirming some people’s faith in our ability to fend off corporate influence. How the Model 3 should kill off Chevy’s Bolt electric car. And how the Model 3 is spinning the automotive industry into an existential crisis.
But here’s a piece of breathless rhetoric that caught my eye came from Green Business: “Why Tesla’s Model 3 sales surge should make the oil industry sit up and take notice”.
Trust me, the oil industry has already been paying attention. And they’re not quaking. They’re not quaking now, and they won’t be for awhile. But they know their day is coming, like a horse-drawn buggy maker who saw his first Model T in 1908.
As a person who writes about green automotive and technology in general, it would be easy to join the hype machine. But as a level-headed Midwesterner, I understand that the despite the popularity of hybrid, electric and diesel cars, they are nowhere near toppling the gasoline internal combustion engine as King of the Car.
Why am I not ready to claim the green car as King of the Future? Actually…I am ready to claim that. But the numbers tell us that the green car won’t be king of the present and near future. Let’s take a look.
Below is a screenshot from a really cool interactive data feature I found at the Annual Energy Outlook, a publication of the Energy Information Administration. It’s on US Light Duty Vehicle Stock from 2012 projected to 2040. Here’s where they get their data.
We will look at 2014-2020. I use the image instead of the embed, because it tells more at a glance. I encourage you to click through and look at the chart live.
As of 2014, there were 122.72 million conventional cars in America, broken out by gasoline and diesel. Moving down, you see the breakout of alt-fuel cars (hybrids, electrics, fuel cell, etc). “100 mile Electric Vehicle” means electric vehicles with a range of up to 100 miles. “Plug-in 10 Gasoline Hybrid” means a gas hybrid car with an all-electric range of up to 10 miles. And so forth.
Take a look, and you’ll see some things that the “breathless rhetoric” types tend to ignore, forget, or don’t think to include:
- By 2020, conventional car stock will flatten and decrease to 121.82 million. Alt-fuel car stock will grow to almost 10 million between 2014 and 2020. Gasoline already has a big lead.
- They forget about Ethanol/Flex-fuel cars. In 2014, Flex fuel cars accounted for 2.97 of 6.2 million alt fuel cars. By 2019, gasoline hybrids stocks should surpass Flex-fuel. After that, alt fuel stocks will grow faster than flex-fuel.
- If you project out to 2040, there will be 135 million conventional cars, 20.9 million green cars, and 156.27 million cars total. It is safe to say gasoline will be king for awhile. At the same time, declining market share is the future of gasoline.
These projections don’t take into account new vehicles, technological innovations, marketing and buyer incentives. If you make it easier for people to buy alt fuel cars, whether through design, innovation or price–they’ll do it.
Another thing not leveraged into the data is the impact of China and India. China is already looking to clean up their air through more EVs. India is just beginning to look seriously at alt fuels. These two countries are the future of the automobile, no matter the power train. If these two countries embrace alt fuel technology, the market for green cars will explode. We will see economies of scale in place for hybrids and EVs that cost a lot less than the Model 3.
Consumer tastes in emerging markets will also heavily influence sales growth of alt fuel cars. When it comes to status symbols, the emerging markets take their lead from the West. As the West shows off with green supercars and SUVs , so will the entrepreneurs and salarymen in these newly-minted free markets.
So the next time you read or talk to someone about the Model 3, or green cars in general, understand that great gains are being done. But the gasoline engine will still be around. For now.