The EV’s great disruptor to mass transportation has widespread implications for industry and geopolitics.
Subsitioning oil for electricity to power propulsion for mass transport is the greatest macro trend of this century, which is likely to impact national economies and even the political-economic stability of the EU, a 14.5 trillion economy (2021), approximately 14% of the world’s GDP.
The EV great disruptor is being forced, by the hand of global legislators
Internal Combustion Engines ICEs are no longer viable as a means of mass transport for a current global population of 8 billion people.
The steam engine was invented in the 17th century when the global population was 500 million people.
If the steam engine were the means of propulsion in 2023, there would be no trees, and if ICEs continue to be the dominant power source by 2100, with an estimated 11.2 billion people, portable oxygen tanks could become the new accessory.
“Internal Combustion Engines ICEs are no longer viable as a means of mass transport for a current global population of 8 billion people”
Emissions from an ICE are deadly, particularly carbon dioxide (CO2), where an overdose causes rapid unconsciousness followed by death. Then there is the issue that ICEs are allegedly contributing to climate change and poisoning the air.
So the EV great disruptor is initially being forced by the hands of global policymakers.
No new vans or cars with combustion engines will be sold, as of 2035, in the European Union.
In the US, Democrats are introducing federal legislation banning US sales of new vehicles with internal combustion engines by 2035.
China is planning to sell only new energy vehicles by 2035.
Global policymakers are effectively banning the construction of ICEs within the next decade.
“China is planning to sell only new energy vehicles by 2035”
The invisible hands of the market will accelerate the adoption of EVs, the great disruptor to mass transport in a century
The cost of running and maintaining an ICE keeps going higher.
Meanwhile, the alternative EV, still in its infancy, prices and maintenance costs are falling.
Burning oil as an energy source is becoming less cost-efficient with cheaper alternatives.
The worst cost of living crisis will accelerate the great EV disruptor
With a scarcity of mechanics for ICE due to few next-generation mechanics willing to invest time and money learning a dying ICE technology, the servicing costs for ICEs could go sky-high.
Availability of parts and time delays could also make ICEs absolute.
Carrot approach to getting EV mass adoption
The next government stimulus program, cash for ICEs to subsidise EVs during the coming recession/ depression, is what could trigger mass EV adoption.
The writing is on the wall; the great EV disruptor is coming which could make ICEs obsolete as a form of mass transport.
“China is the largest EV market in the world” – Win Investing
What is the Macro view of the great EV disruptor?
What if economies and industries built on ICEs over the last century are disrupted?
Gabor Steingart, former editor and chief of Handelsblatt, fired a distress flare
“The German car industry will collapse. Germany will collapse,” he warned
in Focus Magazine, on July 15, 2023
Europe’s largest automaker, German, is facing its greatest challenge since the invention of ICE.
Germany is late to the great EV disruptor and lags behind the US and China in technology
There is chatter that Mercedes is contemplating partnering with China’s Nio to build luxury EVs. Nio’s unique selling point is battery swap technology, which is of interest to the luxury market.
China is the largest EV market in the world.
US’s Tesla gives the US a head start in the great EV disruptor.
There is talk of alternative energy source autos and hydrogen cars, but massive capital flows into EV infrastructure and the technology suggests that the future of mass transportation is EVs.
“Germany is already in recession as its energy-hungry industry finds no cheap alternative to Russian Gas” – Win Investing
EV disruptor and the EU
Europe’s largest economy, Germany, built an entire industry around ICEs.
The German trade surplus, amounting to billions of euros, was generated through the reputation of the reliable, well-made German-built ICE auto industry.
But China and the US are now eating Europe’s largest automaker’s lunch.
Germany is already in recession as its energy-hungry industry finds no cheap alternative to Russian Gas.
The destruction of the North Stream Pipeline, which funnelled an abundant supply of affordable Russian gas for Germany, has been a bitter blow to German industry.
So with the German trade surplus falling, there is likely to be fewer euros recycled as cheap loans to bankroll the indebted southern countries of the EU.
EVs’ great disruptor and war in Europe could be a cocktail for the next great euro sovereign debt crisis in the peripheral states of the EU
The last time this happened, the euro USD exchange rate crashed to 1.13.
Productivity in the southern part of Europe continues to remain low as a bloated state and large public deficits keep the economy ticking.
So nothing has changed structurally with the economy since the last euro sovereign debt crisis.
But with Germany now in recession, its great auto industry battered by the EV great disruptor and cut from its lifeline of affordable energy, there is no bailout money for the south.
The ECB could be the lender of last resort, but excessive money printing debases the currency.
We would not be surprised to see the euro fall below the USD soon.
EU policymakers seem oblivious to the great EV disruptor, and they are shooting themselves in the foot with ICE bans and a foreign policy that sees energy-rich Russia as an enemy rather than a strategic ally.
With the deindustrialization of Europe underway the beneficiary here is China and the US.