The Projected Demise of ICE Cars: Do Tony Seba and Cathie Wood Have It Right?
Earlier this year, investors and analysts such as Tony Seba and Cathie Wood predicted that internal combustion engine (ICE) cars would largely disappear by 2025. This prediction has sparked significant debate within the automotive industry and among environmental enthusiasts. Could Seba and Wood be right, or are they perhaps jumping the gun in their timeline?
Let's break down the potential validity of these predictions, considering the current state of electric vehicle (EV) technology, market penetration, and the practicalities involved in transitioning the global fleet from ICE to EV.
Current State of EV Development
While there is no doubt that electric vehicles (EVs) are becoming more prevalent and promising, the reality is that the 2025 prediction may be overly optimistic. At present, the majority of vehicles being developed and manufactured still fall under the ICE category. Even for those car manufacturers actively investing in EV technology, many models are still in the initial stages of development and tooling. It takes significant time, resources, and manufacturing capacity to transition an entire line of vehicles to EVs.
Moreover, the lifecycle of a typical road vehicle is quite long. On average, a vehicle remains in use for around 8 years, with some models lasting up to 20 years or more. This longevity means that even as new EVs are introduced, the existing ICE fleet will continue to dominate the market for some time to come. Unless there is a compelling reason to shift to EVs, such as stricter emissions regulations, the majority of vehicles will likely remain ICE powered.
Cost Considerations
Another aspect to consider is the cost differential between ICE vehicles and EVs. Although the total cost of ownership for an EV is often lower due to the absence of fuel costs and lower maintenance, the upfront purchase price remains higher. As long as this price gap exists, there will still be demand for new ICE vehicles.
It's crucial to assess not just the initial purchase price but also the broader financial implications. For the average consumer, the savings from reduced fuel and maintenance costs may not compensate for the higher up-front investment in an EV. This cost barrier plays a significant role in the continued purchase of new ICE vehicles.
Predictions and Realities
While it is inevitable that EVs will ultimately replace ICE vehicles in the long term, predictions of a rapid transition by 2025 may be premature. Instead, a more realistic timeline suggests that the demand for private ICE vehicles could end closer to the end of this decade.
The production of EVs is still in its growth phase, and while companies like Tesla are expanding at an unprecedented rate, their current capacity is limited. Tesla's ambitious plans to supply the world by 2040, driven by the rapid expansion of its factories, reflect this potential. The high share prices of companies like Tesla validate the market's belief in the future of these technologies.
Challenges and Limitations
Despite the growing acceptance and advancement of EV technology, there are still significant challenges to overcome. One of the main hurdles is the need for significant increases in national and global electrical infrastructure capacity. It's important to recognize that the transition to EVs requires a substantial increase in the availability of reliable and sustainable electricity generation.
Moreover, there are still concerns about the capacity of existing and future power grids to handle the surge in demand for electricity from EVs. This issue is further complicated by the need for increased nuclear generating capacity, which, despite its potential benefits, is a topic of ongoing debate and controversy.
In conclusion, while the transition to EVs is inevitable, the prediction that demand for ICE cars will end by 2025 appears to be overly optimistic. The transition will likely unfold over a much longer timeline, driven by a combination of technological advancements, policy changes, and gradual consumer preferences.
For those interested in the future of transportation, it's essential to stay informed about the progress of EV technology, the evolving market dynamics, and the broader geopolitical and environmental factors shaping this transition.