Electric Cars Are Going To Change Everything


When Elon Musk first announced the Tesla Model 3 back in 2014, everybody’s ears pricked up. No longer were electric cars the preserve of the wealthy. Instead, they were going mainstream, and now people in the middle class could afford one. Most expected the Model 3 to come in at around $50,000 being an electric car, but such has been the decline in battery prices over the last decade or so that Musk was able to promise fans $35,000, and perhaps even less in the future. 

The latent demand for electric vehicles is enormous. Following the announcement of the Model 3, 400,000 put down a $1000 and committed to buying one as soon as it came off the production line. That’s the largest number of pre-orders in history, eclipsing every other car maker in the process. Tesla’s share price started to trend up, and by the middle of this year, the car company was the highest valued automaker in the US, ahead of GM and Ford, despite only making around 2 percent of the sales. Clearly, something is going on here.

Many pundits have said that Tesla is in a bubble and it's going to burst when economic reality hit. And while that’s a possibility, it’s important to understand that Tesla isn’t really a car company in the traditional sense, although it’s been put in that box for the sake of convenience. Rather, Tesla should be seen as the leaching out of the digital world into the real world. We’ve seen this in a number of places already, including Uber for taxi rides, and Airbnb for hotel stays. But now it’s come to cars and offers a fundamentally different business model that will disrupt the industry. 

When seen in this context, Tesla’s share price makes sense. Uber actually has a higher valuation than Tesla, despite the fact that it has practically no physical assets whatsoever. But Tesla, a kind of new age startup itself, is developing its own technologies, including battery power, which is subject to the same trajectories as all other information technologies: towards greater value. 

Electric cars are going to dramatically change infrastructure and the landscape, as well as make the air in cities perfectly clean and fresh. The role of gas stations is going to change. Although it's been known for a while that gas station canopy repair helps get more visits to your station, the future of gas stations is in doubt. Gas stations will have to diversify from their current offering, just as farms have done, offering ancillary services for people on the road. Yes, there will still be demand for electric charging, but the real appeal of gas stations will be convenience and, perhaps, beauty. 

The other big change will be the amount of pollution on our roads. Diesel pollution, in particular, is associated with increased cancer deaths and greater occurrence of chronic conditions, like asthma. Electric cars produce no waste products at all (they don’t have exhausts), meaning that running a fleet of electric vehicles is no more damaging to our health than running a fleet of mobility scooters.





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Published by Michael J Schiemer
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