The Impending Big Auto/Oil Implosion Explained: Video


Now You Know wants you to know what they think about the imminent implosion of Big Auto and Big Oil.

Zac and Jesse from Now You Know have a series they call “In Depth.” Essentially, it’s like a video OpEd. They pick an interesting topic and dissect it. This recent episode is based on an article by Ross Tessien in Seeking Alpha entitled “EVs, Oil, And ICE: Impact By 2023 And Beyond.” They’re clear to point out that although Seeking Alpha can be an anti-Tesla outlet, this is not the case with Tessien’s article. Instead, Ross submits fascinating and heavily researched articles to the publication.

Tessien’s article mentions Tesla, Rivian, and legacy OEMS and focuses on the impact of EVs on the oil industry and gas-powered cars. Ross believes that ICE car sales will plummet by 50 percent by 2025. He also sees a major surplus of oil by 2023, followed by about one billion electric cars on the road globally by 2031. The 22-page article is highly detailed, contains plenty of interesting graphs, and is not a simple read. However, we suggest that you set aside some time to take it all in. Thankfully, Zac and Jesse break it down and discuss its implications.

Check out the video, as well as Tessien’s article, and let us know your insights in the comment section below.

Video Description via Now You Know on YouTube:

The Impending Big Auto/Oil Implosion Explained | In Depth

On today’s episode of “In Depth” Zac and Jesse talk about The Impending Big Auto/Oil Implosion!

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63 Comments on "The Impending Big Auto/Oil Implosion Explained: Video"

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Notice the huge dip in car sales in the ’30’s The Great Depression. The problem with comparing the uptake of evs adoption rates is there really nothing to compare it with. We love to make comparisons or analogies, but sometime it’s hard to find one that fits. This is the case with conversion to evs, it’s certainly not like the horse to the car, as some would have you believe, perhaps more akin to the color tv where as it took a number of years as they were expensive and the early color was not all that good, and people had back-up B&W sets, but cars cost a lot of money. As regards the effect on oil, we can already see some of that happening even with low adoption rates of evs, and evs will be a thorn in the side of Big Oil that will just work in deeper, Big Oil will never go away entirely of course, planes, locomotives, long-haul trucks will still need it, though with supplies increasing and demand decreasing the prospects for oil do not look good. Looking at what is happening in big legacy auto and it’s a bleak prospect too. Sedan lines being… Read more »

It’s interesting that as the EV population grows, the price of gas falls, as more inventory stays out there, unused in the market.

That’s an important point, as people should be happy evs, among other things, will keep the price low for many years to come.

Oil prices are highly volitile – as a conflict in the Gulf region will push the price to $100 a barrel. During wars, oil consumption sky rockets. In periods with a better economy – people drive more, and buys more stuff that need to be transported. As times go by, oil will be more expensive to get out of the ground. A growing population, and a growing wealth (more cars, scooters and trucks ) in poor countries equals more oil consumption. In general the oil consumption grows, and have been growing since the oil crysis. We have more and more EVs in Norway – but I pay more for fuel then ever it seems. A lot is taxes of course. There are not fewer gas stations, we have more – but a lot of the newer once are unattended/automated. Luckily I only fill up the tank once a month or so. I think we’ll have to wait a few more year, before we really notice any difference. Especially in global usage. People still use planes, and planes use a LOT of fuel. A standard 747 will consume 1 gallon of fuel for every second it is in the air (on… Read more »

You are discounting how fast the planes, ships, and your lawn mower are gonna go electric. 400 watt hours per kilogram is the needed battery density to make commercial electric flight a reality. Google Ryobi riding lawn mowers. You can buy a 100 Ah mower now for $2,800 US. Robo mowers are also on the rise. Most retail still offers 60V yard tools, but 80V is now available online. Buy two 80V batteries and you will get years of use out of all your home appliances from chainsaws, snow blower, push mower, hedger, weed trimmer, blowers, pole saws, etc.
If you read the 22-page article, you see that this disruption is coming faster than expected.

It’ll be decades before battery powered airliners can cross the Atlantic, if that ever even happens (by which I mean other energy storage systems may establish themselves first, like hydrogen tanks). Sure, battery powered planes will come, but they’ll likely be propeller driven and need to run relay to cross long distances. Flying New York to London will be like it was in the 30’s, taking 20 hours with stops in Newfoundland and Iceland along the way. I’m not sure many people would go for that.

Gotta stop looking at all-or-nothing scenarios. There is plenty of money to be made without crossing the Atlantic.

Airlines will use biofuels there already doing that but still in it’s infancy. In 20 years it will be common.

Mowers are easy. A lot of the mowers in Norway are now autmatic and electric. Snow blowers.. not so much.. yet. Only small passenger planes with short routes will be able to go electric. How much would not a 747 size plane weigh, to be able to have the same energy as 150 000 liters of aviation fuel. Hydrogen is more realistic, due to low weight.. but I will not hold my breath for that. Small garden tools are already mostly electric now where I live. Imagine a cruise ship that use 80.000 gallons of fuel a day – how large would not that battery be? No room for passengers for sure. Imagine a 10 day voyage with no charging. 800.000 gallons of fuel.. If you look up how many hours a year a plane or a ship is in motion – there is no way they will be electric. Again.. there may be an option with hydrogen sometime in the near future for some ships.. Solar and wind energy could result in less use of gas in some countries. Gas is not common to use in Norway. I have never ever been in a house in Norway that use… Read more »

@ John Doe: I agree lawnmowers (and lawn tools) are easy. Not sure why you are contradicting yourself since you are the one who added it to your first list to which I simply responded with what is available now. All-or-nothing scenarios when it comes to light trucks, heavy trucks and planes are gonna cost somebody a lot of money. Your first argument was to point to the total fuel consumed. Now the goal post is moving to handle extreme cases. The oil faucet won’t be shut off, but when electric technologies displace much of the current demand, I believe the article suggests 100 million barrels per day, then oil investments are going to take a huge hit. Investors look at growth.

Yeah Norway gets the vast majority of electricity from hydro. I don’t think Norway uses any fossil fuels for electric generation.

Planes and ships not that much

I wish they had an electric riding mower. John Deere could be the leader in this category but I bet it will be a foreign company.

The US dollar is backed by the US military. They will always need oil. The industry will never go away…even if the citizens never use another drop directly.

We will need oil for a long, long time, we just will be burning less and less of it. It is still going to be used as a raw material for manufacturing plastics and as a lubricant for the foreseeable future. Sometime in the future they will look back at us with wonder at how we took this valuable resource and just burned it up.

Does anyone know what the percentage of total oil consumption is used for non-combustion purposes?

This site says 14% Petrochemicals and 11% Other Industry.

Both of those categories include some combustion, though, especially Other Industry. I’d guess non-combustion is a bit below 20%.

You’ve been sucking your tailpipe again.

There is presently a war a brewing against plastic as well. Many countries, states and cities are starting to ban it. No doubt this will lead to compostable and recyclable replacements already under development.

I don’t know that it’s realistic to think we can end our use of plastic; it’s too darn useful.

What I hope to see, and hopefully soon, is that all forms of plastic designed to be disposable will be made from biodegradable types of plastic.

What happens to the carbon when plastic bio-degrades?

Many of the compostable or plastic made from plants and stuff is in general a problem.
It can not be recycles and used in make new plastic products. It will be burned for energy in stead – or end up in a landfill (depending on where you live).

Right now, a good recycling system is probably much better – and in addition replace some plastic products with natural products if possible.

Right now, they should probably ban microplastic from cosmetics and shampoo etc. The particles are so small that they will pass through the water treadment plants and end up in the ocean or lakes.
We’ll have to check additives in car tires, and other products that is sold in volumes and that wear down.
Washing machines should have a super fine mesh sieve filter to get plastic particles from synthetic materials like fleece.

As a diver, I’ve seen so much plastic on the bottom of oceans, lakes and rivers.

Advanced biofuels and better recycling programs could replace oil. Currently the recycling process is broken.

The supply ramp is going to be slow for EVs unless the car makers can find ways to switch to battery within the current car design, perhaps the Kona EV is a sign of that going mainstream. In any case, the main concern for ICE manufacturers is the Osborne Effect. By talking about the better thing that’s coming you kill sales of your current products. More and more people are going to stick with their current ICE cars while they wait for new EV options to become available. EV only manufacturers will do great, but traditional ICE companies could be caught short in the gap with not enough sales to fund the transition.

Interesting times ahead…

EVs which are not designed from the ground up to be EVs — that is, EVs that use gasmobile bodies which have an EV powertrain shoehorned into it — will never be able to compete with cars which are designed and built from the ground up to be EVs.

The Mitsubishi Outlander sold pretty well, for a gasmobile conversion, because there weren’t any other PHEV SUVs to compete with it. But now that there are, it’s not doing so well in the market.

The same thing will happen to the Kona EV — count on it.

Yeah they held out the USA market far too long and now they hurting

Is there a link to the Seeking Alpha article?

Also, 1B electric cars by 2031 seems quite frankly impossible. Even assuming that’s actually electrified, not BEV (so mild hybrids and PHEV’s), with a global car/light vehicle volume of around 80 million a year we would have to have 100% electrified vehicle sales by next year to have a hope of reaching that level. Assuming there’s no massive explosion in car sales in future (most are predicting a decline in sales, not an increase).

Perhaps the article actually explains it better though.

I agree that the transition is going to be much slower than the switch to smartphones, but the problem for the ICE companies is that as EV awareness grows the market for new ICE or token PHEV vehicles is going to dry up as people wait for the EV market to realize. So the slower the transition the worse it might be for ICE companies as the gap in new sales grows wider…

About a third of all new vehicles are leased already. The anticipation of coming EVs might just push more folks to lease in the interim.


These articles usually go behind a paywall after two weeks.

Correct. We linked it into our article but the link broke upon publishing. It should work now. Sorry about that.

It was supposed to be linked in to the article on the title. For some reason it didn’t publish that way. I added it now. Thank you.

“1B electric cars by 2031 seems quite frankly impossible.”

Ross says a lot of goofy things. His numbers don’t make sense, and sometimes aren’t even internally consistent.

Do Not Read Between The Lines

He wrote 700 million by 2030, in any case.

He wrote 1 billion by 2031 in the intro bullet points. He later wrote 700 million by 2030. His table says 530m in 2030. His numbers are all over the place.

That same table says 34m bpd oil consumption in 2030 but the graph made from the table says 27m. The graph also goes to zero in 2032, which is absurd, but in the text he says it will actually settle at a “low number” then drift toward zero. In reality there will still be close to a billion ICEVs in 2030, roughly as many as there are today. Transportation oil consumption will be less than today, but only marginally.

The “Now You Know” guys are even worse. They take Ross’s bad numbers and ladle a bunch of dumb claims on top. I felt my IQ dropping as I listened.

Do Not Read Between The Lines

Having had neighbors go from Camry to RAV4 and Beetle to some small SUV or CUV, I think the whole idea that the dip is sedan demand is people waiting for electric is just utterly ridiculous.

Who will buy an ICE knowing it will have no resale value. It doesn’t take long for that realization to spread. As gas sales drop service stations that sell it now as a lost leader to sell snacks will start to close. When it becomes harder to find gas, and EVs are everywhere……

Do Not Read Between The Lines

There are lots of gas stations in urban areas. I live in a small city and my city and the smaller towns around it have at least 10 gas stations. Rural areas are more likely to be later adotpers of EVs.

It’s going to take a huge shift before getting gasoline would be a problem.

Ross says a lot of goofy things. His numbers don’t make sense…”

Looks that way to me, too.

Quoting from Ross’s blog post (I refuse to label anything on Reeking Alpha an “article”):

There are around 90M new cars sold per year, and there are around 1 billion ICE cars in the global fleet.

Based on the information studied, I estimate new ICE car sales will be approaching 0 around 2026 and that the installed base of EVs will approach 1 billion by about 2032.

This makes no sense at all. In the first place, 2026 is only 8 years from now, and ICE automobile sales won’t have dropped to 0 that soon. Furthermore, the average age of an automobile on the road, even in the USA, is 11.6 years, and doubtless older worldwide (due to all the older cars in third-world countries). So even for that average of ~12 years to be reached, after 2026, would take until 2038 (which would be >50% EVs, but still a long way from 100%); and he’s claiming near-100% EVs by 2032.

This is beyond merely wrong; it’s downright ridiculous.

Oil prices may fall in the short term — but as economies of scale begin to dwindle — prices will go up and likely up pretty fast.

Nope. As demand falls, prices will come down until supply drops ==> lower prices.
With reduced demand comes lower investment and fuel production will become late stage cash cow ==> lower prices.
As demand drops even further, price wars will ensue while the bigger dogs push out the smaller ones to stabilize the market ==> temporary very low prices.
Once the supply drops, the market will stabilize. But who cares by that point as we’ll all be driving EVs.

Net net: unless governments intervene, gas prices will remain low until we no longer care.

Oil does not have a constant or even decreasing marginal cost of production like many other things do. There’s a certain amount of oil available to produce at $30/barrel, some at $40, some at $50, etc. and some that’s not economic unless you want to spend $100. As demand drops the supply curve drops down to the cheaper oil to produce. The distribution infrastructure is already in place so that has little effect on how much oil gets bought or produced.

This is my hope: as the demand for oil goes down, prices drop, which means that unconventional oil from sources like fracking and tar sands becomes uneconomical. The remaining players will be marginalized OPEC members, but at least they have an interest in limiting supply to keep prices stable, unlike some that would like the price to be negative.

As gas prices go up the switch to electric goes faster.

The economics of this disruption/transition in the coming years are not simple. For example, there are problems with price sensitivities and economies of scale. BEVs start to really take off, and demand for oil drops, which leads to price drops, less revenue and profits for oil companies, less money spent on equipment expansion and even maintenance. Plus, we’ll start seeing gas stations closing, which sets off a death spiral, as it gives people a new and sizable incentive to go electric, which hastens the decline of oil consumption. And these effects will not happen uniformly. Expect to see gas stations closing much quicker in urban areas than in rural, for the obvious (to people on this site) reasons. This will create a cross-cutting dichotomy — in addition to the one for type of vehicle (electric cars vs. gasoline trucks), we’ll see an urban/rural one.

(I’ve commented here before about the nasty, reverse chicken-and-egg problem of unwinding the tiny hydrogen refueling infrastructure. Unwinding the gasoline one will be orders of magnitude more complex and expensive, even if you assume that many gas stations will turn into EV charging stations with cafes or retro gaming arcades.)

Replace a urban gas station with a bunch of Superchargers and coffee shop/lounge.

“And these effects will not happen uniformly.”

Right. If you look at a graph of whale oil prices during the period when whale oil was being replaced by kerosene, it was anything but stable; there were huge spikes up and down in the price. I expect petroleum prices will also have wild fluctuations as demand drops, followed by some sources becoming unprofitable and shut down, followed by some refineries shutting down. There are a lot of factors which will cause large fluctuations in the price.

The upward price spikes in gasoline will also help push people into replacing their gasmobile with an EV sooner, which will be another factor affecting demand.

While I do think electrification is inevitable at this point, it does seem like a lot of things have to fall in place “just right” for this timeline to occur. Tesla (as an example) has obviously been a catalyst and, most recently, are actually making money. I have to believe, however, that we are on the verge of a recession and when I see the “typical trade-in” for a Model 3 is often an Accord or Civic, well, I am worried those folks are streeeeetching pretty far to get one and those same buyers will evaporate in a recession. I hope I’m wrong, but it is just another hurdle and if Tesla falters, then traditional auto makers might feel a lessening on the pressure to go EV quickly. On the flipside, there’s always China (who would have guessed!)…

Do Not Read Between The Lines

If people are trading in older, mainstream vehicles, maybe they aren’t stretching because they didn’t blow lots of money on premium vehicles the last time they bought a car.

Does the demand for gas and diesel fuel already decrease in Norway. First the fuel stations in Norway should see a change , since Norway seems to have the highest share of ev cars.

It has started to decline their oil consumption, but evs are still a small part of the vehicles on the road, around 7%.
In 2020 Norway is going to ban burning oil as a way to heat buildings, so that should reduce consumption too.
Also the situation is not static, you have do a per capita analysis.
Currently they use around 4% less fossil fuels, than an average year.

If they keep adding to the cumulative fleet with 40% EV sales per year then what does that do to the Norway fleet in just a decade?

Will take time to sort out all the ICE vehicles. People are still buying ICE cars, and many cars are used until they are about 19-20 years old, due to high prices for new vehicles.
Maybe EVs will reduce the time a car is in use – since they may scrap it sooner and buy a cheap(ish) EV insted of an old ICE car.

As for using oil to heat building.. that will have very little impact on oil consumption – since almost nobody use that. Some used it between 1970-1980.. after that, almost no houses had it installed, and now they get money from the government to replace the oil hear system with heat pumps, solar and what not.

Agree on the heating buildings. Not an issue.

Without having read the Seeking Alpha article, I do have to say that the picture published on this article doesn’t bode well for the plausibility and neutrality of the opinions presented. A teenager with a Tesla t-shirt and a bearded guy with a Space-X t-shirt might just have a slight pro-EV bias.

It’s a blog post published on Reeking Seeking Alpha. Looking for a well-researched real article there is nearly as fruitless as looking for a fine meal at McDonald’s. People who post to SA are almost invariably trying to persuade investors that one type of stock or another is a good or bad investment. Very few blog posts there make any attempt at being objective, and even fewer are well-researched. You don’t have to read very far into this one to see it’s not one of the few exceptions.

I am quite impressed with his work and diligence. But, like you said, and like I pointed out in the article, there are few there worth reading. Some of the deeper dives are compelling, however. I respect his writing. His projections may be far-fetched, but they are actually much less aggressive than Seba and others these days. It’s a give and take for sure.

I confess I didn’t watch the video, those two make a nice couple but 80% of what they say it’s normally crappy – sorry.
The seeking alpha article is good, but in my opinion is a bit exaggerated and more or less obvious.

The numbers are pretty mind-boggling. The thing that makes the most sense is the error in the flatness of the S curve. It is highly unlikely that EVs level out cumulatively after 2025.

The geopolitical repercussions will be staggering – Russia and Saudi Arabia running out of money could spark a couple of revolutions.