An excerpt from Insane Mode: How Elon Musk's Tesla Sparked an Electric Revolution to End the Age of Oil by Hamish McKenzie.*

To understand how electric cars can end the Age of Oil, you might want to visit a fast food restaurant. Oil may have dominated our economic times, but it fades in significance when compared to salt. Civilization was built on the stuff that McDonald’s now gives its customers for free.

Photo by Zbynek Burival on Unsplash

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Posted by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Salt is essential to the human diet—without it, your body would gradually shed water in an attempt to maintain constant salt levels in your blood, eventually leading to your death from thirst. But it has been almost as important as a means to preserve food. Over the centuries, humans have harvested salt in a number of ways, from mining to evaporation to digging up bogs that had been soaked with seawater. Such methods have been traced back at least 3,500 years, with evidence that they stretch back even 5,000 years, and some bear similarities with how oil is extracted today. In AD 400, the Chinese discovered a way to drill into mountains and extract brine with bamboo pipes, some of which reached as deep as three thousand feet.

Salt, like oil, was unevenly distributed around the world. Thriving settlements arose around salt sources in Jordan by the Dead Sea; in North Africa, where salt could be dug from the ground; in the Austrian Alps, where salt was mined; and in Persia, Egypt, and the Sahara, where there were salt swamps in the deserts. In parts of Africa where salt was scarce, people got their salt hits by drinking the blood and urine of cattle and wild animals. It was the world’s most important commodity and so became the subject of transport, trade, and conflict.

“A certain political pattern seems to emerge,” wrote the journalist M. R. Bloch in Scientific American in 1963. “Where salt was plentiful, the society tended to be free, independent, and democratic; where it was scarce, he who controlled the salt controlled the people.” In the civilizations of the Nile, Babylon, India, China, Mexico, and Peru, autocratic rulers controlled their subjects by maintaining a monopoly on salt, and taxing it.

While today’s global economy remains inextricably linked with the fortunes of the oil industry, salt’s connection to the economy was even more direct. Salt was synonymous with money, and in some cases literally was money. Ethiopia used bars of salt as currency as early as the sixteenth century and, in remote areas, as recently as the twentieth. The word salary has its origins in the Latin word for “salt money.” The Romans paid their civil servants in salt. Slave traders bought humans with it.

There were, of course, wars. In Roman times, German tribes fought over salt sources. France’s salt tax, the gabelle, caused such outrage that it was an aggravating factor leading to the French Revolution. Even during the American Civil War, salt was a military target. At the end of 1864, for instance, Union forces captured Saltville, Virginia, a leading producer of the stuff, then embarked on a destructive two-day rampage that, according to the historian Rick Beard, effectively brought an end to salt making in the South of the United States.

These days, dieticians say our problem is too much salt, not too little. So if salt carried such strategic importance only 150 years ago, why is it so cheap today? The answer is that it was supplanted by an invention that changed the course of history.


The first refrigerated ships appeared in the mid-1870s, and General Electric started marketing the first household refrigerator in 1911. Instead of relying on salt for food preservation, or using large ice blocks to keep their food cold, people in developed countries started storing it in electrically chilled boxes. Food became safer, lasted longer, and tasted better. This revolutionary development facilitated the rise of large modern cities, the opening of global markets for food, and the spread of population. It also made salt a lot less valuable. There would be no more wars over sodium chloride. Its multithousand-year reign as the world’s most important commodity was over.

What happened with salt is not that it was displaced by a superior ionic compound. It was displaced by a superior system. The same thing is happening with oil.

“The idea electric cars pose a serious threat to oil might seem fanciful”

The oil industry may be the most lucrative the world has ever known, and the idea that still-scarce electric cars pose a serious imminent threat to it might seem fanciful. The industry is worth trillions of dollars a year. The production, supply, and distribution of oil is the subject and cause of much geopolitical instability, and it has been central to conflicts on every continent, from the Middle East to Sudan and the South China Sea. While it continues to be fought over, and while the burning of oil continues to warm the Earth’s atmosphere in an unsustainable way, it’s also important to acknowledge that oil, like salt, has been essential to the vitality of modern society. The United States of America as we know it would scarcely hold together without an abundant supply of gasoline to fuel the cars and trucks that connect its highly dispersed towns, cities, and agricultural areas. We still depend on oil to maintain our quality of life, to enjoy freedom of travel, and to connect global economies. If oil disappeared immediately, life for many would quickly become grim.

None of that, however, means that oil is not vulnerable to the same forces that made packaged salt a free item at fast-food outlets. In 2014, about 47 percent of petroleum products consumed in the United States were used for gasoline, according to the US Energy Information Administration (EIA). While oil is used for many other products, such as jet fuel, plastics, and detergents, the wealth of the industry is fundamentally dependent on cars, trucks, and buses. Without gasoline and diesel filling the tanks of motor vehicles, the oil giants of today would be far less significant players in the global economy.


It doesn’t take much to trigger an oil market crisis. From June 2014 to January 2015, an oversupply of oil sent prices crashing from $116 a barrel to $47 a barrel, prompting an industry panic. Oil companies big and small laid off staff and canceled hundreds of billions of dollars of projects. Supply had been driven up by a number of factors, including the shale boom, which, in 2012 and 2013, resulted in the fastest growth in United States oil production history. The improving fuel efficiency of America’s vehicle fleet also contributed. According to the EIA, the US transportation system used 10 percent less oil in 2014 than it did in 2007. As electric cars become more widespread, the demand for oil will further decrease, putting more pressure on oil prices and creating more economic stress in the industry. Shell has said that oil demand could peak in as little as three years.

“Shell has said that oil demand could peak in as little as three years”

The displacement of two million barrels of oil a day—about 2 percent of global daily production—would be enough to trigger oil price decreases equivalent to those seen at the start of the crisis in 2014, according to a story by Bloomberg that drew on a 2016 study by Bloomberg New Energy Finance. Electric cars could do that by the early 2020s, the study found. The growth rate of electric cars from 2014 to 2015 was 60 percent, which was similar to the growth rate Tesla was projecting for the years ahead. If that rate continued, electric cars could displace two million barrels of oil a day by 2023, Bloomberg noted. A more conservative estimate based on the component costs of electric vehicles and when they would be affordable to mainstream car buyers found that the two-million-barrel threshold would be crossed in 2028.

But might that time come even sooner? Both Tesla and GM think battery prices will come down fast enough for electric cars to be more affordable than equivalent gasoline cars by the early 2020s. The Chevy Bolt sells for less than $35,000, after subsidies. Tesla is producing Model 3s at a rate of hundreds of thousands a year. Other electric car companies, new and old, are developing competitive strategies.

It is still difficult to predict how quickly the sales of electric cars will overtake those of gasoline vehicles. Even assuming all goes well for Tesla and their electric competitors, it could take years, or decades. Bloomberg New Energy Finance’s study estimated that electric cars will account for 35 percent of new car sales by 2040. That’s based on battery prices decreasing at a slower rate than Tesla and GM anticipate. But, as noted earlier, gasoline cars will face the difficult task of competing with electric cars that are both cheaper and better.


One characteristic of disruptive technologies, as the electric car has the potential to be, is that their market penetration tends to start slowly and then accelerate rapidly. In 1900, less than 10 percent of US households had access to electricity. In 1960, less than 10 percent of US households owned a color TV. In 1990, less than 10 percent of US households had a cell phone. The first versions of all these products tended to be expensive, clunky, inconvenient, or all of the above. But then, as the technology improved, manufacturing processes were refined, and economies of scale kicked in, prices came down dramatically and the technologies found their way into homes and pockets. In 1990, there were 5.3 million cell phone subscribers in the United States—about 2 percent of the population. Twenty-five years later, 92 percent of Americans owned a cell phone.

When mapped on a graph, this adoption curve looks roughly like a stretched S—a gentle incline at first, followed by an inflection point that triggers a sudden and steep rise, and then, ultimately, a leveling off when the technology reaches saturation point. Over the last hundred years in the United States, the “S-curve” has occurred with the automobile, the radio, the color TV, the microwave, the VCR, the personal computer, the cell phone, and the Internet. Oh, and the refrigerator.

Could the electric car follow the same path?

Many of the effects that spur demand for electric vehicles are only just starting to take hold. The decline of battery prices, which will make electric cars more affordable, is probably the biggest factor influencing demand, but there are others. For a start, many hundreds of millions of people still don’t know a thing about electric vehicles that aren’t golf carts or hybrids like the Toyota Prius. They might be unaware of the benefits of instant torque, or the near-total silence of the propulsion, or that the vehicles can be charged at any power point. Tesla, with its fancy stores, slick websites, and high media profile, has captured a hard-core loyal market, but there’s a lot more market to be had.

“In 2013, GM alone spent $5.5 billion on advertising”

Traditional automakers spend billions of dollars a year on advertising to encourage people to buy their products. In 2013, GM alone spent $5.5 billion on advertising. Tesla, on the other hand, has spent virtually nothing on advertising its cars. Automakers invest in advertising because it correlates with increased demand. What will happen once Tesla and others start paying to advertise the benefits of electric mobility?

But no matter how much you spend on ads, if customers can’t get near the cars, they won’t buy them. If you live in New Zealand, for instance, you weren’t able to buy a Tesla through official channels until 2017. Many cities in the United States don’t have a Tesla store, and most Americans haven’t sat in a Model S or Model X—or any other electric car. As more full-electric cars get on the road, more people will be able to experience what they’re like and realize that they’re much different from golf carts and Priuses. Tesla has long believed that the best way to sell its cars is to get people in them. Once a potential customer has taken a Tesla for a test drive, she is more likely to buy one. Many Nissan Leaf owners say they’ll never go back to gasoline cars.


And then there’s the wild card of regulation. Market forces already suggest that electric cars will soon be more affordable than gasoline cars independent of rebates and other incentives, but even slow-moving governments with conservative expectations for how quickly things can change are considering regulatory packages that seek to end the sale of gasoline cars within two decades. Every country in the United Nations, except the United States, has committed to drastically reducing its carbon emissions, and automakers have been expected to continue to improve the fuel economy of their vehicles.

But the global political environment could get even worse for gasoline cars if the effects of climate change wreak more havoc with the world’s economy and way of life—particularly if affordable, low-emissions alternatives are readily available. For example, Norway is working on a combination of taxes, subsidies, infrastructure, and other incentives in an effort to end sales of gasoline cars in the country by 2025. In October 2016, Germany’s federal council voted for a nonbinding resolution to end all sales of gasoline cars with internal combustion engines by 2030. In May 2017, India’s power minister announced a plan to have only electric cars—and “not a single petrol or diesel car”— sold in the country from 2030 on. France has said it will end sales of diesel and gasoline cars by 2040. And even China has said it will set a date that will signal the end of all gasoline car sales in the country (although it hasn’t said what that date will be).

All these scenarios could have a drastic effect on the uptake of electric vehicles, which would in turn have a dramatic impact on the consumption of oil. By Bloomberg New Energy Finance’s estimates, there will be enough electric cars on the road to cause an oil crash in the late 2020s. And every year from then on, the story will only get worse for the oil companies. Bloomberg’s study forecast that electric vehicle sales will leap from 462,000 in 2015 to forty-one million in 2040. Every new electric car on the road represents another dent in the oil companies’ profits.

“It’s clear that the sector is going through one of the most transformative periods in its history, which will ultimately redefine the energy business as we know it,” said a PricewaterhouseCoopers report on oil and gas trends in 2016. But it’s not just industry job losses, write-downs, and budget cuts that will come. Geopolitical power structures will be rewritten, from oil-rich regions in the Middle East and Africa to oil-import-dependent nations elsewhere. National security priorities will shift.

Saudi Arabia, which has traditionally relied on the petroleum sector for 90 percent of its state budget, is responding. Prince Mohammed bin Salman, next in line to the throne, has control over Saudi Aramco (Saudi’s oil monopoly), economic policy, and the national investment fund. He has announced plans to create a $2 trillion fund to make returns from investments, not oil, the primary source of Saudi government revenue.

Saudi Arabia, the world’s largest exporter of black gold, fears that the S-curve could cause oil to go the same way as salt.


*Hamish McKenzie is a journalist and the author of Insane Mode: How Elon Musk's Tesla Sparked an Electric Revolution to End the Age of Oil, a book about the transition to electric cars and a clean energy economy. He was hired by Elon Musk and worked for Tesla in 2014/15 before leaving to write the book, and now he's one of the founders of Substack, a subscription publishing platform. He's from New Zealand originally but lives in San Francisco.

*InsideEVs Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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