Robert Gottliebsen, 08 October 2015

If Alan Kohler is right and the Volkswagen debacle is going to trigger a swing from petrol/diesel cars to electric cars then fasten your safety belts for incredible changes in the Australian and world economies and business communities. We will have seen nothing like it since horses gave way to cars early in the twentieth century.

If you missed Alan’s commentary click here to read it. Right now electric cars are fashionable so, just as in the swinging 1920s petrol cars were a social talking point, electric cars may be the same social drivers.

For Alan to be right there has to be considerable further cost reduction in battery technology and also in the costs of solar panels and wind turbines. Unless that happens we will end up effectively driving cars on coal rather than oil.

But the rapid advances in battery, solar and wind technology over the last two or three years and the momentum created by using artificial intelligence to speed up research means that there is a high likelihood that we will make the advances and electric cars will sweep the world in the 2020-30 decade.

We had better understand what that means and be prepared for it.

We will start with the enormous network of petrol retailers around the nation and the world. Blacksmiths and hay and corn stores boomed when horses gave us mobility but they were wiped out by the car, although it took a long time. If we swing to electric cars the momentum will be much faster, although heavy vehicles may stay with diesel for an extended period. The swing from horses to cars was delayed by two world wars and a Depression.

A whole series of corporations will require new or amended strategies. The number of service stations will be slashed and motor repairs will be much less. Retail strategies of Woolworths, Coles and Caltex will need to be amended. Many petrol selling sites will need to find new uses.

It’s true we may call into service stations to top up our batteries but it’s more likely that we will do that at night at home.

Corporate giants like Shell and Esso will find life much more difficult. It’s very difficult for large companies to adapt to major change quickly. On the small business arena, petrol tankers will have much lesser roles.

The oil price will inevitably fall, which will make life tough for oil exporting nations. A lower oil price won’t help our LNG because the price of LNG is linked to oil.

Of course if the oil price falls it will make petrol/diesel cars much cheaper to run, which will slow the switch.

In theory our power networks should become much more efficient because cars will be plugged into the network in off-peak times and it might be possible to use a small portion of the stored power in car batteries to supply the morning peak. But our networks were not constructed to take large amounts of power from decentralised generation points like household roofs or car batteries. On the other hand if the users of electric cars tie their transport mode to greater investment in solar panels on their roofs then that changes the game for power companies or government authorities. It makes old-fashioned power regulation almost unworkable.

I have already discussed the impact on society of driverless cars, which can happen irrespective of whether the vehicles are driven by petrol diesel, electricity or some other energy source.

Driverless cars will substantially reduce the road toll and our medical and insurance costs. Both these industries will undergo considerable change.

It will also require important decisions from the new CEO of IAG. After I wrote my previous commentary on automated cars, I was alerted by the Australasian New Car Assessment Program that it had joined with the Australian Medical Association to press for Autonomous Emergency Braking (AEB) to be made standard in all new cars sold in Australia. They say it will substantially reduce road accident medical bills.

Such a change in the source of energy to drive a car does not require an automated car but it’s a signal that we’re looking at major changes to the motor industry. Australia has a chance to be a leader in electric car technology. We are very well placed with solar energy and the new free trade agreements to give our parts makers a chance to participate in specialised product markets.

Extracted in full from The Australian.