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Over the last decade, plenty of discussion has taken place as to whether the world will see a new generation in the automobile industry. A generation in which we will see the fall of gasoline cars and the rise of electric cars. This argument especially comes at a time where the automobile industry has sluggishly recovered from the aftermath of the recession and tries to diversify to stay more competitive.
The last couple of years have been riddled with volatile oil prices, scrapped oil subsidies in the Middle East and automobile reforms as a result of the major emission scandals of one of the most successful car companies in existence, Volkswagen. This volatility and uncertainty in petroleum prices and automobile frauds puts forward a new case, the case for the Rise of Electric Cars.
Tesla, the current leader in the electric car market led by the great visionary, Elon Musk, have singlehandedly changed the way the world sees the prospect of oil-free, emission less and cost-efficient cars in the form of electric cars (EV’s). The company (ticker: TSLA, for all you investors out there) have already released two luxury electric vehicles with a third, more affordable car being recently introduced, making Tesla clearly the world leader in the electric car market, followed by Nissan and BMW.
So, two important questions need to be answered here.
Do electric cars pose a challenge to world economies and auto manufacturers?
For starters, the world economy is secretly worried! A research conducted by Bloomberg earlier this year stated that another oil crash, from which we may not be able to recover, is imminent in the near future. One of their primary reasons stem from the rise of electric cars, which is likely to lead to a 2 million barrel/ day drop in crude oil demand as early as 2023. This could send the price of crude oil into a death spiral.
It also puts pressure on several developing countries such as India and China who lacks the power grid infrastructure necessary for these cars, as the consumption of more power would certainly constrain their daily power needs due to rising pressure for these countries to reduce pollution. Furthermore, major players in the automobile have colluded to block the rise of Tesla and consequently, electric vehicles, as this jeopardizes the long-term growth of gasoline car manufacturers who have no plan in sight to enter into the EV industry.
Secondly, why buy electric cars when gasoline/ diesel cars are cheaper by far?
This is a no-brainer for the environmentalists. Transportation is one of the largest contributors to air pollution and gasoline/ diesel cars lead to awfully high carbon dioxide and greenhouse gas emissions. In addition, the recent emissions scandal of Volkswagen, which led to the company programming its cars to manipulate emission safety tests, have led to an outcry of the importance of electric cars as profit-focused gasoline carmakers simply cannot be trusted any more.
Therefore, electric cars offer lower maintenance costs, are less noisy and are currently the most energy efficient transportation method to date. They have also been given further tax breaks from the government and this reform clearly shows that the world sees electric cars as a new revolution within the automobile industry.
To conclude, the cheaper oil prices and considerably higher prices of electric cars may, as of now, put off some potential investors from buying these vehicles however, considerations need to be put in place about whether the world can cope with the rise in demand of EV’s and whether they truly offer savings in energy, money and emissions in the long-run. The EV industry still has a long way to go and major gasoline auto manufacturers are currently blocking its growth. However, with the fast rise of electric cars, it remains to see who has the last laugh.