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The Impact on the Economy due to widespread EV usage

Discussion in 'Tesla Motors' started by Evpro2, Jul 25, 2013.

  1. Evpro2

    Evpro2 Member

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    Have not seen much discussion of this aspect.

    All our local communities are currently bleeding-out millions of dollars a week to the oil companies/foreign despots. This money is gone forever and is being used in many oil producing countries to support dictatorships and purchase weapons and luxury goods for the 1%.

    As more drivers are able to stop making those weekly $80 gas purchases they will have more money left in their pockets to spend in the local economy. The money they do spend on electricity (about 1/3 or less of what they were spending) will remain in their local states and communities, where it can be recirculated and invested in things like grid improvements and large scale solar generation, creating more jobs in renewable energy.

    I am convinced that this, along with the thousands of good factory jobs in America that it will take to replace the ICE, will have a major positive impact on our still-struggling economy. When you combine this with the net decrease in CO2 and other pollutants from cars that can (and increasingly will) run on sunshine, there is every reason to think that the Tesla vision will be the "hope and change" that so many of us want to see. Go Tesla!
     
  2. PhilBa

    PhilBa Active Member

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    Um, I don't think it's that simple. While some crude oil is purchased from "foreign despots", the US is rapidly becoming self-sufficient. Note also that about 66% of the cost of gas is for crude. A lot of it is for taxes.
    So what does widespread EV adoption imply? These are just my guesses.
    1. Lower revenues/employment for the auto service industry. This assumes that the annual "check up" is standard.
    2. EVs have fewer components than ICEs - look for shrinkage in the industries that feed the automakers.
    3. Look for shrinkage and upheaval in a number of industries that support ICE - motor oil (suppliers and change stations), transmission fluid, oil recyclers, after market suppliers.
    4. Lower gas tax revenues will cause new taxes - mileage or usage based, most likely.
    5. Somewhat cleaner air and water.
    6. Corn prices will be lower. expect farm income decreases (or grower subsidies). Lower food costs in general.
    7. Natural gas prices will increase as power generation switches from coal to NG.
    8. Some increase in solar and wind power generation. I'm skeptical either will become the dominant generation method. I don't think the rest of the country will follow California in this regard.
    9. The electrical distribution grid will teeter, go into crises and then get upgraded.
    10. Gasoline and petroleum based product prices will remain fairly stable (production will fall to match demand).

    And by the way, I wouldn't hold my breath about this happening anytime soon.
     
  3. brianman

    brianman Burrito Founder

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    I'm a bit confused. I thought "the 1%" referred to a segment of the U.S. population, not citizens of foreign lands.
     
  4. VolkerP

    VolkerP EU Model S P-37

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    Well I'm afraid you have to cool down your hopes a bit. This is a bit lengthy, though...

    U.S crude oil demand in 2012 was 18.65m barrels per day or 6,826m barrel per year.
    U.S. production was at 2,377m b in 2012, and imports were at 3,878m b
    Source: EIA U.S. Energy Information Administration (EIA)
    It doesn't sum up exactly, because a lot of crude oil products are exported.
    By the way, 2012 oil consumption was at a several year low point.

    Source: EIA Predicts U.S. Oil Demand to Rise 0.3% in 2013 - WSJ.com

    I stick to a suggestion from David MacKay from his Book "Sustainable Energy - Without the Hot Air" and not look on national totals, but instead at personal (per capita) numbers. So with 310m inhabitants in U.S. in 2012, we have 22 barrels per person per year demand crude oil, of which 12.5b were imported.

    Some 2/3 of U.S. oil usage is for transportation. This includes air, ship, rail, road freight, and passenger cars / light trucks. Passenger cars / light trucks use roughly half of the amount of oil for transportation, or 1/3 of all U.S. oil consumption. Source: Martin Eberhard TED presentation 2007

    So if all of these cars are replaced by electric vehicles, U.S. oil consumption will drop by 1/3. There is an additional drop because of savings in transporting crude oil and gasoline products via road, rail, and ship. But it is very minor: less than 5% I would guess. It stems from the added 20% carbon footprint of every gallon of gas dispensed at a gas station.

    For ease of numbers, let's stick to one third. That makes the above numbers:

    15 b per person and year of crude oil demand.
    The reduction by 7 b will not even neutralize imports, but merely curb it to half.

    Still better than nothing.

    Fully agree here, but it takes more than 200k EVs per year to make that switch. The EV revolution has to spread across the entire car industry in order to curb oil demand significantly. Then we need electrification of all other transports: air, road freight, ship. Only then oil consumption will go down to where it was back in 1960(!).
     
  5. Evpro2

    Evpro2 Member

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    Not claiming that oil imports will be eliminated, just that each new Model S on the road cuts the outflow of gas money from the local economy to overseas, never to return. Every dollar not exiting can then be utilized and recirculated, so there is a multiplier effect. Plus the overall lower fuel cost/mile frees additional local spending. Plus the domestic factory jobs manufacturing cars for both the American and export markets.
     
  6. Tim

    Tim Member

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    According to the eia link you posted the u.s. imported 36.4% of its oil this year. That percentage has been dropping by about 5% per year for the last several years. Of course the elimination of imports implies energy security and a profound change in foreign policy. This is why Cheney and some otherwise very right leaning(and oil supporting) politicians support evs. Because they accelerate the trend. Evs would have similar effects in Europe, Japan, and China due to their even larger energy deficit. It should be noted that a large amount of u.s. military resources are not used in just securing our energy supply, but our allies too.

     
  7. PhilBa

    PhilBa Active Member

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    But the money that flows to dictators (or what ever) often comes back to the US as arms purchases (not that it's good, just addressing your "lost forever" point). Frankly, the basic premise of "lost forever" is a fallacy. The money doesn't get burned or stuffed away under a (very large) mattress. Pumping up other economies means that they have money for trade and thus improves the world economy which benefits us all.

    A lot of the Model S is sourced outside the US - 45% according to Tesla. So even the car itself contributes to "outflow". I still feel pride that we are able to design and manufacture the most advanced car in the world here in the US but it is truly a global economy.

    And by the way, all those factory jobs - I suggest you watch the Tesla factory video that's floating around. We're talking about highly automated factories. Plus, as I said earlier, EVs are a lot simpler than ICEs so I wouldn't be surprised if the net auto industry employment went down for an equal number of cars produced.
     
  8. Tim

    Tim Member

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    However that trade is not frictionless. Our military budget for 2014 is 600 billion dollars. Its not a simple guns vs butter analogy, but the large trade deficit(due almost entirely to energy) is a drag on potential GDP growth. While I agree that a multiplier effect exists in trade whether its energy or military the argument that its less optimal than a substitution to other goods or services is still valid.


     
  9. richkae

    richkae VIN587

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    Where my dollars go is very important to me, allow me to anthropomorphize them.

    My dollars are happy going to Japan to buy cells, England to buy an aluminum chassis or France to buy carbon fiber panels.
    My dollars are unhappy when they go to the middle east to buy oil.
    My dollars are also unhappy when they buy tarsands from Canada ( I lived in Fort McMurray where the tarsand are, so I am very qualified to disapprove of them )
    My dollars are very unhappy when they go anywhere to buy weapons of mass destruction, or spread terror and oppression.
    My dollars are very happy to buy a domestic car built with domestic labor and domestic robots.

    I do my very best to not let my dollars go where they are unhappy.
     
  10. ModelX

    ModelX Member

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  11. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    #11 ItsNotAboutTheMoney, Jul 26, 2013
    Last edited: Jul 26, 2013
    Not to mention that there's over 2M people employed by the Department of Defense, with the USA having 243M people of working age. That's a lot of resources and labor that could be freed up by gaining energy independence (i.e. foreign policy not driven by need for reliable access to foreign resources).

    Now, the global economic dependence on petroleum means that even if significantly lower demand in high-consumption EV markets lowered prices in the short term, global economic growth would maintain demand growth and sustain prices, but any significant reduction of the USA's petroleum imports would be economically significant, especially given the USA's large refining capacity.

    Although, as VolkerP pointed out, only replacing light vehicles with EVs wouldn't eliminate imports, I'd suggest that a complete shift in light vehicles would imply improvements to EV drivetrain technologies that would be able to cross over and have a significant impact in heavy transportation.

    Then of course EVs would affect the great unknown of atmospheric pollution. This is a current externality and shifting to PEVs could reap large dividends not only through reducing the medical burden but also through improving quality of life in cities. Cities are efficient places and the more pleasant they are the more likely society would continue re-urbanization.

    While the large increase in use of electricity could see NG price rises, I'd point out a few downward pressures and caps:
    - Each 1W of NG capacity can support 1W of renewable capacity. Texas' NG share of electricity generation has actually fallen because of the growth in wind installation and infrastructural improvements. While additional wind resources become less powerful, renewable pricing tends to fall so while NG capacity may grow at one rate, NG generation will grow at another.
    - NG use is expanding because of overall growth in electricity use, cheap NG and environmental policy. If NG rises in price to anything like old pricing you'll get new, more efficient, cleaner coal capacity added instead. It's a few cents more expensive per kWh than old coal but given the combination of improved efficiency and the additional cost being in the technology, you should find that it has lower price inflation than conventional coal power.
    - PV cells keep improving in cost and efficiency. PV has absolutely incredible potential for use in the USA in particular and at worse helps acts as a price cap.
    - A lot of NG is wasted at source due its relatively low value. At certain price-points the NG supply would increase dramatically and act as a cap.
    - A few years ago it was suggested that economical biogas just from farms, sewerage and landfill could meet 8% of the USA's needs. Rising prices would likely lead to another biogas push, this time, as ever, with improved technology.
     
  12. Benz

    Benz Active Member

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    Anyhow, each EV means one less ICE.
    The marketshare of EV's will rise steadily.
    It's just a matter of time.
     
  13. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    On yesterday's evening commute there were two EVs in front of me. They're becoming more common.
     
  14. VolkerP

    VolkerP EU Model S P-37

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    I saw 3 EVs in the wild this month. Yes; EV is the way to go for personal transportation, and I agree further, that mass adoption of electric drivetrains will lead to more and more people questioning the status quo in other transportation sectors.
    Road freight is a lot harder to convert, since it's all about vehicle weight. And these batteries will be heavy.
    short- to mid range air traffic will be possible according to Elon when energy density has grown another 5x.
    But these will set in motion very slowly. We talk about decades here. There will be time enough for involved sectors of the economy to adapt.
    Hell, there are a lot of business disrupted by innovation all the time (try to find someone repairing a CRT) and it's just part of our modern life.
     
  15. brianman

    brianman Burrito Founder

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    Not necessarily. The ICE that my S replaced went to a family member (who didn't put another ICE to pasture, so no net decrease in ICEs in service).

    I'm pretty sure when/if Leno buys an EV, he's not discarding an ICE to make room for it.
     
  16. Benz

    Benz Active Member

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    You are right.

    I think that I should have said/phrased it differently.

    Because what I actually meant is that when a buyer decides to buy a new car and when he/she chooses an EV, then that would mean that one less new ICE will have been put on the roads. Because it's very likely that when this buyer would not have chosen to buy an EV, that he/she would have bought an ICE (or some hybrid car, or something else).
     
  17. brianman

    brianman Burrito Founder

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    ... or wouldn't have bought a car at all. :)

    If I hadn't run across the Model S when I did, I wouldn't have bought a vehicle (of any kind) in 2012.
     
  18. Benz

    Benz Active Member

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    OK, that's an option as well, and that's a step in the right direction too.

    And people who were not looking to buy a car, but still bought a Tesla Model S, are very much likely not going back to ICE anymore. And if these people had not bought a Tesla Model S, then the chance that they would have bought an ICE at some point in the future would have been greater than it is now, right?
     
  19. brianman

    brianman Burrito Founder

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    Agreed.
     

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