On electric cars and war clouds

There have been two major developments over the past month that are worth highlighting. Tesla, the electric carmaker, created history by surpassing the market value of the US motor giant Ford.

The shares of Tesla – a company that was founded in 2003 – have been rising rapidly. They have increased by nearly 42 percent since the beginning of the year to more than $300 per share. The company is currently valued around $53 billion. According to the Stanford economist Tony Sheba, “Tesla Model S has 18 moving parts – one hundred times fewer than a combustion engine car, which has some 2,000 moving parts. Maintenance is essentially zero. [T]hat is why Tesla is offering infinite-mile warranties. You can drive it to the moon and back and they will still warranty it”.

Professor Sheba has predicted that huge chunks of the world’s population will switch to self-drive electric vehicles (EVs), which are 10 times cheaper to run than fossil-based cars. They will have a low maintenance cost and an expected lifespan of one million miles. It has been predicted that there will be no new petrol or diesel cars, buses or trucks sold anywhere in the world within the next eight years. The entire land transportation systems will switch to electric vehicles. This will result in the catastrophic collapse of oil prices and lead to the devastation of the petroleum industry as well as automobile manufacturers who fail to adapt to this innovative industrial disruption.

The price of crude oil will fall to $25 or even less per barrel. Petrol stations will be hard to find and people will adapt to vehicles on demand rather than owning vehicles themselves. Cars will essentially become “computers on vehicles”. The changes taking place have become an existential threat to automobile manufacturers who are now competing with Tesla to bring out electric cars.

Professor Sheba’s report has caused severe anxiety among international automobile manufacturers as well as oil-producing nations. Saudi Arabia and other oil-producing Arab countries will slide back into the state of poverty that enveloped them till 1950 as they have failed to take advantage of the window of opportunity that history had offered them. Instead of developing strong knowledge economies like Korea, Finland and other countries had done, they have frittered away their wealth on luxuries and weapons.

At the heart of this race lie the rapidly evolving battery technologies that enables cars to travel longer distances without the need for a recharge. Since batteries contribute about 40 percent of the cost of electric cars, the race is all about making more powerful batteries at lower costs. According to international reports, the cost of power production per-kilowatt-hour has dropped from $542 in 2012 to $139. It is likely to fall beneath the $100 mark by 2020. Electric cars are already outperforming petrol cars owing to their ability to go from 0 to 100km in less than 2.4 seconds and travel about 350km on a single charge.

The prices of electric cars are also coming down sharply. According to Professor Sheba, the “tipping point” will arrive within two to three years as EV battery ranges surpass 200 miles and electric car prices in the US drop to $30,000. By 2022, the low-end electric cars are likely to cost about $20,000. After that, the petrol vehicles will quickly disappear. Professor Sheba predicts that: “What the cost curve says is that by 2025 all new vehicles will be electric, all new buses, all new cars, all new tractors, all new vans, anything that moves on wheels will be electric, globally”.

China and India have joined the race to ride this new disruptive wave of innovation. India plans to phase out all petrol and diesel cars by 2032. The process is to be accelerated in India through a mix of subsidies, car-pooling, and caps on fossil-based cars. China aims to produce seven million electric vehicles annually by 2025. We are witnessing an example of how innovation will disrupt the automobile and petroleum industries and destroy many national economies.

The other major political development occurred on May 20 when the world witnessed a madness of global proportions in Saudi Arabia: the signing of an arms deal between US President Trump and the Saudi leadership whereby arms worth $110 billion will be purchased from the US with an option to purchase arms worth $350 billion over the next 10 years. The Saudi leaders were seen rejoicing alongside Trump in blissful ignorance of how they have been fooled. Their money – a huge amount of $350 billion – will be sucked away by the US government to create thousands of new jobs in arms factories across the US. These arms will, in turn, be used by Muslims to kill other Muslims.

If the $350 billion were being spent to set up world-class research centres and high-technology manufacturing facilities in Saudi Arabia, such expenditure would have been understandable. But to throw a large sum of money away on expensive toys that will soon become outdated within a decade – particularly when Saudi Arabia is itself going through financial difficulties – is utter madness. Terrorism cannot be fought with weapons. It must be fought by education, creating jobs for the youth and addressing the root causes that lead to deep frustrations.

The presence of Prime Minister Nawaz Sharif in Riyadh along with our former army chief General Raheel Sharif heading the Saudi-led coalition of armed forces following the formal permission of our government has raised fears that Pakistan is going down a path of war and self-destruction. The Islamic Republic of Iran has been a good neighbour and a friend of Pakistan. Sunnis and Shias have lived peacefully together for centuries and we must not fall prey to schemes to pit us against each other.

We have seen how the deception of the weapons of mass destruction was created to invade Iraq with “shock and awe” policies. It was arguably the biggest hoax in the history of humanity. We have also seen how situations in several Islamic countries were manipulated by external powers. We have witnessed how this resulted in the destruction of Afghanistan, Libya, Syria and Yemen and triggered insurgencies in Turkey, Egypt and parts of Balochistan.

Pakistani leaders must refrain from becoming part of a partisan coalition. Instead, we should focus all our energies on building our nation by making investments in education, science, technology and innovation and maintaining friendly relations with Saudi Arabia, Iran, China, Russia, India and the US.

The writer is chairman of UN ESCAP Committee on Science Technology &
Innovation and former chairman of the HEC. Email: ibne_sina@hotmail.com