I found this very interesting article over at SeekingAlpha.com today. In it, Jim Kingsdale talks about 3 lessons from Carlos Ghosn, who is chief executive of Renault-Nissan. The three lessons are:
- The world is split into two distinct economies, one stable and one growing rapidly.
- Jevon’s Paradox is alive and well in India (and elsewhere)
- The electric car has huge implications for oil demand, and the timing relates in a strange way to the first lesson above
First off, you’re probably asking yourself, what is Jevon’s Paradox?Â William Stanley Jevons was a 19th century economist who said that as technological improvements increase the efficiency with which a resource is used, total consumption of that resource may increase, rather than decrease. Mr. Kingsdale applies this paradox to the announcement by Tata Motors of India of their new $2,500 car, the Nano. Even though the Nano will get 59 mpg, its introduction will increase the demand for oil because it will enable millions more people who currently cannot afford a car to have one. This will drive up the total amount of miles driven by a staggering amount, and even though the fuel consumption of each individual Nano is smaller compared to larger and more expensive cars, total oil consumption will increase. Where will the Nano be popular? Not in the countries that have stable more developed countries – rather its the rapidly growing countries that will “experience enormous growth in car population due to the Nano and its imitators.”
Which brings Mr. Kingsdale to the electric car. You may have previously seen Israel’s announcement that it fully intends to transition to all-electric vehicles beginning in 2010 though a partnership with Project Better Place. According to Mr. Kingsdale, “Israel’s announcement came soon after new developments in generating electricity with solar thermal technology were announced . The solar/thermal system promises cheap, reliable, 24/7/365 carbon-free electricity, especially for sunlight-intensive areas such as Israel. The combination of unlimited cheap electric power with a transition to electric transportation is stunning because the two developments are obviously symbiotic. Each is critical to the success of the other. In combination, they suggest what the entire world’s ultimate solution to the coming petroleum shortage will tend to look like.”
All isn’t peachy keen, however. If the Israel solution is successful, other developed countries will probably start to imitate it. Mr. Kingsdale sees large scale transitioning to electric city cars in the 2012-2020 time frame if Israel is successful. However, oil demand will continue to increase in the developing countries as their electric infrastructure and generation capability isn’t enough to power their current electrical needs, let alone a country full of electric cars. China, for example, is currently facing extreme shortfalls of electricity at the same time they are under huge international and domestic pressure to clean up its environment. Right now, China is building an average of one new coal fired plant per week and still falling behind in needed electricity.
Anyway, lots more to read in this very interesting article. Check it out at SeekingAlpha.