1/ Thread on the coming internal combustion engine death spiral (which needs a better name). A hypothesis..
2/ #energytwitter talks a lot about the utility death spiral. Still a theory - I think - as most utilities who haven't set their state on fire seem to still be doing pretty well. Shouldn't we expect the same kind of thing to happen in the internal combustion engine value chain?
3/ Imagine a scenario where a substantial percentage of internal combustion vehicles are replaced by #EVs. Doesn't even have to be that big of a percentage.. Maybe 30%? Which Bloomberg thinks will happen globally around 2040? about.bnef.com/electric-vehic…
4/ Even before that happens - gas stations start losing business. These are very low margin businesses - expect closures and consolidation. Result? Drivers need to drive further, wait longer to refill, reducing or eliminating one of the big advantages of an ICE.
5/ Same thing at dealerships and repair shops. They start losing business. Less sales of high margin things: fluids, belts, spark plugs, etc. More closures and consolidation - making it more difficult and inconvenient (and expensive) to service an ICE vehicle.
6/ Maintenance costs, already a disadvantage of ICEs, start going up, amplifying the advantage for EVs
7/ Manufacturers of ICEs and their suppliers start feeling the crunch. They are building less volume of ICE stuff. But they have many of the same fixed costs for design, engineering, tooling, testing, factories, etc. Less volume. Means lower margins and/or higher vehicle costs.
7/ Meanwhile, EV batteries continue getting cheaper every year, and performance is increasing (range, recharge time). Charging infrastructure is growing.
8/ Just wondering if folks like @BloombergNEF and others who forecast EV penetration, factor in impacts to margins and changes in costs in the value chain for even a modest penetration of EVs, and how that will further accelerate penetration.
@Tesla 10/ And, ironically, perhaps the ICE death spiral will delay or prevent the utility death spiral..
