Electric vehicles, or EVs, haven't really reached MENA yet. But when they do, the impact will be as destructive as everywhere else in the world.
Bloomberg New Energy Finance (BNEF) advisory board chairman Michael Liebreich and chief editor Angus McCrone identified eight broad trends where electric vehicles would have devastating effects.
For the petrol-head naysayers out there, they aren’t convinced just because battery costs are dropping fast, but because EVs outperform internal combustion engines.
“They drive more smoothly yet accelerate better, they can be charged at home or at the office, they require much less maintenance, they help solve air quality problems, they improve the energy autonomy of oil-importing countries,” they wrote in a commentary piece for the company.
“And it simply makes no sense to have an inherently analogue power unit – vibrating, volatile-liquid-consuming, hot-polluting-exhaust-producing – at the heart of a fully digital, sensor-pervaded, solid-state-electronics-controlled system.”
These are the industries you, as entrepreneurs, might want to start watching very, very closely. Already startups such as My Cars in Dubai are pushing the electric barrow, so it's certainly not too early to jump on board.
1. A shift from gearboxes to batteries
The car parts supply chain is going to radically change, from gearboxes and exhaust systems to batteries and cyber security software.
It will be the end of the industry that makes and supplies traditional car parts, and will support the continued rise of battery and software giants such as Panasonic and LG Chem.
2. The end of the car mechanic
Repair shopsmechanics in the oily overalls will also become a rarity. Fewer moving parts mean fewer repairs needed, and systemic changes will be handled through software updates rather than a regular tune up.
All of this will vastly reduce the need for maintenance and repair work, and break the model for dealerships which traditionally followed up sales with ongoing maintenance work. Liebreich and McCrone see cars being sold via showrooms rather than dealerships offering long-term sale benefits.
3. Grid changes
Given the struggles MENA countries are now having with updating their legacy electricity systems, it’s unlikely electric cars will cause rapid change in state-owned grids any time soon.
But around the world they will have a heavy impact. BNEF estimates EVs will add at least 2,701 terawatt-hours, or 8 percent, to global annual electricity demand by 2040.
It will support electricity demand as more efficient devices reduce it, and enhance the shift from base-load-and-peak power management systems to forecast-and-balance as renewables come on stream and as EVs can charge at times of the day when solar or wind power is available.
Second hand car batteries could compete with the Teslas, Redflows, and Daimlers of this world who currently offer home energy storage devices, creating a much cheaper option, and enabling more off-grid living.
“Once a battery’s performance has degraded by around 30 percent, it could become available for stationary storage. Upcoming research by BNEF’s advanced transportation team will suggest that by 2018 these second-life batteries could cost as little as $49 per usable kilowatt-hour to repurpose, compared to the current new stationary battery price today of around $300 per kilowatt-hour,” Liebreich and McCrone said.
4. The descent of oil and the rise of entrepreneurs
The BNEF estimates there could be a drop in demand for oil by 13 million barrels a day by 2040, caused by electric vehicles.
Although oil is used for many things other than petroleum fuel, the impact of electric cars on that sector, and on countries that heavily depend on that sector, will be painful.
Already we are seeing increasingly public promises and actions from Saudi Arabia, Kuwait, and Bahrain to support digital industries and entrepreneurs as they recognise the risks of continued reliance on oil.
That alone suggests now is a good time to be an entrepreneur in the Middle East.
5. Road and charging infrastructure
Electric cars will require a lot of charging stations. Owners will expect to charge their vehicles at home, at work, while shopping, and regularly on long trips.
Liebreich and McCrone said the construction industry would benefit first. It will be the one installing these points as building codes start requiring charging points, and ones along motorways as drivers demand regular stops, much like filling stations.
6. Changing urban spaces
The most obvious change to cities will be the addition of charging points, the BNEF analysts say.
“Charging stations will be ubiquitous in car parks, whether municipal and multi-storey ones, those belonging to employers, or those outside supermarkets, shopping malls and hotels and restaurants. Since many potential EV owners don’t own their own garages or driveways, retailers will lead the charge, as they realise free charging is a great way of securing regular, captive customers,” Liebreich and McCrone said.
7. Electric bikes, buses, trucks, snowmobiles...
Cars aren’t the only EVs available, now or in the future. China already has 200 million electric bikes, and Tesla and Mercedes are working on truck designs. Startups Proterra and Next Future Transportation are, however, ahead of the game with designs already well underway.
The BNEF analysts say light engines such as lawnmowers and snowmobiles will see early adoption as battery systems and power control technologies improve. Later, when battery prices drop, that trend will spread to heavy vehicles too.
8. Radical change in government finances
It won’t just be oil producers who will suffer from a reduced demand for petroleum, but all governments that extract hefty taxes from oil.
Budgets will be under pressure as governments scramble to find new sources of income and as unemployment rises among those working in declining industries, such as parts or maintenance.
“While there might be an economic pay-off eventually as these people are freed up to fill other roles in the workforce, there is a real question as to whether they can acquire relevant skills,” Liebreich and McCrone said.
They said the debate about guaranteed income, a concept has only really been tested in Switzerland so far (they said no thanks), would grow if the transport sector began to shed millions of jobs.
Feature image via Mercedes-Benz: the Mercedes-Maybach 6 is the company's prototype that aims to compete against Tesla's X Model in the EV industry.