“Disruption is Coming to Canada”

By Brian Banks
If Tony Seba were a company, its slogan might be: The future is coming … faster than you think.
Seba, a Stanford- and MIT-educated entrepreneur, educator, researcher and author, is both lauded and criticized for his bullish predictions on the pace and impact of technology disruption, most notably in energy and transportation.
It’s one thing to say, as Seba does, that the 2020s will be “the most disrupted decade in history.” But it’s another entirely to forecast that electric vehicles will be cheaper than internal combustion vehicles as early as next year — or to declare that by 2025 every new car made will be electric.
Yet that’s the future which Seba’s research, based on a proprietary “disruption framework” analyzing cost curves and technology convergence, points to. And it’s not just cars: “Every new tractor, every new bus, every new truck will be electric, too,” he says.
Along with that change, the model of individual vehicle ownership will dramatically shift to transportation as a service, and be fully realized by 2030, says Seba. That’s a future in which the bulk of driving is done by fleets of electric, automated vehicles; where far fewer people own their own cars; and where cities start to be redesigned to take advantage of all the newly available space no longer needed for parking lots.
Electric Autonomy Canada is delighted that Seba agreed to join us for an exclusive interview from his office in California to discuss his outlook and share his thoughts on what transportation as a service means for Canada.
Electric Autonomy Canada: Is there anything particular about Canada that might hold us back or propel us forward towards the transportation-as-a-service scenario that you envision for 2030?

Tony Seba: This disruption is going to happen, whether Canada wants it or not. Essentially, it’s going to happen for purely economic reasons. When you have this convergence of on-demand, autonomous and electric transport as a service, the cost per mile of transportation is going to go down by 10 times, from about $1 to 10 cents. Every time we’ve had a 10x decrease in cost, we’ve had a disruption and very quick. So, Canada is going to have to do it. The only question is, will it be upfront and gain the upside, or will it be behind and essentially let others dominate?
Canada has become a leader in information technology, essentially artificial intelligence. And AI is key, of course, to self-driving vehicles, to autonomous vehicles, and is key to pretty much every industry. And Canada is now a hub for AI. So, Canada has an opportunity to be a leader in energy and transportation because it is a technology disruption and Canada has great talent and investors to do that.
On the other hand, Canada is an extraction energy powerhouse. The Canadian government just bought a pipeline. And it owns or protects nukes, power companies and so on. And that could hold Canada back, because essentially the government is going to protect its legacy industries to the detriment of Canadian people.

This disruption is going to happen for purely economic reasons. The cost per mile of transportation is going to go down by 10 times, from about $1 to 10 cents

Tony Seba

Electric Autonomy: You’re very explicit in saying that the economics are driving these changes, that governments shouldn’t subsidize energy technologies. Yet you’re also saying there still is an important role for government to play, in having the right policies. Is that correct?
Tony Seba: Absolutely. Policy is really, really important. The government should set standards, set the right policies. The government also has the power of signalling — by saying we want to be a world leader in clean energy and clean transportation by 2030, that’s signalling. It can enable the right policies for this to happen. But it should allow entrepreneurs and the market to work because that’s where energy is right now.
Electric Autonomy: Here, we’ve got vastly different views on energy and transportation policies between different governments and the federal parties. The differences in direction and potential outcomes seem huge.
Tony Seba: What we have seen in the U.S. is that the states are leading, not the federal government. Look at California. It’s no coincidence that Tesla is here, that autonomous companies from all over the world are here. That’s because the state of California has policies that have enabled electrification, solar, batteries, autonomous technology and so forth. If we can extrapolate from that to Canada, the leadership should come from the provinces.
Electric Autonomy: In Ontario, and Alberta, we have two premiers who are tied to the legacy industries and characterize electric vehicles as symbols of leftism. What advice would you give to municipalities and business leaders in these provinces who are looking to be progressive on this front?
Tony Seba: Part of the mistake that a lot of folks make is to see this purely as environmental topic. This disruption is going to happen for purely economic reasons. When I did the numbers for the U.S., our conclusion was that by going to transport-as-a-service world, because it’s going to be that much cheaper on a per-mile basis, and because it’s going to free us from the cost of owning a car and insurance and gas, the average American family is going to get $6,000 back. That’s a trillion-dollar boost to the economy. On top of that, by not driving to work or to shop, there is another trillion dollars in productivity gains for the economy. So, we’re going to get new jobs and get money back.

The fallacy is that this disruption is going to be government-led, that we’re going to have to make sacrifices, that it’s going to cost us a lot of money. I think that once leaders and policy makers understand that, it’s a no-brainer.

Tony Seba

So, what can they do to enable this that it’s not going to cost us money? One, give every consumer and every business the right to generate, store and sell electricity. Right now, I don’t have to ask permission to publish a blog or sell my computer on eBay, why should I need permission to generate and sell electricity?
Another thing. Once we have Level 4 autonomous technology approved and ready — 2021 or 2022 — that day, essentially, the cost of transport is going to go down by 10x. That’s going to unleash all kinds of innovations and an upside for society in terms of access to work for people who don’t have access to public transportation, for the disabled, for the poor. The social upside for all those demographics is huge.
The government doesn’t need to subsidize EVs for it to happen, it just needs to have the right policies.

Electric Autonomy: Disruption in media has been driven by platforms like Facebook and Twitter. Whatever their benefits, they’ve also decimated local media and raised concerns about the quality of information, privacy, data rights. Is there a similar concern in conceding control of local transportation in Canada to global ride-hailing companies like Uber and Lyft?
Tony Seba: That’s a great question. Governments are hierarchical, they’re used to making decisions in industries like publishing and telecom and energy that are monopolies or centralized. By and large, they don’t know networks well enough to regulate them. That’s why companies like Facebook got out of hand. It’s a network, and governments by and large don’t know to manage or regulate networks.

So, one thing that we have to start doing — the people in governments that represent us — is to think about how to manage networks from a regulatory perspective, in the best interest of the people, not in the best interest of the networks.

Tony Seba

Today’s ride-hailing model is actually a double-sided network. Drivers on one side and users on the other side. Once you have that double-sided network, the barriers to entry are huge. So how do you get out of that? Well, when you enable autonomous technology, you disable the drivers’ side of the network. What that does is lower the barriers of entry to any company. When you have that, when you essentially have a network of users in transport as a service, anybody — a Ford, a GM, a Google, anybody — can come in with 10,000 or 20,000 cars — autonomous, electric, on-demand — and basically get into that market. So, one way to get us away from the power of the network is enabling autonomous technology.
Electric Autonomy: What about data privacy?
Tony Seba: Data privacy is very, very important. Whose data is it in the self-driving cars? Mapping right now is very important for autonomous technology. Who owns that mapping data? I, as a consumer, I am generating mapping data…who owns that data? Governments should at least make sure that a lot of that data is open, for instance. That data, in the beginning, should be consumer data. And also, some of it should be open, because it’s going to be in the best interest of society. High-definition mapping is digital streets. Today society owns the street. If we go into a mapping world where it’s all private, then basically every street becomes a toll road, to drive on any street you’re going to have to pay somebody who owns the high-definition mapping and we don’t want to go there.
Electric Autonomy: Are you optimistic that we can manage that new way of thinking?
Tony Seba: It will get easier as we move forward to 2030. We’re on the cusp of a lot of great things happening for society. On the other hand, because essentially every industry’s going to be disrupted, the danger is that we don’t take care of the downside. There’s going to be a lot of job losses, then the job gains will come later. Governments should be thinking about how do we protect our workers, to provide them health, a financial cushion and education to make the transition to the new growth industries? If we do that we’re going to be a lot more successful as a society and take advantage of the upside without having to go back to protecting obsolete industries.

WANT MORE ON THE THEMES RAISED BY TONY SEBA?
In future, we’ll be asking Canadian leaders for their reaction and views on these same topics.

Electric Autonomy: Do you have a sense of where the new jobs will be? And when will they come on?
Tony Seba: A lot of the new jobs, we don’t know where they are going to be, because new industries are going to create new opportunities that we can’t even envision. But we do know that the whole battery industry goes through the roof. Basically, this is a huge growth market. Countries should be investing in battery R&D and battery infrastructure and capacity rather than buying pipelines and nuclear power plants. Batteries, big growth. EVs, big growth. Wind. Solar. Autonomous technologies. All of these are big growth areas that are going to generate huge work over the next decade, if not two.
That’s one area. Another is construction. Individuals park their car for 96% of time. When you have transport as a service, individuals are not going to own cars because it doesn’t make any sense, it’s going to be fleets that drive around and don’t need to park. Essentially, a third or so of the land mass of cities is going to open up to people, to businesses, to green parks and that is going to generate a massive construction boom. Affordable housing, check; new business, check; new green spaces, check.
Electric Autonomy: Last question. You are often challenged for your ambitious forecasts. But in March, BloombergNEF updated its annual projection on the declining cost of EVs. It now foresees EVs becoming cheaper than internal combustion vehicles in 2022. Two years ago, it said 2026. With a year to go until 2020, they’ve nearly matched your forecast. Any comment?
Tony Seba: First, they ignore you, then they attack you, then you win. That’s how mainstream analysis and insiders work. The tipping point is happening as we predicted, the analysts are missing a lot of pieces for this equation. In particular, what the mainstream analysts are missing is fleets. They still see EVs as a one-to-one substitution for privately owned automobiles. The disruption will be when fleets start becoming electrified, automated and more widespread.