Lost Glory: Tesla, Uber, Fracking and Biofuels mark big Changes for auto Industry

The market victory of Tesla and Uber and the discovery of ways to access cheap sources of shale oil and biofuels have presented the auto industry with revolutionary changes not seen since smog-control laws strangled production of high-performance cars in the 1970s. Unfortunately, everywhere you turn the status quo is aligned in intransigence. While all these new and innovative ways of attacking existing problems in the auto industry need to resolve side issues, the relentless march of progress seems to be on their side over the long haul.

Tesla Stiffed by Politicos in Pockets of car Dealers
In the case of Tesla Motors sales being banned by states that require franchised car dealers to sell to retail consumers, the company is getting stiffed by politicians in the pockets of the car dealership lobby. Car dealership franchise laws are the product of a bygone era that started about the same time that Henry Ford consigned the Model T to the dustbin of history.

The fact that Tesla even has to deal with this controversy speaks to the complete ignorance that politicos such as New Jersey Gov. Chris Christie and the dealership associations bring to the debate. Unlike the mass-produced mediocrities that come out of many Detroit auto plants, Tesla Model S sedans are custom made. A consumer cannot walk in from the street and drive a Model S off the showroom floor. There is no stock.

Banning of Tesla direct sales in New Jersey and other political-machine states amounts to a turf war. If the car dealers cannot get their pound of flesh, they are not going to play ball and let Tesla do what it wants. Tesla Motors has already triumphed in Silicon Valley. It would be foolhardy to bet against Elon Musk and crew in this tussle.

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Lost Glory (photo credit: Peter J. Fontijn / Foter / CC BY-SA)

As it turns out, Tesla is facing the irony of history. Its namesake, Nikola Tesla, also faced entrenched opposition from the establishment during his quest to make alternating current the electricity gold standard. Thomas Edison, George Westinghouse and other Gilded Age industrialists won the battle and Tesla fell into obscurity. However, Tesla won the war when these two robber barons adopted his technology in the end and passed it off as their own.

Uber Faces Reactionary Luddites in taxi Opposition
As with all innovations, Uber, the car-sharing phone app, faces the forces of economic inertia. And while Uber needs to deal with driver and passenger safety issues that have surfaced in New Delhi and other cities, the compelling economic nature of its shared-car service is nigh impossible to refute. But this has not stopped its opponents from trying.

In June 2014, protests by taxi drivers in Berlin, London, Madrid and Paris jammed the streets causing virtual gridlock. Ironically, taxi drivers and their legal monopolies promoted by interventionist policies of socialist governments in Britain, Germany, Spain and France laid the groundwork for Uber. By denying alternate cab systems an opportunity to compete with the taxi infrastructure, incentive for the transportation powers-that-be to improve was removed.

Now Silicon Valley entrepreneurs step into the breach courtesy of mobility tech to disintermediate dispatchers and connect riders directly with drivers. Granted, Uber exists in legal gray areas in localities where it operates. But the irresistible winds of change will not be abated.

Just as 19th century English Luddites failed to stop the inexorable momentum of the Industrial Revolution by destroying power looms and other automated textile machinery that endangered the highly skilled weaver profession, Old World taxi drivers must read the writing on the wall. Their days are numbered. Perhaps some will embrace change and go work for Uber, Lyft or other ridesharing services.

In the end, this is just another example of Creative Destruction. As Steve Jobs disrupted the record industry by providing a better and cheaper service in the iPod and iTunes delivery system, Uber will usurp taxis.

Shipping oil by rail Critical to fuel Independence
Then there is the reactionary political opposition that recently cropped up in Washington State against longstanding plans to construct a rail-port facility to transship North Dakota Bakken shale and Alberta tar sands crude oil. This facility would transfer oil from train to tanker for transport down the West Coast to California facilities for processing into gasoline.

The shortsighted nature of the opposition from the Vancouver, Wash., city council to have a nonbinding vote against the Tesoro crude project exemplifies NIMBY—not in my backyard—politics at its worst. Rather than buckle under the parochial interests of a few kneejerk residents, the city council and Washington State Gov. Jay Inslee should take the Big Picture view and realize that enabling easier delivery of North American crude to California will not only lower the cost of living for the Golden State but also supercharge the entire economy of the West Coast, which will have significant ripple effects on Washington State.

Plus, overall crude transportation safety will be increased, as fewer supertankers from the Middle East and Africa will be headed for the West Coast and in turn deliver more oil to India. Not only is more and cheaper oil important to India’s automotive strategy but also is a critical piece of the overall energy puzzle on the subcontinent.

Organically Derived Power: Nothing new Under the sun
Even if cheap shale oil is all it is fracked up to be, alternative biofuels will continue to make inroads as borne out by the recent introduction of a factory production compressed natural gas (CNG) vehicle by General Motors. But CNG is only the latest arrow in the renewable fuel quiver. In fact, biofuels are as old as the Old West. On the Great Plains of the United States both Native Americans and Western Pioneers burned buffalo chips from bison for fuel to cook and keep warm during the long, deep winters.

Now that we are in the second millennium, we have need for biofuels again in our automobiles. While peak oil may not have occurred yet due to the breakthrough of fracking oil shale to enable us to extract petroleum, this new source will not last forever. And we need to move to “greener” fuels for environmental reasons to reduce the emission of greenhouse gasses and slow global warming.

There are startups and universities in California researching how to get bioengineered microbes to produce “green” equivalents of diesel and gasoline. A way of producing gasoline-like molecules from cellulose material would be a gigantic step forward.

It is very important to be able to utilize these cellulosic materials instead of foodstuff crops such as corn that have been used for the production of ethanol. This has had the unintended consequence of driving up the price of grains that are needed to feed the hungry of the world, including in India. Scientists around the globe should make research into this area a top priority as we near the midway point of the second decade of the 21st century.

Derek Handova

Derek Handova is a freelance journalist, blogger and content marketer in the high-tech industry with an emphasis on social media and related channels. He received his masters in business administration (MBA) and bachelors in journalism from California State University, Long Beach (CSULB). The opinions expressed in this article are purely his and do not reflect the views of any of his past or present employers.