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Tesla and EVs didn’t brake for the pandemic, and now the age of oil is ending
During the first nine months of 2020, car sales cratered, with every major automaker seeing a steep drop in sales as the pandemic raged across the globe. That is, of course, every major automaker except Tesla. Despite the world practically stopping due to the pandemic, the Silicon Valley-based electric car maker sold more cars than ever before. Tesla even maintained its momentum from the previous year by posting five profitable quarters in a row, and it’s poised to end 2020 with an inclusion into the S&P 500 index.
A Make or Break Year, and EVs Made It
What’s quite interesting is that it was not only Tesla that saw some serious momentum this year. Even as sales of internal combustion vehicles collapsed, EVs in general managed to thrive. A good example of this could be seen in Daimler and Volkswagen’s electric car sales in 2020. Both companies saw record-setting declines in their ICE divisions, but both companies also saw their EV sales this year doubling. This, if any, further highlighted that there is a growing demand for electric cars.
Even more impressive was the fact that 2020 was a year when the electric vehicle movement could have been crushed once more. The year saw the launch of some of the most important EVs for their respective companies. In Tesla’s case, this was the Model Y, a vehicle that Elon Musk expects would outsell the Model S, Model 3, and Model X combined. Volkswagen also launched the ID.3, a car that, if successful, could very well be the second coming of the ubiquitous Beetle. Failure on the Model Y and the ID.3’s part could have resulted in the EV movement getting set back again. That did not happen.
Peak Oil
To state that 2020 was challenging would be a gross understatement. Amidst lockdowns in several countries, the world changed. Air travel all but stopped and working from home became the norm. Then in September, British oil firm BP Plc announced something remarkable: peak oil may have very well happened, and the demand for oil may never return to its prior levels. Granted, oil prices rose in November as vaccine trials continued and demand recovered somewhat in Asia. But even as the world approached a return to some form normalcy, it was evident that things would no longer be the same.
US Federal Reserve Chairman Jerome Powell echoed this sentiment last month. “We’re not going back to the same economy. We’re recovering, but to a different economy,” he said. Powell has a valid point. In the post-pandemic world, more people will likely continue to work from home. A good number of people will likely travel less as well. BP’s estimates noted that about 2/3 of the pandemic’s impact on oil demand will be from adverse effects on the global economy, and 1/3 will be due to permanent changes in human behavior. This behavior, it seems, includes a shift to electric cars.
A Point of No Return for the Internal Combustion Engine
The transportation sector accounts for a large part of the world’s oil consumption. Bloomberg notes that over half of the world’s crude is used by the transportation sector, and 3/4 of that amount is taken up by wheels on the road. With car buyers going for sustainable vehicles during a pandemic, and with sales of ICE cars dropping steeply, it is starting to seem like the transportation sector’s demand for oil is only bound to get less in the coming years. With this drop in demand comes the end of the internal combustion engine.
Signs of the ICE extinction actually started becoming notable before the pandemic hit. As early as 2018, EVs started bucking the trend in auto sales, resulting in some analysts speculating if sales of gas and diesel-powered vehicles will no longer return to levels seen in years prior. The idea of “peak oil” happening seemed farfetched then, but amidst the pandemic and the collapse of ICE sales, the end of the oil age is looking very plausible.
Batteries and a Path to ICE Extinction
The electric car age will be powered by batteries. It is then fortunate that batteries are a technology, not a consumable fuel. This means that as battery production reaches higher levels, battery prices are bound to get lower. Data tracked by BloombergNEF revealed that every time battery supplies doubled worldwide, the cost of batteries declined by about 18%. And considering that companies like Tesla are actively pursuing plans to produce batteries at unprecedented volumes, there is a good chance that battery prices will decline to such a degree that electric cars may reach price parity with gas and diesel-powered cars sooner than expected.
Price parity will likely be the final nail in the ICE coffin. Cost, after all, is the one area where the internal combustion engine still has an edge against EVs. Once this edge is taken away, and once rapid chargers become as ubiquitous as gas stations, there will quite literally be no more reason left to own a vehicle equipped with an internal combustion engine.
Elon Musk
Tesla’s secretive “Project Crystal Sun” gets a big green light in Texas
Fort Bend County approved four incentive agreements Thursday for Tesla’s proposed $10.1 billion solar factory.
Fort Bend County commissioners on Thursday approved a package of tax incentives for Tesla’s proposed $10.1 billion solar cell factory near Needville, Texas, giving the company one of the last local approvals it needs before it decides where to build. All four Tesla agreements passed 4 to 0.
The votes covered a property tax abatement inside Reinvestment Zone No. 34, a Chapter 381 economic development agreement, a foreign trade zone non-objection paired with payments in lieu of certain taxes, and a separate payment in lieu of taxes “true up” agreement, according to agenda notes from the Fort Bend Commissioners Court meeting.
The project, known internally as “Project Crystal Sun,” would make solar cells and finished modules on roughly 3,000 acres near FM 762 and FM 1994, south of the Brazos River. As Teslarati reported when the filing first surfaced in August, Tesla’s application under the state’s JETI Act splits the investment into $1.5 billion in real property and $8.6 billion in equipment, with 9,712 permanent jobs projected by 2033 and commercial operations targeted for the first quarter of 2029. The plant would handle the full chain from ingot and wafer production through cell testing.
Inside Tesla’s secretive $10 Billion “Project Crystal Sun” filing
Thursday’s approval does not lock in the site. Tesla has told the Texas Comptroller it is still weighing other locations, and site selection adviser David Dennison told Lamar Consolidated ISD trustees in September that the race had narrowed to Fort Bend and one out of state rival with a “very compelling package,” according to the Houston Chronicle. Tesla hopes to decide before the end of 2026, and the incentives still need sign off from the Comptroller and the Governor’s office.
Local officials have now done nearly everything within their control. Commissioners created the reinvestment zone in an August 24 special meeting, with Interim County Judge Daniel Wong formally withdrawing himself over his engineering firm’s past work with Tesla. Lamar CISD trustees voted 7 to 0 on September 15 to advance a JETI agreement that would tax Tesla’s qualifying property at 50 percent of its value for maintenance and operations from 2029 through 2038.
The plant lines up with a target Elon Musk set on Tesla’s Q4 2025 earnings call in January, when he said the company would “work toward getting 100 GW a year of solar cell production, integrating across the entire supply chain from raw materials all the way to finished solar panels.” In March, Tesla was reported to be negotiating a $2.9 billion purchase of Chinese solar manufacturing equipment bound for Texas. The Houston area already hosts Tesla’s Megafactory in Brookshire, where Megapack 3 production has started. Tesla said on its Q3 call that Megapack supply for 2027 is nearly sold out, and Musk wrote on X Thursday that the company is “increasing production of Megapacks as much as possible,” as demand from data centers climbs.
Tesla revealed plans to develop its own maps internally to fix Navigation issues and give owners more control over their routing.
On the company’s Q3 2026 Earnings Call, a question was asked about FSD Navigation issues, particularly speed limit recognition, parking, and routing. These are issues that surface from version to version and seem to be seriously challenging for Tesla’s AI team to resolve.
Tesla’s Head of AI, Ashok Elluswamy, said in response to the question:
“You’re totally right that we shouldn’t be depending on external people’s maps. So we are building our own maps, but not like the same way as OneMoreMap. We are building an entirely new architecture with essentially AI-based mapping and navigation.”
He continued:
“It’s going to be super awesome. It’s going to be integrated with voice. You can talk to it, ask for different routes. It’s going to learn your personalized preferences, plus the fleet preferences. The collective intelligence of all the cars is going to flow into making the maps and navigation super cool.”
Elluswamy said this issue should be confronted, and the mapping should be available for people by the time the v15 release starts deploying to customers.
“And over the next several months,” he added, “it’s just going to take over all of the navigation functions, parking, destination handling. And it will know you better than you know yourself in some regard for the driving task, and then handle it fully.”
Tesla Summon got insanely good in FSD v14.3.2 — Navigation? Not so much
Navigation is perhaps the most notable complaint with FSD, and although it has gotten better, it is still flawed. Much of the time, FSD will take people on routes that are not preferred by the driver, but Tesla tried to combat this with a routing feature in the Summer 2026 Update.
Tesla currently relies on Google for map data, but it is sort of counterintuitive to believe the company would rely on a third party for this. These improvements will be welcome, as routing and navigation have been such a pain point for so many owners for so long.
Quotes via Motley Fool
Tesla Full Self-Driving (Supervised) showed a record attach rate at delivery for new vehicles in the third quarter of 2026.
75 percent of new vehicle deliveries in North America included a subscription to FSD software, up from 55 percent in the prior quarter, a 20-percentage-point sequential gain in the company’s most mature market.
Tesla Q3 2026 Earnings results: in-line revenues, slight beat on EPS
Tesla shed light on the Q3 Shareholder Deck that 75 percent of new deliveries came with an FSD subscription:
“FSD (Supervised)⁴ attach rate continued to grow, reaching over 75% of new vehicle deliveries in North America – our most mature market – a nearly twenty percentage point sequential increase. We believe that FSD is driving demand in markets where it is available, and we continue to work with regulators to get it approved in other markets. “
The higher attach rate accompanied strong growth in the overall FSD consumer base, as active subscriptions rose to 1.75 million, a 67 percent year-over-year increase. For the first time, more than half of paid customers are on the monthly subscription, which is priced at $99 per month in the U.S.
People are buying FSD with a car attached, not the other way around
— Elon Musk (@elonmusk) October 21, 2026
The transition to subscriptions has accelerated since Tesla discontinued the one-time purchase option in most markets earlier this year. The recurring model improves revenue visibility and margins compared with large upfront payments. With three-quarters of North American deliveries now including FSD, the software is now an evidently large contributor to Tesla’s economics and ancillary revenue.
Geographic expansion remains important for further gains. FSD is now available in nine countries in the EU, and more than 100,000 customers have driven over 160 million kilometers. Tesla is pursuing broader EU-wide approval, with a related vote expected in December. Similar progress in additional markets could support higher attach rates beyond North America.
These results came as Tesla had a strong quarterly delivery performance of 486,532 vehicles in the quarter, which came with its largest passenger-vehicle backlog in four years. Battery supply continued to limit volume, but the company has pointed to FSD as a clear difference-maker that is helping sustain demand. As supervised capabilities improve, the attach rate will likely continue to improve.
At face value, it is a key measure of how Tesla is converting sales into autonomy progress.
Tesla’s secretive “Project Crystal Sun” gets a big green light in Texas
Tesla is building its own maps to fix Navigation issues
