Stranded Asset, What Occurs When A Fuel Automotive Turns into Value Much less Than Zero As Transportation?

On this article, I’ll make a five-year wager. I’m not making a declare about your native lot in 2026, however about the place we’ll be in 2031. I believe extraordinary gasoline and diesel vehicles within the US will probably be price lower than the gas, upkeep, and repairs it takes to maintain them as soon as low-cost used EVs are sitting subsequent to them. That’s what I imply by price lower than zero. In fact, vehicles will nonetheless have scrap worth for the supplies in them and mawkish worth for many who fondly bear in mind the period of gasoline vehicles. So they’ll have constructive worth, however I’m saying they gained’t have worth as transportation if issues play out as I describe under. That is just like horses within the US. They nonetheless have worth, however not for mainstream transportation for the common particular person.

My current article titled “For Lagging Automakers: Cease Pouring Cash Into The Flawed Powertrains” defined how automakers ought to make investments their cash to stay viable, however I failed to clarify why the marketplace for new gasoline and hybrid vehicles can be so poor. The market within the US for gasoline vehicles and hybrids is superb now, why ought to it dramatically change in 5 years? That’s what I’m attempting to clarify on this article.

This truly first was true when an individual spending $250 a month on gasoline method again in 2014 noticed that they may lease a Nissan Leaf for $199 a month and have a brand new automobile and gas it for the worth they spent on gasoline.

I’ve been driving electrical autos for 15 years, so the course is just not a shock. I already ran the US math in my current article on hybrids: 12,000 miles, $4 gasoline, 20 cents a kWh. I already highlighted used 2024 LEAFs at $15,000 to $20,000. What I’ve not written but is the Norway and China used-ICE story, and why that very same math exhibits up right here on a lag.

I’m satisfied of the course. So I’m going to deal with Norway and China as main indicators, and I’m going to say out loud what must be true to lose this five-year wager.

Norway completed new-car ICE. That’s the preview.

Norway is the proof case for brand new gross sales. Battery-electric autos took 95.9% of latest passenger-car gross sales in 2025. Plugins collectively took 97.5%. By July 2026, BEVs have been 97.6% of latest vehicles. CleanTechnica‘s Maximilian Holland put it plainly: Norway has successfully reached the tip of the new-car transition.

The fleet is a special animal, as a result of vehicles final years. By mid-2026, BEVs have been about 34.6% of Norway’s passenger fleet. Greater than 60% of the vehicles on the highway nonetheless burn one thing. New-car share will be 98% electrical whereas used heaps are nonetheless buying and selling combustion-engine vehicles. Anybody who tells you Norwegian used gasoline vehicles are already price zero is mixing up this yr’s showroom with final decade’s car parking zone.

The stations are altering the way in which companies truly change. Circle Okay’s Berger web site close to Oslo minimize pumps from 8 to six in July 2026 and added chargers. That isn’t “Norway ran out of gasoline.” Residual worth dies that method: the assist system will get thinner whereas the used EV different will get cheaper.

Iceland is just not Norway, and that’s helpful. Plugin share there has bounced with incentives, together with a 2024 dip to about 43%. Coverage can sluggish an S-curve. The US already yanked the federal EV tax credit score. That isn’t a hypothetical.

China is the used-market check

Norway is a wealthy, small lab. China is the manufacturing facility.

In June I wrote that China’s NEV share had hit 63%. Jose Pontes has July 2026 passenger NEV retail at about 65%, with pure BEVs at 44%. That’s the world’s largest automobile market flipping on new metallic.

The used market is the half that’s information to me. From January to April 2026, used NEV trades in China hit 547,900, up 29% yr over yr, and resale values have been up about 30%. Sellers have been scrambling to purchase used NEVs. Used gasoline vehicles went the opposite method. Sellers known as them “unsellable.” One talked about almost a ten% drop per 30 days and consuming a 30,000 RMB loss (about $4,400). Automobiles that had not too long ago bought for 300,000 RMB have been at 200,000 RMB.

Right here is the quantity that really issues: three-year ICE residuals in China have been tracked right down to about 46%. That could be a actual hit. It’s also nonetheless a automobile with a five-figure worth, not scrap. The sign I belief is the hole: NEVs round 63% of latest gross sales however solely 8.57% of the used market. That hole is the following wave. As three- and five-year-old EVs hit heaps, leftover ICE autos get tougher to maneuver.

The $50,000 gasoline automobile that turns into a $5,000 drawback is the five-year vacation spot I’m betting on. It’s not the 2026 Chinese language lot, and it isn’t your neighbor’s Camry this weekend.

The Common Joe math

A typical 25 mpg gasoline automobile at 12,000 miles burns 480 gallons. At $4 a gallon, that’s $1,920 a yr, or $160 a month, only for gas. A thirstier truck at 18 mpg is about $2,667 a yr, or $222 a month. For a 5-plus-year-old US ICE automobile, I’ve used about $200 a month in gas and $100 a month in repairs and upkeep. That upkeep quantity is an old-car quantity, not a brand new Camry. Shopper Reviews is nearer to an ICEV costing about twice a comparable BEV.

An EV doing those self same 12,000 miles makes use of about 3,000 kWh. At 20 cents a kWh, that’s $600 a yr, or $50 a month, for those who can cost at house. Upkeep can be half as a lot because the gasoline automobile at $50 a month.

A really environment friendly hybrid can get gas close to $800 a yr. That closes many of the gas hole with the EV. It doesn’t shut the hole with a daily ICE automobile. That’s the reason I take hybrids severely if gas costs don’t rise considerably and legal guidelines don’t mandate change.

You will notice $200 a month in gasoline plus $100 in oil, filters, brakes, and repair.

College of Michigan work already finds used BEVs have the bottom US complete price of possession. The five-year wager is that these costs maintain falling as extra off-lease EVs hit, and {that a} used gasoline automobile’s operating prices cease making sense subsequent to them.

Three choices for Common Joe, about 2031, not this weekend:

1. Hold the paid-off gasoline automobile. You might be nonetheless writing a gas verify, and retailers and pumps get thinner. That prices you $300 a month.
2. Promote it whereas another person nonetheless desires it. In China that window is already slamming. Within the US you continue to have time. That’s the reason I’m scripting this now. Purchase an inexpensive used EV for $10,000 and get a 5 yr mortgage so you will have a $200 a month fee plus your $100 a month for electrical energy and upkeep for those who can plug in at house. Whole of $300 a month, the identical quantity because the “free” gasoline automobile.

If somebody supplied you a free gasoline automobile in a market the place used EVs are cheap and low-cost to run, choice #2 is a logical selection. That’s price lower than zero.

The export valve delays the collapse. It doesn’t cancel it.

Undesirable gasoline vehicles must go someplace. China is the larger dump valve: gasoline stock that won’t promote at house are headed to Southeast Asia, Latin America, Africa, and the Center East. You possibly can postpone a residual-value collapse by exporting it. You can not cancel it if these markets begin doing the identical TCO math, or if used EVs get low-cost sufficient there too. The issue for the US is the opposite markets are doing the identical math as I did above and can attain this similar conclusion earlier than we do within the US as a result of they’ve entry to cheap electrical vehicles from China that we don’t have entry to.

What this implies if you’re nonetheless driving a $50,000 gasoline crossover or planning to promote new gasoline vehicles in 2031

If in 5 years a five-year-old gasoline automobile that bought for $50,000 is a $5,000 drawback as a result of no person desires the gas invoice, what is going to GM, Ford, and Stellantis do with their new crossovers which can be priced at $60,000? They gained’t promote. That line is a situation I’m placing on the calendar.

This isn’t a sudden occasion. It’s what occurs when EVs hit price parity on complete possession and maintain a a lot decrease working price. Norway confirmed the new-car endpoint first. China is exhibiting the used-car endpoint at scale. The US is on a lag.

Satan’s advocate: what must be true for me to be flawed?

I might be early. Within the US I nearly definitely am. I may not be 5 years early. I could be a decade early.

The US is just not Norway. NADA’s July 2026 figures have battery-electric share at 5.9% of latest autos yr up to now, down 1.9 factors after the federal tax credit score expired. Hybrids are 15.4% and up 20.5% yr up to now. That’s the hybrid waypoint wanting like a vacation spot, not a relaxation cease. At $800 a yr versus $600 for a home-charged EV, Common Joe will take the hybrid and by no means open PlugShare.

This can be a truck nation. A used LEAF at $15,000 to $20,000 doesn’t change a piece truck, a tow rig, or a rural driveway. If there isn’t a low-cost used electrical truck, used ICE truck residuals keep “regular” even whereas sedans get tougher to maneuver. In America, that could be a vital a part of the market.

Fleet math is brutal. S&P International Mobility had the common US automobile at 12.8 years in 2025, from about 289 million mild autos. We promote about 16 million new autos a yr. In 5 years, you nibble the fleet. You don’t flip it over. “Value lower than zero” as a typical residual requires low-cost used EVs to be plentiful. We do not need that inventory but.

Residence charging is doing a variety of work in my $50-a-month quantity. Roughly a 3rd of US households are in multifamily housing. Public charging can flip that $50 into $150, and the hybrid wins on problem. I can not discuss Common Joe right into a used EV if he parks on the road or in a big car parking zone and not using a devoted EV charging spot.

China’s 46% three-year ICE residual is a warning, not a corpse. The export valve can keep open previous my five-year mark. Africa and Latin America nonetheless motorize with low-cost used ICE autos. Ethiopia’s ban is on new personal imports, not the used Corolla pipeline.

Used EV oversupply cuts each methods. If off-lease EVs glut the heaps, EV residuals crash too. That helps the following purchaser on TCO, and it wrecks the lease math that was supposed to place these EVs on the highway. Electrical energy is just not a relentless. If residential charges maintain climbing and gasoline stays in a $3/gallon to $4/gallon band, the operating-cost hole shrinks. Coverage already reversed right here. 5 years is one election cycle and one oil-price cycle. It’s not future.

For the five-year US wager to land, a number of issues must go proper directly:

1. Used EV costs fall into Civic cash for vehicles that really change a commute, not only a LEAF-shaped gap.
2. Residence charging, or low-cost dependable public charging, exhibits up for folks and not using a storage.
3. Hybrids don’t eat the “I don’t need to change” purchaser.
4. A used electrical truck exists that Common Joe will truly purchase.
5. Export markets get pickier, so leftover ICE autos can not all be shipped away.
6. Gasoline stays costly sufficient that the gas invoice hurts.

If two or three of these fail, 2031 appears like 2026 with a slower leak, not a ground dropping out. None of that reverses what already occurred to new-car ICE in Norway or the course of used ICE in China. It means I will be proper in regards to the physics and early on the calendar.

Conclusion

The residual worth of extraordinary gasoline and diesel vehicles collapses as soon as used EVs are plentiful and cheaper to run. Norway and China are the main indicators. The US is late. My wager is it can take about 5 years.

When you personal a paid-off gasoline automobile, run the month-to-month numbers this week: gas and repair versus a used EV you may truly plug in. If the gas verify already hurts, promote whereas somebody nonetheless desires the automobile. If you’re buying, have a look at a used EV earlier than you signal one other gasoline be aware. When you make vehicles, each further yr of ICE tooling is a wager that the used market stays silly.

Late is just not by no means. 5 years can also be not a promise. I’m nonetheless making the wager.

If you wish to use my Tesla referral hyperlink for 3 months of Full Self Driving, right here it’s — https://ts.la/paul92237 — but when one other proprietor helped you extra, use theirs.

Disclosure: I’m a shareholder in Tesla [TSLA] and XPeng [XPEV]. However I provide no funding recommendation of any kind right here.