Liam Denning is a Bloomberg Gadfly columnist covering energy, mining and commodities. He previously was the editor of the Wall Street Journal's "Heard on the Street" column. Before that, he wrote for the Financial Times' Lex column. He has also worked as an investment banker and consultant.

At first glance, Mohammed bin Salman, Deputy Crown Prince of Saudi Arabia, and Elon Musk, clean-tech mogul and budding red-planet pioneer, couldn’t be more different.

Prince Mohammed is an aristocrat in a country where women can’t drive, but which relies for its wealth on many women, and men, driving everywhere else. Musk, meanwhile, runs a California company posing a direct threat to oil, Tesla Motors Inc. Believe it or not, the royal is a millennial, while the CEO was born before the first oil shock.

Yet they also have something in common: Both are attempting the seemingly impossible.

The prince aims to transform Saudi Arabia from a relatively closed society lubricated by redistributed oil rents to something approximating a modern, diversified economy within 14 years. Musk, meanwhile, plans to end the dominance of the internal combustion engine while also taking on utilities and Uber (and, yeah, he also wants to go to Mars). Both have an eye on global oil demand peaking at some point; one wary and the other welcoming.

Either or neither may succeed. But their antagonistic relationship provides essential context for energy in the 21st century.

Back in April, in a wide-ranging interview for Bloomberg Businessweek, the prince declared:

We don’t care about oil prices -- $30 or $70, they are all the same to us. ... This battle is not my battle.

Saudi Arabia's sudden rediscovery of the joys of OPEC production cuts in November suggests a radical rethink on that front. Reform is fine, but more pressing issues -- such as the possibility of recession in a country full of young, underemployed people that is fighting or funding multiple wars -- must be acknowledged.

Kingdom Comedown
Saudi Arabia's GDP is expected to rise by just 1 percent this year and next as austerity measures bite
Source: Bloomberg, International Monetary Fund
Note: Data for 2016 and 2017 are IMF estimates.

Transforming Saudi Arabia's economy (and thereby its society) isn't the same as retooling a corporation. It's a risky proposition that must ultimately be funded by the country's current main earner, oil exports.

This doesn't mean reform is necessarily dead. Certain ones remain very likely, such as selling off a small stake in Saudi Aramco. But the big bang with which the prince began the year has given way to pragmatism. Certainly, oil revenue retained its starring role in the budget presented last week The real test could come in 2017: If OPEC's policy succeeds in raising oil prices materially, watch closely to see if Riyadh's zeal for reform matches them.

It should. I have my doubts about the Muskplex of businesses, with this year's bail-out acquisition of SolarCity Corp. resplendent with red flags (see this, this, this, this, and this). Yet Tesla's ability to keep tapping investors despite everything should make any country, or company, depending on oil revenue uneasy. It represents the thin end of the wedge.

General Motors Co. just began deliveries of its long-range, mass-market electric vehicle, the Chevrolet Bolt. Is it a small car that isn't for everyone, in a country that has rediscovered its love affair with trucks since gasoline prices fell? Yes. But it's also part of a wider strategic shift by global automakers.

About 621,000 electric models, representing roughly 1 percent of the global vehicle market, were sold in the 12 months through September, according to Bloomberg New Energy Finance. That's what you call "niche."

Yet, as Harry Benham of Carbury Consulting points out in this recent blog post, auto executives wouldn't necessarily see things that way.

About 75 to 80 million new light vehicles are sold each year, and annual growth has averaged about 1.8 million over the past decade, according to Bloomberg Intelligence data. Once electric vehicle sales surpass 2 million a year (and if they keep rising), they would still be only a small part of the market -- but they would then be where the growth lies.

Size Matters ... But Growth Matters More
The market for regular vehicles will remain huge but stop growing by the early 2020s, with electric vehicles making up all the growth in total sales, according to BNEF projections
Source: Bloomberg New Energy Finance
Note: "Traditional vehicles" includes those using internal combustion and hybrid engines. "Electric vehicles" includes plug-in hybrids and battery-electric vehicles.

Growth attracts investment and, as more electric vehicles are sold, costs will keep dropping. As with any technology, once costs fall low enough, and performance is good enough, a tipping point can be reached, leading to rapid gains in market share. In a recent speech, BP PLC chief economist Spencer Dale laid out a detailed argument for why electric vehicles might not seriously cut oil demand this side of 2035. It is well worth reading. He did acknowledge, however, that other forces may trump his analysis:

Economists don’t do cool, but it can be a huge factor in how quickly some new technologies are adopted.

We've already seen this sort of thing happen in a different part of the global energy market: shale. Like Tesla, the U.S. shale boom is no stranger to hype. It certainly isn't cool. But fracking technology has surprised everyone with its performance and resilience (aided in part by the industry's Tesla-like knack for raising money off the back of growth plans). That resilience is a big reason why Saudi Arabia reversed course.

OPEC & Co.'s resorting to supply cuts shows power in the oil business -- like some giant game of Risk -- still resides largely in sovereignty. It's an approach that is at once immensely powerful but also vulnerable to technologies that tend to fall in price and don't acknowledge borders. Discover a giant new oil reservoir beneath Saudi Arabia, and that country gets a leg-up on Russia and others. Cut the cost of fracking by 20 percent or push the price of a battery below $100 per kilowatt hour, and it threatens to throw the board in the air.

To put it another way, the couple-dozen countries now trying to juice oil prices in a decidedly 20th-century fashion are facing off against something that looks much more 21st century: a growing network of thousands of companies -- ranging across oil, autos, utilities, chemicals, and software -- competing with and learning from each other.

The Prince can take comfort in Saudi Arabia's low cost of oil production, which will keep it relatively competitive however slowly or quickly these trends play out. The Martian, meanwhile, has clearly pushed his automotive rivals to get serious about electric vehicles overall, yet in doing so has thereby piled up further challenges for his own company.

In 2017, it's likely oil prices will rise and Tesla will be out seeking more funds. Just don't mistake that for the end of this tale.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Liam Denning in New York at ldenning1@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net