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This article is part of Fortune‘s Blueprint for a climate breakthrough package, guest edited by Bill Gates.

On a sunny day 18 years ago this month, I found myself in a Sacramento park, surrounded by tall trees, shiny cars, and green hype. Nearby loomed the California Capitol, the granite-based bunker from which lawmakers in the environmentally pesky state were pummeling U.S. automakers with legislative bombs designed to force them to crank out climate-friendlier cars. Seeking to persuade the politicians it really was trying to clean up its act, the biggest of Detroit’s Big Three, General Motors, had invited a posse of reporters to take a spin behind the wheel of its latest laboratory prototype: the Hy-wire, a rakish ride powered by a fuel cell, a device that converts hydrogen into electricity to make a car move in ostensible harmony with Mother Nature.

The Sacramento event featured food, fanfare, and an unforgettable flub. For more than an hour, as we scribes looked on in disbelief, the Hy-wire wouldn’t start. The world’s biggest automaker had pitched the car as a plausible vision of a clean-transport future. What we saw looked more like a broken chunk of vaporware.

At the time, in 2003, climate change seemed a distant worry, and the stakes for GM’s fickle concept car—beyond the cringeworthy embarrassment—were pretty low. Today, with climate change having surged as a consumer concern, a political priority, and thus a corporate imperative, Detroit is attempting a high-wire act that makes the Hy-wire seem quaint. So are oil producers, utilities, banks, governments, and the rest of the global economy.

The goal is to rewire the world. It is, at least in theory, to decarbonize human endeavor—largely over the next decade, when, scientists say, the fight to stave off particularly disastrous effects of climate change will be won or lost. And it’s to do so by electrifying the energy system—to transform it from one that burns molecules produced by the detritus of dead dinosaurs to one that runs on electrons from such unending sources as the wind and the sun.

That shift now is kicking into high gear. In few sectors are the risks greater than in the auto industry, whose products affect the fortunes not just of the motor barons but also of Big Oil—and, if cars electrify, also of big electricity producers, who stand to sell more juice.

On Jan. 28, GM announced that by 2035, a short time in an industry that plans over decades, it intends to cease building petroleum-powered cars and light trucks and to move entirely to ones that run on electricity. The General, as GM is known in Motown—a nod to the dominance over the global auto sector that GM once had and hopes, through its switch to electrification, to claw back—declared that it would spend $27 billion over the next five years on a combined effort to electrify its lineup and to increase its vehicles’ ability to drive autonomously. That’s more money than the company intends over the same period to throw at its internal-combustion-powered vehicles, the products that have powered GM since William Durant, the company’s cofounder, pivoted more than a century ago from hammering out horse-drawn carriages to manufacturing smoke-belching automobiles.

Workers unveil a sign in tandem with the renaming of GM’s Detroit-Hamtramck Assembly Center as Factory ZERO in October 2020. The plant will be GM’s first facility to be fully dedicated to electric-vehicle assembly.

Four days later, on Feb. 1, Exxon Mobil raised a green flag in Houston. Long among the world’s largest publicly traded oil companies, Exxon has faced mounting criticism from environmentally minded shareholders who argue the company is failing to adequately decarbonize its business and thus to safeguard its profits and dividend. It announced a new business unit that will spend $3 billion over five years to develop low-carbon technologies, including hydrogen, which, among other uses, could be fed into fuel cells to generate electricity to power automobiles.

That sum is small in the context of Exxon; last year alone, the oil giant spent $21.4 billion on capital and exploration. The next day, Exxon, which, like most of the oil industry, is drowning in red ink, reported a groaning fourth-quarter net loss of $20.1 billion.

Reaction to Exxon’s results—and to the company’s announced increase in its focus on decarbonization—was swift, and mixed. Engine No. 1, an investment firm that has proposed a slate of four people it says have extensive experience guiding companies in transitioning to a low-carbon energy future and whom it wants Exxon shareholders to elect at the company’s annual meeting in May, derided the company’s low-carbon announcement as insufficient. The firm said Exxon’s new moves would help “only in the absence of a material long-term energy demand shift” and that Exxon “remains positioned for continued value destruction for decades to come under alternate scenarios.”

But Exxon’s announcement drew praise from some on Wall Street, who now expect Exxon to do more. J.P. Morgan, in a research note that day, said Exxon “is beginning to hear the message around more aggressive actions and disclosures on climate,” adding that “pressure on these initiatives will only continue to rise from all stakeholders.”

Soon afterwards, back in Michigan, Ford, not to be outdone by its crosstown rival’s prior-week bombshell, announced its own electrification intensification. It said on Feb. 4, as it reported a fourth-quarter net loss of $2.8 billion, that it intends to have spent at least $29 billion during the decade ending in 2025 to develop electric and autonomous-driving vehicles—with the vast majority of that investment, $22 billion, going to electric vehicles. The announcement nearly doubled Ford’s prior electric-vehicle spending commitment. Ford is “all in and will not cede ground to anyone,” CEO Jim Farley said in a statement, in an unsubtle jab at GM. “People are responding to what Ford is doing today, not someday.”

A new American moment?

The pledges from GM, Exxon, and Ford are notable primarily because they were made in America. Hardly coincidentally, they came just days after a new President, Joe Biden, moved into the White House and began firing off a fusillade of climate-crackdown policies, including returning the world’s No. 2 carbon emitter to the Paris Climate Accord and moving to end federal subsidies for fossil fuels.

But they merely intensify a trend that elsewhere has long been underway—and that amid the COVID crisis has been gaining traction. The shift has been led by European multinationals such as Volkswagen and Shell, both of which announced strategic diversifications into electric vehicles and renewable energy a couple of years ago. And it has been driven by a decade-old green pivot by the country that is the world’s top carbon polluter and its biggest market for almost everything, including electric cars and solar and wind power: China, whose climate push long ago left the United States’ in the dust.

Employees work on the e-Golf electric automobile chassis and body welding line in the Volkswagen AG factory in Dresden, Germany.

In recent months, moreover, regulators far from Washington have been tightening the environmental screws. California and Quebec have, over the past year, set goals of ending sales of petroleum-powered light vehicles within their borders by 2035; the U.K. has set a 2030 target. The pandemic has intensified, not slowed, this transformation, as governments have moved to tie stimulus programs to corporate environmental progress and as increasing numbers of CEOs have concluded that electrification—and, more broadly, decarbonization—is likelier to help their companies’ fortunes than to hurt them.

If things play out as more and more sober-minded observers predict, this environmentally induced power shift will constitute an epic economic shock. Automakers will crank out battery-powered cars not as niche products but as the norm. Oil companies will grow not by drilling more crude but by developing cleaner energy sources—for a long while natural gas, a fossil fuel that burns more cleanly than coal or oil, but increasingly and ultimately renewables. Utilities will build and operate a “smarter” power grid, one optimized for a bigger and more complex electricity system in which the breezes and rays set production cycles cushioned by a buffer of energy-storage devices and of wires. All three of those sectors, and others, will pour money into a bevy of technological startups, makers of everything from batteries to control systems to more-efficient electric machines. And every step of this electric switch will create new investment opportunity and risk for myriad middlemen: banks, insurers, pension funds.

Waiting for “e-day”

Market watchers are, with dizzying speed, racing to the conclusion that the future is electric. IHS Markit, an energy-analysis firm, this month launched a new periodical to track the revolution: “ZEV Watch,” for zero-emissions vehicle. Only a geek could love the title, but any driver will appreciate the upshot: IHS projects that “e-day,” the day when the cost of manufacturing the guts of a battery-electric small or midsize car will have fallen to the cost of manufacturing an internal-combustion one, will arrive in about five years.

If projections hold, a child born today almost certainly will buy as her first car an electric vehicle—if she buys a car at all. A category that IHS calls “plug-in electric vehicles” represented just 4% of global sales of new cars and light trucks and just 0.7% of the total global fleet on the road in 2020. (The typical car stays on the road for about 15 years, so the global fleet takes a long time to turn over.) But IHS expects that these electrified rides will represent 15% of new light-vehicle sales and 4.1% of on-road light vehicles by 2026. Those global numbers eclipse stark regional differences: IHS envisions that those vehicles—comprising both all-electric models and hybrids that have a plug-in battery system but also retain an internal-combustion engine—will, by 2026, represent just 12% of all new light-vehicle sales in the United States, but 23% in the world’s biggest auto market, China, and fully 29% in Europe. Another analysis firm, Wood Mackenzie, suggests that by 2047 sales of electric vehicles—those that either plug into a socket or are powered by a fuel cell—will account for more than half of all global car and light-truck sales.

Oil’s days hardly are numbered. IHS estimates that electric vehicles will reduce global oil demand by about 1.1 million barrels per day in 2026, only about 1% of what IHS Markit figures global demand that year otherwise would be. The majority of oil demand, which is burned in heavy trucks, airplanes, industry, and other non-road uses, wouldn’t be affected by the rise of electric cars. Indeed, the biggest automotive hit to global oil demand is likely to continue to come not from electric vehicles but from the increasing fuel economy of internal-combustion-powered models. Exxon Mobil said in a 2019 report that even if all cars and light trucks sold globally in 2025 were electric—a shift so aggressive that it’s a mere modeling exercise rather than a view of a likely future—oil demand that year still would have fallen back only to its 2013 level. Layering the drop-off in oil demand induced by the pandemic onto the erosion from electric-car sales might push the level of oil consumption in 2025 back further, Exxon Mobil says, perhaps to the 2010 level.

Nonetheless, electric cars, assuming their sales increase broadly in line with experts’ expectations, absolutely will materially threaten oil’s hegemony. The 1.1 million barrels of daily global oil consumption that IHS projects electric vehicles will have erased by 2026 would itself be “disruptive,” largely because of the longer-term demand decline it would have hastened, said Rob Smith, a director at IHS Markit who tracks the refining industry. Ride-share services such as Uber and Lyft, widely expected to continue to erode growth in individual driving, are likely to make particular use of electric vehicles as those vehicles become steadily cheaper to operate than internal-combustion vehicles. And so, Smith said, the 1.1-million-barrel-per-day hit to global oil demand may prove conservative. “As a greater share of society’s miles are driven by these sorts of vehicles,” Smith said, referring to electrically powered ride-share cars, “that’s disproportionately going to affect demand” for oil.

A change at the General

GM’s electric conversion—though just beginning—is an instructive road trip. The herky-jerky GM approach to green vehicles whose less-than-inspiring results I witnessed 18 years ago had, by about a decade ago, evolved into a growing focus on battery-powered cars. In 2010, GM rolled out the Chevy Volt, a plug-in hybrid advertised as going, before its gas-powered engine kicked in, on average some 38 miles on an electric charge. In 2016, GM introduced the Chevy Bolt, whose one-letter name change brought with it a new car that ran fully on batteries and that the company said would go 238 miles on a charge. The Bolt, said Tim Grewe, GM’s director of global battery cell engineering and strategy, was the first GM vehicle that made electric power “practical.”

Mary Barra, GM’s CEO, pledged in a March 2018 speech that GM was committed to “an all-electric, zero-emissions future.” But at the time, Dane Parker, now GM’s chief sustainability officer, told me, it remained unclear how GM might get there. “There was not a plan, and there wasn’t a date.”

Over the next couple of years, Grewe and his technical teams, working with LG Chem, the South Korean company from which GM has been buying batteries, boosted the driving range and reduced the cost of GM’s electric propulsion systems. At the same time, Parker and other GM strategists, meeting frequently with Barra and with executives of the Environmental Defense Fund, one of the nation’s biggest environmental advocacy groups, fleshed out both a plan and a date: 2035.

Mary Barra, CEO of GM, in the driver’s seat of a Chevrolet Bolt EV at the 2016 North American International Auto Show in Detroit.

As GM executives scrambled, they watched with worry as other automakers pressed ahead to electrify not just cars but light trucks, GM’s bread and butter. (Among those upstarts: Tesla, which now has a market capitalization of $783 billion, about 10 times GM’s market value, and which plans to roll out an electric pickup, the Cybertruck.) “We see ourselves as leaders in trucks,” Parker told me. As he and his colleagues worked, he recalled, they were thinking, “This is our business to lose, and we’re not going to lose it. We need to get something out that differentiates ourselves in the market.”

So a lot will be on the line for GM when, if all goes as planned, it rolls out an all-electric Hummer later this year. In a move whose brashness would elicit glee from any veteran Detroit auto marketer, GM has decided to turn the Hummer’s monster-truck image on its head—to transform it, environmentally, from bad boy to golden child. Just as its predecessor had a cavernous fuel capacity, the new Hummer will hold a massive battery bank. GM says the beast will wield 1,000 horsepower and rocket from zero to 60 miles per hour in about three seconds. It’s hardly an ecological dream, but it’s certainly an engineering feat. “I would have lied in 2010,” Grewe said, “if I’d told you we’d make a Hummer in 2021” powered by electricity instead of petroleum.

In January, GM unveiled a new corporate logo that it said was designed in part to resemble an electric plug. The company plans, by the middle of this decade, to sell 30 electric models globally and for 40% of its U.S. lineup to be electric. But progress will depend on how much help GM and the rest of the auto industry get from the government. GM’s Jan. 28 announcement talked of a “vision” of an all-electric fleet and an “aspiration” to nix carbon emissions from its cars and light trucks by 2035. But that would require an array of government subsidies, including continued tax credits for electric-vehicle buyers, government grants for automakers’ electric-vehicle research and development, and government spending to hugely expand the nation’s infrastructure of electric-vehicle charging stations. GM’s “policy team is working very closely with the Biden administration,” Parker said, “and the Biden administration has wanted to listen.”

The Environmental Defense Fund, the green group that worked with GM to develop GM’s all-electric pledge, is trying to leverage GM’s corporate promise into national policy. Fred Krupp, the group’s president, said it wants federal regulators to “eliminate the air pollution” from new cars and light trucks by 2035. “GM’s announcement creates the momentum for them to do that.”

For now, the electric future remains something of a mirage. In a sign of the rough road ahead, even GM’s Parker had to trade in his company-issued Chevy Bolt for an internal-combustion-powered Chevy Cruze when the COVID crisis took hold. Because of the pandemic, Parker no longer was driving to his office at GM’s headquarters, which has plentiful electric-charging facilities. And there’s no such infrastructure at the apartment complex in which he lives in a Detroit suburb.

Still, for all the bumps to come, today the General, like many of its competitors, has several electric models on sale globally, and more soon to come. Though that’s far from a full-scale transportation revolution, it’s a big switch from 18 years ago, when GM’s fuel-cell car, glittering in the Sacramento park, made the idea of a high-volume zero-emissions vehicle look like a nonstarter.