Big Oil Is Not Prepared For The Electric Car Revolution

JUN 16 2018 BY EVANNEX 64

THE ‘VOLT-AGE’ IS COMING AND BIG OIL ISN’T READY

While car consumers increasingly buy into the impending transition to electric vehicles, Big Oil remains a bit flat-footed. According to Giles Parkinson (via Renew Economy), “Big Oil, it seems, can see the EV revolution on its radar, but still can’t figure out how far it is away, or what it should do about it. Denial is one popular option.”

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Related: Big Oil Continues To Push Back Against Electric Cars

Read Also: Tesla Pushes EVs, Legacy Automakers & Big Oil Work To Save ICE

Above: Tesla’s Model 3 (Instagram: _mn_cars_612_)

At the Australian Petroleum Production & Exploration Association (APPEA) conference, a new report “Enter the Volt-Age: Electric vehicle disruption of the oil and gas industry” was presented by consultancy Deloitte to conference attendees. After gaining access to the report, Parkinson notes, “nearly half of oil and gas companies are not preparing for the shift to EVs. They could be in for a shock.”

Deloitte’s report explains that “demand for crude oil… may soon stall. This is because of a new technology which offers superior qualities in all three dimensions of the energy trilemma – security of supply, affordability and environmental sustainability – the electric vehicle (EV). The EV is a game-changer in the evolution of both the energy and transport industries.”

Above: Oil and gas executives expect EVs to impact their business in the coming decade(s) or “never” (Source: Renew Economy via Deloitte)

Yet some in the oil industry haven’t accepted this reality (see above). Perhaps they should — Steve McGill, one of the authors of Deloitte’s report notes, “All the countries that are looking to ban sales of cars with internal combustion engines are among the major oil importers.”

In addition, Parkinson notes that the “graph below is interesting. It highlights how the big growth economies – particularly China and India – are looking to EVs for the future. In both countries, more than 85 percent of consumers are showing an interest in EVs.”

Above: In countries represented in dark green, including China and India, more than 85% of consumers show interest in EVs (Source: Renew Economy via Deloitte)

Even though EVs aren’t commonplace today, Deloitte’s report predicts “this is set to change, and fast. Every major car manufacturer has outlined plans for electrification over the next decade.” Parkinson also points to an increasing selection of lower cost EV options like the “Nissan Leaf and the new Tesla Model 3” as examples of where the industry is heading.

While these trends converge, there’s something else that could accelerate EV adoption en masseIt turns out, as internal “combustion engine ban legislation [continues] in a number of cities and countries globally, the world sits on the cusp of a global transportation transformation that will impact all market segments.” Deloitte’s authors conclude, “The EV opportunity is enormous – oil and gas operators must recognize this and should not ignore the rise of EVs.”

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Source: Renew Economy

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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64 Comments on "Big Oil Is Not Prepared For The Electric Car Revolution"

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Big oil is in severe denial and pays to have permafrost kept frozen mechanically as it drills for oil in the arctic. That is how much in denial big oil is BELIEVE ME CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS THANKS FOR CARING

Yeah, just bury your head in the oil sands.

As a Canadian, may I tender my sincere apologies for the bipolar nature of my country’s approach the energy and the environment. However, in our defence, we’ve collaberated with the worst possible in the oil business (CINOOC & Koch) and they are bending our politicians to their will. But hey, at least we don’t have The ‘Rump.

If you are going to sell anything, it’s good not to be reliant on a single country for all your sales. Canadian oil is sold at a massive discount. From this perspective, you can appreciate why they want that pipeline so badly.

No need to apologize because 99% of Earthlings are bipolar LOL I have observed that energy and environment are similar to diet and heart disease in adults we know what needs to be done in both situations but 99% of humans behave bipolar and hope the problem goes away. CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS co2.earth

Take a lesson from this. This is how Republicans FAIL HARD in government. And Canadian Conservatives too. Because, you’re not determining policy by actual economic, social or scientific methods. You’re using “Legal” Bribery of government, and Monopoly Control to determine policy. Where as China and Europe is not. Koch PAC money gets Republicans elected, and Koch Policy is Cancer for American Economics.

This will burn Republicans / Conservatives in the near future.
This allows China to become the number one supplier of solar, and therefore direct more R/D money into Solar and Wind. To the point where Solar WILL compete against oil with no subsidy and cancel out oil’s subsidy.

Trump Policy makes CHINA Great Again.

How do you prepare for eating razor blades?

Drink a lubricant (oil?) to help them slide down?

“How do you prepare for eating razor blades?”

Contrary to the headline big oil is preparing for the inevitable. How do they do that? Good Q.

1) like any good captain you make sure someone else is on the hook when the ship goes down. Look at their financials and you’ll see they have been taking on debt whilst they have been paying out dividends. Look at Rosneft, Gasprom, Pemex, Aramco. All have been looking to sell big chunks of equity.

2) Optimize production for the short term because there is no long term. Nothing is more telling than their changes in strategy which have been to maximize short term production of fields at the expense of overall production. You simply don’t do that if you believe in the long term market for oil.

3) Diversify. You’ve seen announcements here about adding chargers at gas stations. That is probably more of a PR ploy but expect less publicized forays elsewhere.

The huge rush to get tar sands oil out of Alberta and monetized confirms your theory.

Had to chuckle a bit at “Denial is one popular option.”

Another such popular option is . . . . . wait for it . . . . Hydrogen !!!

H2 can match denial any day in probable financial results.

Blur those plates, please.

We might be at peak gas but reality is
Diesel, jet fuel, heating oil are still growing markets. Petrochemicals (plastics) still growing. Lubricants and industrial processing still growing.
Add in natural gas, still growing.

Back in the 1800’s gasoline was a by product with little value.

Mini market/ convenience stores still growing lol

Big oil has decades to adjust

Exactly. I love how close minded the extreme EV enthusiasts can be. Gas/oil will still be in demand long after everyone reading this is dead.

But at the amounts they want to claim. There are people making money from buggy whips today, There is even a bigger market if you look a horse blankets and saddles.

The oil companies today are like horse-tech companies in the 1800’s projecting sales to 350 million people who all use horses for transportation.

Classically, people over estimate the rate of change in the short term but underestimate in the long term. I believe you’re a classic. 😉

The transition to majority plug-in vehicles on the road won’t be complete in the next 5-10 years, but it’s very unlikely to require half a century, either.

Rather, sales will be majority plug-in in about 10 years as lower purchase price joins lower operating costs for EVs due to inexpensive, energy-dense batteries. Given the average vehicle lifespan of 11 years, crossover to majority plug-in across the entire fleet will follow about 20 years later, or 30 years from today – at which point I plan to still be very much alive, thankyouverymuch.

That’s my prediction. Check back in 30 years to let me know if I nailed it. 😀

I believe the IEA still forecast growing demand for oil. But it was predominantly for petrochemicals. Clearly transportation is taking a hit. Also the IEA is usually too optimistic. The industry has to respond immediately to the fast falling demand for transportation fuels. Make the wrong decision, and they will have built a white elephant. Wait too long, they will be left with a portfolio of stranded assets.

Big companies thrive on steady growth and die in the absense of it or decline.

Setting aside the massive tanking of diesel vehicle sales in europes long term effect on diesel sales Soon enough heavy vehicles will begin to be electrified (Buses are already there).diesel usage will plateu then decline.

Big Oils denial as seen in its future projections are more about not spooking their shareholder and financiers until its time for them to take a bath.

Diesel is about to plateau and shrink and when that is combined with the same trend for gasoline, it’ll crash the market since it’s the margins that now make it. That’s before discussing the opportunities for the other uses to also be decreased.

Not any time soon
Between trucking, trains, ships, infrastructure repair vehicles, building and construction growth
Plus third world countries just now coming to modern infrastructure

Very long time before diesel declines, that just reality. Eliminating diesel cars is just tiny fraction of where diesel is used.

“Big oil has decades to adjust”

I’m not so sure about and neither is big oil. I have a relative who recently retired from a large oil concern HQ’d in Northrrn California. According to him their estimate on when they expect the oil market to crash is 2028.

Doubters point out that demand is still growing and that there are alternate uses. Both of those points are true but oil is an inelastic market so a small change in quantity demanded can have a dramatic impact on the market price. While oil will still have a number of markets the age of oil will begin to sunset next decade.

Well said, sir!

Yes, it’s true that there is substantial demand for petroleum beyond merely burning gasoline and diesel as fuel for transportation.

But transportation fuel is overwhelmingly the majority of the market. When that shrinks down to a small fraction of what it is today, there are going to be a lot fewer companies selling oil than there are today, and their currently obscene levels of profits are going to disappear right along with most of that market!

When that eventually happens, everybody alive on Earth will be able to breathe a lot easier. 🙂

Go all in on Koch then Bunny Boy! LOL!!

Even if all cars are now EVs, that still leaves our ships and planes, and as the global economies continue to grow, the shipping and air travel market will grow and continue burning fuel.

There’s nothing wrong with acknowledging reality folks.

The reality is electric planes are in development now. And electric ships are being deployed now.

Heating oil ( diesel? ) isn’t a growing market by any stretch of the imagination. Heat Pumps and Ground Source heat pumps are coming on strong.

Looking at your average age of CEO’s and senior executives, factoring the timeline when EV’s will have significant impact in their business, there is no doubt that they intend to ride it out regardless of long term impacts to the company’s solvency.

Be sure to check your 401k portfolios to make sure your funds aren’t investing into oil.

They have 15 years left of a shrinking market where they lose 50% of transportation business. The have 4 years left where this is widely acknowledged in the financial markets. Expect bankruptcies after a stock crash in 4 years.

Just because consumers show an interest doesn’t mean they can afford it. Everyone in India wants to drive a car, live in an air conditioned house, and have 24×7 supply of clean water and electricity. But it ain’t happening anytime soon…

That’s why I kinda question the tax credits, it’s debatable wether the first 190,000 Tesla used in the US actually helped, it’s almost seems squandered on high priced cars. Seriously hasn’t helped “every mans car” into EV’s

I mean seriously if you can afford a $90,000 car , you need a tax credit?

They should of put a cap on it.

Yup. Everyone I know who drives an EV would have bought one regardless and those who don’t but want to (e.g. myself) are waiting for a $20k EV without the need for tax credits. EV tax credits are a waste of tax payers’ money and only help early adopters who don’t need the credits buy overpriced cars like Teslas.

True but the expression “Seeing is believing” relates to 90% of humans and that is what the tax credits will have achieved. A sort of cultural lubricant.

> waiting for a $20k EV without the need for tax credits

I bought my second Spark EV for $21.5k including tax, lic, and delivery without the credits in June 2016. After credits my total cost was $10.5k. You waited too long.

Oh and I definitely considered the credits for both EV purchases.

I mean the Leaf, the Ioniq EV, the i-Miev, and other cheap EVs also qualify for the tax credit…

“Everyone I know who drives an EV would have bought one regardless”

If that were true in general than we would have expected very different results in Georgia when incentives were removed. Similarly we would not have expected the results we’ve seen in China or New York. All available data seems to point to this contention being patently false for the general population. Can you offer any evidence to the contrary?

“EV tax credits are a waste of tax payers’ money and only help early adopters who don’t need the credits buy overpriced cars like Teslas.”

What you are calling “overpriced cars like Teslas” are precisely the cars which have transformed the EV industry from just a cottage industry making the occasional conversion EV, to a now rapidly growing industry mass producing more and more highway-capable, highly desirable cars every year.

If it was possible to make a profit selling tiny, cheaply made EVs, then a company like Th!nk would have succeeded decades ago. No, Th!nk went bankrupt (four times!), because trying to sell mass produced, cheaply made EVs doesn’t work anywhere outside China. It took Tesla to lead the way to more desirable EVs; EVs which are going to make gasmobiles obsolete in first-world countries in the coming decade or two.

To claim that this would have happened without tax incentives is denying history and the facts very hard indeed!

I think the state of California has had more to do with EV’s in general in the United States.

Far more impact on EV’s than Tesla.

I’m not against Tesla, but the state of California is kind of a reality check for all the automakers

Looking at how long that list of “compliance” cars we watch every month. That’s California’s leadership position , not Tesla’s.

You’re new here than. Check next month’s sales figures when they come out, or go back a few articles. Tesla’s are not dominating EV sales.

Amen! Preach!

<1% after 7 years is not exactly a "revolution".

This is just the beginning. Norway has shown us what’s possible. We will follow, slowly at first until it starts to snowball.

Depends on how much we’re actually talking. After all, small moves in the oil market cause massive swings in prices. Additionally, 2017 was the last year of 1%. In 2018, sales will definitely break through 2% nationally and 5% in California, both of which would be double their 2017 numbers. How many doublings does it take to reach 100% again?

“<1% after 7 years is not exactly a 'revolution'."

Maybe <2%, but I'm pretty sure plug-in EVs are now more than 1% of annual passenger vehicle sales, and growing every year!

People can keep belittling the EV market as being insignificant as long as they like, but the market is going to keep growing exponentially until nobody will listen to anybody still claiming it's insignificant.

You think there are more than 1% EVs out of a billion vehicles in the world, keep dreaming.

No, it’s not. But it is how revolutions start and how tipping points are reached.

Are you the new Troll assigned to InsideEv’s?
Look up Geometric Growth in Tech Products, actually in any new product to hit the market. Sales do no increase by 1% Year-over-Year. They grow Geometrically, and EV’s are on that growth path.

They are in denial because we in US are in denial of global warming and we believe that the world will follow our Trumpiest ignorant approach, the world is moving ahead to renewable energy. The good think is that all is happening because Elon vision.

True. Americans have no Idea India is now building Gigawatt projects, and up’d their production targets by 30%.

“Big Oil, it seems, can see the EV revolution on its radar, but still can’t figure out… what it should do about it. Denial is one popular option.”

Here’s hoping that every single Big Oil company in the world adopts a deeply held corporate groupthink for stubborn, pig-headed, head-in-the-sand attitude about the future of transportation… and so stops trying to fight against the EV revolution or slow it down!

Make no mistake: Big Oil is the enemy of every true EV advocate!

Up the EV revolution!

Big Oil is the enemy of every true EV advocate!

Lighten up dude, one can assume the folks who bought EVs are usually of the higher income group, which means they fly regularly too, and where does the fuel into planes came from?

Wait a minute do you want higher income ev drivers to fly in electric aircraft? You are clever lol they go up in electric aircraft and crash, therefore eliminating all demand for electric vehicles and we can all go back to driving gas guzzlers CONNECT THE DOTS ON CLEAN AIR WAKE UP co2.earth

Exxon, for example, should be right now bidding for every Off-Shore Wind project out there, this is in their area of expertise. They clearly have competent staff to do this work. The corporation dies from the head. But, as they are not bidding, other companies are right now STEELING Their Business.

This is the natural birth/death cycle of a corporation.

The Stone Age did not end because we ran out of stones.
The Bronze Age did not end because we ran out of copper and tin.
The Oil Age will not end because we run out of oil.
Big Oil, adapt or die.

Denial is a big part of who we are.. no matter who. Oil will continue to be a big part of energy well past our lifetimes. Unfortunately True. Why should they hasten the demise of their very profitable business. But transportation will transition to electric drive [battery or fuel cell] over a decades long period. Look out for more plastics!

It also happens that oil companies can be part of the [GHG] solution. They have the locations and operating expertise for a great charging business, They have the money and business expertise to become solar/wind clean energy suppliers, to the grid and/or their charge locations. Nothing wrong with becoming an [cleaner] energy company, when the time is right. If you had the money, would you jump from the huge oil fryer to the tiny electric one now? Personally, I’d start to dabble sooner than later. They may not feel the need yet. But, I believe they will transition as the cascade of improving EVs take their business away.
What can you do to hasten that change?

I’m on my second nissan leaf lease to make the change CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS co2.earth

Refiners are already adjusting. Less gasoline but more of everything else.
You even have two new large refineries being built in Texas.

In the US we’ve had like 14 small projects over the last 40 years, but having two new large refineries is huge.

I’m all for EV’s
But big oil is going to be around a very very long time.

“But big oil is going to be around a very very long time.”

Oil will be around a very long time just as the horse and buggy are still with us, film cameras are still with us, as are vinyl records are still with us. What is going to change is our dependency and the importance of oil. This will take a very long time but will happen within the next two decades. Book it.

Two decades will make a difference but just use Tesla and Spacex as example short term.

Spacex 64 launches 2019 that Double of RP1 used still growing that use………

Tesla doubles automotive output…..
That Doubles the diesel used to deliver both component parts raw materials and car deliveries…….

That used ice car that got sold off to buy new Tesla probably still on road for many years by someone else

Yeah…… the IMPORTANCE of fossil fuels……. will be DECADES to come

Tesla is using electric Semi’s today.

“Tesla doubles automotive output…..
That Doubles the diesel used to deliver both component parts raw materials and car deliveries…….”

Wrong. In the future those deliveries will be made with Tesla Semis using electricit not diesel.

“That used ice car that got sold off to buy new Tesla probably still on road for many years by someone else”

That used ICEV has on average a little over a ten year life with its usage declining each year on average. It is the usage which matters. disproportionate share of miles are driven by newer cars. Sorry but this is true in all countries. If 100% of new LDVs were BEVs the reality is it would only take about 4 years until about half of LDV miles were electric.

We’ve seen what havoc a 1-2% change in supply can cause in the oil markets. Try to comprehend what a mere 5% decline in quantity demanded would mean. Now try to estimate the impact of a 10 to 20% decline. Big oil is about 10 years away from the same fate as king coal.

Aren’t those two new refineries to be used to crack the Koch Industries Canadian tar sands? Yeah, that’s the least profitable oil on earth. That’ will soon be the first to go, and Koch industries will also be one of the first to go bankrupt.

Yep, designed to export to Mexico and South American countries, parts of the globe that are way behind the EV curve for sure.

But I also think everything Airbus, Boeing, Cat and Deere is building today is still going to be around needing fuel 20 years from now.

Even 10 year old semis get exported out of the USA to live another ten years in dirty countries.

EV cars, garbage trucks and bus’ are low hanging fruit on the EV curve.
But at least it’s a start.

As long as for hire trucking uses the fuel surcharge method of tendering freight, there’s almost no incentive to convert. Private owned fleets are a different story.

“As long as for hire trucking uses the fuel surcharge method of tendering freight, there’s almost no incentive to convert”

…..until their competitors driving electrics are able to charge less because their costs are less.

One would do well to keep in mind that automotive fuels are by no means the only product, manufactured by fossil fuel industries.

As of now, most (perhaps 90%) of our plastics, synthetic fibers, solvents, tar, coolants, lubricants, detergents and countless other industrial chemicals are derived from petroleum, coal and gas. As well as a significant proportion of our rubber, pharmaceutical and agricultural active ingredients.

Besides, non-fossil-fuel commercial aircraft and space launchers do not exist yet (if in doubt, ask Musk what he they use for fuel at Space-X).