Big Oil Starting To Take Notice Of Rise Of EVs

3 months ago by Steven Loveday 70

EVs

Tesla continues to lead the pack with U.S. plug-in sales, but the Chevrolet Volt and Bolt, Toyota Prius Prime, and Nissan LEAF are all faring well, and the outlook for EVs continues to improve. (via Josh B/InsideEVs)

It was really only a matter of time, and now the world’s top oil companies are seeing EVs as a viable and permanent threat.

Though makers of EVs are still much more bullish about the timeline for mass adoption, several oil producers are taking note, and many are beginning to change their initial conclusions. BP and Exxon Mobil have bumped up their estimates this year, and OPEC has quintupled its future sales forecast for plug-in EVs.

Bloomberg New Energy Finance (BNEF ) believes that EVs will sell better than ICE vehicles by 2040, totalling 530 million plug-ins on the road at that time, which will account for one-third of the world’s vehicles. According to a study by BNEF, by 2040 EVs will lower the global oil demand by eight million barrels. Chief of advanced-transport analysis at BNEF in London, Colin McKerracher, shared in a note to clients:

General Motors’ Chevy Volt and Bolt have combined this year to approach Tesla’s sales figures thus far. (Photo by Steve Fecht for Chevrolet)

“The number of EVs on the road will have major implications for automakers, oil companies, electric utilities and others. There is significant disagreement on how fast adoption will be, and views are changing quickly.”

“What oil companies and car companies are saying is diverging. This is a trillion dollar question, and somebody is going to be wrong.”

Though these estimates will continue to diverge, the truth is that both sides of the equation are seeing that the popularity of EVs is and will continue to increase, which will drop the demand for fossil fuels. While oil companies may be attempting to make it seem like they aren’t concerned, multiple recent forecasts sing a vastly different tune.

  • OPEC’s previous 2040 estimate was 46 million EVs, and now the group representing 14 nations is forecasting 266 million.
  • Exxon Mobil initially predicted 65 million electric cars by 2040, but has now upped it to 100 million.
  • Norwegian-based Statoil ASA sees an electric vehicle market share of 30 percent by 2030.
  • The International Energy Agency raised its 2030 EV fleet size from 23 million to 58 million.
  • BP bumped its future outlook up by a whopping 40 percent, to 100 million plug-ins on the road by 2035.

Obviously, these estimates are markedly different, but the trend is the same. OPEC’s recent oil market report shows that due to EV sales, oil demand in Asia could see significant declines as soon as next year.

There are many variables, which make these type of estimates difficult. Fuel cost and battery costs are two of the most obvious, but another gray area lies in government support and subsidies (or lack thereof).

According to BNEF, top world automakers combined plans show estimated sales of six million EVs per year as soon as 2025, and eight million by 2030, and these estimates continue to rise.

Source: Automotive News

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70 responses to "Big Oil Starting To Take Notice Of Rise Of EVs"

  1. Ambulator says:

    The big question is: What are they going to do about it? I don’t think that the Koch’s hit piece on EVs is the worst they can do.

    1. AlanSqB says:

      In the short term it is a boon to them. They can re-evaluate the need for infrastructure and capex for poor performing sites and methods. They won’t need to dig for the “expensive” oil. This will make things look great on the financials for quite some time while they continue to profit on less expensive production options.

      The oil companies will evolve. They always do. Many of them may well surprise us and not go kicking and screaming.

      1. speculawyer says:

        Oh they’ll survive since I don’t see aviation or transport ships getting off oil. And transition to EVs will take decades.

        But I certainly could see them stagnating & declining. It’s not like wood companies became the big coal industry. Or coal miners became big oil companies.

        1. SJC says:

          20+ years after the EV1 EVs are less than 1%. If they have to get out of the way from a herd of turtles, no problem.

          1. G2 says:

            Well, EV1 was never for general sale (lease only) and only 5000 were hand built.
            So you can start the clock from Model S and Nissan Leaf introduction in 2011.
            So that is up to 1% in six years, but the rise is exponential, so you may have to “dodge the herd” sooner than you think.

            Divest Fossil Fuels!

            1. Pushmi-Pullyu says:

              Quibble:

              2008: Tesla Roadster introduction
              2010: Chevy Volt and Nissan Leaf introduction
              2012: Tesla Model S introduction

            2. reijer kok says:

              Take some popcorn and watch. I think even the optimist are going to be suprised in a few years.

          2. speculawyer says:

            EV-1? Why not just go back to the days of the Detroit Electric?

            The EV-1 came out at a nadir of gasoline prices and did not have good enough battery technology. The lead-acid batteries were a nonstarter and the much improved NiMH was better but still much too expensive & heavy.

            The modern EV age started with the LEAF & Volt. If you want to push it back further, I guess the Tesla Roadster but that was a tiny volume science project.

            EV sales are still pretty small but they have been steadily growing despite gasoline prices crashing down low. The Tesla Model 3 will be a big test.

            1. SJC says:

              The point is EVs are not a wave but a puddle.

              1. speculawyer says:

                I understand you want to try to make that point but when you have to resort to deception to make your point then you have lost.

                It is a growing market. You tried to make it look like it has been it has been around for 20 years when it wasn’t. There was around a decade after EV-1 before the LEAF & Volt brought plug-ins back with new/better technology.

                1. SJC says:

                  There is no deception, there is FACT.

                  1. Someone out there says:

                    It’s absolutely a deception. The EV market grows at about 40% per year while the auto market as a whole grows at about 3-5% per year. It is obvious where we are heading but your example makes it sound like nothing has happened.

                    1. SJC says:

                      If you sell 2 then 3 that is a 33% increase. Numbers can mislead with a small base.

                    2. SJC says:

                      Correction, that would be a 50% increase!
                      BTW, come back in 2020 and let us know what percentage of sales are EV (not PHEV) worldwide.

                    3. Nix says:

                      SJC — Well, China has an official policy that all manufacturers (foreign and domestic) will be required to generate EV credits that equal 8% of sales in 2018, 10% by 2019, and 12% by 2020.

                      So it really comes down to how well the rest of the world is able to keep up with China. And how willing car makers are to sell their EV’s built for the China market to the rest of the world.

                      It sounds like you want China to beat the US and EU, and leave us behind.

          3. Chris O says:

            It’s called the S curve of adoption. Starts out as a turtle but morphs into hare at some point.

            Let’s hope the oil industry buys into the turtle meme though, its less likely to take drastic action against a turtle than against a hare. Unfortunately the oil industry seems to be waking up to the fact that what it once took for a turtle is starting to look a lot like a hare.

          4. Andrew R says:

            Is it just me or does SJC prove the article’s point for it? A cumulative growth rate from 5000 EV1s 20 years ago to 2m EVs at year end 2017 is about 35% per annum. Kept up, that growth rate hits about 100 million by 2030 and 2b by 2040 doesn’t it? (I may well have the maths wrong on the back of my envelope!)

            IF anything, I think SJC is a bit over bullish on EVs but then he must know some fast tortoises.

        2. anon says:

          Transport vessels and planes are a solid case for fuel cells.

          But who knows – maybe someone will make a graphene battery that is 10x better than lithium ion.

        3. TNT says:

          If you haven’t heard of the Yara Birkeland, you need to google it. Could change shipping in quick order.

      2. Paul Smith says:

        Evolve? From dinosaurs to mastodons? Still would be extinct.

      3. mx says:

        Don’t get your hopes up. This is the USA, they manage their companies in the stupidest way possible. They take management lessons from Tobacco and Coal.

        And Coal is going bankrupt.
        You can export oil to do the same.

        No, I don’t want oil to crash, but, right wing management has proven time and again to be incompetent at business and government. They generate their own propaganda, but, then they go to the next level and BELIEVE it.

        It’s one thing to try to fool the public, it’s entirely a different level of incompetence to fool yourself.

    2. Nix says:

      Don’t you mean what are they ALREADY doing about it? Here are their tangible activities:

      1) Punish even current EV owners for owning an EV by trying to get states to charge a State EV registration tax. It is supposed to replace highway funds (nobody has a problem with that) but in reality the fees they are trying to get states to adopt are punishment taxes that are higher than the gas tax paid by a full-size HD 3500/350 size pickup-truck.

      2) Punish EV owners who have solar, by passing bills in states that create grid connect fees and cut net-metering. This is said to be done to stabilize the grid and to get solar users to pay for their fair share of the grid. But study after study say that soalr is actually improving the grid and stabilizing it. And solar reduces how much power companies have to spend to build new power plants. The real reason is to punish you for not using fossil fuels.

      3) Lobby against even short-term EV/solar/wind tax incentives, while lobbying to keep decades long oil industry tax incentives.

      4) To a lesser degree, even efforts to block Tesla from having stores is part of the block everything at every turn approach they are doing.

      The FUD they are spreading is just the tip of the iceberg. They are pushing a legislative assault against EV’s and green energy in every state they can.

      1. Pushmi-Pullyu says:

        You left out:

        5. Promote the “hydrogen highway” hoax through the California Fuel Cell Partnership and other political and lobbying efforts, to divert efforts to promote EVs in favor of gasmobiles to a dead end

        But yeah, I think Big Oil is already doing pretty much all it can to slow the EV revolution. Fortunately, history shows that economic forces are even greater than political ones (witness the collapse of the Soviet Union, for example). Big Oil is slowing the EV revolution, but can’t stop it no matter what they do.

        Up the EV revolution!

        1. sean o says:

          I think the fuel cell hoax is mostly over isn’t it? It was sponsered by the NG industry, which is currently booming and they don’t need the extra business now. Not to mention they couldn’t get the energy density needed.

          1. Chris O says:

            $10 billion of petrodollars to be disseminated over the next 5 years by the recently created “Hydrogen Council” says the hydrogen hoax will be kept very much alive for years to come.

          2. mx says:

            Right wing propaganda never dies.
            It just pops-up in 3 to 6 months.

            With the economic disaster in Kansas they still believe in “Trickle Down Economics”.

      2. Asak says:

        Yeah, they’ve been trying to do this for years. Fortunately, we managed to fight back enough to get environmental incentives in place, and that helped get solar, wind and EVs out of the cradle. Now it’s too late to stop them. By no means have we fought the final battle, we’ll have to keep fighting going forward, but the writing is on the wall. They can try to slow adoption of EVs and clean energy, but ultimately the oil companies have already lost.

    3. TBill says:

      You gotta realize overall global use of petroleum is probably still trending up due to population growth and rapid development in less developed countries. At the moment we are stuck in a media-driven perception that the age of oil is over we will soon not need any oil due to EV’s …but the probable reality is growth of global energy use, whereas renewables will thankfully help meet the demands, but the much theorized death of oil is a Mark Twainian rumor. Big Oil will use their estimates to decide infrastructure building needs/what to build/where to build it. As a cynic, they probably decided the plan first, and then made up the EV growth to justify a less proactive plan as far as investment to meet demand.

  2. David Murray says:

    We will still need oil for numerous other things besides transportation. So they aren’t going anyway anytime soon. Granted, a large chunk of their business is at stake, though.

    1. Leptoquark says:

      True, we will still need petrochemicals, so if anything, EV’s will increase the lifetime of those. The biggest effect will be the redistribution of earnings in a barrel of oil. For example, if the earnings from gasoline were subsidizing the earnings from polymers or lubricants, and suddenly the earnings from gasoline decline, you would expect the prices of polymers and lubricants to increase. Time will tell.

      1. Paul Smith says:

        Actually, the oil industry is losing ground in all those areas. Trump’s run will soon be over, and the pendulum will swing. We already have replacements for most petro based chemicals in he bio and nano tech fields. Just need to scale them up.

    2. Mikael says:

      No, we do not need it. Plenty of ways of replacing other fossil oil based products with other products or synthetic/renewable hydrocarbons to make those products.

      In Europe 87% of oil was used for energy, heating or transport. ~4% for plastic.

    3. sean o says:

      You don’t need to dent it much to make a big impact. It is like 1% growth/yr. so knocking it to 1% decline a 2% change (whch is a LOT of oil.) starts to send paranoia about growth throughout the industry.

      1. trackdaze says:

        Big businesses seem to live off incremental growth.

        Once that is taken away few do well, some tank.

        In a few short years when demand for gas starts to wane from EVs, A wave of mild hybrids, efficiency gains in general and bulk retirement of vehicle’s preceeding efficiency standards.

        We will see some frayed nerves in big oil.

      2. speculawyer says:

        Yep! If the Model 3 is a big success and we get other such cars, the demand for gasoline may drop. And even if the drop is only 2% or 3%, people are going to freak out.

        Heck, they are already freaking out a bit…that’s the only explanation for Tesla’s really high stock price.

    4. mx says:

      Their business will see a slow gradual decline, their stock price will see a rapid decline unless they show management movement to adjust.

  3. Benz says:

    In 2025 Tesla will sell at least 2 million EV’s per year.

    Total global EV sales number in 2025 (of all the car manufacturers combined) should be at least 10 million.

  4. orinoco says:

    Welcome to the razor blades diet!

    An unhappy slave of the oil industry

  5. speculawyer says:

    The Tesla Model 3 is really going to be a big test. If Tesla can really profitably build & sell the Model 3 at around $35K, it seems that things will really start moving more seriously toward EVs.

    We also need larger PHEVs like SUVs, pick-ups, etc. But since gas prices remain cheap, those probably won’t sell well until gas prices go up again.

  6. Doggydogworld says:

    EVs won’t make a dent in oil consumption for at least a decade. Even with a rapid ramp, they’re too small a fraction of the total fleet.

    EV Robotaxis, on the other hand, could send oil into decline in less than five years. A Robotaxi can replace five ICE cars, and they can ramp much faster because the economics are so compelling.

    1. Josh Bryant says:

      This

  7. Brave Lil' Toaster says:

    “Bloomberg New Energy Finance (BNEF ) believes”

    Well, stop the article right there.

    Has anyone else noticed that Bloomberg is wildly overoptimistic about any new environmentally friendly technology? This might not be the most objective reflection of reality.

    1. trackdaze says:

      Story also has IEA forcasting 60million evs by 2030.

      I recall IEA Solar power forecast out to 2040 4 years back.

      Seems it has already been surpassed 😉

    2. Someone out there says:

      Not really, they’ve been pretty much on target on solar power if not underestimating it. IEA has been much worse than BNEF.

  8. Pushmi-Pullyu says:

    Ah, schadenfreude…

    I’ve been waiting and hoping since I was a teenager for Big Oil execs to get that “deer in the headlights” look. Perhaps it’s still too early, but what the heck, I’ve been waiting long enough… Pushmi-Pullyu is gonna do his four-footed happy dance!

    I’m a bit camera shy, but here’s one of my single-headed cousins:

  9. Bacardi says:

    The absolute best way to “combat” EVs in the states? Lobby for higher speed limits…If most highways were 85MPH it would eat up EV range quick…

    1. doof says:

      and gas mileage…

  10. Warren says:

    Oil, for private transportation, will be going away by 2025. It is very likely that 2017 will push 1998 out of the top ten hottest years in recorded history.

    There is a good chance we will see a dustbowl sized drought in the grain belt by then. It is almost a certainty by 2050. Stuff like that will scare the hell out of people. You will see average people demanding that their government “do something.”

    1. Mister G says:

      Correct co2 has surpassed 410 ppm not good. Co2.earth

    2. Asak says:

      Unfortunately, when things start to go wrong, people demand the government “do something”. But a lot of time the people don’t actually understand the problem, so what they want the government to do is entirely the wrong thing.

  11. Mister G says:

    Big Oil can kiss my arse…I will be gasoline free in 2018.

    1. Dean Rojas says:

      Walking is good for you

      1. Mister G says:

        Dean stop hating people that want to pollute less. We have surpassed 410 ppm of CO2 not good, believe me. Check out http://www.co2.earth and look at the graph from 1958 to today, the data is screaming DO SOMETHING NOW.

        1. Asak says:

          It honestly was screaming “Do something!” twenty years ago. We can thank the fossil fuel lobby for helping put a spanner in the works.

  12. fasterthanonecanimagine says:

    Currently (and since 30 years) annual global oil consumption grows by 1 Mio barrels a day (in 2016 it was 95 Mio barrels a day). To get in trouble, big oil doesn’t need 2040 and a 8 Mio barrel reduction in consumption. Just let the annual growth rate slow a bit, stall, and slightly drop. A rat race amongst oil producers will start to sell oil as much and as quickly as they can – and prices and margins will be collapsing. It’s for a reason that the Rockefeller family has withdrawn all their oil industry investments.

    1. Someone out there says:

      Oil consumption in the west has been dropping for a while already, mostly because of more fuel efficient cars in a mature market but Asia has been expanding rapidly due to more people getting cars in China (mainly). However, China is now pushing EVs really hard and with a decent battery innovation there will be a very rapid change away from oil. Oil companies really should be afraid of the future, it will come faster than most people think.

      1. Dean Rojas says:

        Read my comment above

        1. Someone out there says:

          “Walking is good for you”?

  13. scott franco says:

    A. Oil companies went from having basically %0 of the power generation market to %34 and rocketing upward, since natural gas is replacing coal. Last time I checked, the big oil companies don’t mine coal.

    B. The fracking revolution isn’t driven by “big oil”. Its the smaller drillers who were behind this revolution and still are. “big oil”, (Exxon, BP and others) got burnt trying to play in the fracking market, and have largely returned to high expense projects such as deep water and risky countries where their ability to put large amounts of money on the line is paramount.

    C. OPEC is not worried about EVs. The are being hit hard by America and the frackkers. EVs are still a rounding error in their calculations.

    Other than that, this article is:

    Misleading and wrong.

    1. speculawyer says:

      Oh, I think OPEC is starting to worry. Yeah, EVs are still pretty tiny. But they are consistently growing. And hybrids a reducing oil consumption. And climate change regulations are getting Europe to push hard into plug-ins. China has a REALLY big push into EVs.

      Tesla wouldn’t have such a high-market cap if there were nothing for OPEC to worry about.

  14. Dean Rojas says:

    BIG NEWS TO ENERGY IGNORAMUSES:
    Electric energy powers EVs,
    Electricity is primarily generated by fossil fuels

    Do you guys believe that electric energy comes from an Electricity Tree ???
    Have ANY of the authors of this EV articles ever taken a Thermodynamics course???

    1. Warren says:

      Notice I said oil would be going away for private transportation. Natural gas will be generating most of the electricity used in EVs over the next ten years for sure. That is still a major improvement over burning refined oil (gasoline) in cars.

    2. Don Zenga says:

      But electric vehicles can go 3 times the distance for a given amount of energy compared to running it directly in the engine.

      That means if all vehicles run on electricity and we generate all that electricity from Oil, the World will need only 30 million b/d and not the 90 million b/d.

      Besides the alternative sources like Solar, Wind and Bio are accelerating at a rapid speed. So please come to 2017 and then you can move forward to 2020 and further.

    3. speculawyer says:

      Dean….you really sound like a jerk. And worse, you sound quite ignorant. As Don Zenga points out, EVs are 3+ times as efficient as gas cars. And fossil fuel powered power plants are around twice as efficient as gasoline engines. Thus even when powered by fossil fuels, EVs are much more efficient.

      And I get most of my electricity from the solar PV on my roof.

      So don’t insult people….especially when you don’t really know what you are talking about.

    4. Nix says:

      When President-C.E.O. of oil services company Enterlat, Mr. Diego (“Dean”) C. Rojas shows up to troll, you know you are going to get the most ignorant comments in the history of the world.

      Especially when he uses a link to his own Interlat company website for his name to make sure everybody knows exactly what kind of oil industry troll he is.

      This just goes to show how amazingly fecal-scared the oil industry is about their backsides being handed to them with Tesla about ready to break into huge numbers, and a ton of other EV’s waiting in the wings.

      Let’s get this straight. The only reason why Dean from Intertrat is here posting is because he is crappin’ in his cowboy boots right now. EV’s don’t burn oil, and electricity isn’t made from oil either. And he’s the CEO of an oil services company.

      No wonder he is yelling at us; because his pitiful also-ran company Intertrode isn’t going to be able to successfully compete against energy that is collected straight off of people’s own roofs with zero need of his company’s services. He’s a bit player on the losing end of a dead-end industry, running a failing company that will vanish into oblivion.

      1. Mister G says:

        LOL if what you posted is correct, Dean is crappin his boots LOL

    5. Someone out there says:

      Here’s some BIG NEWS for you: China installed 24 GW of solar power just in the first 6 monts of this year, for a cumulative of more than 100 GW. They are not stopping there.

      1. Mikael says:

        And that is less than the new electricity generation in China from nuclear, wind and especially the big driver of new renewable energy in China that is hydro.

        When even the least contributing source is sounding impressive you know you are in for a rapid change.

        1. Asak says:

          I hope they stick with it, because China really needs that change more than anybody. It’s great that they are getting serious now, but really they should have started phasing out coal two decades ago, you know when the people there could actually still see the sky and go outside without harming their health every day of the year.

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