Chevron Senior Economist May Be An Unfazed Tesla Model 3 Reservation Holder

2 months ago by Steven Loveday 24

Tesla Model 3

Tesla Model 3

This Chevron economist sees no harm in his possible Tesla Model 3 reservation because he believes the oil industry has no immediate concerns.

Chevron Corporation’s Senior Economist Adam Karson all but admitted his Model 3 reservation status during a speech at a recent conference in Houston, Texas. While he may have a personal preference for the new technology, he insists that it’s not going to put a dent in his company’s lifeline anytime soon.

Tesla Model 3

Inside the Tesla Model 3 LA Auto Show (Image Credit: Tom Moloughney/InsideEVs)

Karson spoke at a recent conference in Houston, Texas. He reminded that even though electric vehicles are on the rise, and have been for some time now, they only make up around one percent of the entire global vehicle market. Even with accelerated growth, he realizes that EV saturation will take many years. The average lifespan of most vehicles is 10 to 15 years or more. More and more people can begin to buy electric cars, but these ICE vehicles won’t simply vaporize (although that would be fantastic).

The Chevron executive says even if every car sold today was electric, the global automotive industry wouldn’t be fossil fuel-free until 2035. It will be several years down the road before every single car sold worldwide is electric. However, he admits that, at the rate the industry is growing, there’s potential for EVs to hold leading position by 2035. He explained:

“The problem is it just takes a really long time to turn over the global vehicle fleet. I say that not as an EV basher at all. I may or may not be on the waiting list for Tesla 3.”

Karson also said that current global sales sit around one percent. There are several areas where this number is much higher because some countries are going to great lengths to promote EVs and even set targets for future mandates. He mentioned ICE bans put in place by France and the UK, which are set for 2040. According to Bloomberg New Energy Finance, by 2040, 54 percent of all new car sales will be electric, leading to some 530 million EVs on the road by that time.

These numbers are outstanding, but we’re still talking about only half of all sales over 20 years from now. It makes some sense that Karson isn’t too concerned … yet. If he’s listening to Exxon Mobil’s forecast, he may worry even less, as the oil giant expects only about six percent of the global fleet will be electric by 2040.

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Source: The Indian Express

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24 responses to "Chevron Senior Economist May Be An Unfazed Tesla Model 3 Reservation Holder"

  1. Brian says:

    This is actually a very reasonable, rational view to hold. As much as we (the EV community in particular) would like to see the end of the Oil Age, it just isn’t going to happen over night. If anything, the suppliers of parts supporting the ICE industry is in much more immediate danger.

    “even if every car sold today was electric, the global automotive industry wouldn’t be fossil fuel-free until 2035”

    There is a lot of truth to that statement.

    Also, somewhat unrelated, last night I saw a Jeep Wrangler parked at the mall with lettering that read:
    “You keep driving your hybrid, I need the gas”

    The truth is that EVs will soften the demand for oil a little bit, but that will drop the price quickly. A lower price will spur growth in demand. Oil is an inflexible commodity. That means that demand is not affected much by price. Conversely, change in demand itself has a huge effect on price. But there is a delay. As more EVs hit the roads, the price of gas will drop, spurring more gas-guzzler sales. There could be a huge gap in the next decade – anyone who cares at all about their affect on the environment and others’ health will buy an EV. Those who don’t will buy the biggest, baddest gas-guzzler they can afford.

    1. TheWay says:

      I don’t disagree with his views, it actually aligns with mine:

      2022-2024 = most(50%+) new cars sold will BEV/PHEV/HEV

      2034 = most(50%+) new cars sold will be BEV, most(50%+) cars on the road will be BEV/PHEV/HEV.

      To be honest, I’ve rarely if ever seen anyone pro-EV saying that it’ll happen over night. I don’t know where the overnight notion came from.

      1. SparkEV says:

        Overnight explosion of EV:

        1. There’s a revolutionary new technology that makes EV much cheaper than similar ICE when considering emissions standards.

        2. Cheaper electricity (like $0.01/kWh), thus netting 10 times the savings over ICE to fuel up. Also need ubiquitous public fast chargers.

        3. Self driving or other EV-only feature is “perfected” in EV. ICE may pull it off, but cost may be more due to high power (ie, bigger alternator, batteries, etc).

        All scenarios are only matter of time. For example, cars took over horses in a matter of a decade once “killer app” (aka, low cost and more features) became possible, and things grew exponentially. Same will happen with EV.

      2. Michael G. says:

        I agree with Tony Seba that the ICE will not be sold after 2030. I don’t know if that means “overnight” but is is faster than most people think. That is because they don’t feel comfortable with exponential change. If EVs are 1% now but double every 2 years (as they have been) then by 2030 they are 100% of the market.

    2. wavelet says:

      While I mostly agree with you and the economist,
      This:
      “Oil is an inflexible commodity. That means that demand is not affected much by price.”
      isn’t really the case. The oil price increases of the 1970s were one of the significant causes in the downfall of the US automotive industry; demand for gas-guzzlers dropped off a cliff, and the Big Three didn’t have more efficient, smaller cars ready in time.

      1. Stan1 says:

        “The truth is that EVs will soften the demand for oil a little bit, but that will drop the price quickly. A lower price will spur growth in demand. Oil is an inflexible commodity. That means that demand is not affected much by price. Conversely, change in demand itself has a huge effect on price.”

        This is incorrect and likely enough completely wrong. As noted below regarding the 1970s oil shocks, demand dropped significantly with higher prices. The same thing happened more recently with the great recession. It takes time for people to move locations or buy more fuel efficient vehicles, but those changes do occur.

        Also the industry and countries dependent on oil have been hammered by the recent low prices. Lower prices could very well lead to significant portions of the industry going under or unrest in OPEC countries driving prices through the roof. Heck, users might not even be able to find stations carrying gasoline.

    3. mx says:

      I’ve been in a Wrangler.
      These guys need to raise their self esteem.
      They deserve better.

      1. Brian says:

        Lol!

        I’ve been in a Wrangler many times. It’s a huge vehicle from the outside, but tiny on the inside. Kind of the opposite of my Bolt. Maybe that’s also a metaphor for the owners’ self esteem?

    4. philip d says:

      Like wavelet points out EVs don’t have to make up a majority percentage of the fleet to really start to cause problems with oil markets.

      From Bloomberg: “Yesterday, on the first episode of Bloomberg’s new animated series Sooner Than You Think, we calculated the effect of continued 60 percent growth. We found that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023. That would create a glut of oil equivalent to what triggered the 2014 oil crisis.

      Compound annual growth rates as high as 60 percent can’t hold up for long, so it’s a very aggressive forecast. BNEF takes a more methodical approach in its analysis today, breaking down electric vehicles to their component costs to forecast when prices will drop enough to lure the average car buyer. Using BNEF’s model, we’ll cross the oil-crash benchmark of 2 million barrels a few years later—in 2028.”

  2. I hear Sugar + Gasoline is a Higher Risk, if it is burned!

  3. JyChevyVolt says:

    Same argument Carlos Ghosn made in Fully Charged episode.

  4. Mil says:

    What isn’t factored in, is as people switch over to EV’s they will personally use less oil and this has the potential to create massive changes in oil economics. Drilling/refining of oil gets increasingly more expensive when the scale is reduced which increases the cost and this in turn will encourage more people to switch over to the cheaper EV option. It’s a self fueling cycle which causes the rate of EV adoption to increase (classic S curve). This video explains more: https://www.youtube.com/watch?v=jwHN6QQWv2g

  5. CarGuy says:

    Good video!

  6. Nelson says:

    I’m not so sure his prognostication is correct. Too many variables and future unknowns to analyze.

    NPNS! SBF!
    Volt#671 + BoltEV

  7. mx says:

    It’s good to know what the EV experience is like.

  8. ffbj says:

    Well you have your extremes the oil industry on the one hand, it will take decades, and Tony Seba on the other with his bogus find the horse, 10 year scenario.

    I think the truth is somewhere between those extremes. In 5 years or so when we have many models competing with ice in all categories, including light trucks, which are included in the count now. One reason it’s only 1% on average. If they took out light trucks it would be higher.
    “In 2016, sales of light trucks accounted for about 60 percent of the almost 17.5 million vehicles sold to customers in the United States.”

  9. David Murray says:

    While I agree that it may take a while to get to 100% EV sales. I think once that happens, the fleet will turn over quicker than you might think. You see, the current useful life of a gasoline vehicle is being measured in a world where gasoline vehicles are the norm. However, if you look at technology where there has been a big shift like this, many times once the market has turned completely in favor of the new technology, people want to abandon their old technology so they can get the new.

    So… imagine you’ve had your ICE car for 2 years. You bought it right when the S-Curve was in full swing. During that time, EVs have made it to 100% sales of all new vehicles. Your ICE vehicle will start to look pretty out-dated. The infrastructure you once took for granted is starting to fall apart because everyone is jumping ship to EVs. Under normal circumstances you might have been the type of person to keep that vehicle 5 to 10 years. But suddenly you find yourself wanting to jump ship. Trouble is, ICE vehicles are worthless now.

    1. mxs says:

      No question some people will get hurt making a wrong decision at the key time. Impossible to avoid though …. since many times the car you want is the one you cannot have, so you settle and then boom!

  10. Doubtful says:

    Less than 10 years ago over 80% of all music was sold on CD’s.

    1. Mister G says:

      And 30 something years ago we all used typewriters and pay phones.

  11. Nix says:

    This all sounds fine, until you realize that major oil investments, like refineries and major oil pipelines, are based upon 40 year lifespans. So while they are acting cool, they are actually sweating whether their or not to green light long term investments today.

  12. Mister G says:

    As an EV driver since September 2012 I see the transition to electric vehicles will be slow and erratic unless more and more climate catastrophes scare the hell out of people. CONNECT THE DOTS ON CLEAN AIR WAKE UP FOLKS

  13. Jeff Songster says:

    Between China and their EV efforts… and the rest of the world’s, It seems that the EV revolution will result in a downward pressure on prices of oil… hopefully suppliers will be forced to back off supply to keep prices where they want them… which will keep the capitalist race to the bottom going. Hopefully sooner than later. The other factor is the increase in renewables. This also increases pressure on pricing. So since this guy is so sanguine about it all can anyone go after ChevTex and GM about their trust that conspired to kill off the NiMH batteries. Seems like there could be a case there for some ambitious lawyer to fiscally punish their collusion in stalling the earlier generation of the cars.

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