China’s Oil Giants Likely To Take Massive Hit In EV Transition

DEC 25 2017 BY STEVEN LOVEDAY 7

Electric Car

BYD Qin 100: Wang Chuanfu, founder of BYD (electric car maker) believes that China may ban ICE vehicles as soon as 2030.

Some believe the ban on gas in China could come as soon as 2030 and the impact of the electric car on the country’s oil giants will be monumental.

The chances of the ban happening in full swing by 2030 is doubtful. Wang Chuanfu,  BYD founder, believes that it may happen, but, of course, he’s also hopeful that it will since his electric car company is relying on it. It may take quite a bit of time, especially considering that even with multiple EV and battery makers in the country, and a push toward adoption, the new technology has only reached about a 2 percent market saturation.

BYD 20MW 40MWh Energy Storage Station – BYD Headquarter, Shenzhen

The Ministry of Industry and Information Technology predicts that one-fifth of all vehicle sales in China will be new-energy vehicles (NEVs) by 2025. This includes both electric cars and hybrid variants. However, government regulators are pushing for all automakers to have NEVs account for a minimum of 10 percent of all sales by 2019.

Currently, China has a $440 billion retail fuel market, which not only impacts the country itself but the global market as well. Reuters says that Sinopec and PetroChina will feel the electric car transition more than any other companies. The publication explains:

“Sinopec will be hit hardest. Gasoline sales made up around a quarter of total revenue at the group’s listed unit China Petroleum & Chemical Corporation in 2016, and the energy giant runs almost a third of the country’s 100,000 or so service stations. These hubs boast more than 23,000 convenience stores, a valuable sideline. Non-fuel sales could grow by as much as 25.5 percent a year in the period 2016 to 2019, according to research by brokerage CLSA.

Panasonic Tesla

Panasonic’s Automotive Lithium-Ion Battery Factory in Dalian, China

PetroChina will feel the pinch too. It controls some 20,000 petrol stations, and sold more than 62 million tonnes of gasoline last year, worth about 357 billion yuan at 2016 prices. PetroChina is slightly less dependent on refining than Sinopec – gasoline sales made up roughly a fifth of revenues.”

The report goes on to say that if only one-fifth of automotive sales in China are NEVs by 2025, this means gas stations will lose a whopping seven million customers. Further, this could potentially eliminate 3,500 gas stations in China.

Though China is the world’s largest automotive market, the adoption of the electric car will have a similar global impact. This is especially true since China is not the only country working on banning ICE vehicles. Several European countries are already further along in the process.

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Source: Reuters

Categories: China

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7 Comments on "China’s Oil Giants Likely To Take Massive Hit In EV Transition"

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Euro point of view

“Some believe the ban on gas in China could come as soon as 2030”

“Some” ? Who are they ? Please give the names .

Euro point of view

The founder of BYD ? Well , ok , and ?

Some Guy

I think there is a big surprise coming up a few years down the road. BAIC (one of the largest domestic manufacturers) has recently announced that they will stop selling gassers in Beijing by 2020 and rest of China by 2025. This company has ties to the party, so they perhaps have some insider information. I would not be surprised at all, when “no new ICE allowed” is announced officially in 2023 or 2024, to become effective in 2025.

Mint

That’s a long time for these companies to adjust.

Even if two thirds of new car sales are NEVs in 2028, that’s probably still 10M gas cars and 10M PHEVs being added, roughly cancelling the gasoline demand from the 10-15M old gas cars retiring.

Only then will gasoline demand start a slow decent over the next two decades.

In the meantime, Sinopec and PetroChina will make plenty of profit.

John W

When you say “Some believe the ban on gas in China could come as soon as 2030 and the impact of the electric car on the country’s oil giants will be monumental.”
You mean ban on the sale of gas-only powered cars? The sentence is misleading, it sounds like no gasoline will be sold in China at all after that date, I don’ think that’s what you meant.
There will be millions of gasoline cars still on the road after that time that will buy gas.
What would you do if you owned a gas station and fewer people bought gas? You’d add EV chargers, and the EV owners would stop in the convenience store.
While the switch to EVs will cause some disruptions, businesses will adapt.

Roy_H

I took the headline at face value. No gas allowed to be for sale after 2030. No, I don’t believe they will be able to achieve that, but I do think the government will view that as a target. If ICE sales are banned as of 2025 and customers are fearful of no gas by 2030 then who would buy an ICE (plugin or otherwise) in 2024? Resale value in 5 years would be zero.

Pushmi-Pullyu

China is not the only country working on banning ICE vehicles. Several European countries are already further along in the process.

I very seriously question that any European government, with the possible exception of Norway, is “further along in the process” of banning gasmobiles and diesel-powered vehicles from their roads. When a European country says it plans to ban sales of all ICEVs by 2030, all that means is that the current politicians express a hope that this can be done, without imposing any real commitment on what policies future politicians will have to carry out. In China, when the government says “We will do this”, at least we can believe they are serious about intending to do so.