[7 April] Last week Tesla unveiled the Model 3, a mass market, affordable electric vehicle with a starting price of $35,000 and a two hundred mile range.
Electric Vehicle at charging station
In just over five days, more than 276,000 people put down $1,000 to reserve their own Model 3, signaling that American appetite for electric vehicles (EVs) is on the rise.
That’s good news because greenhouse gas emissions from transportation are growing faster than in any other sector in the U.S. and account for about 30 percent of the total. A major shift to electrified vehicles in the transportation sector is necessary to give us a fighting chance to meet our climate goals.
Yet, just as EVs are poised for growth, oil industry interests are sharpening their knives. Energy companies, including Koch Industries, are increasing their public opposition to electric vehicles because they are realizing the significant potential impacts of EVs on oil demand.
Recently, for example, Jim Mahoney, board member of Koch Industries, penned an oped in Fortune about opposing government subsidies that favor one form of energy over another.
“Koch opposes all market-distorting policies, including subsidies and mandates—even if they may benefit the company,” he wrote.
What Mahoney was really taking aim at were incentives offered to the small but growing electric vehicle market in the U.S.
His op-ed was mum on fossil fuel subsidies—which the International Monetary Fund pegs at $5.3 trillion. And he certainly didn’t mention the 11 fossil fuel federal tax subsidies identified by the Department of Treasury that cost U.S. taxpayers $4.7 billion per year—some of which have been in place for more than 100 years. Or the numerous public lands leasing and royalty breaks for oil and gas production.
Mahoney singles out the electric vehicle tax credit because electric vehicles are a threat to oil, which is mainly used for transportation and his op-ed is part of a broader attempt to roll back tax credits that support advanced vehicles.
If you doubt that the tiny but growing electric vehicle market could threaten big oil, consider this: Bloomberg New Energy Finance (BNEF) projects that oil displacement as a result of increased electric vehicle deployment could lead to an oil crash by 2023. BNEF flags battery prices and strong policies as important drivers of EV growth. In fact, battery costs have dropped dramatically—falling by 65 percent since 2010. By 2030 they are estimated to fall from $350 per kilowatt-hour (kWh) to below $120 per kWh.
To-date, oil producers have underestimated the competitiveness of electric vehicles, but they are seeing the threat to their market share and are taking aim at the EV industry. Because they can’t do much to improve the environmental profile of their own core products, we can expect a growing effort by the oil industry to undermine the electric vehicle sector. It’s no surprise that Koch Industries is leading the way.
Read more: EcoWatch