Daily Archives: March 2, 2019

Tesla showroom in Milton Keynes (Image: T. Larkum)

Electric Vehicles and the Future of Oil

Electric Cars, News, Reviews and Comment, Sales, Tesla

Just two percent of all auto sales today are electric. It is estimated that over 3.5 million electric cars are on the road today, and there may be as many as 36 million electric cars by 2025.

By 2040, 30 percent of all new car sales will be electric, according to analysts at IHS Markit. What does this massive increase of electric vehicles mean for the future of oil?

China Matters

The largest disrupter to the future of oil may be coming from China. Elon Musk has big plans in China where electric vehicle sales are three times higher than they are in the United States. Tesla (TSLA – Get Report) has just broken ground on a massive gigafactory that will have capacity to manufacture 500,000 cars per year.

Tesla showroom in Milton Keynes (Image: T. Larkum)
Tesla showroom (Image: T. Larkum)

Since tariffs have driven up the price of importing these vehicles, Tesla will now be able to build locally and bypass tariffs. In addition, BP Ventures just invested in the Chinese electric vehicle (EV) charging start-up PowerShare.

China is targeting sales of more than 7 million EVs by 2025, up from just 350,000 over the last 12 months. By 2030, China will overtake the United States as the largest consumer of oil with net imports reaching 13 million barrels per day, (the U.S. currently consumes about 20 million barrels per day).

Transportation Still Dominates Crude Demand

Global oil demand is forecast to stall within the next decade and the rise of EVs may accelerate the decreased demand. According to the Energy Information Administration, global oil demand is expected to average over 101 million barrels per day in 2019. But growth may have already peaked. The EIA’s estimate is a reduction of about 100,000 from its previous outlook.

The 101 million barrels consists of approximately 80 percent crude oil and 20 percent natural gas liquids. According to EIA, about 55 percent of the crude oil demand is for transportation while 35 percent is for industrial use and the remainder in other categories such as electricity. IHS also estimates that roughly a third of global oil demand is from cars: 40 percent of the growth since 2000 has come from cars. Again, the growth of EVs, especially in China, may greatly affect this number.

Read more: The Street

Tesla Model3 (Image: Wikimedia/Carlquinn)

As More Electric Cars Arrive, What’s The Future For Gas-Powered Engines?

Electric Cars, News, Reviews and Comment, Sales

Most American automobiles are powered by internal combustion engines: Gas or diesel goes in, tiny explosions power pistons and turn a crankshaft, the car moves forward, and carbon dioxide goes out.

But a growing chorus of environmental activists, business analysts and auto executives are predicting a sea change as battery-powered electric vehicles grow in popularity.

Tesla Model3 (Image: Wikimedia/Carlquinn)
Tesla Model3 (Image: Wikimedia/Carlquinn)

Going electric is not just an eco-friendly goal, an ambition that would help fight climate change. It’s a business reality, according to industry analysts. But if the general path ahead is widely agreed on, the speed of the change — and the role that combustion vehicles will play during the transition — is far from clear.

‘You cannot stop it any more — it’s coming’

“Electrification, you cannot stop it anymore — it’s coming,” says Elmer Kades, a managing director with the consulting firm AlixPartners. “We have fantastic growth rates, between 50 and 60 percent on a global level.”

Electric vehicles are currently a tiny fraction of the car market, which is dominated by internal combustion engines. But many more electric car models will hit showrooms in the next few years, and several factors have analysts convinced that is part of a major transition in the industry.

Read more: National Public Radio