Following Shell, oil major Total has now also indicated it is expecting increasingly tough competition from electric vehicles (EVs), writes John LeSage of Oilprice.com. One significant trend is the wide range of EVs that will be available in a few years. Courtesy Oilprice.com.
Speaking at a recent Bloomberg New Energy Finance conference in New York, Total’s chief energy economist, Joel Couse, forecasted that EVs will make up 15 to 30 percent of global new vehicle sales by 2030.
Oil demand for transportation fuel see its “demand will flatten out,” after 2030, Couse said. “Maybe even decline.”
Colin McKerracher, head of advanced transport analysis at Bloomberg New Energy Finance, sees Couse’s forecast as the highest EV sales margin yet to be forecasted by a major company in the oil sector.
“That’s big,” McKerracher said. “That’s by far the most aggressive we’ve seen by any of the majors.”
Royal Dutch Shell earlier projected a similar trend with oil demand in transportation flattening out in the near future. Chief Executive Officer Ben van Beurden said in March that oil demand may peak in the late 2020s. In November during an interview, Shell CFO Simon Henry said that demand is expected to peak in about five years.
Shell and Total have been looking to diversify their energy assets through hydrogen as a transport fuel. In January, both companies joined a global hydrogen council that included Toyota, Liquide, and Linde. The companies will be investing about $10.7 billion in hydrogen products over the next five years.
Like hydrogen fuel cell vehicles, EVs have major walls to climb to find mass adoption in vehicle sales and infrastructure. One barrier is the cost of owning an electric vehicle versus a cheaper, comparable gasoline-engine vehicle. The battery pack in an EV can be quite expensive, making up half the cost of the car, according to BNEF.
Backers of EVs point to various positive trends. One is the longer range, 200-plus-miles per charge EVs coming to market like the Chevy Bolt and Tesla Model 3. The higher-priced versions of the Tesla Model S and Model X are thought to be a sign of it, with consumers willing to finance or lease one of these EVs to gain access to more power and longer range.
Another is that automakers are feeling pressed by increasingly strict emissions reduction rules in Europe and China, with other markets like the U.S., Japan, and South Korea adopting similar standards.
Then it’s helping that lithium ion battery prices are dropping about 20 percent year.
Finally, automakers are spending billions on electrifying their vehicle portfolios. Volkswagen wants to see at least 25 percent of its vehicles sold in 2025 to be EVs. Auto Shanghai has been a showcase for existing and startup automakers launching new EVs to the Chinese and international markets.
“By 2020 there will be over 120 different models of EV across the spectrum,” said Michael Liebreich, founder of Bloomberg New Energy Finance. “These are great cars. They will make the internal combustion equivalent look old fashioned.”
Electric cars only make up about 1 percent of global vehicle sales, so making it to 30 percent in the short-term future would be a huge leap. And there are still major barriers, related to price, driving range and availability of infrastructure. But the likes of Total and Shell clearly regard EVs as a major challenge now.
This article was first published on Oilprice.com and is republished here with permission.