BP’s latest long term outlook for the energy sector looks particularly unrealistic in its projection of a “most likely” case of almost no uptake of electric vehicles by 2035, writes independent energy expert Adam Whitmore. According to Whitmore, even very moderate assumptions lead to substantially higher growth rates for EVs.
Electric vehicles (pure EVs and plug-in hybrids) will make almost no difference to the transport sector until beyond 2035 – that is according to BP in their latest long term projections for the energy sector[i], which were published last month. BP does not quantify the growth of EVs specicifally, but their projections show oil continuing to dominate, with electricity use accounting for only in the order of 1% of energy in the transport sector by 2035. The Outlook notes that oil will still account for 88% of transport fuel in 2035, with the remaining 12% mostly biofuels and natural gas. Electricity will only supply a fraction of transport fuel in this projection.
BP’s estimates of the fuel mix in the transport to 2035
Note: Historic electricity use in transport has mainly been for rail. The proportion of miles driven on electricity will be somewhat higher than the proportion of energy used due to the greater efficiency of electric motors compared with internal combustion engines, but the totals shown still includes only very small proportions of plug-in vehicles.
It is easy – and perhaps accurate – to dismiss this view simply as an incumbent not facing up to the effects of a disruptive new technology, the equivalent of a silent movie producer suggesting in the late 1920s that talking pictures were a merely a fad which would never catch on.
However sales of electric vehicles remain a small proportion of the market, with continuing challenges around cost, range and charging infrastructure. And they are presently a relatively expensive way of reducing CO2 emissions.
So why does the BP analysis look to be so far from being the most likely outcome that it’s presented as? There are several reasons for this.
The trend is of rapid sales growth
Although small, the market for electric vehicles looks to be growing exponentially at present. Annual sales have grown from almost nothing 5 years ago to approaching 1% of the total market of just over 70 million cars p.a.[ii]. Sales have roughly doubled every 18 months over the last three years, which is similar to the growth rate of solar PV in its early years.
Simply extrapolating this growth rate would imply annual sales of nearly 5 million vehicles in 2020, with a cumulative total of about 13 million vehicles, or 1% of the world stock, which is currently about 1.3 billion vehicles[iii]. Even a slower rate of growth, with sales doubling every two and a half years, would imply annual sales of over 2 million vehicles by 2020 (about a 3% annual market share), and a cumulative total of 7.8 million.
This figure is close to a projection given by Bloomberg New Energy Finance in a recent new report of 7.4 million electric vehicles to be on the road by then (and 41 million by 2040). By contrast, Opec’s 2040 oil outlook has 1.7 million EVs on the road by 2020.
Annual global sales of plug-in vehicles in thousands [iv]
New models are increasingly coming on line
Growth in sales looks likely to be sustained by new models. Pure electric vehicles with mainstream market prices and a range of around 200 miles are expected over the next couple of years or so, including a new version of the Nissan Leaf, as well as the Chevrolet Bolt and the Tesla E. Apple is widely understood to be undertaking a major programme to produce an electric car. Meanwhile major manufacturers including BMW, Mercedes and Porsche are gradually migrating plug-in hybrid drive train options across their ranges. These developments should greatly increase the number of customers who can find a model that fits their needs.
Battery technology is improving rapidly
This growth is being underpinned by rapid improvements battery technology, with cost and weight per kWh halving or more in the last five years. This trend is expected to continue in the coming years. Goldman Sachs[v] estimates that continuing advances in technology (see chart below) will lead to major improvements in cost and performance over the next five years.
Projected battery cost reductions and performance improvements
Source: Goldman Sachs
CO2 emissions standards will continue to tighten
Regulations limiting average CO2 emissions from cars are tightening across the world. As this trend is sustained and extended electric vehicles are likely to play an increasingly important role in reaching targets. As adoption of electric vehicles increases this is, in turn, likely to lead to governments to seek tighter standards, knowing that the technology to meet them is available. Furthermore, a move to electricity in transport is consistent with wider programmes of emissions reduction that include increasing decarbonisation of electricity generation. However, lifecycle emissions, including from vehicle production, will require continuing attention.
Regulations to promote urban air quality are likely to tighten
Just about every major city in the (increasingly urbanised) world has problems with poor air quality. Vehicles are responsible for much of this. Concerns about this are likely to lead to increasing prevalence of low emissions zones in cities. The UK Conservative party manifesto went further in its 2015 election manifesto, setting out an aim for nearly all cars and vans on the road to be zero emissions by 2050[vi]. Indeed, improving local air quality is often seen as a more pressing problem than reducing CO2 emissions because of the immediate and localised health effects.
Such regulations are likely to lead to greatly increased take-up of electric cars and buses. (Around 46,000 electric buses were already in use worldwide by 2014[vii].) This is among the reasons why choices between EVs and internal combustion engine vehicles won’t simply be a matter of which is cheaper. EVs only need to be close enough in cost and sufficiently available for tighter regulation to be practicable.
Consumer preferences and lifestyle are likely to favour electric vehicles
Electric vehicles are quieter than those with internal combustion engines, especially at low speeds (at higher speeds wind and road noise tend to predominate for all vehicles). They are also good to drive, with excellent acceleration and road holding, and they reduce or eliminate trips to petrol stations (never pleasant places despite the best efforts of those involved). They fit with consumer preferences for cleaner vehicles, which seem likely to increase in tandem with regulatory action. And they fit comfortably with trends towards increased functionality of communication systems (cars as “smart phones on wheels”), driver assistance and autonomous driving, and greater prevalence of car sharing models. These trends look likely to be significant, especially for younger consumers.
Together these trends give a convergent story of much earlier and more rapid growth in EVs than suggested by BP. Norway shows what can be done. Electric vehicles reached 16% of sales of new cars there in 2015[viii].
Changeover of the vehicle stock will take a while. And oil products look likely to continue to predominate in aviation and heavy trucks. But their future in light vehicles seems much more challenged. Electrification of light vehicles is likely to lead to substantial changes in the transport system over the next 20 years. It is to be hoped that the next edition of BP’s long-term outlook includes a much more realistic view of this.
Editor’s Note
“Adam Whitmore is an independent advisor on energy economics and climate change policy, with over 25 years’ experience of the energy sector. He was previously Chief Advisor, Energy and Climate Change Policy for one of the world’s 100 largest companies. He is a member of the supervisory board of the British Institute of Energy Economics, and also gives guest lectures at several leading universities. This article was first published on his website On Climate Change Policy.“
[i] http://www.bp.com/content/dam/bp/pdf/energy-economics/energy-outlook-2016/bp-energy-outlook-2016.pdf , see p.22-23 of the presentation
[ii] http://www.statista.com/statistics/200002/international-car-sales-since-1990/
[iii] See BP presentation page 25 for current global total
[iv] Data is from:http://www.iea.org/evi/Global-EV-Outlook-2015-Update_1page.pdf
http://cleantechnica.com/2015/03/28/ev-demand-growing-global-market-hits-740000-units/ , https://en.wikipedia.org/wiki/Electric_car_use_by_country, http://cleantechnica.com/2015/03/28/ev-demand-growing-global-market-hits-740000-units/ |
[v] See http://www.goldmansachs.com/our-thinking/pages/new-energy-landscape-folder/report-the-low-carbon-economy/report.pdf See p.23for sales projection
[vi] https://www.conservatives.com/manifesto, see page 15
[vii] http://www.iea.org/evi/Global-EV-Outlook-2015-Update_1page.pdf
[viii] See http://www.goldmansachs.com/our-thinking/pages/new-energy-landscape-folder/report-the-low-carbon-economy/report.pdf
Aloysius Fekete says
I suspect that BP is following a policy of “plausible complacency”. They frame the question in conventional terms when they insist that electric vehicles will require more thermal generation and speciously argue they emit more than ICEs. They also perpetuate myths that cost effective EVs are still a long way off, that their performance is sub-marginal.
Were they to recognise the threat of EVs to their business model it would be hugely damaging to shareholder value. Their entire projection on EVs relies on continued high rate of growth in vehicle ownership in China and India, and that this will continue to be ICEs. But, these will be first time vehicle owners and it would be foolish to prejudge their preferences. Furthermore, it would be unwise to underestimate the determination of the Chinese government to “nudge” their automobile industry to go electric.
In the end, the oil price is about marginal supply and demand, a shift of 1 million barrels per day one way or the other. In a world where China growth is decelerating, where China is building GWs of renewable capacity and China is pushing EVs, as a BP shareholder I would be nervous.
Fred says
I love how a pathetic 66 bps of market share is pumped up to be a “disruptive” technology. I’m sure all the eco-snobs in their tiny a$$ EVs think that the rest of the US (and the world) will eventually drive one too, but if they ever dared to venture out beyond the pathetic range of their insanely overpriced grocery-getter, they would be terrified by all of the giant SUVs and Trucks that threaten to squash their tiny little EV at every turn.
People in American want to drive REAL vechiles that have POWER (and range, plus the convenient ability to refuel at a moments notice is under 3 minutes…..people who can afford to waste extra money on over-priced, sub-par EVs must not value their time very highly (especially Telsa drivers that waste their time on long drives along the supercharger network)). Real people know that their time is limited and extremely valuable.
Then there’s the financial side of the EV story, which is not yet playing out. The Leaf story provides probably the best crystal ball when it comes to overall cost of ownership and resale value of EVs. When there’s no tax credit for buying used (and a phased out to zero credit after a manufacturer sells 200k new EVs…Telsa will face that figure soon), people stay away. Here in Georgia, Nissian dealers return 100% of leased vehicles to the manufacturer after the (usually 2 yr) lease is up. Is that doesn’t describe a wildly successful “disruptive” technology, I don’t know what does.
one.second says
Yes, exactly, when so many vehicles with a higher price and a lower range can be sold, just imagine, what will happen, when EVs match ICE cars at range and price. Tesla already said that after their launch of the Model 3, that will do just that, they will work on an all-electric pick up truck. Everything you just wrote perfectly explains why EVs sales will take off big time and soon.
Kent Doering says
Goodness, Fred. There are also hybrid vehicles. The Porsche Panamera hybrid gets 70 m.p.g. and the state pf the art VW XL1 gets 250.
They do sell quite well. The next generation, being developed in Munich by the “Munich Aqueous Fuel” initiative, are “winterproofed2 “dual fuel” hybrids- which let the an internal combustion engine run 10% gasoline or diesel” and a full 90% off water. i.e. it starts fossil and shifts to 100% aqueous fuel system after engine heat up.
Thus the Porsche Panamera plug in hybrid diesel- supplement by dual – aqueous fuel systems (AFV- Aqueous Fuel Vehicles) gets 700 miles per gallon of diesel in experimental runs, and the VW XL 1 gets 2500 miles per gallon of diesel and 9 gallons of water. Fancy that.
Hm. Where I live in Munich Germany, we have many other forms of established “electro-mobility” in the form of brake energy recycling streetcars, (10 lines) 7 brake energy recycling subway lines, brake energy recycling commuter rail – 8 cross town lines extending out in 15 different directions, regional rail systems, high speed intercity-express- which scoots along dedicated h.s.r. tracks at speeds of up to 180 m.p.u. Why drive on an intercity commute when I can ride first, relax in the dining car with a good meal, and quickly arrive relaxed and refreshed. The all h.s.r. dedicated tracks between Munich and Paris – will be completed in 2018. And then I can travel by train – downtown to downtown in the T.G.V supertrain at 250 m.p.h. in 3 hours and 45 minutes- which is faster than flying including the travel times to the airport – the endless – conveyors to check in, check in, etc, and the same at destination.
Here in Germany, we not only still have smooth and well maintained publicly owned, REAL RAILROAD service, we even have High Speed Rail at affordable prices that is competitive to busses and driving. Sometime I wonder if Georgia has had REAL RAILROAD service ever since my great grandfather marched from Atlanta to the sea with Sherman, tearing up a few railroad lines on the way. LOL.
Here in Germany, Germans invented the Otto gasoline and Diesel diesel fuel internal combustion engines, and REAL automobiles, and the company that invented them, still makes cars in Stuttgart, Daimler-Benz.
Here in Germany, we think that “no sane gun control in the United States due to ARA lobbying is insane considering the number of people who die from gun violence every year. We still have a version
pf “social darwinsm” with sections of “autobahn” having no speed limits so we can drive as fast as we want on thpse well maintained
roads when conditions allow. The fastest I`ve ever personally driven is 212 m.p.h. in a V.W group Lamborghini Aventador. (A REAL muscle car) The Audi R 8 10 cylinder “muscle car” is based on the same technology. And as with the entire other V.W. group line, both of them will be “aqueous fuel” by 2019- running 90% ordinary tap water, and 10% gasoline. Of course, the VW group – VW, Porsche, Bugatti Audi, Lamborghini, Bentley, SEAT, Skoda, M.A.N trucks and busses, Scania trucks and busses- makes REAL cars like S.U.V.s and mini-S.U.V.s- but they will all be shifting to AFV – Aqueous Fuel Vehicle mode to comply with ever stricter emissions demands, especially the demand for lowering particulate emissions.
Of course Germans just cracked “quantum gravity” using a paradigm shift from the Rutherford Bohr “‘source-free” standard model, to the “non-source-free” Lullian bullular model of the atom.
The immediate “automotive spin off” for that is “thin cell, lightweight – “Gravity field retransformation” sheeting under the trunk and the “motor” compartment- capturing the positron wave functions of beta particles related to gravity. That goes to a special motor driving one set of wheels, with conventional electric brake energy recycling- going to a battery- which drives the other two-electric Porsche wheels with the conventional electric motors and brake energy recycling built right into the wheels. There are hopes of getting the costs down on producing thin cell- gfr systems… so these can go into production and be included in vehicles by 2019 at the latest.
This gravity field retransformation- thus enables “infinite range” all electric that never needs hook up at a charging station. Literally free energy from the earth´s gravity field- that is constant and invariable unlike other renewables. Lightweight electrics have excellent accelleration and top end speed ratios. Gravity field retransformation top end vehicles will be no exception.
The top end vehicles built as described above- gravity field retransformation- all electric with no re-charging will be the GFR Tron Audi A 8, top end limousine, the GFR Tron Bugatti, the GFR Tron Audi A8, the Porsche GFR Tron, and the Lamborghini- GFR tron.
One of these top end vehicles will be putting- 500 kw of power on the rear wheel drive train, bolstered by front end Porsche wheels putting out about 50 kw- 550 kw on lightweight aluminum vehicles means fast accelleration as you find with electric motor High Speed Rail- and high top ends of over 500 kmh- 312.5 mph, something that cannot be accomplished by ICE vehicles. Street versions for Europe will have their top end speeds- computer blocked at 250 kmh- or 156.5 mph which is the standard “factory set” cut off rate for cars on the ” no speed limit” German autobahn. Then “lower end” GFR – vehicles will be made, all the way down to -middle class levels around 30.000 Euros.
So you will have a choice of “duel fuel” – fossil-aqueous fuel – all I.C.E. systems with fossil cut by 90, gasoline or diesel hybrids that run “dual fuel'” in all price classes, new or later used.
I myself am divorced, with two married children, just starting families. Because of the excellent mass transit and rail we have in Germany, I and my ex-wife share two cars with our two kids and their spouses. Two cars more than suffice for six adults, four in working age and two-semi-retired. Due to superior rail and mass transit, neither of the two vehicles gets more than 3000 km clocked on to them annually. they are a “luxury” but not a necessity here in Munich.
Enjoy lifein the “‘ol`South”. I shall continue to enjoy life in Munich which is already 50% renewable for power,heat and mass transit” and which will be 100% renewable by 2025. Great mass transit, rail, and air connections plus- the coming age of massive consumption and emission cuts of “real” cars made in Germany like V.W., Audi, Porsche, Mercedes, B.M.W., (Here in Munich) G.M. Germany- Adam Opel A.G., and Ford, Germany.
We Gernans invented the Pttp asplone, the Diesel engine, and the automobile, and have been improving them ever since. Ferdinand Porsche, Austrian born founder of VW-Porsche group, also started his career manufacturing electric automobiles in England by the way. Real electrics way back in 1903.
Rakhou says
EVs will grow at a rate, if indeed Norway’s 16% of 2015 sales of new cars, is showing what other governments regulation efforts across the world may now lead to, given Paris-outcomes, and obligation to globally report back every 5 years. High level peer pressure is a wonderful growth driver.
I am more puzzled by ability of electricity industry to take over the logistical role that oil majors play now with their “convenient” pump stations. Will that be a showstopper for EV-growth, or not?
Aloysius Fekete says
What could be more convenient that not having to go to a pump station in the first place? The potential for suburban drivers to charge at home is huge. This represents a massive opportunity for the electricity industry because EVs represent not just more business in the form of more kWh sales, but also a whole new market segment related to EV services, not to mention the potential benefits of adding flexible demand.
The electricity industry can eat the oil industry’s lunch.