The Electric Vehicle Report That Will Terrify Big Oil
At less than 1% of U.S. auto sales, electric vehicles are no major threat to the oil industry, and OPEC is on the record saying the trend will continue for decades. But according to research by Bloomberg New Energy Finance (BNEF), oil companies should not expect gasoline to rule the road so long. As of 2022, BNEF forecasts have EVs becoming as affordable as gas cars and 35% of the auto market becoming electric by the end of the 2030s.
Released February 25, the BNEF report serves as a stinging rebuttal to the OPEC forecast from December that predicted EVs holding 6% market share by 2040. While oil cartels have an interest in assuring investors of their own long-term dominance, OPEC’s call hinged on the slow development of batteries, saying plug-ins could not take off “without a technology breakthrough.”
Curiously, the Bloomberg research suggested “further, big reductions in battery prices” were coming as early as the the first few years of the 2020s, at which point gasoline cars would have no price advantage over EVs. Without an extension of available plug-in vehicle incentives, federal tax credits will have expired by then, so the BNEF report assumed there would be no incentives attached. Cheap batteries will make EVs cheaper on their own.
By 2040, that could give electric cars better than one-third of new car sales in the U.S., and EVs would by then represent 25% of the automobiles on the road, the report said. The shift would cut domestic oil demand by 13 million barrels per day. (Currently, the count is over 19 million barrels per day, according to the EIA.) If you think these figures haven’t made it to fossil fuel magnates, have a look at what the Koch Brothers are doing.
A February report from Huffington Post detailed the efforts of Koch Industries lobbyists who are mounting a campaign against electric vehicles while incentives from government agencies are still on the table. HuffPo quoted a source saying the billionaires would spend as much as $10 million per year on the effort.
However, with a cap of 200,000 vehicle tax credits per manufacturer, this factor may only be in play for the next few years. Tesla, General Motors, and Nissan are likely to exhaust incentives before 2018. As for the Model 3, Tesla has shown a high level of confidence in announcing its MSRP at $35,000 — below that of the Chevy Bolt EV ($37,500) arriving in 2016. This move indicates the Model 3’s battery costs will be low enough to justify the surprising base price.
The BNEF data assumes a world in which $33-per-barrel oil is no longer the norm. Government-backed forecasts expect $50 per barrel in the coming years, with $70 per barrel establishing itself in the 2020s. However, the research said even $20-per-barrel would only delay the rise of EVs by a few years, pushing it to 2030.
All told, this report is enough put the fright in an oil company executive that gets his daily briefing from OPEC. As for electric vehicle advocates, the air must be smelling cleaner already.
Source: Bloomberg New Energy Finance