Electric Cars Are Officially Keeping the Oil Industry up at Night

Matt Posky
by Matt Posky

Even though electric vehicles still only account for a sliver of the global market, Big Oil is beginning to take them seriously as a long-term threat to the industry. While preserving a finite resource is still probably the way to go, oil companies are accustomed to making money and have now begun revising their forecasts to account for accelerated EV adoption.

Companies like Exxon Mobil and BP are ratcheting up their outlooks for the technology, anticipating slowing oil demand, while OPEC has quintupled its forecast for sales of EVs in the coming years.

Those vehicles should account for a reduced oil demand of roughly 8 million annual barrels by 2040. According to Bloomberg, that’s more than the current combined production of Iran and Iraq.

“The number of EVs on the road will have major implications for automakers, oil companies, electric utilities and others,” Colin McKerracher, head of advanced-transport analysis at Bloomberg New Energy Finance, wrote to clients. “There is significant disagreement on how fast adoption will be, and views are changing quickly.”

So quickly, in fact, that OPEC now believes EVs will account for almost a quarter of the global market in under 24 years. That’s 266 million vehicles, up from a scant 46 million it anticipated just a year ago.

If you’re wondering what’s causing the shifting projections from oil companies, it’s the newly concentrated effort from major manufacturers to incorporate electrification into their fleets.

Tesla is beginning production of the more-mainstream Model 3 this summer, Volvo is planning to place an electric motor in all of its vehicles within two years, Mercedes is shifting toward mild hybrids, Volkswagen is promising to be a cleaner, greener company by bringing more electrics to market, and nearly every company is coming out with a new EV as they simultaneously scale down the size of their internal combustion engines. That’s in addition to a growing network of charging stations and governments pushing for more aggressive emission regulations. It’s all working toward an increasingly electric and less oil-driven future.

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Jeff S Jeff S on Jul 16, 2017

    No one has mentioned generating electricity from methane gas from land fills and sewer plants. Add the power generated from this methane gas and add it to the power grid. Energy from thorium as well, along with natural gas, wind an solar where feasible, hydro-electric, and geothermal. There is not so much a shortage of resources for energy as there are no real energy plans for the future. Years ago when I was getting a degree in Petroleum Land Management I did a research paper on alternate sources of Energy which were more abundant than I could have ever imagined. True not all sources are practical but there were many that were and that were clean sources. The mistake that many greenies make is assuming that solar and wind will meet all our energy needs. The reality is that energy should be generated from many sources and not just one source meets everyone's needs. KY Utilities have set up power generating plants at landfills across KY that add extra energy to the grid. The Toyota plant in Georgetown, KY is supplementing its power with solar and methane gas from a nearby landfill. Methane gas is usually flared off at most landfills so why not use it for energy. There are 200 years of known coal reserves in the US with an estimate of 1,000 years of total reserves. Coal is dirty and we should eventually transition away from it but without a comprehensive plan we will never move away from it. We need to project energy needs on 10, 20,30,50, and even 100 year projections. Without a long-term energy plan we are going from one crisis to another and with erratic price swings. I don't see us getting away from ICE anytime soon but we should be utilizing more hybrid drive trains.

  • Ricky Spanish Ricky Spanish on Jul 17, 2017

    Good. Maybe those savages in oil producing nations will lose their international clout and focus on killing each other instead of the rest of the world.

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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