There will be more than a billion electric vehicles on the road by 2050, according to Morgan Stanley, adding one more voice to notion that the EV revolution is coming.
The investment bank says that despite hiccups for many EV models to date, Tesla’s success thus far “shows that the consumer preference for internal combustion engines can be swayed.” Morgan Stanley analysts go on to add: “technology and usability are improving, and charging times are falling. There will come an inflection point where range and usability combine with the right price.”
In fact, the conversation seems to have completely changed only recently, with projections and policies getting a lot more bullish on EVs this year, a marked change from even just a year ago.
There have been a flurry of announcements from the auto industry, detailing an array of new EV models. Obviously, Tesla’s Model 3 garners most of the attention, along with its early rival, the Chevy Bolt.
But the latest is an announcement from Nissan about an overhaul of its all-electric Leaf. The new Leaf will have a stronger battery and much longer range at a lower price. The 150-mile range is less than its closest rivals – the Model 3 and the Bolt get over 200 miles on a charge – but the Leaf will retail for $31,000, undercutting the competition. It might not be appropriate for long road trips, but for everyday commuting, it would work just fine. Related: The Next Step In Mexico’s Oil & Gas Privatization Push
Many more EV models are coming down the pike. According to CleanTechnica, there are about 65 new EV models that will go on sale by 2022, taking total hybrid and fully electric vehicle models up to about 100. More models will offer more options to consumers at lower prices.
The excitement surrounding the long list of EV announcements is arguably only eclipsed by the ambitious policy pronouncements as of late.
Scotland just announced that it would ban the sale of diesel and gasoline vehicles by 2032, eight years earlier than the rest of the UK. That comes a little more than a month after the British government outlined a 2040 plan to ban petrol-fueled vehicles. France has also put in place a complete phase out by 2040.
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EVs are still growing from a small base, but the growth rate is impressive. After passing the cumulative 1 million-vehicle mark in 2015, the global electric car stock hit 2 million a year later, according to the IEA’s Global EV Outlook 2017 released in June. China, the world’s largest auto market, is rolling out policies to scale up EV adoption. By 2025, China alone is targeting 35 million EV sales.
That level of ambition is perhaps only surpassed by India, which is aiming to have almost all vehicles sold to be powered by electricity after 2030. Whether or not the exact date is hit, or fully 100 percent of vehicles sold are electric, the scale of what India is trying to achieve is revolutionary. “These are the types of ambitious targets that drive transformations,’’ Clay Stranger, director of the Rocky Mountain Institute, told Bloomberg in a May 2017 interview.
The sales projections for EVs are all over the map, but according to Bloomberg New Energy Finance, one of the leading clean energy forecasters, EVs will capture more than half of the global auto market by 2040.
To be sure, projecting that far out is exceedingly difficult, and only offers a general sense of what to expect, rather than revealing hard numbers that investors should count on. But, these projections could also be wrong by understating the case, as has often occurred with clean energy. Costs tend to decline faster than expected, and adoption can ramp up at a non-linear rate. One of the major uncertainties is government policy, which is likely to only tilt the playing field more in direction of cleaner technologies versus incumbent techs that rely on fossil fuels. Related: In A Bold Move, Saudis Raise Crude Prices For Asia
But even if some of these forecasts prove too optimistic, it would only take a small dent in oil demand to really upend long-term price forecasts for crude. The oil market really booms and busts on the margins. For example, the U.S. “shale revolution” saw a ramp up of some 4.5 million barrels per day over the course of roughly 7 years. Those volumes, amounting to less than 5 percent of total global supply, are often credited with the historic meltdown in prices beginning in 2014. So, a change of just a couple of percentage points in the supply/demand balance can really cause havoc.
In that context, the threat of EVs causing such an upheaval is very real. BNEF says that some 8 mb/d of oil demand could be erased over the next 25 years because of EVs. And, of course, that demand destruction only rises over time. In other words, EVs may be a rounding error in the auto market right now, but they represent an existential threat to the oil industry, and a threat that is looking increasingly inevitable.
By Nick Cunningham of Oilprice.com
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