Oil companies and utilities won’t dispute that electric vehicles are on the cusp of becoming mass market. Their battle will be more over which business will dominate the booming charging infrastructure that will go along with it.
BP and Shell have charging company acquisitions in the works, with Europe being a key market for EV in-frastructure growth.
Utilities see huge potential in the surging demand for electric power that would accompany predicated high-volume EV sales in the next decade and beyond.
Power companies are working closely with global automakers building EVs, said Erik Fairbairn, CEO of Pod Point, one of the UK's largest EV charging companies. The oil industry "is realizing if they get this wrong then the requirement for them in the future is significantly diminished,” he said.
Demand is expected to grow as new vehicle buyers express growing interest in EV purchases in the near future, which is expected to surge by leaps and bounds as automakers roll out lineups of electric sedans, SUVs, crossovers, and trucks. Governments around the world, including China, France, the UK, Norway, and Germany, are passing rules mandating EVs in decades to come. The U.S. and Canada are also expected to play a role.
BP is taking a very serious approach, predicting that EV sales will leap by 8,800 percent between 2017 and 2040. If that were anywhere near accurate, oil companies will be selling much less petroleum as consum-ers and fleets switch over to the new technology and leave internal combustion engines behind. Related: OPEC Losing Control After Libya Outages
The British oil major will be investing about $170 million to acquire EV charging company, Chargemaster. The advantage for BP will come through adding the company’s charging stations to its existing network of retail fueling stations.
Companies such as BP already have major fueling station networks in place. Why not add EV chargers to what they already have set up?
"BP wants to remain a fuel retailer of choice, therefore they need an EV offering as those vehicle types rise in number,” wrote Oswald Clint, an analyst at Sanford C Bernstein, in a report.
Pod Point CEO Fairbairn sees utilities having the real advantage here. Fairbain estimates that only 3 percent of EV charging will take place as EV drivers commute to the workplace. Most of it will be done when EV owners charge at home overnight, power that will be supplied by existing utilities.
Utilities are working hard at preparing for the surge to come. They’re expecting to be the leading suppliers meeting growing demand for power.
Sweden's Vattenfall and Finland's Fortum Oyj utilities are currently installing chargers at homes and at workplaces.
"What we see is that most charging takes place when the car is parked for four hours or more," said To-mas Bjornsson, vice president of e-mobility at Vattenfall. "Essentially at home, at work or at a destination like if you're going to a shopping mall, football game or whatever it could be. So this is really where we want to make sure that EV drivers get access."
Royal Dutch Shell sees most of the charging evenly split between home and work, at 40 percent for each. Like BP, Shell is preparing to hedge its bets on future market growth.
Last year, the oil giant bought First Utility, the UK’s seventh largest electricity supplier. That will compete directly with UK utilities investing in the EV infrastructure.
There have been other charging company investments in the works for Shell. Last October, the oil compa-ny announced it would be buying NewMotion, Europe’s largest EV charging company. Related: Saudi Arabia Won’t Bring 2 Million Bpd Online
The following month, Shell made an agreement with IONITY, a collective venture forged by BMW, Daimler, Ford, and Volkswagen. Their charging network will be stretched out to cover 10 European countries.
Speculation continues over which companies will have influence in the charging infrastructure. Automakers such as Tesla could be well positioned, especially through Tesla’s Supercharger stations. Property owners could play an important part as charging infrastructures grow at multi-unit dwelling complexes, airports, parking garages, workplaces, and retail shopping outlets.
A Bloomberg New Energy Finance analyst doesn’t see the future necessarily bringing a win-win for either one of the energy sectors. Aleksandra O'Donovan, an advanced transportation analyst at the company, sees both oil giants and major utilities having a part to play. Demographics and geography will have much to do with it.
"It won't be one solution fits all," O'Donovan said. "The split will vary from country to country depending on how people live. It will be a different story in Norway versus Tokyo.”
By Jon LeSage for Oilprice.com
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