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Deja Vu: OPEC's Recurring Oil Production Dilemma

Deja Vu: OPEC's Recurring Oil Production Dilemma

Saudi Arabia, OPEC’s largest producer…

‘’It’s Gonna Be A Long Runway” American EV Makers Face Major Problems

Despite low fuel prices, scarce charging networks, and battery capacity problems, U.S. carmakers are forging ahead with their EV plans as regulatory pressure on the sector increases, Reuters reports, citing industry insiders.

According to data from the International Energy Agency, the country ranks seventh in the world in terms of EV sales and Tesla accounts for a third of this, as of the end of 2018. As a proportion of total sales, electric cars and hybrids accounted for 2 percent last year, at 361,307, according to Inside EVs.

Projections for the future are not overly optimistic, either. “It’s going to be a pretty long runway,” Reuters quoted an analyst from Autrotrader, Michelle Krebs, as saying. Krebs added that the biggest initial boost to electric car sales in the United States would likely come from corporate and government fleets.

Indeed, the obstacles in the way of faster EV adoptions would need a while to be overcome: range is still an issue in a nation where driving is a deeply ingrained part of the culture but so is the availability of charging stations, the latter a problem that’s global.

Also, there is the challenge that comes from low fuel prices, despite their recent rise as international benchmark oil prices climb higher on the OPEC+ cuts, falling production in Venezuela, and expectations of a slowdown in demand driven by slower economic growth.

Another problem is the higher upfront costs for electric vehicles, which again have to do with the batteries, which are the costliest component in EVs. This is a conundrum yet to be solved while making ranges longer and efficiencies higher, along with cutting charging times.

The situation is certainly complex and fraught with difficulties. However, with carmakers spending billions on the design and construction of various electric cars in anticipation of the EV era that media are hyping about, doing a U-turn is not an option and focus probably remains on the longer term when at least some of the most pressing problems would be at least partially solved.

By Irina Slav for Oilprice.com

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  • William Meek on April 22 2019 said:
    The growth of EV sales is on an exponential trajectory of greater than 50% per year. The only thing holding it back is availability of batteries.

    EVs already have a lower Total Cost of Ownership than comparable ICE vehicles. Within 3 years, the sticker price will be on par, then lower as well. And because batteries are the cost and batteries are range, this means range will be on par as well.

    The only other negative for BEVs is charge time on road trips. Since most people charge at home except for long trips, this means an EV is already the better option as a second commuter car and daily driving. Once charging is more available at places we spend time while traveling, like restaurants and rest stops, the time to fuel advantage goes away.

    After that, ICE vehicles will lose money and manufacturers will stop making them and the all new car sales will be EV. Probably by 2030.
  • Al S on April 19 2019 said:
    So, I have to say that after driving both, electric cars are just better. Performance, maintenance, convenience, technology. Drive back and forth to work 65 mile round trip, plug in at home, range isn't even an issue. I do have my Transit for long camping trips. So I don't know... maybe it's time to find ways to profit from the evolution instead of dismissing it. It will be interesting to see who adapts and who keeps trying to sell me cassette tapes.

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