The rise of electric vehicles could well catch oil companies off guard. Having underestimated the global e-car market, they may be about to see it drive down demand for crude oil over the next decade.
Falling electric vehicle (EV) prices and lower renewable-energy costs could see demand for oil start to tail off from 2020, according to the London-based experts behind a report quoted by AFP. By the estimates of the non-profit organisation Carbon Tracker and the Grantham Institute, the growth of the EV market could lead to the demand for oil dropping by 2 million barrels per day (mbd) by 2025. That figure could increase fivefold by 2035, in which case EVs would account for a third of the road-transport market.
A shift that continues to be underestimated
“Electric vehicles and solar power are game-changers that the fossil fuel industry consistently underestimates. Further innovation could make our scenarios look conservative in 5 years’ time, in which case the demand misread by companies will have been amplified even more,” said Luke Sussams, senior researcher at Carbon Tracker.
Almost as if to prove that point, oil and gas giant BP last week announced that it believes car fuel demand will continue to increase through to the mid-2030s at least. In its view, EVs will represent only 6% of the market in 2035.
EVs to claim 22% market share by 2035
Independent experts are divided as to the speed with which EVs will replace conventional internal combustion engines. In the view of the International Energy Agency, EVs will account for 8% of the market by 2040 and cause a drop in oil demand of 1.3mbd only. Yet according to research organisation Bloomberg New Energy Finance, EVs are expected to grab a 22% market share by 2035, a forecast consistent with the aforementioned report.
“Our assumption is that electric vehicles will be cheaper than conventional internal combustion engines by 2020,” Sussams told AFP. The forecasts made by Carbon Tracker and the Grantham Institute tally with those of car manufacturers such as Tesla and GM and of Europe’s leading constructors. It should also be remembered that in China, the largest EV market in the world, more than half a million electric vehicles were sold in 2016.
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