Even Oil Companies Know that Electric Cars are Inevitable


Many car companies and utilities have been preparing for the inevitable transition to electric vehicles (EVs), but oil companies have been dismissive about EV potential.

Until recently.  This week, at the Bloomberg New Energy Finance conference in New York City, the Chief Energy Economist of Total SA said that the company expects EVs to make up potentially 30-percent of all new vehicle sales as soon as the end of the next decade. Total is the world’s fourth largest oil and gas company and one of the world’s largest producers of crude, and hasn’t before forecast falling demand.

Yet he warned that demand for fuel oil “will flatten out” and “maybe even decline” at that point.

We have to remember that mobility demand will increase—miles driven will rise worldwide as populations around the world grow and get wealthier. 

That would normally drive much higher demand for oil to provide that mobility. But what we will see—thanks to electric vehicles and thanks to fuel efficiency improvements—that increase in transportation demand will result in much slower increases in fuel demand, and probably a point in time after 2030 and before 2040 when that demand will flatten out and maybe even begin to decline, depending on how rapidly the penetration of EVs occurs. 

The Total economist’s projections were even more conservative than some made recently by the CEO of Statoil, a Norwegian oil major.  Last fall, Statoil’s CEO predicted that oil demand will peak in the 2020s, and that EVs could represent a 35-percent share of new car sales by 2035.

These perspectives stand out in the oil and gas industry, as evidenced in this graphic from a presentation at the Bloomberg New Energy Finance conference. 

Particularly interesting to note that Volkswagen, which was actually late getting into the EV production game relative to other manufacturers like Ford, Chevy, and Tesla, is expecting that within eight years, a full one-quarter of its cars sold will be electric

Bloomberg New Energy Finance’s own research has predicted that EVs will make up 35-percent of new car sales by 2040

It’s worth noting that some analysts think that all of these predictions are far too conservative. Like Tony Seba of Stanford, who expects all new vehicles purchased to be electric vehicles by 2025, citing plummeting purchase and life cycle ownership costs, and other similar technological disruptions.