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Graph of the Day: How EVs are driving the next oil crisis

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When Bloomberg published a story under a version of the above headline at around this time last year, it was based on data predicting that by 2040, 35 per cent of new cars worldwide “would have a plug.” Last week, a new graph based on new data by Bloomberg New Energy Finance has updated the details on how such a global shift electric vehilces might play out for the oil sector.

According to the graph, featured below, some 13 million barrels of oil per day will be displaced by electric vehicles by the year 2040 – an amount, BNEF says, that is equivalent to 14 per cent of the Energy Information Agency’s estimated global crude oil demand in 2016.

bnef chart(2)

(in million barrels of crude oil per day)

On the same trajectory, BNEF says, electric vehicles will displace 1.1 million barrels per day by 2025. For the record, that’s slightly down on what BNEF forecast last year: that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023.  But we will leave you with Tom Randall’s closing comments on the February 2016 BNEF analysis:

“One thing is certain: Whenever the oil crash comes, it will be only the beginning. Every year that follows will bring more electric cars to the road, and less demand for oil. Someone will be left holding the barrel.”  

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  • DevMac

    Divest early, divest often.

  • trackdaze

    Probably misses the wholesale changeover adoption, decreasing rates of vehicle ownership, bus fleets, you name it.

    35% of new vehicles is much more likely by 2030 if not before. One or two nordic countries are already there!

    It took one hundred years to sell the 1st million evs to september 2015, it took just 16 months to sell the second million. The next will be in 12months, then……..

    • Anders Arne

      People are cost conscious. And driving and maintaing a car is expensive. EVs offers a 1/10th ratio compared to a fossile based car.

      The demand is already there. People hold on to their investments until they get what they need. The demand for the upgraded versions of the existing cheaper EVs exceeds (i3, Golf , Leaf, Zoe) already exceeds expectations in Norway.

      There is market to fill with products. The car manufactures will understand once Model 3 hits the street. For those that came to late to the table (Toyota, Mazda, Fiat/Chrysler etc.) will loose.

  • Nick Thiwerspoon

    The thing is, technology uptake numbers form S-curves, where (on a linear scale) slow rises suddenly morph into steep rises, before slowing as market share gets close to 100%. What will happen is not a nice linear progression, as the IEA and BP and the OECD keep on forecasting, but an exponential growth path. (They’re making the same mistake with solar, too)

    Right now EV sales are doubling every 18 months. EV sales now make up, what, 0.8%? of total global car sales. If this rate of growth is continued, they could theoretically reach 100% of total car sales in 10 or 12 years. EVs are funner and much cheaper to drive than ICEs, are cheaper to maintain, and soon will have the same or lower sticker price. When price parity is reached or exceeded, ICE car sales will plunge, and oil demand will crater.

    • empower electricity

      totally agree. these numbers are way out. EVs are not the future. the model 3 is now……..nearly…..

    • Anders Arne

      The western media is talking about BMW i3, Nissan Leaf, Tesla X, S and Model 3 and so forth.

      In China the sales of EV’s were 400 000 cars last year up from 200 000 in 2015. And the majority of these cars were not produced by the Western brands, but by Chinese.

      I think the sales of EV’s will in China get closer to 800 000 in 2017, than 400 000. China has all to win by supporting its own car manufacturing. They have no interest in oil and gas, since they have limited resources. And their position within the world’s car industry is near to non-existent.

      China is 200% into renewables in energy production and transportation. And they will continue to do so in order to please their inhabitants, their investors and the society at large.

      • Chris Marshalk

        China is choking on smog. EV will sell like hot cakes.

        • Anders Arne

          True, and it will have severe consequences for the established car companies. China will have 5 million EVs on their streets by 2020. They will learn on a scale that will bankrupt half of the incumbent car companies. Brands like Mazda, Subaru, Fiat, Citroen etc. will soon join Saab.

  • Phil

    That Oil will still have lots of value for non fuel applications and we can only hope more than enough will be left for future generations to use.

    It’s used in roads for asphalt that EV’s will run on and i have not seen a suitable replacement for that apart from concrete.

    Although if all roads were concrete that could be a good thing as they have some advantages over asphalt , especially energy saved by the vehicles themselves due less rolling resistance.

  • suthnsun

    Every car with a plug, every barrel displaced is significant. Oil industry will crash within a few years and sensible governments will position their people to minimize disruption when that happens. Unfortunately for us in Oz, we don’t have a sensible goverment, so citizens need to protect themselves ASAP by buying a car with a plug.

    • Anders Arne

      Once the EVs impact on the oilindustry is marginally understood. Countries like Saudi-Arabia will start to pump the stuff in a speed that drives out countries like Mexico, Brasil, Norway, England, Russia and so forth.

      The only producers left will be the once that can handle a price of less than 20 dollars a barrel.

  • Bristolboy

    The idea EVs causing oil supply exceeding demand and therefore a price crash has been around for a while, but it is important to note even oil majors such as BP and Shell now acknowledge the risk of falling prices and stranded assets. This will hopefully follow through into less investment in oil infrastructure.

  • t1oracle

    Here’s an idea, leave the oil in the ground where it belongs. Then you won’t be left holding any barrels.

    • James

      Brilliant!

  • 7073jeremy

    I think this is a very conservative estimate.
    Already EVs are beating ICE vehicles on performance, and in the next year or so there will be several models available with a range exceeding 200 miles – so the technical challenges have been solved.
    Once EVs reach price parity with ICE vehicles, what possible reason could anyone have for buying petrol or diesel cars unless you actually enjoy constantly having to tinker with them, changing oil and filters, spark plugs, timing belts etc.
    When EVs are truly affordable I suspect the changeover will happen almost overnight and the oil companies won’t know what hit them!

    • James

      Plus the Model S is beating every car in it’s class (luxury sedan)in the US and Europe. Imagine if the Model 3 has that level of success or even close to that.

    • Ren Stimpy

      Changing a timing belt, oh what fun that is, what jolly excellent fun, akin to getting smacked in the head with a lump of 4×2.

  • Mike Dill

    Newer cars get driven more than older cars, on average. Given reasonable mileage numbers, each EV will not consume the petrol that is created from about 1/2 barrel of crude per day. Therefore 1,000,000 EVs will reduce demand by about 500,000 barrels. If we think that we will have 26 to 30 million EVs by 2040, then a 18 million barrel decrease in demand is reasonable.
    As others have noted here, the number of EVs by 2040 will probably exceed that figure.

  • MrP

    Hmm, given that oil supply will meet demand in the future… I’m not that convinced that production will keep up and neither is the EIA. This projected consumption reduction could be very welcome for a ‘smooth’ transition to a carbonless lifestyle.