Electric cars are here, oil producers should worry
A new forecast by UK-based McKinsey says the number of electric and plug-in hybrid cars on the world’s roads would exceed 4.5 million by 2020, consequently, smart oil producing countries are tweaking their business models and diversifying to alternative energies.
Statoil, Norway’s biggest petroleum company changed its name to Equinor in a bid to broaden its energy reach beyond oil and gas production. The company said the name reflects the starting point for equal, equality and equilibrium, and “nor,” to signal the company’s Norwegian origin. Statoil, is 67 percent controlled by the government.
It is troubling that some of the world’s biggest crude oil markets are turning to alternatives, especially China. Yet many oil producing nations, including Nigeria seem preoccupied with short-term market prospects.
India and China who currently buy the bulk of Nigeria’s oil are ramping production of electric cars and are heading a global move to form an oil buyer’s cartel that will cut back on OPEC’s influence on oil prices.
In China alone, there are 487 electric car makers. According to JPMorgan Chase & Co.’s 2025 EV Outlook report, robust global growth through 2025 would see China accounting for 12 per cent of the total EVs produced, from last year’s 2.3 per cent market share.
China remained by far the largest electric car market in the world, accounting for half sold last year. Nearly 580,000 electric cars were sold in China in 2017, a 72% increase from the previous year. The United States had the second-highest, with about 280,000 cars sold in 2017, up from 160,000 in 2016.
Meanwhile in India, over 2,000 units were sold year and heightened interest from many automakers Hyundai Motors Co., Maruti Suzuki India Ltd., Tata Motors Ltd., Mahindra & Mahindra Ltd., Ashok Leyland Ltd. and BYD Co to open plants in the country could sales hit the roof from government tenders bulk orders from fleet operators.
Nordic countries remain leaders in electric vehicle market share. Electric cars accounted for 39% of new car sales in Norway, making it the world leader in electric vehicle (EV) market share. In Iceland, new EV sales were 12% of the total while the share reached 6% in Sweden. Germany and Japan also saw strong growth, with sales more than doubling in both countries from their 2016 levels.
However, electric mobility is not limited to cars. In 2017, the stock of electric buses rose to 370,000 from 345,000 in 2016, and electric two-wheelers reached 250 million. The electrification of these modes of transport has been driven almost entirely by China, which accounts for more than 99% of both electric bus and two-wheeler stock, though registrations in Europe and India are also growing.
Charging infrastructure is also keeping pace. In 2017, the number of private chargers at homes and workplaces was estimated at almost 3 million worldwide. In addition, there were about 430,000 publicly accessible chargers worldwide in 2017, a quarter of which were fast chargers. Fast chargers are especially important in densely populated cities and serve an essential role in boosting the appeal of EVs by enabling long-distance travel.
The growth of EVs and other alternative s to fossil fuel has largely been driven by government policy, including public procurement programmes, financial incentives reducing the cost of purchase of EVs, tightened fuel-economy standards and regulations on the emission of local pollutants, low- and zero-emission vehicle mandates and a variety of local measures, such as restrictions on the circulation of vehicles based on their pollutant emission performances.
The rapid uptake of EVs has also been helped by progress made in recent years to improve the performance and reduce the costs of lithium-ion batteries. However, further battery cost reductions and performance improvements are essential to improve the appeal of EVs.
These are achievable with a combination of improved chemistries, increased production scale and battery sizes, according to the report. Further improvements are possible with the transition to technologies beyond lithium-ion.
This is why oil producing countries should take note. Despite Nigeria’s stated intention to diversify its economy from crude oil, the commodity still accounts for over 80 percent of the revenue.
The oil sector employs less than 1 percent of the populace and while it is only now beginning to gain traction, the agricultural sector employs 50 times more. Yet more brain matter is dissipated on the oil sector at the expense of others. This policy would no longer be relevant in the new scheme of things.