We’re Probably Underestimating How Quickly Electric Vehicles Will Disrupt the Oil Market - by David Roberts

Unpredictably rapid growth happens pretty predictably.

Just about every analyst agrees that the electric vehicle market is poised for rapid growth.  But how rapid?

It’s not an idle question.  The rate of EV growth will have huge implications for oil markets, auto markets, and electric utilities.  Yet it is maddeningly difficult to predict the future; forecasts for the EV market are all over the place.

I don’t think the wide range of projections means that we’re blind here, though — I think we can make educated guesses.  Specifically, I think history justifies optimism, the belief that the high-end projections (like those in a new study I discuss below) are closer to the truth.
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Bloomberg New Energy Finance expects electric vehicles to represent 35 percent of new car sales globally by 2040.  Greentech Media Research expects 11.4 million electric vehicles on the road in the U.S. in 2025, compared to 7.5 million in the EIA's latest Outlook.

Projections for EV growth feed into projections for oil demand.  EIA, IEA, and BP expect demand for oil to continue rising into the 2040s and even beyond.

On the other hand, Michael Liebreich, the head of Bloomberg New Energy Finance, expects oil demand to peak in 2025.  The CFO of Royal Dutch Shell agrees — he said the company expects it to peak within five to 15 years.  The World Energy Council predicts peak demand in 2030.

Into this milieu comes a big new study that claims all those previous projections are hopelessly pessimistic.

New study says oil and coal are F’d
Monday saw the release of a new study from the Grantham Institute for Imperial College London and the Carbon Tracker Initiative.  It argues that solar photovoltaics (PV) and EVs together will kick fossil fuel’s ass, quickly.

“Falling costs of electric vehicle and solar technology,” they conclude, “could halt growth in global demand for oil and coal from 2020.”  That would be a pretty big deal.
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If these forecasts play out, fossil fuels could lose 10 percent market share to PV and EVs within a decade.  A 10 percent loss in market share was enough to send the US coal industry spiraling, enough to cause Europe’s utilities to hemorrhage money.  It could seriously disrupt life for the oil majors.  “Growth in EVs alone could lead to 2 million barrels of oil per day being displaced by 2025,” the study says, “the same volume that caused the oil price collapse in 2014-15.”

Yet, according to the study’s authors, virtually none of big fossil fuel companies are taking the possibility seriously, or planning for it.

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