We’re probably underestimating how quickly electric vehicles will disrupt the oil market  

Posted by Big Gav in ,

Dave Roberts has an excellent summary of the growth of the electric vehicle market up at Vox, noting EVs may start capturing the transportation market as quickly as solar power is capturing the power generation market - We’re probably underestimating how quickly electric vehicles will disrupt the oil market.

The article references the following studies and forecasts :

* Grantham Institute
* EIA
* BP Energy Outlook 2017
* BNEF
* GreenTech Media

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.

So EV forecasts range from modest to revolutionary. What should we make of this?

It seems to me that we don’t come to these questions with a clean slate. The very kind of models this study critiques are the ones that have consistently underestimated the growth of solar and wind. They use baseline scenarios that assume no further cost and policy changes when, in reality, cost and policy changes are both rapid and inevitable.

Multiple drivers (pardon the pun) are lining up behind EVs — rapidly falling battery costs, rising range, synergy with other new energy technologies, widespread international policy support, growing consumer interest, and (my pet dark horse) wireless EV charging.

Experience shows that markets at the center of this kind of interest and activity do not continue to grow on a steady, linear path. They take off, lurching into exponential growth. That shift is impossible to predict in advance with any precision, but at this point, we ought to know that it’s coming.

By now, we need not be neutral toward this range of projections. History has taught us that for new, distributed, consumer-focused technologies, unexpected explosive growth is … to be expected. Big oil companies and investors would do well to prepare.

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