Evs could erase 7 million bpd in demand oilprice.com electricity recruitment 2015


Electric vehicles will become cheaper than the internal combustion engine in a half decade, while electric buses will completely “dominate” its sector by the late-2020s, according to Bloomberg New Energy Finance (BNEF), which just published its Electric Vehicle Outlook 2018 report.

EV sales will top 1.6 million in 2018, up from just a few hundred thousand in 2014, according to BNEF. The acceleration in sales can be chalked up to a few factors. First, battery costs have declined by 79 percent since 2010, falling from over $1,000 per kilowatt-hour to just $209/kWh at the end of 2017. Energy density has also increased by 5 to 7 percent each year. Costs could drop to as low as $70/kWh by 2030.

The third reason can be summed up in one word: China. Roughly 21 percent of all EV sales in 2017 occurred in just six Chinese cities. China is offering an array of carrots, but also sticks, including restrictions on buying and using gasoline or diesel vehicles. By 2025, China will account for roughly half of the entire global EV market.

Meanwhile, key ingredients used in lithium-ion batteries, such as cobalt, have seen costs skyrocket as demand has increased. Without significant investment in new cobalt capacity, for instance, there could be shortages within a few years. “If capacity does not grow as planned, cobalt prices could continue to spike and there could be a major cobalt shortage,” BNEF analysts said. “This would have serious implications on the electric vehicle market.” Related: India To Saudi Arabia: We Need Stable And Moderate Oil Prices

Cobalt prices have already tripled in the past two years, and with supply lagging demand, prices could continue to rise. The problem is all the more worrying because new mines have long lead times, which sets the market up for some serious speed bumps in the early 2020s.

Nevertheless, the BNEF forecast is bullish for EVs. Sales are expected to continue to accelerate, topping 11 million units by 2025 and 30 million by 2030. By 2040, EV sales will hit 60 million, or about 55 percent of the global market for light-duty vehicles. Cumulatively, about 559 million EVs will be on the roads in 2040, or about a third of the global fleet.

Many of the BNEF projections are similar to last year’s report, although some of the near-term projections appear more bullish. But one of the more eye-opening forecasts is for electric buses. Consider this statement: “The advance of e-buses will be even more rapid than for electric cars,” BNEF concluded.

Electric buses will reach cost parity with conventional municipal buses as soon as next year, BNEF says. And whereas EVs will capture 28 percent of the market by the late 2020s, e-buses will “dominate” its segment, making up 84 percent of the bus market by the same date. “China has led this market in spectacular style, accounting for 99 percent of the world total last year. The rest of the world will follow, and by 2040 we expect 80 percent of the global municipal bus fleet to be electric,” Colin McKerracher, lead analyst on advanced transportation for BNEF, said in a statement. Related: Washington Threatens Sanctions For Nord Stream 2

Oil prices are largely determined at the margins, with small discrepancies between supply and demand responsible for wild swings in prices. In that context, while demand will still be enormous in 10 or 20 years, the demand destruction stemming from EVs and e-buses present a mortal threat to high oil prices.

Many things besides cars use oil. Here is a short list: trucks, ships, railroad locomotives, airliners, farm machinery, construction equipment, billions of small power tools, mining trucks and equipment, and the global military. You need oil to pave many millions of kilometers of asphalt roads. Roofing shingles use millions of tons of oil products. Tires are made out of oil, as are millions of other plastic products.

Oil demand will remain strong until it runs out. Decades before that, civilization will be in trouble because oil is so essential for so many things, especially transportation. Not being able to buy all the oil energy we need will force the economy to shrink. Our banking and financial system is not designed to function for long in a shrinking economy. It will probably collapse soon after peak global oil production is reached. Fracking & horizontal drilling probably pushed that date back about 10 to 20 years. We would need a massive study of the oil industry to narrow down the date further. No organization has the power to conduct such a study because countries and private companies won’t produce all their data.

Your conclusion that electric vehicles (EVs) could erase 7.3 million barrels a day (mbd) of global oil demand by 2040 is based on two hypothetical assumptions: one is that we could have some 559 million EVs on the roads by 2040. The other is that the car manufacturing industry could raise its production capacity of EVs from the current 500,000 EVs to 559 million EVs by 2040.

Global oil consumption is projected to hit 100 million barrels a day (mbd) next year rising to 120 mbd by 2040 and accounting for 33% of global primary energy consumption in 2040 as it did in 2017 despite rising global oil production and consumption.

A few experts have been projecting the advent of the post-oil era within the next fifty years. They are now saying that widespread electric vehicle use could spell the end of oil. The tipping point, they reckon, is 50 million electric cars on the roads. This they believe could be reached by 2040.

As explained above, by 2040 the world will be using 43.8 billion barrels a year (bb) of which 75% or 32.85 bb will be used to power 2.790 billion ICEs around the world. Bringing 50 EVs on the roads will reduce the global oil demand by only 0.59 bb (1.6 mbd) or 1.8% by 2040 and not the 7.3 mbd your article indicated. This will neither be the end of oil nor a tipping point.

Your second assumption that the car manufacturing industry could produce 559 million EVs by 2040 is not realistic. Current worldwide production of EVs and hybrids amounts to 1 million vehicles of which only 500,000 are EVs and the rest are hybrids. So it will take many decades to manufacture 50 million EVs let alone manufacturing 559 EVs.