Oil Industry May Soon Be Losing Sales From Electric Car Adoption
The past year has seen record adoption of electric vehicles in countries around the world, including Norway where more than half of all vehicles sold in the country are electric vehicles. If a new car is bought by a Norwegian citizen today, it’s more likely that the car will be an electric car than a fossil fuel powered car.
The high adoption rate of electric vehicles in Norway and around the world may be putting the squeeze on oil companies, which may see sales figures decline in the near future.
100% Zero Emissions By 2025?
The widespread and rapid adoption of electric vehicles in Norway is largely driven by the Tesla company which has delivered thousands of vehicles to the country over the last year. Tesla delivered over 1000 Model S and almost 1.5 thousand model X SUVs to the country in 2017. Overall, BEV and PHEVs were responsible for 39.2 of Norway’s market in 2017, which was up from 29.1 percent from 2016. Norway has a goal of getting 100% new zero mission vehicles on its roads by the year 2025, only seven years from now. The country is already halfway to its goal, and the arrival of the Tesla Model 3 in the market will probably make the numbers of even higher.
While the adoption rate of electric vehicles has been extremely impressive, they still only account for less than 10% of all the vehicles on Norwegian roads. After all, given the number of vehicles in the country, it takes quite a while to replace them. Nonetheless, an adoption rate approaching 10% is still a significant amount of vehicles, and the oil industry might finally be seen an impact on its sales.
Norway’s government has just recently released its final sales figures from last year for the Sales of Petroleum Products section of their energy industry report. The numbers reveal that Norway’s overall consumption of both diesel fuel and gasoline declined in just about every single category. Sales of motor gasoline dropped by approximately 3%, while sales of dutiable diesel dropped by 2.7%, and duty-free diesel sales dropped by 2.6%. Overall, the sales of petroleum products declined by a little more than 2%.
This is the first time in the country’s history, since the introduction of electric vehicles, that the demand for petroleum products utilized by motor vehicles has decreased. This is likely a result of the increased adoption of EVs and some analysts see this as a harbinger of times to come.
Displacing 2.5 Million BPD
Pierpaolo Cazzola, a transport analyst and senior energy analyst at the International Energy Agency says that electric vehicles are expected to displace the sale of 2.5 million bpd by 2030. This is likely to occur because of both local and government policies, such as Norway’s 2025 plan, to reduce reliance on fossil fuel vehicles and transition to electric vehicles. Governments that have policies supporting a transition to electric vehicles include Canada, China, France, Japan, the Netherlands, and Sweden.
While the IEA noted that much of future success of electric vehicles will hinge on how ED producers can meet demand for scarce materials, such as lithium and cobalt, their New Policies Scenario currently projects the number of electric vehicles on the road to be 125 million by the year 2030.
While the IEA noted that much of future success of electric vehicles will finish on how ED producers can meet demand for scarce materials, such as lithium and cobalt, their New Policies Scenario currently projects the number of electric vehicles on the road to be 125 million by the year 2030.
If countries like Norway, France, and Japan continue to pursue an electric vehicle revolution and continue to create timelines for the transition to electric vehicles, the sorts of decreases in fossil fuel sales that Norway saw are likely to keep snowballing. It’s only a question of when demand for oil will peak, after all a decrease of only 2.6% sales is tiny when you consider the other ways that demand for oil has recently grown.
Doubling-down On Electric Vehicles
Nonetheless, countries around the world are aggressively pursuing expansions in electric vehicle markets, with China selling approximately 58,000 electric cars last year. Not only has Norway set a goal to be selling exclusively electric vehicles by 2025, but it has also recently announced plans to have a test flight for electric powered passenger planes occur, and announced plans to make its fjords the first ever zero-emissions zone at sea. These combined plans have given Norway a bonafide green reputation, and many other countries examine the country quite closely when planning their own green revolutions.
Advances in electric vehicle technology and performance will also help cut the cost of electric vehicles and increase adoption further. Last year saw the cost of lithium-ion batteries drop due to innovation and increases in efficiency, which helped boost electric vehicle sales.
“Further battery cost reductions and performance improvements are essential to improve the appeal of EVs,” the IEA stated.
A New Hypermiling Recrod
Speaking of advances in electric vehicle technology, Tesla’s new Model 3 has achieved a new hypermiling record. Hypermiling refers to the practice of driving a vehicle as efficiently as one can in order to drive the longest possible distance on a single charge. While hypermiling isn’t really intended to determine the range of a vehicle during normal use, it does provide some interesting insights into how the way a person drives a vehicle can impact energy/fuel efficiency of that vehicle.
The hypermiling record for the Tesla model 3 was set by Sean Mitchel and Erik Strait over the weekend. The two managed to drive over 965 kilometers (600 miles) to set what could be a world record for the longest distance ever driven on a single charge of an electric vehicle. Mitchel and Strait found that the Tesla 3 uses energy most efficiently while operating under 40 Kmh (25 Mph). This strangely mirrors Tesla CEO Elon Musk’s 2015 comment that he expected people to eventually be able to get 600 miles on one charge in a Tesla vehicle while hypermiling. While hypermiling certainly isn’t representative of a vehicle’s normal use, it does show that electric vehicle technology has come quite far from where it used to be and will continue to advance in the future.