Oil Companies Finally Recognize the Threat of the Electric-Car Boom

It has taken them long, but oil companies are finally waking up to the threat of the rising demand for electric cars. Today, many oil producers are seeing electric cars as the biggest threat to their future existence. Electric vehicles are fast taking over the automobile market and this isn’t just the opinion of automakers anymore—some of the world’s biggest oil companies are also admitting it.

Total S.A., a French multinational company and one of the world’s biggest oil producers, believes that by the end of the next decade, electric vehicles sales will account for almost a third of the new-car sales. According to a study released by Bloomberg New Energy Finance on Friday, July 14, in the past year, oil companies such as BP P.L.C and Exxon Mobil Corp revised up their outlook while OPEC raised its forecast for sales of plug-in electric vehicles by four times.  In 2015, OPEC predicted that forty-six million EVs will be sold by 2040. In 2016, it increased that number to 266 million.

In addition to the above, Bloomberg New Energy Finance, the researcher based in London expects plug-in EVs to lower demand for oil by eight million barrels by 2040. This is more than what Iran and Iraq collectively produce right now.

Expecting battery-powered cars to increase in popularity over time, or because they strongly believe that the world needs to embrace sustainable energy, Tesla and some other automakers have been developing electric vehicles since the past few years. But, after the admission by the some of the major oil companies that EVs could make up a substantial part of new vehicles sales in a decade or two, Tesla and kind have all the reason in the world to continue doing what they’re doing.

Speaking at a conference organized by Bloomberg New Energy Finance in New York, Joel Couse, the chief energy economist of Total oil, said that the demand for oil-based fuels will peak in the 2030s due to the increase in battery-powered vehicles. According to him, by 2030, electric vehicles will make up 15 to 30% of new vehicles. Moreover, he believes that after 2030, the demand for fuel will flatten out or may even decline.

There is a danger that the increasing popularity of electric vehicles will stagnate the demand for oil in the coming decades. This has put many people in a spot of bother as over $700 billion revenue is generated by fossil-fuel industries each year. Some ‘big-name’ automakers have already planned to go all electric in the future. These include Volvo Cars, General Motors Co, and Mercedes-Benz.

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While EVs may take over the automobile market in the U.S and Western Europe soon, it would be some time, maybe even decades, before they upsurge fossil-fuel powered vehicles in regions such as East Asia, Africa, and India.