Oil Majors Can No Longer Ignore The Electric Car Threat

[ahojunk]

Oil Majors Can No Longer Ignore The Electric Car Threat
By Tsvetana Paraskova - Apr 28, 2017, 4:12 PM CD

Many carmakers, and not just Tesla, have been developing electric vehicles, betting on the expected continuous rise of battery-powered cars in the future. Now it’s not only carmakers that predict that EVs will make up a substantial part of new vehicle sales in a decade or two—oil majors are admitting it too.

France’s Total SA expects EVs to account for up to 30 percent of new car sales by 2030, which could lead to oil-based fuel demand peak in the 2030s, Total’s Chief Energy Economist Joel Couse said at Bloomberg New Energy Finance conference earlier this week.

Couse reckons that after 2030, fuel demand “will flatten out” and “maybe even decline”, in what Colin McKerracher, head of advanced transport analysis at Bloomberg New Energy Finance, described as the “most aggressive” projection by an oil major about the rise of EVs.

Other oil majors have their projections about peak oil demand as well, ranging anywhere from as early as the next decade, to nowhere in sight. At the same time, analysts believe that EV sales will only rise, but the pace will greatly depend on incentives and government policies. Meanwhile, many carmakers are preparing for the EV surge and entering the battery-powered car market.

Germany’s Volkswagen AG, which is still paying penalties and settling civil claims following the diesel emission scandal, plans to launch four affordable Volkswagen-branded EVs and an Audi EV crossover in the coming years. Premium carmaker Volvo said in mid-April that it would build its first fully electric car in China, which will be available for sale in 2019, and exported globally from there.

According to Frost & Sullivan, the global EV market is expected to grow by 25.6 percent to 950,000 sales this year. The 2017 launches of new EV models will be around 25, with Chevrolet Bolt and Tesla Model 3 being the most anticipated, Frost & Sullivan says. Incentives and subsidies, substantial investment by original equipment manufacturers, new entrants, and lower battery prices are driving the double-digit growth.

Still, challenges that manufacturers need to address include the lack of standard charging technology, the short-distance range, and lack of a fixed business model, according to Frost & Sullivan. The analysts’ underlying conclusion is that “continued incentives and subsidies will be crucial market drivers for growth.”

France’s Total sees that growth as potentially leading to peak oil-based fuel demand in the 2030s. Other majors also have ideas about the impact of EVs on global oil demand.

Shell’s chief executive Ben van Beurden said in March that oil demand could peak as early as in the next decade.

“We have to acknowledge that oil demand will peak, and it could already be in the next decade. It could happen. There are people who believe it will grow forever but I don’t subscribe to that,” van Beurden told the CERAWeek energy forum, as quoted by The Telegraph.

BP, in its Energy Outlook 2017, said that an extra 100 million battery EVs could lower oil demand by around 1.4 million bpd. Still, the UK oil major sees oil demand peak in the mid-2040s, with many drivers to factor in, including global GDP growth, efficiency trends, and climate policy. According to BP, the penetration of the EVs will depend on how fast battery costs would continue to drop; the size and durability of government incentives; how conventional cars’ efficiency would improve; and how consumer preference towards EVs would shift.

Not unsurprisingly, Amin H. Nasser, president and CEO of Aramco—the oil powerhouse of OPEC’s largest producer and exporter Saudi Arabia—said at an oil summit in Paris this week:

“The conclusion is clear: oil demand will continue to grow… in absolute terms… at fairly healthy levels… for the foreseeable future. It is why I believe ‘Peak Oil Demand’ is not in sight for at least the next few decades.”

The EVs may be increasingly popular in Western Europe and the U.S., but growing population and growing income in India, China, and other emerging economies are still demanding oil-based fuels for the cars their residents drive. India’s oil consumption growth, for example, reached a record-level 11 percent last year as an increasing urban population with rising income fueled greater use of cars, trucks, and motorbikes.

Regardless of when peak oil demand will occur, electric vehicles and their rise are a reality that oil majors are no longer ignoring.

By Tsvetana Paraskova for Oilprice.com

 

[Hamartia Antidote]

Oil Majors Can No Longer Ignore The Electric Car Threat

It's actually way more serious than they think. Take for instance the overnight success of shared bicycles in China. Is it necessary or even desirable anymore for someone to purchase a bike? Since you can just grab one off the street and go wherever you like and not worry about it...then why buy one?

The same is going to happen with driverless cars. You just press a button on your cellphone app..the nearest available car drives right up to you..takes you to your destination..and then it drives off to pick up the next person. No worry about looking for a parking space, no parking fees, etc. Why own a car? Now instead of selling millions of oil guzzling cars a year car companies will be selling only hundreds of thousands...and many of them will be all-electric. The oil peak is far far closer than they think. Just the US and China account for over 50% of worldwide auto sales. A shakeup in just these two countries would be serious.

https://www.fool.com/investing/2017/02/23/will-driverless-cars-end-traditional-car-ownership.aspx

Will Driverless Cars End Traditional Car Ownership?
When self-driving car technologies and ride-hailing services fully merge, we may never need to buy cars again.

I bought a used car recently, and a few days after I brought it home, a friend asked me, "Do you think this is the last car you'll ever buy?"

We talk a lot about self-driving cars, so I knew exactly where he was going with his question. He was hinting at the fact that both autonomous car technologies and ride-sharing services are advancing so quickly that by the time I'd be in the market for another vehicle, I might not actually need to buy one.

By 2035, the IHS estimates there will be 76 million cars on the road worldwide with some level of autonomy. Even now, semi-autonomous cars that can keep themselves in their lanes, automatically brake in emergency situations, and slow down to match the speed of the car in front of them can be purchased for as little as $20,000.

And as genuinely driverless cars get cheaper and become ubiquitous, you and I may opt out of monthly car payments and opt-in to a monthly mileage subscription service instead.

Automakers are investing in this future
To understand how it's possible that we could soon live in a world where most people don't own cars, we need to look no further than what the automakers themselves are doing.

Elon Musk's recently updated version of Tesla's (NASDAQ:TSLA) master plan includes details on a new service: When the company's vehicles become fully autonomous (by 2018 or 2019, according to Musk), Tesla owners will be able to allow their vehicles to drive themselves around and be rented out by other people.

As Musk wrote:
You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost.

IMAGE SOURCE: TESLA.

Musk also said that Tesla would deploy its own fleet of driverless vehicles for rent in areas where there was more demand for Tesla vehicles than privately owned cars could meet, so that "you can always hail a ride from us no matter where you are." Remember, this isn't the catchphrase of a taxi company, nor even a ride-hailing service -- but rather the direction where Musk sees his automaker headed.

And just in case think this mentality is unique to the innovative Tesla, consider what General Motors (NYSE:GM) is doing. The giant automaker launched a ride-sharing service last year called Maven, which allows some GM owners to rent out their vehicles when they're not in use. The cars don't drive themselves yet, but the company sees it as a first step toward a future where people are less inclined to own cars.

In a press release at the time, GM said that more than 25 million of its customers around the world will use some form of shared mobility by 2020, and describe Maven as "a key element of our strategy to changing ownership models in the automotive industry." Maven has spread to 17 cities across North America in just 11 months, has 22,000 members, and has been used for 57 million miles of driving.

Not to be outdone, Ford (NYSE:F) has launched its own ride-sharing service, and is developing autonomous cars just like GM. Ford has made it clear that it intends to launch a "high-volume" driverless car paired with ride-hailing and ride-sharing services by 2021. The company is already testing 30 self-driving Fusion Hybrids in several states, and plans to triple the number of test vehicles this year.

Other automakers are moving in this direction as well. Fiat Chrysler (NYSE:FCAU) is working with Alphabet's (NASDAQ:GOOG)(NASDAQ:GOOGL) Google to test a fleet of 100 self-driving minivans that will be the basis for a ride-hailing service set to launch later this year. It's still unclear what the service will look like, or if Fiat Chrysler will play a critical role in it, but what is clear is that the automaker believes in the viability of Waymo's cars-as-a-service goal.

Will this really end car ownership?
It's hard to answer this question conclusively, of course. After all, most people haven't even seen a fully autonomous vehicle on the road, let alone ridden in one.

But John Zimmer, the co-founder and president of ride-hailing company Lyft, believes that by 2025 "private car ownership will all-but end in major U.S. cities." Lyft expects the majority of its vehicles to be self-driving by 2021, and rival Uber is testing similar strategies as well.

Others have set similar timelines for the demise of car ownership. Georg Bauer, who has held executive positions at Daimler, BMW, and Tesla told Business Insider last year that he thinks car ownership could be dead within five to 10 years.

Government regulations and our own apprehension about giving up control over our vehicles may preserve the widespread car ownership culture for longer than some expect. But what's crystal clear is that tech companies and automakers alike are betting on an automotive future that looks very different than today. Like many things, the transition from owning cars to renting driverless ones on an as-needed basis will likely occur in stages -- but let's be clear, things are certainly moving in this direction. And I, for one, would welcome a world without car payments.

 

[Hamartia Antidote]

http://spectrum.ieee.org/cars-that-...ing-electric-cars-will-dominate-roads-by-2030

RethinkX: Self-Driving Electric Cars Will Dominate Roads by 2030

Within 13 years self-driving cars will dominate the roads, representing some 95% of all car miles driven, according to a new study released this week. And while 40% of the cars in 2030 will still be of the old, internal combustion variety, they'll represent just 5% of the consumer miles driven.

The report “Rethinking Transportation 2020-2030: The Disruption of Transportation and the Collapse of the Internal-Combustion Vehicle and Oil Industries,” released today [ https://static1.squarespace.com/sta...80288/Rethinking+Transportation_May_FINAL.pdf ] by San Francisco think tank RethinkX departs from a number of forecasts in the past few years, including Moody’s and IHS Automotive, which expect the transition to self-driving cars instead to occupy multiple decades.

The rapid, Facebook-like or smartphone-like adoption curve, the report says, will be driven largely by market forces. Self-driving electric car share plans, in which consumers “subscribe” to a self-driving service much like they subscribe to a cellphone plan today, will be cheaper and more convenient for many people than owning a vehicle. And as a result, the authors say, incumbent industries like oil, cars, insurance, and transportation will face a consumer mass migration away from their old-model products and services if they don’t start preparing for the disruption now.

Contrast these words of warning to Moody’s, for instance, whose March 2016 self-driving car study for the insurance industry assured its readers, “While self-driving cars will likely force auto insurers to rethink their business models, widespread adoption of this technology is decades away, allowing insurers plenty of time to adapt.”

James Arbib, who authored the RethinkX report with Tony Seba, says they reached their findings after “talking to a ton of people down the supply chain in all kinds of different businesses, in high-utilization EV businesses, bus companies, truck companies, car companies.” He adds, “We think when you change a business model from private ownership (of cars) to transport-as-a-service, you change a lot of other things as well.”

Arbib says the report’s dramatic conclusions hinge on a singular assumption: Fully autonomous (also called Level 5 or “wheel optional”) driving, of the kind Elon Musk famously claims will soon be available in Tesla cars, will be coming online in the early 2020s.

“This scenario in the report is based on full autonomy,” says Arbib. “Without full autonomy, the bet’s off. If it is 2030, and we certainly don’t believe that, this scenario is delayed.”

The authors’ forecast of full autonomy within years and not decades is based in part on the rapid growth of data from partially self-driving cars rolling out today. The deep learning AI systems in Waymo’s, Baidu’s, NuTonomy's, Tesla’s, GM’s and others’ fleets get better as more data becomes available. Seba and Arbib think these cars’ self-driving capabilities will be getting markedly better as the exponentially-growing sensor, mapping and driving data comes in.

“These companies are investing billions of dollars in making this happen,” Seba says. “All you need is one operating system to work, and then you have Level 5 autonomy. And the U.S.-centered view — if it doesn’t happen here, it doesn’t happen anywhere — is a little misguided. A lot of these technologies are global. The Chinese are working on self-driving, and Europe is working on self-driving. And the first one to get it is going to be the Android or iOS of Level 5 autonomy.”

Seba adds that whenever the threshold of Level 5 autonomy is crossed, market forces they outline in the report will take over and start disrupting various sectors of the economy within a decade. On the upside, they forecast the so-called “transportation as a service” (TaaS) industry of self-driving car subscription plan providers will entail broad consumer savings compared to car ownership. The savings represent some $5600 per consumer per year or $1 trillion in additional disposable income in the U.S. alone by 2030. And productivity gains in recouping that time otherwise occupied today in driving represents another $1 trillion per year, Seba and Arbib say.

On the downside, auto dealers, car repair shops, taxicabs, buses, car insurance, filling stations, not to mention oil companies and car makers, will all be hit by a shockwave as the rapid adoption of self-driving electric vehicles drains these present-day industries of income. Which, Seba and Arbib say, could mean widespread job loss — if companies and governments today do not anticipate the deluge and begin retraining their workers for jobs of the 2020s and ‘30s.

The report’s dramatic conclusions further depend on other intermediate figures, like their assertion that compared to the internal-combustion standard, self-driving EVs will represent, “a 90% decrease in finance costs, an 80% decrease in maintenance costs, a 90% decrease in insurance costs and a 70% decrease in fuel costs.”

Those cost savings, Arbib says, come from the interviews they conducted with industry leaders and technical reports they consulted. The financing price drop, for instance, comes from taking car ownership out of the mix. Car subscription services will increase utilization of a vehicle from 16,000-32,000 kilometers per year to 160,000 kilometers or more. And that reduces the number of years the car is in service (and thus interest paid on any financing plan) as well as increases the amount of use wrung out of it per year.

Seba says internal combustion cars have some 2000 moving parts, whereas EVs have something closer to 20. So the wear and tear and depreciation of an EV is similarly lower. And there of course won’t be fully autonomous vehicles broadly adopted till their safety record at least matches that of human drivers. But Seba and Arbib say they think autonomous safety will be significantly better than the 38,000 road deaths per year (U.S.) presently. Which would mean great news for the epidemic of car accidents today, although perhaps less-than-rosy news for the car insurance business model.

The full force of the changes self-driving, electric cars will bring, Seba and Arbib say, is only being dimly appreciated today. Their prognostications carry an echo of recent Cassandras like Alibaba’s Jack Ma and Kai-Fu Lee of Sinovation Ventures in China, who warn of AI and automation inciting “social conflicts over the next 30 years [that] will hugely impact every industry,” in Ma’s words.

But it doesn’t have to be this way, Seba and Arbib say. “We see it in parts of the world right now — there is real resistance to this process,” Arbib says. “People want to reach back to some kind of past security, and stop the process. But that’s economically illiterate. What we need to do is retrain and mitigate and provide the social support networks, and we need to at least have a conversation about how we deal with this. And we don’t feel that’s being done on the basis meaningful data that can really show across the economy how this might do.”