Electric Vehicles And The Future Of Oil
- By 2040, 30 percent of all new car sales will be electric, according to analysts at IHS Markit.
- What does this massive increase of electric vehicles mean for the future of oil?
- Is the death of crude oil imminent? It doesn’t appear to be, and there is still reason for oil markets to be skeptical of a near-term massive decline.
At A Glance
- Electric vehicles will represent 30 percent of new car sales by 2040.
- Tesla (NASDAQ:TSLA), BP investments in China point to a big electric vehicle future there.
Just two percent of all auto sales today are electric. It is estimated that over 3.5 million electric cars are on the road today, and there may be as many as 36 million electric cars by 2025. By 2040, 30 percent of all new car sales will be electric, according to analysts at IHS Markit. What does this massive increase of electric vehicles mean for the future of oil?
China Matters
The largest disrupter to the future of oil may be coming from China. Elon Musk has big plans in China where electric vehicle sales are 3 times higher than they are in the United States. Tesla has just broken ground on a massive gigafactory that will have capacity to manufacture 500,000 cars per year.
Since tariffs have driven up the price of importing these vehicles, Tesla will now be able to build locally and bypass tariffs. In addition, BP Ventures just invested in the Chinese electric vehicle (EV) charging start-up PowerShare.
China is targeting sales of more than 7 million EVs by 2025, up from just 350,000 over the last 12 months. By 2030, China will overtake the United States as the largest consumer of oil with net imports reaching 13 million barrels per day (the U.S. currently consumes about 20 million barrels per day).
Source: seekingalpha
