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Big Oil Betting On Electric Vehicles

by Jon LeSage for Oilprice.com

Speaking this week at the Bloomberg New Energy Finance conference in New York, Total SA’s chief energy economist, Joel Couse, forecasted that EVs will make up 15 to 30 percent of global new vehicle sales by 2030.

Oil demand for transportation fuel see its “demand will flatten out,” after 2030, Couse said. “Maybe even decline.

Colin McKerracher, head of advanced transport analysis at Bloomberg New Energy Finance, sees Couse’s forecast as the highest EV sales margin yet to be forecasted by a major company in the oil sector.

That’s big,” McKerracher said. “That’s by far the most aggressive we’ve seen by any of the majors.”

Royal Dutch Shell Plc sees a similar trend with oil demand in transportation flattening out in the near future. Chief Executive Officer Ben van Beurden said in March that oil demand may peak in the late 2020s. In November during an interview, Shell CFO Simon Henry said that demand is expected to peak in about five years.

Shell and Total SA have been looking to diversify their energy assets through hydrogen as a transport fuel. In January, both companies joined a global hydrogen council that included Toyota, Liquide SA, and Linde AG. The companies will be investing about $10.7 billion in hydrogen products over the next five years.

Like hydrogen fuel cell vehicles, electric vehicles have major walls to climb to find mass adoption in vehicle sales and infrastructure. One barrier is the cost of owning an electric vehicle versus a cheaper, comparable gasoline-engine vehicle. The battery pack in an EV can be quite expensive, making up half the cost of the car, according to BNEF.

Backers of EVs point to two trends fast approaching the market; with one being the longer range, 200-plus-miles per charge EVs coming to market like the Chevy Bolt and Tesla Model 3. The higher-priced versions of the Tesla Model S and Model X are thought to be a sign of it, with consumers willing to finance or lease one of these EVs to gain access to more power and longer range.

Automakers are feeling pressed by strict emissions reduction rules in Europe and China, with other markets like the U.S., Japan, and South Korea having similar standards.

Auto Shanghai has been a showcase for existing and startup automakers launching several EVs to the China market, with some of them ending up overseas.

It’s helping that lithium ion battery prices are dropping about 20 percent year, as automakers spend billions on electrifying their vehicle lineups. Volkswagen wants to see at least 25 percent of its vehicles sold in 2025 to be EVs. Toyota is moving toward selling zero fossil-fuel powered vehicles by 2050.

Another sign that the Total SA report carries some weight is the diverse and broad portfolio of EVs that automakers till be rolling out on the market soon.

By 2020 there will be over 120 different models of EV across the spectrum,” said Michael Liebreich, founder of Bloomberg New Energy Finance. “These are great cars. They will make the internal combustion equivalent look old fashioned.

Electric cars only make up about 1 percent of global vehicle sales, so making it to 30 percent in the short-term future would be a huge leap. Analysts point to a few market forces that need to be addressed before that technology takes off in sales. Among those issues are pre-incentive prices coming down, distance per charge going up beyond 300 miles, and the fast charging infrastructure becoming pervasive and cost competitive to gas pumps.

Link to original article: https://oilprice.com/Energy/Energy-General/Big-Oil-Betting-On-Electric-Vehicles.html

Comments

sd

A new version of peak oil.

Calgarygary

I expect the adoption of EV's to go like flat screen TV's. If it hits 30% in 2030, it will probably be 60% in 2031. Of course there will always be specialized applications for some ICE vehicles but buyers will have to consider that many gasoline stations will close down and internal combustion mechanics will become harder to find. Resale value of an ICE in 2038 probably won't be as good as an EV. A lot of folks were giving away those 3-4 year old monster, fill half your living room TV's that preceded the flat screens.

Juan Valdez

I agree that EV's will probably grow quickly, then once the charging infrastructure is in place (by Tesla, VW and others), it will "switch" within a few years to mostly electrics.

I drive an electric VOLT by GM, and wouldn't consider buying an old gasser now that I'm used to lower fuel prices, and plugging in at home and never have to visit a gas station. Once enough people have the same experience as I, they will create the message that it's ok to switch.

Of course the other shoe that might drop is once autonomous driving is fully enabled, people might just drop buying cars altogether and just use their UBER app on their smart phone to order (fully autonomous) cars when they need them. Then good bye 80% of car manufacturers !!

Trees

The post's title says it all, "Big oil betting on electric vehicles", but the energy source probably the battery and fuel cell. Did you notice Big Oil is investing in hydrogen?

I watch a PBS MOTOR WEEK show on update of the hydrogen fuel cell car. The history was interesting as they reviewed the challenges and delays of production. Up to date the problem is so much innovation and improvements to technology, the manufacturers can't dedicate to production. Recently, some have just frozen the design and starting production as the challenges are to automate the design. This industry must integrate with production to achieve results. The panel explained the state of art and the incredible path to improvements. The take away is, this technology has a wide berth and active path to improve at a high rate. The advantages to transportation is very attractive. Also, to renewable energy. They thought some will still prefer the plug in vehicle as they can refuel at home. The owners that have a consistent travel need.

SJC

I was hoping peak oil would be peak demand.

gorr

I don't believe that and this guy is lying to get a high paying job in the climate change organization.

Engineer-Poet

OF COURSE Big Oil is going to bet on hydrogen.  It is the last gasp of relevance it has for ground transportation.  Even PHEVs push the majority of energy through electrons at home, not fluids at stations... and electrons have no loyalty to hydrocarbons.

A PHEV architecture which produces most of its energy via electrons and the bulk of the rest through waste-derived biofuels would leave Big Oil in the lurch.  Wouldn't that be great?!

gorr

@ Engineer-Poet, They talk about hydrogen since 1998. If big oil was interested in hydrogen, they could have done it with their own capital and infrastructure. Elec-etrons at home and garbage everywhere will never replace 1 percent of ground transportation energy. Stop spreading scientific lies and stop trying taxing my gasoline.

LUH3417

Battery prices falling at 13% per year are 50% in 5 years. Last few year decline is steeper than this. It's hard to imagine that oil price can decline enough to compete with batteries in 5 years. While a barrel of profitably fracked oil dropped from $80 to $60 in the last few years, can it drop a lot more?
EV uptake will act as a hedge against oil price increase, but oil price can't fall much as long as fracked oil is required to meet demand.

Trees

The history of hydrogen was challenging and only within current times is the cost and technology within the zone of commercialization. Hydrogen has made giant leaps of improvement within cost, size, and performance. The experts within this technology are very bullish on this energy sector being able to improve at a rapid rate. There is more capability for improvement within the entire spectrum of components support. I do think this is a good part of light duty vehicle manufacturers desire to develop electric vehicles. Battery car is generation one introduction for hydrogen vehicle. Based on cost and needs of consumer the manufacturers can sell ICE, battery, or hydrogen fueled vehicles or a hybrid adaptation. Hydrogen will continually be the vehicle of choice for extreme range, low weight, high power, and the fuel is a magnificent energy carrier as compared to hard wired grid with poor efficiency and poor energy storage ability. Batteries can't compete with hydrogen energy storage per cost, weight, and power density. Batteries, will always be useful and needed within transportation or for other portable light duty devices.

Engineer-Poet

Trees, are you nuts?

[hypedrogen] is a magnificent energy carrier

An energy carrier so sucky, the Department of Energy has a long-standing goal of improving the weight of the systems to carry it to less than 18 times that of their contents... and still hasn't succeeded.

as compared to hard wired grid with poor efficiency and poor energy storage ability.

The US grid delivers 93% of the energy that goes in from generators to consumers.  Combined-cycle gas turbines are now up to 62% efficiency, so pipeline-to-consumer energy efficiency can be as high as 57.7%.  Batteries are as good as 90%.

Steam methane reforming alone has losses of 32%, and that includes co-products with hydrogen.  Then you've got the energy required to transport hydrogen (probably 20% given the high weight of tankage), compression work for fueling stations (at least 5%) and the losses in the fuel cell (40%) and you're down to 31% from pipeline to the terminals.  The efficiency of the hydrogen system is about as good as, if not inferior to, compressed natural gas engines.

Hydrogen cars are the taxpayer's subsidy to try to keep the oil companies relevant, when they need to die.

Trees

It seems you provided much info on why the grid has poor efficiency. You have to transport fuel, steam turbines low efficiency, line loss, no power storage so electric system must always operate out of efficiency zone, battery losses. Also, the grid is incredibly expensive and delicate as compared to pipelines. Pipeline is incredible efficient for transport of high btu fuel, natural cost free storage, and pressure recuperators to lower pumping costs. Fuel cell have incredible efficiency of cogen heat and power. Even power generation upon the grid is looking at hydrogen to solve their power balance problems. Once generating hydrogen it makes more sense to just utilize the gas as an portable energy fuel. Easy to amass hydrogen for strategic defense. How would once accumulate electricity? Seasonal variations no problem just pump up more storage.

A couple gallons of water suffice for hydrogen car refueling. There isn't many conclusions available for hydrogen power as the technology is a moving target. The transportation industry is taking hydrogen very seriously. Battery energy is expected to improve, but not as quickly or as potent of a solution. Hydrogen generation isn't really a problem given all the possible channels of improvement. Again, fruitless to attempt to compare or deduce the future. You do read the R&D going on for improved efficiency of hydrogen production. That is just starting point and not much fear out their for roadblocks such as battery technology. The fuel cell developers are not concerned with the current high cost of hydrogen. I do see batteries playing an important role within hybrid improvements and powering light vehicle fleet. Most enthusiasts love electric drive, not the battery.

SJC

You can make hydrogen at a fueling station using renewable power contracts then sell the oxygen to reduce costs. They are advancing eletrolysis every day, just because a position is stated forcefully does not make it right nor the only valid opinion.

Engineer-Poet

The farce is strong in this one.

It seems you provided much info on why the grid has poor efficiency.

Honestly.  You can look at figures showing that a grid-based BEV system achieves nearly twice the efficiency of a hydrogen FCEV system running off reformed methane (which doesn't include any overhead for carbon capture, BTW) and spout a completely opposite assertion?  You really ARE nuts.

You have to transport fuel, steam turbines low efficiency, line loss, no power storage so electric system must always operate out of efficiency zone, battery losses.

SMR has to transport fuel too, and electricity travels very well.  Ultrasupercritical steam turbines hit 45% even without GT topping cycles.  The grid doesn't use batteries, and BEVs are quite acceptable today.

Also, the grid is incredibly expensive and delicate as compared to pipelines.

Expensive?  Not at less than 15¢/kWh, and there is no substitute.  Delicate?  Hardly; you can run an AC grid using 19th-century technology, you just need bigger operating margins than with good SCADA.

Pipeline is incredible efficient for transport of high btu fuel, natural cost free storage, and pressure recuperators to lower pumping costs.

Pipelines are more delicate than the grid.  During the Enron-engineered blackouts in California, gas deliveries to critical generating plants was slowed down.  The compressors on the natural gas pipelines are electric, and when they got blacked out the whole system took a hit.

Know what kept running flat-out?  Diablo Canyon and San Onofre.  No fuel delivery problems there!

Once generating hydrogen it makes more sense to just utilize the gas as an portable energy fuel. Easy to amass hydrogen for strategic defense. How would once accumulate electricity? Seasonal variations no problem just pump up more storage.

So you're blythely assuming the feasibility of H2 electrolysis on the scale of many, many GW, the availability of suitable storage (you might want to look at Aliso canyon again and ponder a leak of explosive gas on that scale) and other things which are currently operating at industrial scale...

Precisely nowhere.  You would bet civilization and the lives of millions on something that has literally never been tested in practice.  That's not merely nuts; if you were in any position of authority I would have to call for you to be removed as a danger to the public.

A couple gallons of water suffice for hydrogen car refueling.

Hydrogen from electrolysis is 3x or more the cost of hydrogen from SMR.  You can talk about "renewable hydrogen" all you want, the truth is that it's part of a bait-and-switch.  The oil companies are gas companies now and they want to own the energy system just like they do now.  Batteries won't let them.  Hypedrogen does.

Hydrogen generation isn't really a problem given all the possible channels of improvement.

You're going to need plenty of improvements, seeing as electrolysis is competitive exactly NOWHERE.

Again, fruitless to attempt to compare or deduce the future.

You just assumed that the grid and BEVs will not improve and make hypedrogen pointless.  Rather, keep hypedrogen pointless.  It is not remotely competitive today.  Absolutely, totally nuts.

Most enthusiasts love electric drive, not the battery.

The battery in my PHEV is charging right now.  I LOVE the battery.  I haven't had to fill the car's tank since a long trip in January.  I would love it more if it held more juice and took up less room, but the perfect is the enemy of the good enough.

Engineer-Poet

Quoth SJC:

You can make hydrogen at a fueling station using renewable power contracts then sell the oxygen to reduce costs.

When oxygen is produced on the scale required to fuel even 20 million FCEVs using electrolysis, it will flood the market and the price will fall to the cost of compression and transportation.

As of 2006, the world market for oxygen was about 1.2 million tons per day.  A large part of this is required by steel producers at specific points of demand and shipping becomes the major factor.  Producing 8 kg of O2 per kg H2, your 5 kg fillup in a Mirai will generate 40 kg of oxygen.  Filling 1/wk per vehicle is 6 kgO2/day, so just one USA-full of H2FCEVs would satisfy 100% of world oxygen demand by itself.

Doing the math helps keep you from looking like a fool.  I highly recommend it.

Trees

The economic vitality of both vehicles is ytbd. That is why so much R&D investment. Hydrogen has very attractive attributes that surpass what is possible with batteries. The Motor Week discussion did say some, as yourself, will stick with battery car as no need for long distant travel and enjoying home plug in power. Battery car has lot of hurdles to overcome and must compete with zero subsidy and longer range to be acceptable to public. Fuel cell as well must become cost effective, but has great refueling and range solutions.

The grid is fragile and expensive. It's just the nature of the beast. Our grid is horribly expensive to update and will slowly progress. Cost is expected to accelerate and road tax will be applied to battery car eventually. Nuclear power may never progress per public's perception within fear mongering. Thank you Jane Fonda. The grid will improve and hydrogen will improve. I read an analysis of companies product that claim a fuel cell powered charger is a good solution to battery cars charging infrastructure needs.

Read the current trend of warehouse fork lifts. No better place for battery power. Heavy slow moving fork lifts can easily justify low cost lead acid batteries that are multiple times more cost efficient as compared to lithium for this purpose. Easy to recharge with 460v three phase power. The industry is in the throws of converting to fuel cell for a whole host of advantages.

SJC

EP,
Did they ban you for a while?

SJC

BTW,
Oxygen for fossil fuel power plants reduces NOx and produces CO2 for fuels production.

Engineer-Poet
The economic vitality of both vehicles is ytbd. That is why so much R&D investment. Hydrogen has very attractive attributes that surpass what is possible with batteries.

"Attractive" attributes, like cost in excess of $2 million per fueling station which can handle perhaps a dozen vehicles per day.  Meanwhile, $300k worth of Supercharger can field 4-6 vehicles every 30 minutes, and at least 50% of the population has everything they need to do overnight charging at home:  an electric outlet in reach of the vehicle.

The grid is fragile and expensive. It's just the nature of the beast. Our grid is horribly expensive to update and will slowly progress.

Are you proposing we get rid of it so we can stop paying for it?  No?  Then shut up.

Are those costs going to be increased by BEVs any time soon?  No.  Using BEVs as schedulable demand can even lower grid costs by e.g. substituting for spinning reserve.

Read the current trend of warehouse fork lifts. No better place for battery power.

Forklifts are intended to run an entire workday, often 2 and sometimes 3 shifts.  Swapping out batteries to charge is time-consuming and dangerous.  The amount of energy is small and its cost is negligible, so HFCs are a good fit.  Road vehicles have radically different needs.

The industry is in the throws of converting to fuel cell for a whole host of advantages.
The word is "throes", and it's ONE advantage:  faster fueling time and elimination of the battery charging/maintenance bay.

Trees

EP you gave me a good chuckle. You're outrageous. It really isn't as black and white as you propose. You can make a case that auto companies think building battery cars is a good investment given that the electric drive is the same for fuel cell. You can't make a case for car companies and government investing in fuel cell technology if the battery car is the end all be all as you attempt to spin.

HarveyD

Until much lower cost (way below $100/kWh); much higher performance (between 800 and 1200 wh/Kg) batteries become available, extended range, all weather BEVs will be restricted to light short range units.

Larger, heavier, longer range all weather units may have to use improved lower cost FCEVs. Much lower cost clean H2 will become available and will compete with BEVs and ICEVs within about 10 years.

Engineer-Poet
EP you gave me a good chuckle. You're outrageous.

My "outrageous" positions have a way of becoming conventional wisdom over time.  Truth eventually wins out over propaganda and wishful thinking.

You can't make a case for car companies and government investing in fuel cell technology if the battery car is the end all be all as you attempt to spin.

I make the case that the auto companies are paid $tens of millions/year to build fuel-cell cars (including the government-paid H2 fueling stations) so of course they're going to do what it takes to get that money.

SJC

conventional wisdom over time
Ego is SO impressed with one self.

Engineer-Poet

Were you incognizant of the PNGV efforts, which were so close to realization and then so quickly abandoned in lieu of hydrogen "Freedom Car" programs after the election of Da Shrub?

Do you not realize that the hybrid and PHEV offerings of Honda, Toyota and other companies owe more to PNGV than anything later?

Such ahistorical blindness is what happens when you prefer ideology to anything resembling fact.

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