Electric cars are a threat to the oil industry. Cars and trucks that burn gasoline or diesel make up for the 50% worldwide demand for oil. Now if electric cars become more widely used, that could really cause a threat to the oil and gas producers.
Oil groups are under threat from the rise of electric cars. Oil companies face a resoundingly negative threat from a sharp growth in electric cars. This warns of a radical change to the oil industry spurred by new technology. It outlines a grim scenario for global oil companies such as Chevron, ExxonMobil and Royal Dutch Shell. The threat of electric cars could create an investor death spiral with nervous asset holders selling out of oil companies, making debt and equity more expensive.
It will take a long time for electric cars to become a disruptive force through mass adoption. There are only about 7.5 million cars with a plug on the road today worldwide. Annual electric vehicle sales are less than 1% of the global total. But battery costs have fallen 73% since 2008 to $268 per kilowatt hour. $120 kWh is generally considered the point at which electric cars become cost competitive.
Oil companies argue that new developments and population growth mean more combustion engines by the mid 2030s. The oil sector, big electricity utilities that burn fossil fuels could be affected by the latest battery advances.
Some oil companies appear to be addressing the potential for disruption by making some big renewable investments. While the others seem to be satisfied that the market for crude oil is unlikely to be affected by electric cars or new technologies for decades.
Internal combustion engine of a gas burning vehicle is about 17 to 21% energy efficient, so 80% of the energy in the tank actually goes up in smoke or any heat. On the other hand, the electric motor is 90 to 95% energy efficient, that is, the latter one is three to five times more efficient. Electric vehicles are 10 times cheaper to charge or fuel. A gasoline car has more than 2000 moving parts, whereas, electric vehicles has only 18 moving parts. Therefore, the maintenance cost of the latter is far more affordable than the former. Electric vehicles are far more powerful than the internal combustion engines. The Tesla P90D accelerates faster than $1 million gas ‘supercars’ from Ferrari, McLaren, Lamborghini, Pagani and Porsche.
People who want to buy an electric car also need a market to sell the used electric car. But at this moment the used electric vehicle market does not exist. There are no government incentives for a used electric car presently.
Electric vehicles make up 1% of all new car sales and just half a per cent of all used car sales. Another problem is that, dealerships make less on average per used electric vehicle than they would make on a used gas burning vehicle, about $300 less and they take a longer time to sell. A used electric vehicle would take an average of 69 days to sell a opposed to 59 days for gas burning or diesel burning car.