Bloomberg Vs. Navigant Research: Will EVs Produce A New Oil Crash? When?

Juan Carlos Zuleta profile picture
Juan Carlos Zuleta


  • In this article, I correct, update and extend the information contained in a previous contribution to put Bloomberg’s hypothesis that EVs will produce a new oil crash under scrutiny.
  • The findings provide considerable support to this line of reasoning albeit conclude that the crash is likely to occur not by 2023 but by 2024.
  • Here two game-changers can be identified: BEVs and electric buses. They would both account for almost 2/3 of the oil consumption reduction.
  • It’s concluded that not one but many Li-ion battery gigafactories will be needed, and that much more lithium than expected will also be required in the years to come.

In recent days, there has been a great deal of discussion about the possibility that electric vehicle [EV] sales will produce a new oil crash. A series of reports by Bloomberg are at the center of this controversy. One can find them here and here. These views have been put into question by navigant research and summarized by green car reports.

Somewhat surprisingly, Bloomberg's contentions reinforce at least two of the views I put forward last year in another Seeking Alpha article.

First, that the worsening of climate change would have prompted the electrification of the automobile industry in the world as reflected in a decreased demand for diesel and gasoline which is likely to intensify in the years ahead as Tesla's (TSLA) Li-ion battery gigafactory and other carmakers' gigaplants are introduced into the market.

Second, that even though oil prices won't fall forever, their recovery will take some time and it's highly unlikely that we will return to business as usual, which would nonetheless keep the incentives for persisting a search for substitutes intact generating a new downward impulse for the demand for oil.

Now, the main thrust of Navigant Research's arguments resides in four points. One, conventional vehicle fuel efficiency is meant to increase 22% over the next decade resulting in significant oil displacement to belittle the oil displaced by EVs. Two, autonomous vehicles will also tend to increase fuel efficiency on the roads further contributing to displacing oil. Three, assuming oil prices stay in the $40-$80 range for the next 10 years, conventional hybrids are likely to win the energy cost equation over electric drive. And four, low oil prices may lead to reforms which will have a negative impact on EV sales.

There are many problems with these ideas. To begin with, oil displacement due to fuel efficiency

This article was written by

Juan Carlos Zuleta profile picture
Juan Carlos Zuleta is an economist. He holds a master's degree in Agricultural and Applied Economics from the University of Minnesota and did Ph.D. studies in Economics at the New School for Social Research. Since 1992 he has published a number of articles on the economics of lithium. Due to his contributions to EV World.Com, Industrial Minerals and Seeking Alpha.Com during the period 2008-2009, Juan Carlos was invited to participate as a speaker at both the inaugural Lithium Supply & Markets Conference (LS&M) held in January 2009 in Santiago, Chile as well as the second LS&M Conference held in January 2010 in Las Vegas, USA.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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