BP's Unthinkable Is Happening Now

Keith Williams profile picture
Keith Williams
8.21K Followers

Summary

  • China and India make dramatic new electric vehicle policy changes.
  • Dramatic growth of electric vehicles on a different timescale to BP’s projections.
  • Implications for car manufacturers wishing to capture part of the Chinese and Indian growth markets.
  • IEA to provide an update on EVs in November. Moody’s says direct financial effects from falling oil demand, including gasoline, "could be material by the 2020s”.
  • Not just cars: UN Framework Convention on Climate Change (UNFCCC) to require fossil fuel lobbyists to declare their conflicts of interest.

For some time I've been focused on the contradictions between BP's (NYSE:BP) projections and business planning with what is happening in relation to reduction of greenhouse gas emissions. Here I suggest that there is dramatic news concerning electric car growth in both China and India that will fundamentally change BP's (and other oil and gas majors e.g. ExxonMobil (XOM)) business planning. This is no longer in the distant future.

BP 2035 outlook

In the BP 2017 Energy Outlook, transport accounts for 56% of global oil demand, but in the electric vehicle discussion BP focuses on cars (20% or 19 Mb/d). In the fine print BP puts SUVs in the trucks section (another 24% or 23 Mb/d). I've argued elsewhere that buses and trucks are rapidly electrifying. I think that cars, buses and trucks are in play when considering electric vehicles. So we are talking about 44% of global oil production threatened by electric vehicle implementation.

BP's 2017 Energy Outlook envisages by 2035, 6% electric vehicles or 4.5% BEVs (Battery Electric Vehicles). The most extreme case (which is not taken seriously) would give ~3x this penetration or 13.5% BEVs.

BPs projections are that by 2035 just 10% of the new car numbers will be BEVs. In other words BP sees ICEs overwhelming dominant for car transport even in 2035.

BP's Spencer Dale and Thomas Smith summed up the threat of BEVs to oil consumption in the following statement. "EVs are not likely to be a game changer for the growth of oil demand over the next 20 years, where the increasing prosperity in emerging Asia is likely to swamp the impact of even a very rapid increase in electric cars." Note that not only is the impact of EVs dismissed, but because this means dramatic expansion of ICE vehicles, oil consumption

This article was written by

Keith Williams profile picture
8.21K Followers
Keith began his career as a research scientist (developmental biology, biochemistry, molecular biology) at the Australian National University, University of Oxford (UK), the Max Planck Institute for Biochemistry (Munich, Germany) and finally Macquarie University (Sydney) where he held a Chair in Biology and established the Centre for Analytical Biotechnology. Pioneering the area of proteomics (with Marc Wilkins in his group coining the term), Keith established the world’s first government-funded Major National Proteomics Facility (Australian Proteome Analysis Facility) which was involved with industrialising protein science. Keith left academe with his team to found Proteome Systems Ltd in 1999 to commercialise proteomics. The company had a strong focus on intellectual property, engineering/technology and bioinformatics. As CEO he led the company to ASX listing in 2004. Since 2005 Keith has been involved in new business development in biotech, e-health and other emerging technologies. Keith sees climate change and sustainable development as a major issue for humankind and also a major business disruptor/risk and opportunity. Keith holds a Bachelor Agr Science from the University of Melbourne and a PhD from the Australian National University. He is a Fellow of the Australian Academy of Technological Sciences & Engineering and received an AM (Member of the Order of Australia) for services to the Biotechnology Industry. He has received various industry awards including an Innovation Hero Medal from the Warren Centre for Advanced Engineering. With 300 scientific papers and many patents written, Keith has a clear view of innovation in the Biotechnology and Climate/Renewable Energy space. He is not a financial advisor but his perspective adds relevance to decision-making concerning feasibility and investment in technology innovation.

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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