If you look at the results of most economists, financiers and journalists you will see that their prognostications are never particularly good at predicting the future. It is nevertheless tempting to make a few suggestions about the future of oil and electric vehicles as solid trends are now emerging. Ultimately everything is driven by price - and oil and electricity is certainly no exception.
As engineering professionals you are certainly going to be impacted by the changeover from oil driven cars to electric over the next few years. How can you prepare yourself to take advantage of these huge opportunities ?
Two Observations are Notable Today
The first one is the collapse in previously strong power utilities from monolithic highly profitable entities to often shadows of what they were before – mainly because of the massive growth in solar energy in homes and other independent producers. This process of the weakening of the power utilities is often referred to as the power utility ‘death spiral’. As more households provide their own power and thus reduce their consumption of electricity from the utility; the utility responds to the overall drop in power consumption by increasing their prices. This in turn, drives homes to increase their solar energy installations further to reduce their reliance on the (often government owned) utility.
The second item is the incredibly swift (Elon Musk of Tesla reckons it is still slow growth) growth of electric or hybrid cars in the Western World. When my young programmer nephew puts a deposit down for an electric car, I know things are changing.
Fitch (the investor ratings agency) refers to the ‘investor death spiral’ for companies that don’t adjust to the rapid change from oil fuelled cars to electric and the impact it will have on previously solid businesses.
The suggestion is that over half of global oil demand is driven by transport (Bloomberg). I have heard other numbers saying that 25% of global oil demand is for cars. I am not quite sure of the actual numbers here – probably a guestimate somewhere in between.
Oil majors such as BP are now saying that the pick up in electric vehicles will be swift with an estimated 100m electric cars in 2035 (as opposed to an earlier estimate of 57m). Shell says the majority of cars on the road by 2030 will be electric. Amazing numbers from oil companies.
Are these estimates correct ? Who knows ?
But one thing is for sure – even with 5% or 10% of the mix of cars being electric and a big chunk of households using solar – this will have a major impact on the consumption of oil and coal and the way we conduct our lives.
As Engineering Professionals Prepare yourself for Change – they are definitely a’coming
One immediate impact is the huge increase in electric power consumption as opposed to that of oil and coal. Will this save the bacon of the traditional power utilities ? Perhaps.
From an engineering point of view – recharging of cars will place a huge load on the existing grid and local distribution network. For example, it is estimated that even six closely located vehicles charging together at peak times (e.g. a wintry evening in Europe or a ferociously hot day in Australia); could lead to local brown outs.
Surely a few of the great challenges and opportunities for engineering professionals such as yourselves.
Elon Musk makes encouraging noises:I really do encourage other manufacturers to bring electric cars to market. It's a good thing, and they need to bring it to market and keep iterating and improving and make better and better electric cars, and that's what going to result in humanity achieving a sustainable transport future. I wish it was growing faster than it is.
Yours in engineering learning