Room for Variance

There is much potential for variance when forecasting outcomes over long periods of time, especially when attempting to predict change that is occurring rapidly. Growth in sales will be the biggest factor in the impact that EVs have on PCMO volumes, and those sales are indeed growing fast. During the decade that ended with 2019, global sales grew more than 300-fold, from 7,000 units per year to 2.2 million. The global electric car population grew from less than 100,000 at the end of 2011 to more than 7 million at the end of 2019, for a compound average increase of more than 70%.

Analysts and EV proponents agree that sales and the global EV parc will continue to grow rapidly, but there is wide variation about when their numbers will reach critical mass and the level to which they will penetrate the car population in the coming decades. Some of that variation probably stems from the core interests of different organizations.

The most aggressive prediction for the highest number of EVs on the roads in a given timeframe is from Bloomberg New Energy Finance. Perhaps the fact that it has no dog in the fight allows its forecasts to be so optimistic. BNEF reckons that 57% of cars and 81% of public buses sold around the world will be electric by 2040. This adds up to a fleet of almost 550 million vehicles, far more than predicted by the oil majors, which stand to lose significant business if ICEs go the way of the dodo.

The most aggressive prediction for the highest number of EVs on the roads in a given timeframe is from Bloomberg New Energy Finance. Perhaps the fact that it has no dog in the fight allows its forecasts to be so optimistic. BNEF reckons that 57% of cars and 81% of public buses sold around the world will be electric by 2040.

In its Global EV Outlook 2019, the International Energy Agency presents two pictures. First is the New Policies Scenario, which considers the effects of existing government policies and objectives, as well as announcements by carmakers on their EV manufacturing plans and uptake. It puts global EV cars sales at 23 million per year and stock at more than 130 million units in 2030, up from 21.5 million sales and 25 million stock in its previous forecast. By territory, EVs will comprise 28% of total passenger car sales in China, 28% in Europe, 21% in Japan, 29% in Canada and 8% in the U.S.

Next is the EV30@30 Scenario, based on pledges made by signatories to the Electric Vehicle Initiative, which targets 30% vehicle electrification by 2030. This scenario projected in 2019 that purchases of vehicles will rise twice as fast as under the New Policies Scenario so that sales top 43 million and stock exceeds 250 million by 2030. This scenario put EVs at 42% of total car sales in China in 2030, 50% in Europe, 37% in Japan, 30% in Canada and the U.S., 29% in India and 22% in other countries.

In an analysis named the Sky Scenario, Royal Dutch Shell predicted that more than half of new car sales around the world will be electric by 2030 and all of them by 2050. This might seem surprisingly bullish for a corporation whose core business is petroleum, but Shell has a vested interest in EVs. Over the past few years it has invested in Greenlots, a Californian charging network startup; Newmotion, a Dutch electric charging company with 30,000 charge points; and another Californian charging startup called Ample. Shell also signed an agreement with Ionity, a European charging network operator, and acquired Sonnen, a German energy storage and home EV charging business.

ExxonMobil, the biggest oil company in the world, predicted in its 2019 Energy Outlook that what it calls “advanced vehicles” (hybrids, plug-ins and fuel-cell cars) will grow to occupy more than 20% of the vehicle fleet, or some 420 million units, and 30% of new sales by 2040.

BP also takes a stab at a figure. In its 2019 Energy Outlook, the oil giant thinks there could be 350 million EVs by 2040. Like its Anglo-Dutch rival Shell, BP has laid out lots of money for a handful of EV-related businesses: the charging network company Chargemaster, ultra-fast charging lithium-ion battery developer StoreDot, mobile rapid EV charging technology firm FreeWire and PowerShare, one of China’s leading charging platforms.

ExxonMobil, the biggest oil company in the world, predicted in its 2019 Energy Outlook that what it calls “advanced vehicles” (hybrids, plug-ins and fuel-cell cars) will grow to occupy more than 20% of the vehicle fleet, or some 420 million units, and 30% of new sales by 2040. The U.S. giant has been slow to invest in EV charging infrastructure companies and start-ups, although it did signal in January 2019 that it was mulling entering those sectors.

According to Andrew Logan, oil and gas program director at nonprofit sustainable investing organization Ceres, “This move suggests that a cultural shift may be underway … [in] the most bearish of the oil majors on electric vehicles.”

The Organization of Petroleum Exporting Countries, typically more downbeat than ExxonMobil, puts EVs (both BEVs and PHEVs) at 320 million by 2040, a share of 13% of the global fleet, of which 305 million will be passenger cars.

The U.S. Energy Information Agency is one of the most cautious, despite ratcheting up its figures by a significant order of magnitude. Its first prediction in 2011 had sales of battery EVs in the U.S. at fewer than 500,000 units a year by 2035.16 Its current prediction in the Annual Energy Outlook 2019 puts the figure in the region of 19 million by 2040.

It would be easy to think that under the current U.S. administration, which has repealed armfuls of federal legislation on the environment and clean energy, such cautious forecasting was politically motivated. But EV industry insiders put it down to the legislative status quo. 

“I don’t believe the conservatism of the EIA’s EV projection is driven out of the White House. I’m actually relatively confident in their independence, if for no other reason than they’ve been conservative under much more progressive presidents as well,” Dan Woynillowicz, deputy director of Clean Energy Canada, told Lubes’n’Greases.

“Now, this isn’t to say that this approach isn’t problematic. The scenarios are treated as ‘forecasts’, and incumbents often point to the business-as-usual scenario to justify future demand for their products,” he added.

None of the organizations mentioned above offer estimates on the effects EVs will have on PCMO demand, but such wide variations would have an impact on volumes. EV uptake in Oronite’s analysis was significantly higher than any of these other projections, and it is safe to say the impact would be less under those scenarios. Under all except BNEF’s forecast, the volume loss would be a fraction of what Oronite calculated.