The Effects of Electric Vehicles Adoption on the Oil and Gas Sectors
Electric vehicles (EVs) are gaining momentum in the global transportation sector, driven by environmental concerns, policy support, technological innovation, and cost reduction.
According to the International Energy Agency (IEA), global EV sales reached 10.2 million units in 2020, up 43% from 2019, despite the overall decline in car sales due to the COVID-19 pandemic. The IEA projects that the global EV stock will grow to 145 million by 2030, accounting for 7% of the total vehicle fleet.
This rapid growth of EVs has significant implications for the oil and gas (O&G) industry, which has traditionally relied on the transportation sector as a major source of demand for its products. As more people switch to electric cars, the demand for petrol and diesel will decline, affecting the profitability and competitiveness of O&G companies. At the same time, the rise of EVs also creates new opportunities for O&G companies to diversify their business portfolios, invest in low-carbon energy sources, and participate in the emerging EV charging market.
The Growth of Electric Car Charging Companies
One of the key enablers of EV adoption is the availability and accessibility of charging infrastructure. EV owners need convenient and reliable places to charge their vehicles, whether at home, at work, or on the road. This creates a huge market potential for companies that provide EV charging solutions, such as charging equipment, software, services, and networks.
According to a report by BloombergNEF, the global EV charging market was valued at $6.4 billion in 2020, and is expected to grow to $33.5 billion by 2030. The report estimates that there were 1.3 million public charging points and 11.4 million private charging points worldwide in 2020, and these numbers will increase to 12.7 million and 191.3 million, respectively, by 2030.
In India, the EV charging market is also expanding rapidly, driven by the government’s ambitious target of achieving 30% EV penetration by 2030. According to a study by the CEEW Centre for Energy Finance, India will need 2.9 million public and 69.6 million private charging points by 2030 to meet the projected EV demand. This will require an investment of $2.9 billion for public charging and $12.6 billion for private charging.
Several companies are already tapping into this opportunity and offering various EV charging solutions in India. Some of the leading electric vehicles charging companies in India are:
✅ Tata Power: Tata Power is one of the largest EV charging network providers in India, with over 500 charging points across 100 cities. The company offers AC and DC chargers with different power outputs and standards, as well as a mobile app for locating and paying for charging sessions. Tata Power has partnered with several automakers, such as MG Motor, Jaguar Land Rover, and Hyundai, to provide charging solutions for their EV customers.
✅ Charge Zone: Charge Zone is a startup that provides smart EV charging solutions, such as cloud-based software, mobile apps, RFID cards, and analytics. The company has installed over 300 charging points in 40 cities and aims to reach 10,000 charging points by 2025. Charge Zone also operates a franchise model, which enables individuals and businesses to set up and operate their charging stations using the company’s platform.
✅ Ather Energy: Ather Energy is an EV manufacturer that also operates its charging network, called Ather Grid. The company has set up over 200 charging points in 18 cities and plans to expand to 30 cities by 2023. Ather Grid offers fast and free charging for all EVs and also provides real-time information on charging availability and status through a mobile app.
✅ Charzer: Charzer is another startup that provides EV charging solutions, such as charging equipment, software, and services. The company has developed a low-cost and compact charging device called Kirana Charzer, which can be installed at any shop or location with a power supply. The device can charge any type of EV and also allows the owner to earn revenue by setting their tariff and accepting payments through the Charzer app.
✅ Statiq: Statiq is a startup that provides EV charging infrastructure as a service. The company installs, operates, and maintains EV charging stations at various locations, such as malls, hotels, offices, and highways. The company offers AC and DC chargers with different power outputs and standards and also provides a mobile app for locating and paying for charging sessions. Statiq has deployed over 250 charging stations in 20 cities and aims to reach 5,000 charging stations by 2025.
How Oil and Gas Industries are Affected the sire of Electric vehicles
The rise of EVs poses a significant threat to the O&G industry, as it reduces the demand for petrol and diesel, which account for about 60% of global oil consumption. According to the IEA, global oil demand will peak in the late 2020s and decline thereafter as EVs displace about 5.4 million barrels per day (mbpd) of oil demand by 2030 and 17.6 mbpd by 2050. This will hurt the revenues and margins of O&G companies, as well as their asset valuations and investment attractiveness.
However, the O&G industry can also leverage its strengths and capabilities to adapt to the changing energy landscape and capture new opportunities. Some of the possible strategies for O&G companies are:
✅ Diversify into low-carbon energy sources: O&G companies can invest in renewable energy sources, such as solar, wind, and biofuels, to reduce their carbon footprint and hedge against the decline in oil demand. O&G companies can use their existing skills and assets, such as project management, engineering, and infrastructure, to develop and operate renewable energy projects. Some examples of O&G companies that have invested in renewable energy are Shell, BP, Total, and Reliance Industries.
✅ Participate in the Electric vehicles charging market: O&G companies can also enter the EV charging market, either by developing their charging solutions or by partnering with existing players. O&G companies can leverage their extensive retail network, customer base, and brand recognition to offer convenient and reliable charging services to EV owners. Some examples of O&G companies that have entered the EV charging market are Indian Oil, HPCL, BPCL, and Essar Oil.
✅ Innovate and optimize the oil and gas value chain: O&G companies can also focus on improving the efficiency and profitability of their core business, by adopting new technologies, optimizing processes, and reducing costs. O&G companies can use digital solutions, such as artificial intelligence, big data, and blockchain, to enhance their operations, performance, and decision-making. O&G companies can also explore new markets and segments, such as hydrogen, natural gas, and petrochemicals, to diversify their revenue streams and meet the evolving energy demand.
The Need for Good Charging Stations
One of the main barriers to electric vehicles adoption is the lack of adequate and accessible charging infrastructure. EV owners need to have confidence that they can find a charging station when and where they need it and that they can charge their vehicles quickly and safely. Therefore, there is a need for good charging stations that can meet the following criteria:
✅ Availability: Charging stations should be available in sufficient numbers and locations, to cater to the current and future EV demand. Charging stations should also be compatible with different types of EVs and charging standards, to ensure interoperability and convenience. Charging stations should also have a high uptime and reliability, to avoid breakdowns and disruptions.
✅ Accessibility: Charging stations should be easily accessible and visible, to reduce the search and waiting time for EV owners. Charging stations should also be integrated with other modes of transportation, such as public transit, parking, and mobility services, to enable seamless and multimodal mobility. Charging stations should also be user-friendly and secure, to ensure a smooth and safe charging experience.
✅ Affordability: Charging stations should offer competitive and transparent pricing, to attract and retain EV owners. Charging stations should also provide flexible and convenient payment options, such as mobile wallets, QR codes, and RFID cards, to enable cashless and hassle-free transactions. Charging stations should also leverage smart technologies, such as dynamic pricing, demand response, and load management, to optimize the utilization and profitability of the charging infrastructure.
Changes in the Oil and Gas World
The growing popularity of EVs is transforming the oil and gas world, as it reshapes the energy demand and supply dynamics, alters the competitive landscape, and accelerates the energy transition. Some of the key changes that the O&G industry will likely witness are:
✅ Shift in the oil demand and supply balance: As EVs displace oil demand, the global oil market will likely face an oversupply situation, leading to lower oil prices and revenues for O&G producers. This will also affect the geopolitics and trade patterns of oil, as some of the major oil-importing countries, such as China and India, will reduce their dependence on oil-exporting countries, such as Saudi Arabia and Russia.
✅ Increase in the competition and collaboration among energy players: As EVs create new market opportunities and challenges, the O&G industry will likely face increased competition and collaboration from other energy players, such as utilities, automakers, technology companies