Are oil and car executives hiding their heads in the sand? (Looking for more oil reserves perhaps?) Is Musk right about the end of the fossil fuel industry? UK-based research and analysis group Rethink Energy (no affiliation with RethinkX) believes so.
In a recent email from Lead Analyst Peter White, he states: “Come 2027/8 the Electric Vehicle sales will overcome the rise of pandemic fossil fuel recovery and oil will get squeezed. Bankruptcy for oil follows swiftly. If total car sales do NOT recover from the pandemic (which I expect) within 5 years, then oil begins to falter sooner. Either way, only one or two oil companies survive 2030, but as ailing players whose time has come. Our forecasts assume total car sales globally recover to pre-pandemic levels in 5 years, and that 2025 or 2026 oil sales get close to 2019 levels, and then fall away rapidly at a rate of 5% per annum (the pandemic was only 9.5%).”
As the graphs above delineate, the oil industry will not recover to pre-2019 levels, and EVs will rule the highways globally long before any bans come into play. It won’t just be in Norway.
The potential for global oil infighting inside and outside OPEC+, and the desecration of a number of emerging economies still reliant on oil but unable to compete with Saudi Arabia, Qatar, Russia, and the US as the price falls, will lead to huge international unrest, debt defaults, and falling currencies. A global crash is not out of the question, despite the fact that investors and government debt agencies are perfectly clear that this has been on the cards for a while. It will be its suddenness that will make it so shocking.
Once prices fall, they will never come back, and keeping oil flowing in ever smaller amounts until the last 100 million ICE vehicles are on the world’s roads will prove more than a challenge, with rewards for only a handful of companies employing a relatively low number of people. For all intents and purposes, the oil industry will be in the past and its asset base will be destroyed. From around 2035 onwards, there will be so much wealth creation in the cleantech industry that investors will barely notice the passing of oil, nor gas when it follows it shortly after.
White anticipates the potential of the US EV market accelerating faster than the rest of the globe. New players like Tesla, Rivian, Fisker, and Lucid have optimistic expansion plans. Both Ford and GM are announcing new EVs regularly and are desperate to keep market share. Ford’s F-150 Lightning and Mustang Mach-E are good examples where demand has outstripped production and plans have had to be frequently upgraded.
Volkswagen will soon be building EVs on American soil, and Asian manufacturers are aiming to import as well (Vinfast from Vietnam is a recent example). This year’s Super Bowl had 8 commercials for EVs — and they were worth watching. Automakers are collaborating with battery manufacturers, and many new factories are being built.
By 2036, 100% of all cars sold in the US will be electric vehicles, and by 2037 more than half of all the cars on US roads will be EVs. By 2049, all cars in the US will be zero-emission vehicles, the great bulk of them EVs. We see the US increasing its total car fleet more slowly, but still ending this period just shy of 383 million cars compared to 287 million today. For the first time, this is a report which focuses on the speed at which the EV transition is happening, and doesn’t preserve any optimism for the oil majors just because they are customers. We hope you enjoy it.
Will Musk End Fossil Fuels?
Yes, I think Musk will end the fossil fuel industry, or at least be one of the major destructors.
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