A decade ago when the documentary ‘Who Killed the Electric Car’, focusing creation and commercialization of General Motor’s EV1 was at hype, oil firms were unmindful of the fact that the same electric vehicles upsurge can someday put their future at stake. However, at the time of broadcast (2006), around 1,117 units were under production, but now we witness a whole new breed of electric vehicles. With all-new 2017 Chevy Bolt already in the market and Tesla Model 3 currently in production, oil companies are concerned that electric vehicles will soon substitute the internal combustion engines.
An online source spoke on the prediction of Fitch Ratings agency claims that the rise of electric vehicles will have an explicit negative impact on the oil industry. Last October, EVs reportedly consumed 5% energy in the mass transit sector. Although battery costs are reducing to an extent that can make EVs cost-competitive with ICEs, a recent study shows that oil demands will rise for the next three years. Carbon Tracker and The Imperial College of London anticipated the EV growth seeks to supersede two million barrels of oil per day in 2025. Under this revolution, OPEC is reminded of the Oil Prize War 2014, which has led to having second thoughts to cut supply in 2017.
Shell is optimistic that the apex of demand won’t be achieved for another 5 to 15 years, whereas Exxon hopes to supply oil till 2040. Saudi Arabia being an oil-rich country is confident to last another 70 years. The arrogant attitude of oil firms will do them no good if the tables turn drastically against them. The only chance of survival is to change as the time demands. Shell is making practical efforts toward natural gas and bio-fuel, and Saudi Arabia is creating solar panels. Other firms need to follow suit, as sustainable energy is the future.
While this transformation proves formidable for some, 194 countries that have signed the Paris Accords in pledge to reduce environmental pollution may benefit from it. The Environmental Protection Agency (EPA) has made it obligatory for automobiles to attain a fuel efficiency of 54 miles per gallon by 2025. President Trump is taking steps to dismantle EPA rules and investors should stay alarmed, as this can cause a price hike in oil and auto industries.
Long-term investors should take a safe route by investing in Tesla and General Motors as both auto manufacturers outshine in the electric vehicles industry. As apparent in their products, the sky’s the limit for Tesla, which only seems to get better, as CEO Elon Musk plans on latching solar panels into the roof of cars. Investors can safely invest in these stocks as progress is unending. Nonetheless, oil prices are imminent to rise with the supply cuts under way. Suncor and Trans Canada are among the firms that are stimulating growth. A long-term investment deploying derivatives on any renowned oil firm while exploiting the benefits of short-term returns is also a feasible option.