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Oil firms charging up for electric vehicles

Energy firms and car makers are preparing for the EV onslaught

Nothing underlines the reality that the internal combustion engine (ICE) rein as king of the road is coming to an end like oil companies investing in charging technology for electric vehicles (EVs).

Two of the main European players have taken their first steps into the market and can be expected to beef up their offerings in future, as can petrol station operators around the world, as EVs rapidly gain market share from California to Guangdong.

Last October, Shell said it was opening installing recharging units on some of its UK petrol station forecourts and also bought Amsterdam-based NewMotion, one of Europe's largest specialists in smart-charging facilities for homes, businesses and parking lots.

Now, its BP's turn, as the supermajor unveiled a $5m investment in FreeWire, a US firm, which makes mobile fast-charging units for EVs, with a view to installing them on retail forecourts in the UK and more widely in Europe. The investment is modest and the roll out will be limited to trial sites to start with, but the company acknowledges that this is a business it can't ignore.

"Mobility is changing and BP is committed to remaining the fuel retailer of choice into the future. EV charging will undoubtedly become an important part of our business, but customer demand and the technologies available are still evolving," Tufan Erginbilgic, chief executive of BP Downstream, said.

Uncertainty over the pace at which the EV market will expand and where charging technology should be employed is a headache for downstream firms. They don't want to spend vast sums on infrastructure, which could end up in the wrong place and underused at this early stage of the game.

As a remedy to that threat, the FreeWire product makes sense for BP, as its size and mobility—the charger is basically a big box on wheels—means it can be deployed wherever there is demand, with minimal need for fixed infrastructure. BP is also exploring possibilities for using the chargers away from its retail sites.

Future-proofing

Meanwhile, the giants of vehicle manufacturing are facing a similar dilemma, needing to invest in EV technology if they are to make their businesses future-proof, even though electric vehicles represent a small fraction of what they make money out of now.

Both Ford and GE gave profit warnings in January, in part due to their need to invest in new technologies to survive. Germany's Daimler said in February that its profit growth was being helped back for the same reason.

Ford said it plans to move investment away from sedans and internal combustion engines towards trucks and EVs, unveiling plans to spend $11bn by 2022 on the development of 40 hybrid and fully electric vehicle models. GE said last October that it plans to roll out 20 fully electric models by 2023, as well as investing heavily in autonomous driving technology. Volkswagen and Toyota have also said they plan rapid expansion of their EV line ups. The days when niche players like Tesla can expect to dominate the headlines are fast coming to an end.

Should there be any doubt that the oil companies and vehicle manufacturers need to invest in EV technologies, the Bank of America is eager to dispel them. Its analysts have just produced a report in which they forecast that, by the early 2030s, half of the cars sold globally will be electric and that the growth of the EV market will contribute to global oil production peaking in the late 2020s at just under 106m barrels a day, before declining steadily in the 2030s.

Last year, Bloomberg New Energy Finance forecast that global EV sales would overtake ICE sales in around 2038. It expects EV sales to reach around 59m vehicles by then. Meanwhile, the International Energy Agency has estimated that the number of EVs on the world's roads could grow from some 2m in 2016 to between 40m and 70m by 2025, based on vehicle makers' assessments.

Even the oil industry tends not to predict peak oil much later than 2040—by which time a welter of legislation banning or limiting the sale of oil-powered vehicles is likely to be in force around the world.

It seems an EV-dominated world is coming, ready or not.

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