Worried about EVs reducing demand for oil? Read this.
Posted: Wed May 02, 2018 2:25 pm
Forbes reported in July 2017, Norway’s oil consumption continues to grow despite
surging EV sales. Although EV sales are high, it is unclear how much Norwegians are actually driving
them. Data seems to indicate that Norwegians continue to use their internal combustion cars for much
of their driving needs and are simply keeping their EVs in the garage, except when needed to avoid
paying bridge and highway tolls - EVs are exempt. This would explain why Norwegian oil demand
continues to grow despite rising EV sales and is another data point highlighting the high cost of EV
ownership, even with extensive subsidies.
Read file:///C:/Users/user/Downloads/Goehring%20&%20Rozencwajg%201Q2018%20Letter.pdf
In the introduction, we outlined the challenges both Edison and Ford faced over one hundred years
ago in their quest to adopt the electric vehicle. In the end, the electric vehicle could not compete with
the energy efficiency of the internal combustion engine (ICE), and in one of the most important
events to shape the twentieth century, the passenger car (powered by ICEs) became the dominant
mode of transportation. We recently finished reading Vaclav Smil’s excellent Energy and Civilization
and it made us do some serious thinking about the future of the EV. As outlined in the introductory
essay in this letter, consensus investment opinion believes EVs will have great success in displacing the
ICE. But what happens if the consensus opinion is wrong? Are the problems that Edison faced 100
years ago the same facing the electric car today?
If it’s true that sometime soon the efficiencies of that EV will become equal (if not vastly superior) to
the internal combustion vehicle, then consumers will gladly trade in their old cars for the new EVs
without hesitation. Adoption would likely be fast and widespread, especially given the concerns and
fears over global climate change. However, what if the efficiencies of today EVs are still so far behind
the ICE, that even assuming big increases in battery technology, they will never be competitive against
the internal combustion engines?
surging EV sales. Although EV sales are high, it is unclear how much Norwegians are actually driving
them. Data seems to indicate that Norwegians continue to use their internal combustion cars for much
of their driving needs and are simply keeping their EVs in the garage, except when needed to avoid
paying bridge and highway tolls - EVs are exempt. This would explain why Norwegian oil demand
continues to grow despite rising EV sales and is another data point highlighting the high cost of EV
ownership, even with extensive subsidies.
Read file:///C:/Users/user/Downloads/Goehring%20&%20Rozencwajg%201Q2018%20Letter.pdf
In the introduction, we outlined the challenges both Edison and Ford faced over one hundred years
ago in their quest to adopt the electric vehicle. In the end, the electric vehicle could not compete with
the energy efficiency of the internal combustion engine (ICE), and in one of the most important
events to shape the twentieth century, the passenger car (powered by ICEs) became the dominant
mode of transportation. We recently finished reading Vaclav Smil’s excellent Energy and Civilization
and it made us do some serious thinking about the future of the EV. As outlined in the introductory
essay in this letter, consensus investment opinion believes EVs will have great success in displacing the
ICE. But what happens if the consensus opinion is wrong? Are the problems that Edison faced 100
years ago the same facing the electric car today?
If it’s true that sometime soon the efficiencies of that EV will become equal (if not vastly superior) to
the internal combustion vehicle, then consumers will gladly trade in their old cars for the new EVs
without hesitation. Adoption would likely be fast and widespread, especially given the concerns and
fears over global climate change. However, what if the efficiencies of today EVs are still so far behind
the ICE, that even assuming big increases in battery technology, they will never be competitive against
the internal combustion engines?