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The red-hot electric vehicle market has sparked stiff competition
between Big Oil and utilities.
The oil major, which has sold fossil fuels to cars for a century, is now entering a power industry
geared up for exponential growth.
The problem is that utilities, major electricity providers for a century, have the same idea
.
BP Plc predicts that electric vehicle sales will grow at a staggering 8,800% between 2017 and 2040, an attractive business for oil companies as demand for petrol and diesel is expected to slow.
Big oil companies will have to contend with traditional utilities to recharge
in homes, on the road and even in the offices of green car owners.
Erik Fairbairn, founder and CEO of Pod Point Ltd.
, one of the UK's largest EV charging companies, said: "This is an industry
that has never happened before.
For the first time, power providers are meaningfully interacting with car companies, and the oil industry is realizing that if they miss this wave, the demands placed on them in the future will be greatly reduced
.
”
The logic of the oil company is very clear
.
Since the commercialization of internal combustion engines began at the turn of the last century, the sale of gasoline and diesel has been the backbone
of their business.
But with drivers now becoming more aware of emissions and the environment, most analysts predict demand growth for these fuels will slow and eventually decline
.
Vehicle charging stations are a way
to take drivers to "retail pioneers" at oil companies, keep cash registers in constant use and generate revenue from the sale of coffee and snacks.
Tufan Erginbilgic, CEO of BP's downstream business, expects half of its retail site gross margin to come from non-fuel sales
.
British oil giant BP said last week it would spend about $170 million on electric vehicle charging company Chargemaster, with plans to add the technology to its existing network of retail stations
.
Previously, Royal Dutch Shell Ltd.
, the world's second-largest oil company, took a similar move
.
Oswald Clint, an analyst at Sanford C.
Bernstein Ltd.
, wrote in a note that the deal "makes sense.
"
"BP wants to continue to be the preferred fuel retailer, so as the number of models increases, they need to offer electric vehicle products
.
"
Residential charging
However, Pod Point's Fairbairn estimates that only 3% of car charging will happen in transit, with the vast majority of people charging at home or where they leave their vehicles idle
.
This directly affects existing utilities
.
For utilities, EV charging is not a hedge against lost customers, but more to take advantage of opportunities
where electricity demand could grow substantially.
Sweden's Vattenfall AB and Finland's Fortum Oyj are currently installing charging stations
in their homes and outside offices.
"What we're seeing is that most charging happens when the car is parked for four hours or more," said
Tomas Bjornsson, vice president of electronic mobility at Vattenfall.
"Basically at home, at work or at the destination, like you're going to a shopping mall, a football game or any possible leisure activity during it
.
So that's really where we want to make sure EV drivers have access
.
”
Both utilities are fighting to provide drivers with charging infrastructure along highways, such as gas stations, that rival the oil major's plans
.
"We are covering most of the value chain," said
Rami Syvari, head of international sales and business development at Fortum Charge & Drive, which focuses on electric vehicles.
"Not all customers can charge
at home or in the office.
"
Of course, big oil companies and utilities can collectively dominate fuel retailers, dominate road pricing and utility homes, and offices
.
But the oil majors' ambitions could be even greater
.
Shell estimates that 40% of vehicle charging will take place at home and another 40% at work
.
Last year, it acquired First Utility, the UK's seventh-largest electricity supplier, and the measures taken may have the most direct impact
on the market share of existing electricity providers.
The deal "should come as no surprise," Mark Gainsborough, Shell's executive vice president of new energy, wrote
in a LinkedIn post in December.
In October, Shell said it would acquire NewMotion
, Europe's largest electric vehicle charging provider.
In late November, it reached an agreement with IONITY, a joint venture between the Munich-based BMW Group, Daimler AG, Ford Motor AG and Volkswagen, to begin deploying charging stations
in 10 European countries.
As the scramble for market share intensifies, Aleksandra O'Donovan, senior transportation analyst at Bloomberg New Energy Finance, believes that big oil and utility companies will both play a role, and population and geography will determine the success of
each sector.
"It's not going to be one solution to the whole problem," O'Donovan said
.
"Depending on how people live, the differences between countries will also be different
.
For example, the situation in Norway will be different
from Tokyo.
”
The red-hot electric vehicle market has sparked stiff competition
between Big Oil and utilities.
The oil major, which has sold fossil fuels to cars for a century, is now entering a power industry
geared up for exponential growth.
The problem is that utilities, major electricity providers for a century, have the same idea
.
BP Plc predicts that electric vehicle sales will grow at a staggering 8,800% between 2017 and 2040, an attractive business for oil companies as demand for petrol and diesel is expected to slow.
Big oil companies will have to contend with traditional utilities to recharge
in homes, on the road and even in the offices of green car owners.
Erik Fairbairn, founder and CEO of Pod Point Ltd.
, one of the UK's largest EV charging companies, said: "This is an industry
that has never happened before.
For the first time, power providers are meaningfully interacting with car companies, and the oil industry is realizing that if they miss this wave, the demands placed on them in the future will be greatly reduced
.
”
The logic of the oil company is very clear
.
Since the commercialization of internal combustion engines began at the turn of the last century, the sale of gasoline and diesel has been the backbone
of their business.
But with drivers now becoming more aware of emissions and the environment, most analysts predict demand growth for these fuels will slow and eventually decline
.
Vehicle charging stations are a way
to take drivers to "retail pioneers" at oil companies, keep cash registers in constant use and generate revenue from the sale of coffee and snacks.
Tufan Erginbilgic, CEO of BP's downstream business, expects half of its retail site gross margin to come from non-fuel sales
.
British oil giant BP said last week it would spend about $170 million on electric vehicle charging company Chargemaster, with plans to add the technology to its existing network of retail stations
.
Previously, Royal Dutch Shell Ltd.
, the world's second-largest oil company, took a similar move
.
Oswald Clint, an analyst at Sanford C.
Bernstein Ltd.
, wrote in a note that the deal "makes sense.
"
"BP wants to continue to be the preferred fuel retailer, so as the number of models increases, they need to offer electric vehicle products
.
"
Residential charging
Residential chargingHowever, Pod Point's Fairbairn estimates that only 3% of car charging will happen in transit, with the vast majority of people charging at home or where they leave their vehicles idle
.
This directly affects existing utilities
.
For utilities, EV charging is not a hedge against lost customers, but more to take advantage of opportunities
where electricity demand could grow substantially.
Sweden's Vattenfall AB and Finland's Fortum Oyj are currently installing charging stations
in their homes and outside offices.
"What we're seeing is that most charging happens when the car is parked for four hours or more," said
Tomas Bjornsson, vice president of electronic mobility at Vattenfall.
"Basically at home, at work or at the destination, like you're going to a shopping mall, a football game or any possible leisure activity during it
.
So that's really where we want to make sure EV drivers have access
.
”
Both utilities are fighting to provide drivers with charging infrastructure along highways, such as gas stations, that rival the oil major's plans
.
"We are covering most of the value chain," said
Rami Syvari, head of international sales and business development at Fortum Charge & Drive, which focuses on electric vehicles.
"Not all customers can charge
at home or in the office.
"
Of course, big oil companies and utilities can collectively dominate fuel retailers, dominate road pricing and utility homes, and offices
.
But the oil majors' ambitions could be even greater
.
Shell estimates that 40% of vehicle charging will take place at home and another 40% at work
.
Last year, it acquired First Utility, the UK's seventh-largest electricity supplier, and the measures taken may have the most direct impact
on the market share of existing electricity providers.
The deal "should come as no surprise," Mark Gainsborough, Shell's executive vice president of new energy, wrote
in a LinkedIn post in December.
In October, Shell said it would acquire NewMotion
, Europe's largest electric vehicle charging provider.
In late November, it reached an agreement with IONITY, a joint venture between the Munich-based BMW Group, Daimler AG, Ford Motor AG and Volkswagen, to begin deploying charging stations
in 10 European countries.
As the scramble for market share intensifies, Aleksandra O'Donovan, senior transportation analyst at Bloomberg New Energy Finance, believes that big oil and utility companies will both play a role, and population and geography will determine the success of
each sector.
"It's not going to be one solution to the whole problem," O'Donovan said
.
"Depending on how people live, the differences between countries will also be different
.
For example, the situation in Norway will be different
from Tokyo.
”