Legacy Companies Charging Forward Into The Electric Vehicle Market
From oil & gas to electricity & energy provision
It wasn’t too long ago that the commonplace electric vehicle (EV) seemed a pipe dream. Speaking in 2014, former Toyota executive Bill Reinert suggested that fully electric vehicles (EVs) lacked economic viability. He said that it was difficult to see the case for an electric car, especially given that there was ‘really nothing promising beyond the lithium battery’. At the time, he was probably right. But three years down the line, and the battery scene has been supercharged. Israeli startup StoreDot, for example, has found a way to charge EVs within a matter of minutes. Even in smaller cities, it’s common to see a hybrid or fully electric vehicle charging up. The emergence of a thriving EV market is starting to seem inevitable, and this is something that legacy fuel providers are finally beginning to accept. The question is, what are they going to do about it?
If you can’t beat ‘em, acquire ‘em
Things seems to be moving very quickly in the EV market. The UK government is discouraging the purchase of diesel cars, and France has announced that there will be no petrol or diesel cars on the country’s roads by 2040. It’s no wonder that oil and gas companies are paying close attention to emerging technologies. Earlier this month, Shell bought NewMotion, one of the biggest providers of electric charging points in Europe. By 2030, Morgan Stanley has estimated that one to three million charging points will be needed to meet consumer demand in Western Europe alone. Shell’s acquisition indicates that big oil and gas businesses are taking these estimates very seriously. In August, BP demonstrated this further by announcing the installation of EV charging points on UK forecourts. The company described the decision as a ‘logical step’. In short, if big oil and gas providers were once sceptical about the rise of EVs, they aren’t any more. As demand increases, so will the number of charging points. If the estimations of multiple governments and corporations are reliable, then this is likely to happen over the next 20 to 25 years. So, what can legacy companies do to take advantage of the shifting market?
The creation of charging hubs will change infrastructure, transforming the traditional fuel station and the retail culture that surrounds them. Filling a car up with liquid fuel might be more efficient right now, but charging a vehicle for a prolonged period of time is a chance for businesses to entice idle consumers. Instead of grabbing a snack at the checkout, drivers would have more time allowing them to sit down to a full meal, watch a film or go shopping. This is just one way that retail and entertainment businesses can take advantage of a new infrastructure. Although waiting times clearly present a business opportunity for retail and entertainment companies, the improvement of battery power will slowly eat away at the time that EV owners have to kill. At that point, the infrastructure of charging points will have to change again, and we could see a return to smaller convenience shops. Marketers, for example, could make use of consumer proximity by sending location based ads.
Existing oil and gas firms will track these developments carefully. As experts in energy, they want to retain their hold on the industry, and they have the knowledge and resources to do so. If that means making the transition towards renewable options, then so be it. BP, for instance, is already one of the largest producers of wind power in the US. For more than a decade, the company has committed itself to developing alternative energy solutions with a focus on biofuels and wind. As well as remaining an industry leader, this is about encouraging sustainability through low cost, low carbon options. Looking beyond the automotive industry, if companies like Shell and BP are providing electricity for vehicles, why not for homes, too? Although these businesses have serious experience and influence, their transition to electric power won’t be easy. One option could be forging strategic partnerships with (or outright buying) startups. Young companies would benefit from the influence and resources of a major partner, with incumbent businesses taking advantage of the startup’s flexibility and insights.
It makes perfect sense for legacy oil and gas companies to move into the EV scene. By providing electricity as well as fuel, they will capitalise on both markets and hold their positions of global influence. With a wealth of automotive knowledge and infrastructural expertise, these established businesses are well placed to guide the adoption of electric vehicles and the systems needed to support them. How they will do this is uncertain, but they aren’t exactly short of options. BP and Shell are the first industry giants to openly commit themselves to powering EVs, and with the electric future glowing brightly over the horizon, it’s just as well.
Can legacy oil and gas industries ride the electric current? How will EV owners spend their time while their cars are charging? Are the benchmarks for wider EV adoption realistic? Comment below with your thoughts.