Transitioning from conventional to electric vehicles: The effect of cost and environmental drivers on peak oil demand

Abstract

There are widely varying projections as to the rate at which there is a transition from conventional to electric vehicles (EVs) and the related question of the proximity to peak oil demand. A critical element in these estimates is whether automotive companies will invest in further fuel saving technologies for internal combustion engine vehicles (ICVs) or accelerate EV development and production. Cited studies indicate EV cost parity is already achievable if economies of scale similar to ICVs are accessed. Equally, a number of studies are showing that EV whole of life per km costs are equal to, or are already lower than ICVs particularly if a substantially greater durability of EVs is accepted. Car sharing based on EVs and the advent of transport as a shared service (TaaS) is also identified as likely to further accelerate the EV/ICV transition.There is therefore evidence that justifies projections of a continuing exponential increase in EV market share, and that, consequently, peak oil demand will occur sooner than projected by most major oil companies. These companies’ modest estimation of the growth of EV market share is largely based on expectations of lowering ICV fuel economy. However, over the longer term investment in electric powertrains may prove more cost effective that the cost of investment in raising ICV fuel economy.