Even with low oil prices, the future for electric vehicles is bright. Plummeting battery prices, longer-range models, and more charging stations are driving forward electric vehicle sales. And with the auto industry investing billions to meet strong pollution standards globally, the oil industry has good reason to be nervous.
Experts predicting strong sales growth
Electric vehicle (EV) sales grew 60 percent worldwide last year, according to Bloomberg New Energy Finance, which predicts in an article, "Here's How Electric Cars Will Cause the Next Oil Crisis," that electric vehicles will account for 35 percent of new car sales globally by 2040.
Industry expert Navigant Research also forecasts strong EV growth in 2016 as new, longer range models enter the market and more charging stations are installed. Already through the first two months of 2016, EV sales are up 9 percent compared to the same time last year, according to InsideEVs.com.
No wonder the oil industry is skittish. Bloomberg predicts the EV "revolution" will displace 13 million barrels a day of crude by 2040 and 2 million barrels per day as early as 2023.
It's easy to see why the future of electric vehicles is bright. Here are five reasons:
Reason #1: Battery costs are dropping fast
Battery prices are plummeting, faster than many experts (including myself) would have predicted.
More and more, scientists, industry experts, and automakers are in agreement that battery prices are headed below the magic $150 per kilowatt-hour in the next decade. That's the point where experts believe that EVs enter the mass market.
"EVs may be able to compete directly with petrol-driven cars on cost a lot sooner than most people think,'' wrote scientists Björn Nykvist and Måns Nilsson, authors of a recent scientific study published in Nature Climate Change on falling battery prices.
Battery prices are "on a trajectory to make unsubsidized electric vehicles as affordable as their gasoline counterparts in the next six years,'' Bloomberg New Energy Finance projects. "That will be the start of a real mass-market liftoff for electric cars.''
By 2022, Bloomberg estimates electric cars will be cost competitive on a lifecycle basis (purchase plus fuel costs) with gasoline cars.
Carmakers like GM and Tesla are investing in mainstream EV models because they expect battery prices to rapidly fall.
Reason #2: Longer range, affordable electric cars are coming
Longer-range, affordable electric cars that operate solely on electricity and are capable of traveling 200 miles on a charge, are coming to showrooms.
GM's Chevrolet Bolt, with a 200-miles-per-charge range and costing about $30,000 with tax credits, has been described by Wired as "the electric car for the masses.'' It will arrive later this year, followed by Tesla's affordable Model 3 and the next generation, longer range Nissan LEAF. Even VW has announced it will build a 186-mile, high-volume electric car.
Plug-in hybrids, capable of operating either on electricity or gasoline, are also getting better.
GM's next-generation Chevrolet Volt, a plug-in hybrid whose range has been boosted from 40 miles to 50 miles, is already in showrooms, and selling briskly. Toyota plans to reintroduce its Prius Plug-in later this year, also with boosted all electric range, rumored to be 30 to 35 miles.
Reason #3: More charging stations are coming
Lack of charging stations—so-called "range anxiety"—remains a barrier to much wider EV use. But utilities and others are moving to increase the number of charging stations at workplaces, apartment complexes, campuses, transit stations and other public gathering places.
In California, where Gov. Jerry Brown has set a goal of putting one million electric vehicles on the state's roads by 2023, Southern California Edison is moving ahead with a pioneering plan to deploy 1,500 charging stations initially and another 28,500 in the future. San Diego Gas & Electric is set to deploy another 3,500 stations.
Companies such as Google, Coca-Cola and Walgreens are installing charging stations. Nissan offers buyers of its LEAF two years of free charging at hundreds of stations. BMW and VW are teaming up to build up to 100 charging stations in "express charging corridors" from San Diego to Portland, Ore., on the West Coast and Boston to Washington on the East Coast.
Reason #4: Auto industry is embracing EVs
Car makers are investing billions of dollars to bring more electric vehicle models to market.
The number of EV models has grown from two in 2010 to 25 today. Over the next three years, industry expert Alan Baum forecasts, the number of models to double to over 50, with 16 new models in 2016.
With sales leaders Tesla, GM, Nissan and BMW threatening to run away with the EV market, other companies are playing catch-up.
Ford is investing $4.5 billion in electric cars, and will be adding 13 electric cars and hybrids by 2020, when more than 40 percent of its lines will be electrified.
Honda's Chief Executive Takahiro Hachigo recently announced that two-thirds of its line-up by 2020 will be electrified, including conventional hybrids, plug-in hybrids and fuel cell vehicles.
The mighty German auto industry is also recognizing the threat.
Despite being mired in the diesel scandal, VW will step up its EV investments and plans to roll out 20 electric cars and plug-in hybrids by 2020. Audi, a subsidiary of VW, expects 25 percent of its U.S. car sales to come from electric cars by 2025. Even conservative Daimler is investing 500 million in a new lithium ion battery factory in Germany to supply its growing electric car line up.
Reason #5: The global imperative to cut carbon pollution and oil dependency
EVs have gained importance as the world looks for ways to reduce the carbon pollution and oil dependency that fuel dangerous climate change.
A study by NRDC and the Electric Power Research Institute found that widespread electric vehicle use could cut carbon pollution by 550 million metric tons annually in 2050, equivalent to the emissions from 100 million passenger cars. It also would reduce other harmful pollution, such as ozone and particulate matter.
As part of the historic Paris climate accord, 197 nations representing 97 percent of the world's emissions have committed to national plans to cut carbon pollution, including from motor vehicles which accounts for 17 percent of global CO2 emissions.
The three largest passenger car markets representing two-thirds of global sales all have strong fuel economy standards in place that will help drive up EV sales: the U.S. (54.5 mpg by 2025), European Union (56.9 mpg by 2021) and China (47.7 mpg by 2020).
And it may come to a surprise to many, but China has quickly become the world's largest market for EVs and the home to the world's number one EV manufacturer, BYD.
Watch out, Big Oil. Your time of dominating the transportation sector is running out.