A tail­wind for elec­tric cars

Pres­sure at pump is just what they need to grow de­mand for new mod­els

Houston Chronicle Sunday - - BUSINESS - By Jeremy Hodges, Oliver Sach­gau and Ania Nuss­baum

Oil’s climb to $100 is just what elec­tric car mak­ers need to drive de­mand for new mod­els.

Oil’s march to­ward $100 a bar­rel is com­ing at just the right the time for auto mak­ers in­vest­ing bil­lions in the switch to elec­tric cars.

Fuel prices reached a fouryear high re­cently last month, con­cen­trat­ing con­sumers’ minds on the rel­a­tive costs of in­ter­nal com­bus­tion ver­sus elec­tric mo­tors. For com­pa­nies pre­par­ing to bring a record num­ber of elec­tric and hy­brid mod­els to mar­ket in 2019, oil’s rally could tur­bocharge de­mand.

“The higher the price of oil, the more tail­wind we’re go­ing to have be­hind elec­tric cars,” Car­los Ghosn, chair­man of Re­nault SA and Nis­san Mo­tor Co., said at the Paris Mo­tor Show on Wed­nes­day.

Car­mak­ers in Asia, Europe and the United States plan new mod­els across all mar­ket seg­ments in 2019, from cheap city run­abouts to high-per­for­mance road­sters. Ger­many’s car gi­ants are all ready­ing new mod­els. Audi is slated to start sell­ing the ETron sport util­ity ve­hi­cle later this year, while Mercedes will fol­low with the EQC in 2019. BMW’s Mini unit also plans to re­lease the much-an­tic­i­pated Mini Elec­tric hatch­back.

In Ja­pan, sales are likely to get a boost from the re­lease of Honda’s Clar­ity Plug-In Hy­brid and Ur­ban EV mod­els. Nis­san will start sell­ing a longer-range ver­sion of its best­selling Leaf. In to­tal, the num­ber of plug-in hy­brid and bat­tery ve­hi­cles for sale world­wide will rise 20 per­cent to 216 next year.

While elec­tric and plug-in hy­brid ve­hi­cles are still a frac­tion of global sales, growth rates have been spec­tac­u­lar. In the sec­ond quar­ter, de­liv­er­ies in­creased by 77 per­cent year-on-year to 411,000 ve­hi­cles world­wide. Even be­fore the lat­est rally in oil prices, that was fore­cast to rise a fur­ther 49 per­cent by the same quar­ter next year.

“We’re al­ready see­ing de­mand out­strip­ping sup­ply,” said Fiona Howarth, CEO of Oc­to­pus Elec­tric Ve­hi­cles, a Bri­tish car-leas­ing firm. “EVs are com­ing quicker than most peo­ple think.”

Brent crude, the in­ter­na­tional bench­mark, has jumped 27 per­cent this year to more than $85 a bar­rel and ma­jor traders pre­dict prices could reach $100 this win­ter as U.S. sanc­tion of Ira­nian ex­ports strain global sup­ply. The U.S. bench­mark, West Texas In­ter­me­di­ate, re­cently broke above the $75 a bar­rel thresh­hold.

The rally has started to feed through to prices at the pump. In the U.S., av­er­age gaso­line prices are on the verge of breach­ing $3 a gal­lon for the first time since 2014.

The in­creas­ing abil­ity of con­sumers to switch away from fos­sil-fuel pow­ered ve­hi­cles will be a con­cern for the oil sec­tor, from gi­ant com­pa­nies like Exxon Mo­bil Corp. and Royal Dutch Shell, which sell bil­lions of gal­lons fuel, to pol­icy mak­ers in the Or­ga­ni­za­tion of Pe­tro­leum Ex­port­ing Coun­tries. As driv­ers em­brace elec­tric­ity, it will un­der­mine de­mand for oil.

Across Europe, util­i­ties are pour­ing money into charg­ing net­works. Enel SpA in Italy, Vat­ten­fall AB in the Nordic re­gion and Cen­trica Plc in the U.K. are build­ing up sys­tems to recharge car bat­ter­ies even be­fore it’s ob­vi­ous how they can make money. China has an am­bi­tious na­tional pro­gram to build charg­ing in­fra­struc­ture.

“It’s a pub­lic ser­vice we have to pro­vide,” said Ig­na­cio Galan, chair­man of Spain’s largest util­ity, Iber­drola SA. “We don’t want to be a bot­tle­neck for the de­vel­op­ment of the elec­tric car.”

“The higher the price of oil, the more tail­wind we’re go­ing to have be­hind elec­tric cars.” Car­los Ghosn, chair­man of Re­nault and Nis­san

Eric Pier­mont / AFP/Getty Images

Bil­lions have been in­vested in new elec­tric car mod­els, and the num­ber of plug-in hy­brid and bat­tery ve­hi­cles for sale world­wide will rise 20 per­cent to 216 next year.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.