- Technology breakthroughs are making electric vehicles (EVs) practical and affordable
- Their potential impact on oil demand and CO2 emissions may be overstated, however
- Raw materials shortages may also set limits on EV output
- Geopolitically, China’s power may be enhanced by its dominance in critical industries
In July 2017, the British and French governments announced that they will outlaw the sale of cars powered by petrol- and diesel-fueled internal combustion engines by 2040. The Swedish carmaker Volvo had already pledged to sell only electric or hybrid cars starting in 2019. The mayors of Paris, Madrid, Athens and Mexico City want to ban diesel vehicles from their city centers by 2025. The German diesel scandal has also fueled a debate in that country about hastening the transition to electric vehicles (EVs). A phaseout of internal combustion engines by 2030 could cost Germany’s car industry and suppliers around 600,000 jobs, as EV production requires up to 40 percent less manufacturing labor than conventionally powered automobiles. Because the highest-value items in EVs are batteries, a large chunk of the production and jobs would move from European suppliers to China, the world’s leading battery producer.
These are all signs of an unfolding energy revolution in the worldwide transport sector, which is occurring in tandem with other disruptive changes such as digitalization and self-driving cars. The displacement of oil in this industry would be momentous, because road transportation accounts for more than 50 percent of global oil consumption.