Reuters

LONDON - The biggest oil companies in the world have calculated that few, if any, of today's drivers will see electric cars outnumber gasoline and diesel models in their lifetimes.

While politicians and green lobby groups insist the future of transport is electric, in the past two months BP and Exxon have released data which points to electric cars making up only 4-5 percent of all cars globally in 20-30 years.

Meanwhile some governments are targeting as much as a 60 percent market share for electric vehicles over a similar period.

The oil company forecasts may appear self-serving, but if they are widely accepted could provoke a policy shift that offers greater incentives for electric cars to end our addiction to oil.

And unlike more optimistic predictions from consultants like McKinsey, these forecast are backed by cash. They guide tens of billions of dollars in long-term investment in oil production and refining and it is oil that stands to lose if they get it wrong.

They don't, of course, take into account a major breakthrough in battery technology that could give electric cars a cost and performance edge over the internal combustion engine.

In its Energy Outlook for 2030, released earlier this month, BP predicted that electric vehicles and plug-in hybrids, will make up only 4 percent of the global fleet of 1.6 billion commercial and passenger vehicles in 2030.

"Oil will remain the dominant transport fuel and we expect 87 percent of transport fuel in 2030 will still be petroleum based," BP Chief Executive Bob Dudley said as he unveiled the BP statistics on January 18.

The balance is seen coming from biofuels, natural gas and electricity.

Plug-in hybrids can be powered from the mains and only rely on their small gasoline engines when the battery dies.

Standard hybrids are principally driven by an internal combustion engine whose efficiency is boosted by the recycling of energy generated from braking.

Exxon Mobil, the biggest oil and gas company in the world, says the continued high cost of electric vehicles compared to petroleum cars, means take-up won't even increase much during the 2030s.

In its 2040 Energy Outlook, released in December, the Texas-based company said electric vehicles, plug-in hybrids and vehicles that run on natural gas would make up only 5 percent of the fleet by 2040.

Peter Voser, Chief Executive of Royal Dutch Shell, the industry number two, sees a rosier future for electric vehicles. He predicts they will account for up to 40 percent of the worldwide car fleet, although only by 2050.

A $50 Billion-a-Year Opinion

The statistics published by Exxon and BP, Europe's second-largest oil company by market value, are perhaps the most detailed long-term forecasts on electric vehicle take-up.

These Energy Outlooks guide how the oil groups allocate their annual investment budgets - among the biggest in the world, at over $50 billion combined for BP and Exxon.

The expected continued dominance of petroleum partly explains the scaling back in BP and Shell's solar, hydrogen and wind power ambitions in recent years, and Exxon's continued reluctance to get involved in renewable energy.

Insofar as the companies are active in green energy, it is mainly in the production and blending of biofuels. This is driven by U.S. and European governments' insistence that a percentage of motor fuels sold must come from plant-based sources.

If the oil companies are wrong about electric cars they will find their investments in big and expensive new oil production projects, which increasingly need crude prices around $80 per barrel to be profitable, not paying off.

The companies do see an easing in the addiction to oil, though.

Despite increased car ownership in China and India, Exxon predicts "global demand for fuel for personal vehicles will soon peak" due to an increase in average fuel efficiency.

BP expects the efficiency of combustion engines to double by 2030, with a third of vehicles on the road being hybrids.

This trend will be driven by more stringent fuel economy standards in the U.S., CO2 reduction legislation in Europe and an end to oil subsidies in developing countries.

Increased airline and commercial vehicle traffic will counterbalance some of the efficiency gains from cars but BP predicts that, helped by increased use of biofuels, demand for oil for transport overall will plateau in the mid-2020s.

Greens Fume, Politicians See Quicker Adoption

Green groups reacted with suspicion to the oil industry forecasts.

"Exxon would say that, wouldn't they. A big take-up of electric cars is not something they would like to see," said Jos Dings, director of Brussels-based sustainable transport campaign group, Transport and Environment.

"The future for petrol and diesel doesn't look good," he countered.

Nonetheless, environmentalists like Dings fear political complacency about improving vehicle efficiency could prompt governments to ease targets to cut vehicle emissions, which could in turn delay the electrification of transport.

Big Oil's pessimistic outlook for electric cars is at odds with many governments' plans.

Electric vehicles barely register on the statistics of car sales at the moment. Nonetheless, China is targeting 5 million electric vehicles on its roads by 2020, according to media reports. This would represent around 3 percent of its predicted fleet.

The Australian government's main energy adviser, the Australian Energy Market Commission, has predicted electric vehicles will make up 20 per cent of new car sales in Australia by 2020 and 45 per cent by 2030.

The UK's Committee on Climate, which advises the government, has predicted electric vehicles will reach around 60 percent of new cars and vans by 2030. And New Zealand hopes to get to 60 percent by 2040.

The U.S. has more muted ambitions. President Barack Obama said he wants to put 1 million electric vehicles on U.S. roads by 2015, a figure that would represent less than half of one percent of the total fleet.

Many U.S. experts and officials predict a tipping point in the uptake in electric vehicles in the latter part of this decade, as technology improves, economies of scale kick in and consumer fears about being stranded when their batteries run flat, or "range anxiety," eases.

However, data compiled by the U.S. Energy Information Administration may explain the lack of an official U.S. target. Last week, the agency released an 'abridged version' of its Annual Energy Outlook 2012, due to be released in full in the Spring.

Tables used in formulating the outlook show electric vehicles and plug in hybrids are expected to account for only 1.3 percent of the U.S. fleet in 2030.

Furthermore, the agency predicts that neither consumers, nor carmakers, will get over 'range anxiety'. By 2035, the agency sees few, if any, electric vehicles on U.S. roads that can travel for 200 miles without recharging.

Carmaker Enthusiasm Cools

Many of the headlines out of autoshows in the past couple of years have been captured by the launch of electric cars such as Nissan's Leaf, the Tesla sports car, plug-ins like General Motors' Chevrolet Volt, and the latest incarnation of the Toyota Prius.

Other manufacturers including BMW, Rolls-Royce and Porsche have presented electric-powered prototypes.

On the basis of this, one could be forgiven for thinking the auto industry is betting big on electric power.

Yet few auto executives share the optimism of Renault and Nissan chief executive Carlos Ghosn who has repeatedly said he sees electric vehicles making up 10 percent of all sales in 2020.

A survey of 200 auto industry executives conducted by KPMG released earlier this month gave an average forecast for electric vehicles to account for 6-10 percent of global auto sales in 2025 - more bullish than Exxon and BP but hardly a revolution.

"Certainly a year ago or so, you could have gotten the impression from reading the press that everyone is driving electric cars in two years time," Daimler CEO Dieter Zetsche said at a roundtable at the sidelines of the Detroit auto show last month.

Zetsche said he did not see "an explosion of demand for this product."

Echoing comments from the oil companies, Gerd Kleinert, CEO of KSPG, the automotive parts business belonging to German group Rheinmetall, says take-up of electric cars will be curtailed until batteries can store energy using as little weight as gasoline does, and can be recharged as quickly as refilling a fuel tank.

"When that world exists, then we will all be driving electric cars starting tomorrow. But I personally don't see that happening, not even a hundred years from now." 
 

New York Times

DETROIT -- As the automotive industry rebounds, this year’s Detroit auto show features more dazzle, more optimism and more politicians winding their way through the exhibits.

A sizable delegation from the Obama administration, four governors and numerous members of Congress have been among the visitors this week to the preview days of the show. The visits highlight the unavoidable connection that Detroit has had with Washington since 2009, when General Motors and Chrysler went through bankruptcy protection, earning GM the nickname “Government Motors.”

The show is more than just a chance for the politicians to pose for photos or kick the tires of new models. Many take only a cursory walk across the convention center, spending most of their time in Detroit meeting with auto executives about new jobs, fuel-economy standards and future products.

“I sense a new energy in this industry, and I’d like to believe we’re part of that energy,” said Jay Nixon of Missouri. “If I can make a little bit of a difference by representing six million Missourians with my presence here, it’s worth it.”

Missouri is among the big beneficiaries of the industry’s revival, with the Ford Motor Co. and GM recently announcing plans to invest a combined $1.5 billion to expand plants in that state. While in Detroit, Nixon is meeting with officials from both companies and from numerous parts suppliers that might start operations to support the auto plants.

At various times on Tuesday, Ford’s exhibit area played host to the commerce secretary, John E. Bryson, Rick Snyder of Michigan and a delegation of elected officials from Kentucky that included the mayor of Louisville, home to one of Ford’s biggest assembly plants.

William Clay Ford Jr., Ford’s executive chairman, gave Bryson a tour of the company’s most fuel-efficient new vehicles, including an all-electric version of the Focus compact car and a plug-in hybrid variation of its new Fusion sedan.

The meeting with Governor Snyder took a different tack, focusing on new jobs being created at Michigan factories. While the presentations were hardly newsworthy, the intense interest by government officials in Ford’s resurgence was welcomed by the company’s executives.

Alan R. Mulally, Ford’s chief executive, said Detroit’s surprising comeback and the rebound in vehicle sales last year has underscored the importance of the industry to the nation’s economy.

“Our government leaders are asking us what they can do to create an environment where businesses can grow,” Mulally said.

While political figures and government officials, including the transportation secretary, Ray LaHood, and Lisa Jackson, the administrator of the Environmental Protection Agency, were descending on the Detroit show, one of Ford’s top executives, Mark Fields, traveled on Wednesday to Washington to participate in President Obama’s forum on “Insourcing American Jobs.”

Fields, president of Ford’s Americas unit, detailed how the company’s new labor contract was allowing it to add thousands of jobs that would have previously gone to Mexico and China.

Sergio Marchionne, Chrysler’s chief executive, was already on a first-name basis with the energy secretary, Steven Chu, when the two met Tuesday at the Chrysler stand.

Just days before, they had huddled in Washington about the status of the company’s application for a $3 billion loan from the Energy Department for retooling plants for more fuel-efficient vehicles. Marchionne said he had reduced the amount the company was requesting in hopes of finally obtaining the loan after waiting more than two years.

“We are still talking with Chrysler, and we hope to move forward, but there are no promises as to what will happen,” Chu told reporters after delivering a speech on Wednesday to the Detroit Economic Club on the auto show floor.

At the show, Marchionne showed Chu the new Dodge Dart, the first new model derived from a car created by Fiat, its Italian parent. Production of the Dart, which will get an estimated 40 miles a gallon of gas, allowed Fiat to gain an additional 5 percent ownership stake in Chrysler as part of the rescue plan that Marchionne negotiated in 2009 with the Obama administration. It now owns 58.5 percent.

Chu also pored over a new 1.4-liter engine on display at the Chrysler exhibit, causing his aides to fret that he was falling behind on his schedule to visit the other automakers.

Governor Snyder of Michigan circled the convention hall Tuesday, posting periodic updates of the cars he was seeing on his Twitter page and photos on Facebook.

John R. Kasich of Ohio met with executives from Ford, GM and Honda, which announced this week that it would build a plant in Ohio to made the Acura NSX that it unveiled here. Kasich said he was not here just looking to shake hands with the executives but rather to discuss specific steps the state can take to facilitate more automotive activity there.

“We come away with assignments,” Kasich said. “You’re not going to earn new business just because you have a good relationship.”

The show began to take on more of a political atmosphere several years ago, when the Detroit carmakers were spiraling into financial disarray. Each of the shows since GM and Chrysler started receiving federal aid in late 2008 has attracted more attention from Washington, which previously had a rather antagonistic relationship with Detroit.

Sen. Bob Corker (R-Tenn.), who had spoken out against the bailouts during heated Congressional hearings, upstaged one day of the 2009 auto show with an appearance. The previous year, Republican presidential candidates crisscrossed the floor on the eve of Michigan’s primary.

PRNewswire

SOUTHFIELD, Mich. -- Worldwide new vehicle sales in 2012 are expected to rise 6.7 percent over 2011 volumes to 77.7 million vehicles, according to Polk, a leading global automotive market intelligence firm. Polk analysts believe the global economy will weather the current European sovereign debt crisis and consumers will return to showrooms around the world in 2012.

China is expected to make the largest contribution to global sales growth for new vehicles, according to Polk, with an anticipated 16 percent increase over 2011. Polk analysts anticipate much of this growth to occur outside of the large metropolitan cities of Shanghai and Beijing.

The U.S. market will experience single digit growth, primarily due to the relatively strong year for sales in 2011, and the effects of the weak economy that will continue to impact new vehicle demand through most of 2012. Light vehicle sales are expected to grow at a moderate pace, with a 7.3 percent increase in the region this year, to 13.7 million vehicles, according to Polk analysts, but they do not expect the U.S. market to achieve pre-recession levels of greater than 16 million vehicles per year until 2015.

The luxury segment in the U.S. market in 2012 is expected to be the fastest growing segment, with more than 14 percent growth, according to Polk.

"More affluent buyers are returning to the market for new vehicles, after three years of spending reductions," said Anthony Pratt, director of forecasting for the Americas at Polk. "The luxury segment also offers a wide variety of product options for consumers across all segments, ranging from small cars to SUVs," he said.

Leasing penetration will continue to be higher in the luxury segment in the U.S. and will continue to lift transactions in all segments, as elevated residual values reduce the monthly lease payments, attracting consumers to showrooms who often make purchase decisions on the monthly payments that fit their budget. Leasing penetration has increased to pre-crisis levels for 2011 (through October) of 41.5 percent for the luxury segment and 17.1 percent for the overall U.S. industry. This trend will likely continue through 2012 as automakers will attempt to win back consumers with promotions touting attractive monthly payments.

European sales are expected to be flat or down slightly, to just over 19 million units, according to Polk. Austerity plans will prevent governments in Europe from boosting 2012 sales through scrappage programs and other incentives offered in previous years.

Growth in the other BRIC countries will outpace many mature markets over the next few years. As an example, Polk expects Brazil to surpass Germany as 2011 sales results are finalized, and new vehicle sales in India are expected to surpass those sold in Germany in 2014. Sales growth in Russia will likely be flat in 2012, however, Polk anticipates sales in Russia to outpace Germany by the year 2015.

Brands Gain, Maintain Market Share in the U.S.

Polk predicts Toyota and Honda, respectively, will realize the greatest amount of market share growth in 2012 as they begin to win back some lost share from their 2011 inventory shortages following natural disasters in Japan and Thailand. However, they will likely struggle to regain all of their lost share as they will experience strong competition from other automakers offering vehicles equipped with more fuel-efficient options and increased infotainment features.

Volkswagen will continue to win U.S. market share in 2012, according to Polk, approaching the three percent range, as the Beetle launch will build on its successful Passat and Jetta models available in the market.

Although Hyundai and Kia sales volumes continue to increase year over year, Polk expects their market share growth to be flat in 2012, as the companies face increased competition in all segments.

Traditional domestic manufacturers, General Motors, Ford and Chrysler, will continue to grow in 2012 as the industry continues to recover. Refreshed products and new product introductions will help them to compete in various segments.