Does a green light for electric cars mean a red light for oil?
(Note: companies that could be impacted by the content of this article are listed at the base of the story (desktop version). This article uses third-party references to provide a bullish, bearish and balanced point of view; sources listed in the “Balanced” section)
Electric cars are no longer a novelty. There were more than 5.4 million electric vehicles (EVs) as of January 1, 2019, including hybrids. China represents more than half of the market followed by the US, Norway, Germany and the UK. The number of electric vehicles grows by more than 50% each year and the growth rate has shown no signs of slowing down. Every electric vehicle purchased means less demand for gasoline and thus oil. While it is true that oil is used to generate electricity, oil’s market share of generation is small and decreasing. It is reasonable to ask then, “will electric vehicle growth dampen the demand for oil and cause downward pressure on oil prices?”