Rev or Revolt: How Electric Vehicles Will Change Our Lives
The future is electric. Still in doubt?
Check out these statistics. UBS, a major Swiss bank, predicts that electric vehicles (EVs) will account for 14% of global car sales by 2025. Global information provider, IHS Markit, forecasts that EVs are expected to be 30% of new car sales by 2040. And Imperial College London and Carbon Tracker, a think-tank that studies the potential impact of climate change on investment, projects that by 2035, EVs could make up 35% of the vehicle market.
As can be seen, EVs will change how society works and also change our lives. For Nigeria, it is still a long shot. “I do not see any immediate impact of EVs in the country because the infrastructure to support it is not there. Our electric supply is epileptic,” says Tunji Oyebanji, managing director/chief executive, 11 Plc, formerly Mobil Oil Nigeria Plc.
There are many positives about EVs. It can reduce the emissions that contribute to climate change and smog, thereby improving public health and reducing ecological damage. EVs have lower maintenance costs because they have fewer moving parts. It costs less to charge an EV than to fill up a car with petrol. But putting in place sufficient number of charging locations and infrastructure will be a challenge for Nigeria.
“The new refineries are really a medium term measure to ensure we walk away from subsidising imported petroleum products.”
It is about a holistic energy policy and not just one for ‘electric or fossil fueled engines’. A very balanced energy policy will ensure that we have the right balance on energy sources, the right infrastructure to deliver to end users, the right and properly regulated energy trading and commercial structures.
. Once this is in place, then the use of electric cars will no longer be a novelty,” says Chikezie Nwosu, executive vice-president, Tolea Energy B.V. and member, Board of Trustees, Society of Petroleum Engineers (SPE), Nigeria Council.
Countries that witnessed upsurge in EV adoption were spurred mostly by deliberate government policies. China has a subsidy policy that is capped at 60% of the EV price. It also imposed restrictions on investment in new manufacturing plants for traditional vehicles. India offers extensive fiscal incentives and a favourable regulatory environment for developing its EV industry. In Norway, EVs are exempted from acquisition tax and from the country’s 25% value-added tax.
“It is something that has to be done hand-in-hand with government in Nigeria. They can collaborate with downstream players, support them with policies that will enable them to put infrastructure in place,” says Oyebanji.
Though the EV revolution may open up new markets and create new skills set, some existing jobs and businesses are at risk. EVs need fewer people to assemble and fewer supply chains. Large factories will become obsolete. Joe Hinrichs, Ford’s president of Global Operations, says electric cars need around 30% fewer work hours to make. Also, secondary industries which support the car industry would see a corresponding drop in employment and patronage levels.
“By the time EVs become predominant in Nigeria, the highest volume product sold by downstream operators, which is petrol, will witness very low patronage but I do not see that happening in the next 30 or 40 years,” says Oyebanji.
Mass embrace of EVs could also significantly decrease global consumption of fossil fuels, thereby affecting countries like Nigeria that depend on crude oil revenues to power its economy. For instance, Imperial College and Carbon Tracker projects that by 2050, EVs could displace about 25 million barrels of oil per day. For the government, they may have to be ingenious with taxes to make up for lost revenues from fossil fuels. Vehicles might be taxed in a different way.
But Nwosu believes EVs alone will not have a major impact on oil and gas revenues. “Alternatives, renewables and cleaner sources of energy (solar, wind, nuclear, hydro, biomass etc) definitely will. As these sources become more affordable and price-competi-tive per unit of energy, they would start to become more relevant in the energy mix,” he says.
But more critical is situating the place of new refineries springing up in Nigeria. “The new refineries are really a medium term measure to ensure we walk away from subsidising imported petroleum products. Longer term, the byproducts from the refineries will have to reflect a change in the energy mix, by focusing less on its application as ‘energy carriers’ (diesel, PMS, aviation fuel, kerosene, fuel oil) and more on other products (plastics, asphalt, lubricants etc.)” says Nwosu.
And if you think that EVs will wipe away the kind of geopolitical tensions associated with crude oil, think again. EVs will only redraw the geopolitical map. Saudi Arabia, de-facto leader of the OPEC cartel, could see its powers usurped by Chile, which has by far the largest lithium deposits in the world. Lithium is a critical component of EV batteries. Another disruption is possibly in the Offing