Ludicrous growth of the EV

Hit the ‘ludicrous mode’ setting on the Tesla model S P100D and you feel yourself being propelled from standstill to 60mph in a paltry 2.5 seconds – over 30% slower than Musk’s latest revelation, the Tesla Roadster. The Tesla Roadster boasts a range of over 600miles on a single charge, a top speed of 250mph in addition to neck straining acceleration.

Whilst Tesla’s latest passenger car stole last week’s headlines Tesla’s semi-truck, announced in parallel, is likely to offer greater food for thought to those tasked with projecting future oil demand. The IEA provided its latest long term oil demand projections last week with the release of the agency’s 2017 world energy outlook. The IEA projects robust demand growth to the end of the decade followed by a marked slow-down thereafter driven by efficiency improvements and electrification of the passenger vehicle fleet. Nevertheless, the IEA projects oil demand to continue to grow in absolute terms to 105mmbd by 2040.

The IEA expects fuel switching to lead to a net reduction in light vehicle oil demand by c.1mmbd by 2040 but offset by strong demand growth from the petrochemical sector, as well as rising consumption from trucks, shipping and aviation. However, continued advancement of battery technology could make for a competitive high torque, long-range road haulage solution putting the IEA’s long term oil demand forecasts in to question.

The impact of emerging technology on medium to long term oil demand remains uncertain as analysts struggle to quantify the impact of technological advancement, as we experienced during the shale revolution. On the demand side this includes vehicle automation, ride-sharing, and battery technology. Last week Fisker, for example, filed patents for a solid state battery claimed to have a range of 500 miles, rechargeable in just 60 seconds. Fisker plan to announce details of the firm’s EMotion line of EV’s in January 2018, whilst solid-state battery technology is to be rolled out in 2021. Dyson’s acquisition of Sakti3 could also lead to novel battery technology being developed outside of the traditional OEMS. Elsewhere Top Gear’s Jeremy Clarkson spoke of his ‘near death’ experience in an autonomous vehicle in this weekend’s papers….

Expect to hear more on vehicle automation in this week’s UK budget. The expectation is for a £400m investment in EV charging points and a commitment to put ‘driver-less’ cars on the roads by 2021.

A number of stocks under Edison resource sector coverage offer exposure to EV battery technology including: Alabama Graphite, Volt Resources, Triton Minerals, and Lepidico.