According to Bloomberg’s NEF Electric Vehicle Outlook 2020, EVs across all segments are displacing 1 million barrels of petrol demand per day. As electric mobility advances, oil and gas companies have to reposition themselves to secure their long term revenues. They do so by investing in the same sector that threatens them.
Oil and Gas companies as Charge Point Operators
Oil and gas companies are in an excellent position to play a central role in electric mobility. They already own fuel stations and convenience stores in useful locations. Moreover, they collect valuable insights into consumer choices, for example, through credit cards. This data is useful to understand the needs of an EV driver and outline a strategy for developing a network of charge stations.
Diversifying in the charging network
Investing in a charge station network is a chance for oil companies to reduce risks. As demand for gasoline decreases, revenues can be balanced with EV charging. Oil and gas companies are already being pushed in this direction by regulations and investors. For example, in June 2020, Germany required every fuel station to install a charge point.
Oil companies already collect revenue through their convenience stores at petrol stations. This revenue stream will hasten when drivers spend more time in these stores, whilst waiting for their EV to charge. Providing services such as cafes, restaurants, restrooms, and supermarkets will be crucial for oil and gas companies to attract new customers.
Considerable regional differences
When examining how oil and gas companies are moving into the electric mobility sector, we see significant regional differences.
The top three European oil and gas companies have made landmark investments in electric mobility. In 2017, Shell acquired Dutch CPO The New Motion, one of Europe’s largest EV charging network operators. A year later, Shell invested in Ample in 2018. That same year Total purchased G2mobility (now known as Total EV Charge) and partnered up with Nexas. In 2019, they founded an E-mobility subsidiary Be:Mo, and in 2020 Total invested in us: Chargetrip, an API-based EV routing company. BP acquired Chargemaster and invested in many electric mobility solution providers like MaaS Global, PowerShare, and FreeWire.
The top three American utilities are somewhat less innovative. In 2019, ExxonMobil launched a suite of fluids and greases for EVs. Valero Energy, known in Europe for its retail brand Texaco, hasn’t made any electric mobility investments. The second-largest oil and gas company in the USA, Chevron, has made more progress. In 2019, they invested in ChargePoint and started collaborating with EVGo to install charge points throughout California.
China Petroleum & Chemical Corp., known informally as Sinopec, is the biggest oil company globally. Sinopec is still focused on rolling out natural gas stations (LPG) for vehicles, even though China is the number one EV country globally. However, the EV market is picking up in other Asian countries. For example, at the beginning of 2020, JXTG Nippon Oil & Energy announced its investment in the EV platform Virta.
Oil and gas companies are shifting their business models towards an era of electrification. When it comes to green mobility, the lines between oil and gas companies, electric utilities, and independent CPOs are blurring. Yet, oil and gas companies must step up their game and embrace the renewable energy transition to protect their market share in a rapidly changing world.