Shell sees rise of electric cars unfettered by oil price fluctuations

Energy major says demand will continue to surge as consumers buy into a technology aimed at making driving fun while being environmentally friendly

WM Motor Technology Co.'s EX5 electric sport utility vehicle (SUV) is displayed at the Guangzhou International Automobile Exhibition in Guangzhou, China, on Friday, Nov. 16, 2018. More than 60 new models are being unveiled at the auto show in the southern city of Guangzhou starting Friday, with manufacturers betting on swanky SUVs and electric cars to revive a market headed for its first annual slump in at least two decades. Photographer: Qilai Shen/Bloomberg
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Demand for electric cars will continue to surge irrespective of oil prices as consumers buy into a technology aimed at making driving fun while being environmentally friendly, according to Royal Dutch Shell.

“It’s a technology many of our customers like,” Istvan Kapitany, head of Shell’s global retail business, said in St Petersburg, Russia. “They get a joy out of it, they feel passionate about it, they think it’s a great driving experience.”

Mr Kapitany is not the first oil industry executive to highlight how the "cool" factor could play a big role in the spread of electric vehicles. BP’s chief economist Spencer Dale said in 2016 that the technology could wipe out most of the projected growth in oil demand from cars in the next two decades if consumers embraced it enthusiastically - on par with Apple’s iPhone.

Social desirability is important enough for consumers to ignore that battery-powered technology is currently more expensive than internal combustion engines, Mr Kapitany said.

“Customers don’t always make rational decisions - if it weren’t like that, it would be very difficult to sell sports cars,” he said.

It may take until the middle of the next decade for the cost of electric vehicles, or EVs, and internal combustion engine technology to reach parity, according to Bloomberg NEF. Although EV sales have surged, they still make up only about 3 per cent of all new cars sold globally, but will rise to 55 per cent by 2040.

Mr Kapitany estimates 1.2 million to 1.5 million electric cars will be added this year to the 3.5 million on the road as of end-2017. Tax incentives offered to EV buyers in some countries, as well as regulatory moves to lower carbon emissions, add to their attraction, he said.

Brent crude’s recent surge to over $80 a barrel fuelled expectations of an increase in demand for electric and hybrid cars to market. Prices have since dropped to about $60, bringing down petrol with it and making cars that run on the fuel more economical.

Shell, Europe’s largest oil company by market value, is positioning itself to gain from the demand for EVs. Last year it bought Europe’s largest charging provider NewMotion and agreed with IONITY - a venture based in Munich between BMW, Daimler, Ford and Volkswagen - to expand the business.

Mr Kapitany's comments come as the drive for alternative power sources and the development of technology for cars gathers pace. This month The National reported that Iconiq Motors, the EV sister operation of Dubai's W Motors, is set to become the first company to reveal a Level 5 fully autonomous vehicle.


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Developed under the title "L5", the vehicle will be unveiled at the Consumer Electronics Show in Las Vegas in January, when its production model name will also be revealed.

Level 5 is the highest grade of autonomy for driverless vehicles, defined as "steering wheel optional" with "no human intervention required at all".

'It’s the first Level 5 fully autonomous vehicle, fully developed in the UAE,' company boss Ralph R Debbas said.

"The autonomous car is a very special project we've been working on locally here in the UAE," Mr Debbas told The National. "It's the first Level 5 fully autonomous vehicle, fully developed in the UAE as well, and electric.

"It’s going to lead the way for Expo 2020 to have cars driving around the Expo and showcase the UAE flag as the first country in the world to develop Level 5 autonomous cars.

Meanwhile, Shell’s electric plans include having 100 EV-charging stations in Europe with IONITY by the end of next year from the two sites they currently operate in Austria and France.

“We are going to be giving our customers the ability to fill up their cars in five minutes,” Mr Kapitany said.

Shell says rapid charging technologies will change the behaviour of EV customers at fuel-retail forecourts, so they will need to improve their convenience-store offering.

“Currently, they spend an average 17 minutes at our service stations and buy double of what an internal-combustion car customer would buy,” Mr Kapitany said, referring to purchases from convenience stores.

Forecourts of the future will likely have “more non-fuel services in the front - a convenience store, restaurant, battery-charging, battery-changing and car-sharing services.

“It’ll be far more a mobility service centre than a petrol station,” he said.