In 2017, Trinidad and Tobago saw its first electric vehicle on the road. It was actually an electric bus which was made possible through a partnership with the University of Trinidad and Tobago, the European Union and the Ministry of Planning (formerly the Ministry of Environment). Recently, other electric vehicles have been launched.
Electric vehicles are still largely unavailable unless imported individually, as local car dealers have been cautious to enter the electric vehicle space. Hybrids, on the other hand, have seen a more widespread introduction to the market through foreign-used dealers who have been bringing in hybrid versions of vehicles currently available in the market.
Electric vehicles and hybrids can have a profound impact on the price of oil. Using electric vehicles and hybrids effectively lowers the demand for crude oil as less gasoline is demanded at the pump. Bloomberg estimates that at present, electric vehicles account for approximately 0.1 per cent of all cars on the road.
According to a video from Bloomberg, the Organisation of the Petroleum Exporting Countries (OPEC) estimates that by 2040, electric cars will still only make up about one per cent of all vehicles. Bloomberg contends, however, that the rise of electric cars will be much higher than previously anticipated due to a rapid increase associated with technology changes. The video alluded to the fact that a similar phenomenon was observed with early refrigerators, televisions, microwaves, etc., where demand started off slowly and then when the product connected with everyday people, grew rapidly and then eventually plateaued creating an ‘S’ curve.
In November, the Energy Chamber of Trinidad and Tobago (Energy Chamber) hosted an event titled, 'The Future of Transport — Implications for T&T'. The event featured panelists, Christopher Narine-Thomas, Johan Sydow, Graham King, Dale Ramlakhan, Zindzi John, Curtis Boodoo, Curtis Mohammed and Energy Chamber CEO, Thackwray Driver.
The panellists discussed the impact of peak oil and when the demand for oil and oil derivatives would plunge — a plunge that could be triggered by switching to electric vehicles or for the very least, hybrids which use less fuel. It was felt that projecting the growth of an electric car is very difficult, especially since the ideal electric car isn’t available just yet. However, companies like Tesla and Lucid Air are moving towards achieving an electric car that is stylish and modern, fast and at a comparative cost to traditional cars. In addition, current electric cars also struggle with range and availability of charging stations. Together, these factors make it difficult to predict the growth or shape of the curve.
If the international analysts predict that demand for electric cars will escalate quickly, how does that affect demand for oil and its derivatives?
According to Bloomberg, all cars don’t have to be replaced by an electric vehicle to cause a price shock — all that must happen is to replace enough cars to lower demand enough to cause a glut in the market.
The report points to Tesla as a specific case whose production of cars is going to move from 50,000 units to 500,000 by 2020. If Tesla can meet its projections and each car negates 15 barrels (bbl)/year, at this rate, 2,000,000 bbl/day can be displaced as early as 2023, causing a glut and likely falls in oil price. By 2040, Bloomberg estimates that it would not be unreasonable to assume that 50 per cent of all cars will be electric or at least have a plug.
Here in Trinidad and Tobago, there are just a handful of electric cars but understanding the rise of electric vehicles, growing applications for renewable energy and energy efficiency, and their impact on the sector is key for the future of the economy.