One side-effect of consumers’ shift to electric vehicles is that the world will need less oil. Now Royal Dutch Shell’s CEO is one of those consumers driving the change.
Ben van Beurden is ditching his diesel-powered car for a Mercedes-Benz S500e plug-in vehicle in September, the company told Bloomberg News last week. (That’s one thing he can spend his pay increase on.) Shell’s CFO drives a BMW i3 electric.
Governments around the world are taking steps to get more electric cars on the road. Buyers of electric vehicles in the US receive tax credits. Last week, the British government said it would ban the sale of diesel- and gasoline-powered cars and vans by 2040, following a similar measure in France earlier in the month.
Van Beurden—who leads the world’s second-largest oil and gas company, as ranked by Forbes—is expecting the shift to have a lasting impact on his business. Last week he predicted that oil consumption will peak by the 2030s, or even earlier if biofuel consumption rises. In response to the shift, Shell last year created a clean-energy division and recently said it would spend $1 billion a year by 2020 in the unit.
Electric cars still comprise a small amount of the vehicles on the world’s roads. Besides a pullback in tax breaks, persistently low oil prices, partly thanks to an increase in output from Shell and its competitors, have helped keep demand for gasoline-powered vehicles aloft. New-auto sales last year in the US reached a record, boosted by Americans’ love of large, gas-guzzling SUVs and trucks, whose tanks have become more affordable to fill.
Despite all the buzz, the sleek new Tesla Model 3, the electric-car company’s first mass-market car that starts at $35,000, faces strong competition from gasoline vehicles. The early reviews say the Model 3 is a great car, by any criteria.
Still, the shift is coming. Electric car sales are growing, even if they make up a tiny part of the market. So why is van Beurden so calm? Shell’s vision for more electric cars on the road won’t all bad for its businesses. Power grids are often fed with fossil fuels, so widespread adoption of electric cars could drive up demand. (Natural gas was the largest source of electricity in the US last year). And other forms of transportation, like ships and airplanes, still rely largely on fossil fuels, but that’s starting to change too.