How the Fossil Fuel Industry Is Gearing Up for EVs
Direct investment in battery components and charging stations by carmakers may help move the needle on EVs, but change will come more slowly for old-fashioned oil companies.
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As electric vehicles (EVs) roll into the mainstream of driving in the United States, an industry that has relied entirely on fossil fuels is undergoing a rapid and profound transformation that poses a new, if hardly existential, challenge for the fossil fuel industry itself.
Carmakers have already made considerable strides toward converting much of their fleets to EVs in the coming decade, promising to provide EV technology that’s affordable, efficient, and available in every corner of the country. That has prompted oil companies — recognizing that millions of drivers soon will have no need for their gas pumps at all — to take their own first steps to join the EV revolution.
But don’t expect the major oil companies to give up on old-fashioned petroleum products anytime soon. While they acknowledge that the EV transformation is an unstoppable force that they will have to address, there’s still plenty of money left to be made in the traditional drilling and refining of petroleum products for non-automotive uses.
Digging for EV Battery Components
For automakers, direct investment has become a matter of economic survival. This includes both EV charging infrastructure and behind-the-scenes EV resources such as mines that provide exotic minerals for batteries.
General Motors recently invested some $650 million in a project with Canadian mining company Lithium Americas Corp. to develop a lithium mine in Nevada. It’s projected to be the largest North American source of lithium when it opens in 2026, with the potential to provide enough lithium to produce up to one million EVs annually. The deal follows a $69 million investment in an Australian company that produces nickel and cobalt — two other minerals that are essential to EV battery projects.
Stellantis, the European-based parent company of Jeep and Ram, has also invested in Australian mining projects, including an operation that produces manganese sulfite, which is also needed for battery production. This comes as Stellantis moves aggressively to secure stable, long-term supplies of materials needed to electrify a full 100% of its European passenger cars and 50% of its North American car and light truck fleets by 2030.
As for carmakers’ involvement in charging stations, the most obvious example is Volkswagen’s $2.45 billion Electrify America network, which already operates more than 3,500 ultra-fast chargers at 800 stations across the U.S. and Canada and aims for a total of 10,000 chargers at 1,800 stations.
These initiatives are part of a worldwide investment in charging technology that’s projected to hit $100 billion this year as investors and automakers rush to meet the ever-growing demand for private and public charging options. Efforts here in the U.S. got a major boost last October when President Joseph Biden signed a massive infrastructure bill that included $7.5 billion to build a half million chargers.
Big Oil’s Record Profits Offset EV Worries — for Now
Despite the seismic realignment the EV revolution has set in motion, ExxonMobil isn't making drastic changes just yet.
Corporate leaders say the continued stream of income from fuels for airplanes, transport trucks, and for industrial uses such as heating, power generation, and chemical production means even the widespread adoption of EVs may have relatively little financial impact for years to come. As if to emphasize that point, the company posted a record $55.7 billion in profits in 2022 — the highest ever for a U.S.-based oil company.
ExxonMobil CEO Darren Woods made headlines in 2022 when he told MSNBC he believed all new passenger cars sold worldwide will be electric by 2040. But even with that transformation, Woods said he expects global oil demand in 2040 to match its 2013 level thanks to non-automotive uses. (It can also be assumed that this demand will come from the remaining ICE vehicles on the road.)
“That change,” he said of the shift to EVs, “will not make or break this industry, quite frankly.”
Woods’ sentiment was underscored by the nearly $200 billion in profits that ExxonMobil and other western fossil fuel giants generated in 2022. That staggering total includes $39.9 billion in profit for Shell — nearly double its 2021 earnings — and a record $28 billion in profit for BP.
Just how little will the switch to EVs hurt the oil industry in the short term? According to IHS Markit, a global financial consulting firm, estimates EVs will reduce global demand for oil in 2026 by just 1% — about 1.1 million barrels per day.
Still, it doesn’t hurt to hedge your bets. Oil companies around the world are committing resources to exploring new power-generating and storage technologies, including battery technology.
The EV Revolution Brings New Business Opportunities
While Big Oil may not fuel the cars of tomorrow, it’s still angling to make money from them.
For ExxonMobil, that means a focus on producing synthetic fluids for EVs — which still have plenty of parts that need lubrication — and fluids used in thermal management for batteries, electric motors, and electric components. The company also is investing in new technologies for lightweight automotive plastics that can reduce the overall weight of EVs without compromising safety.
In Europe, where the shift to EVs will be more sudden, major companies such as Shell are hoping to expand beyond traditional charging stations with projects that will provide EV fill-ups at more user-friendly spots, including city lampposts.
Shell signaled its commitment to that concept in 2022 by converting one of its downtown London gas stations into a stylish charging hub, replacing gas and diesel pumps with ultra-fast chargers powered entirely by renewable energy. The company’s network of commercial Recharge stations is slated to grow to more than a half-million charge points globally by 2025.
BP, meanwhile, announced a $1.23 billion investment in BP Pulse, a UK-based EV charging infrastructure system, and partnered with the EV charger manufacturer Tritium to provide commercial chargers in England, Australia, and New Zealand.
The V8 Isn’t Dead Yet
While car companies are vocal in their promises to move largely — or completely — to EV lineups in the next decade, even major EV players such as GM haven’t given up on gas-powered technology just yet.
GM pledged to sell only electric consumer vehicles by 2035, but it clearly recognizes there’s a lot of money to be made from internal combustion engines in the meantime. The company announced in January that it will invest more than $900 million in four US plants devoted largely to producing the next generation of its small-block V8 gas engine.
