Oil and Gas Giants are Jumping into the EV Charging Industry

Electric vehicles (EVs) are becoming increasingly popular as the world shifts towards cleaner and more sustainable transportation solutions. This global transition towards EVs is being driven by many factors, including environmental concerns, advances in battery technology and government incentives. The market for electric cars (EVs) has expanded significantly over the past decade and is anticipated to do so throughout the decade to come. From just 0.2 percent of all car sales in 2011 to 4.6 percent in 2021, sales of electric cars in the US has steadily increased.

As the market for EVs continues to grow, there is a need for a robust and reliable charging infrastructure to support this transition. This is where oil and gas companies can contribute important value – they have the resources, expertise, and infrastructure to play a significant role in growing the EV charging industry. For drivers to be able to charge their EVs on demand, there is an increasing need for available and dependable EV infrastructure. If existing fuel suppliers want to establish a sustainable competitive advantage in the electric vehicle charging market, these  petroleum retailers need to understand the market potential available, create their value proposition and develop new services and revenue opportunities.  By doing so, oil and gas companies can play a role in driving the transition to a cleaner and more sustainable transportation sector.

As the world continues to shift towards cleaner energy sources, oil, and gas companies are facing increasing pressure to reduce their carbon footprint and address environmental concerns. This presents a unique challenge for these companies, but also an opportunity to pivot toward cleaner energy solutions and play a more active role in the transition towards a sustainable energy future. In this context, we see value in examining the role of oil and gas companies in growing the EV charging industry, their motivations for doing so, and the challenges they face along the way.

Oil and gas companies can play a significant role in growing the EV charging industry in different ways:

The growing social and environmental issues faced by the different oil and gas firms create tough challenges defining the changing function of these fuels in a transitioning energy sector and the role of these businesses in our dynamic economy. Oil and gas companies must comply with increasingly strict obligations to modify their operations as a result of the Paris Agreement, the international treaty that the world’s governments have signed in an effort to minimize global warming; this commitment to cutting emissions is more complex than simply reducing purchases, production, and supply of oil and gas products.

Oil and gas firms have the resources, supply chain knowledge and economic development expertise that is needed to expand the scope of low-carbon energy. So by leveraging this experience, these companies can contribute significantly to the global switch to renewable energy. They can contribute to the development of low-carbon energy alternatives, invest resources in clean energy initiatives, and lower their emission rates while simultaneously providing developing nations access to electricity.

1. One path to decarbonization is via investment in EV charging infrastructure: Oil and gas companies can install EV charging stations in their petrol stations, as well as develop new charging stations in areas where there is a high demand for EV charging facilities. These companies can leverage their existing infrastructure in order to invest in EV charging facilities that will provide more charging options for EV drivers. Shell has announced plans to install 50,000 EV charging stations worldwide by 2025, and BP is investing a billion dollars in a plan to increase its EV charging points from 7,500 to 70,000 by 2030.  In 2017 Shell also purchased EV charging network provider New Motion, granting them access to its 30,000 charging infrastructure around Europe.  To date, the electric grid cannot keep up with the steadily increasing number of EVs on the roads. Indeed, the complexity and slow rate of grid expansion is a key obstacle to extending EV charging infrastructure, an issue that exacerbates EV owners’ range anxiety. Oil and gas companies can leverage new technologies arising to resolve these issues; for example, the GenCell EVOX™ offers a new technological approach to close this gap.  The EVOX™ utilizes fuel cells for power generation alongside energy storage to deliver power onsite, satisfying the rising demand for electricity from EVs when grid capacity is insufficient. The EVOX™ can supply power in both remote rural sites and crowded metropolitan settings when grid availability may be limited or non-existent.
2. Cooperation with EV Charging Companies: Oil and gas companies are partnering with existing EV charging companies to expand their reach and provide a wider range of charging services. Petrol providers are offering EV charging stations in more locations and providing faster charging speeds. For example, in 2020 Total and ChargePoint announced a partnership to offer EV charging solutions to businesses in Europe.
3. Diversifying their Business: Oil and gas companies can diversify their operations by expanding into the EV charging industry. Traditional fuel suppliers are now moving into EV charging infrastructure development, EV charging equipment manufacture and provision of other EV-related services such as battery storage or renewable energy solutions. One such illustration from 2019 was Shell’s acquisition of Greenlots, a US-based leader in EV charging and energy management software solutions provider.
4. Renewable Energy Development: Many oil and gas companies are also investing in renewable energy sources such as wind and solar power. By providing renewable energy to power EV charging stations, these companies can help reduce the carbon footprint of the transportation sector. In 2020, Equinor and BP formed a strategic partnership to develop offshore wind projects in the United States. The partnership aims to provide renewable energy to power EV charging stations and reduce the carbon footprint of the transportation sector.
5. Oil and Gas Companies Collaborate with EV Manufacturers: The trend towards increased collaboration between oil and gas companies and EV manufacturers is strengthening. For example, in 2021, Shell and Volvo announced a partnership to provide high-quality charging experiences for Volvo’s customers in Europe. The companies plan to offer charging stations at Volvo dealerships, as well as provide access to Shell’s network of charging stations.

Overall, oil and gas companies are increasingly recognizing the importance of EV charging and taking steps to get involved in the industry. As EV adoption continues to grow, we can expect to see even more collaboration and investment in this area.

Why Do Oil Companies Want to be a Part of the Trend towards EVs?

• Realizing New Business Opportunities: The EV boom is creating new business opportunities for oil companies, particularly in the development of charging infrastructure. As more people switch to EVs, there will be an increasing demand for charging stations, which presents a significant opportunity for oil companies to expand their revenues.
• Adapting to Changing Market Trends: Oil companies recognize that the world is shifting towards cleaner energy sources, and to remain competitive and comply with the changing values of environmentally-conscious consumers, they must align. Investing in the EV charging industry is one way to do this, as it allows them to pivot towards cleaner energy solutions.
• Addressing Environmental Concerns: Fossil fuel companies are now investing in the EV charging industry as a way to address the increasing social and environmental concerns and reduce their carbon footprint. Looking to move away from their traditional branding, investing in renewable energy sources and electrifying the transportation sector are ways for these companies to show support for a more sustainable future.

The Challenges Oil and Gas Companies Face as They Navigate the Transition Towards Cleaner Energy Solutions

1. Talent acquisition: As oil and gas companies expand into renewable energy, they need to hire new talent with skills and experience in the renewable energy sector. This requires retraining and upskilling of the existing workforce and attracting new talent with different capabilities.
2. Regulatory and policy changes: The transition towards cleaner energy is driven by government policies and regulations. To enter these new markets, the companies must  adapt to these changes, dealing with complex new challenges such as  carbon taxes, emissions trading schemes, and renewable energy targets.
3. Infrastructure and supply chain: Building and maintaining the infrastructure for renewable energy, such as wind turbines and solar panels involves establishing a new and different equipment and services supply chain than that of the traditional oil and gas infrastructure. This requires significant investment and coordination with new suppliers.
4. Uncertainty and risk: The transition towards cleaner energy solutions represents a new and unfamiliar market for these traditional and typically conservative enterprises. Oil and gas companies are undertaking broader risks associated with technology, market demand, and changing policies. They will need to carefully manage these risks and uncertainties to ensure a smooth transition.

Faced with myriad geopolitical, economic and regulatory challenges, oil and gas companies are taking a significant stake in the growing EV charging industry, particularly as the world shifts towards cleaner and more sustainable transportation solutions. By investing in EV charging infrastructure, partnering with existing EV charging companies, diversifying their business, and providing renewable energy to power EV charging stations, whether reluctantly or happily, companies that have been until now spurned for their poor environmental profiles are increasingly contributing to the growth of the EV industry and by so doing are driving the transition towards a cleaner energy future.  By taking a proactive and responsible approach, perhaps these companies can utilize the wealth, experience and expertise they accumulated in yesterday’s fossil fuel economy to decarbonize transport.