What's going on?
Oil giant Royal Dutch Shell said on Thursday that it had agreed to buy NewMotion, one of Europe’s biggest electric vehicle charging companies. It’s making a bet that “recharging” is the future of “fueling up”…
What does this mean?
NewMotion currently provides both private chargers for home use and maintains a network of public charging points across Europe. Shell’s plan is to roll out the technology across its global network of service stations (in conjunction with another type of electric charger that it’s already rolling out).
Why should I care?
The bigger picture: Electric cars are starting to have a wider impact.
China has prioritized the development of electric vehicles, partly to reduce its reliance on imported oil and to help improve its notoriously awful air pollution. Meanwhile, the metal cobalt, a key component of electric vehicles, has soared 75% in price this year and Tesla, perhaps the most high-profile electric vehicle manufacturer, has seen its stock jump 70%. The ultimate shape that the automotive industry will take over the coming decade or so isn’t quite clear – but it is clear that investors, countries and companies (like Shell) are betting on a big role for electric cars.
For markets: The electrification of cars will hurt demand for oil – and Shell is hedging its bets.
Car fuel currently makes up about 20% of global demand for oil. If electric vehicles become ubiquitous, the demand for oil will suffer and, as a result, put downward pressure on the oil price – which wouldn’t be good for big oil producers like Shell. But Shell has already been decreasing its reliance on oil: in addition to this latest purchase, it notably spent almost $50 billion two years ago to buy BG Group, a huge British-based producer of natural gas. The long-term prospects for the oil industry are even being questioned by (some) of the oil majors themselves.