Why Big Oil Is Worried About EV Batteries and Tesla

Out of the many types of alternatively fueled powertrains, Big Oil is chiefly threatened by only one: the battery electric. And Tesla is its poster child.

Oil and gas magazine Alberta Oil recently spotlighted the Tesla Model S as “one of the most beautiful and interesting automobiles to ever get made” but possibly also “one of the most dangerous.”

With the long-standing Toyota Prius, the affordable Nissan Leaf and the practical Chevrolet Volt as other top competitors in the electrified market, why did this trade magazine single out a luxury battery-electric?

“Because it’s managed to do something that no other electric vehicle has ever achieved: become an object of desire,” said Max Fawcett of Alberta Oil.

In his examination of the oil industry’s perspective on electrified vehicles and their batteries, Fawcett spoke with Steve LeVine, a Quartz energy and technology correspondent. LeVine is also the author of the recently published book, “The Powerhouse,” an in-depth look at lithium-ion batteries from a geopolitical viewpoint.

“Biofuels, solar, wind, and other non-fossil fuels and technologies all seemed destined to remain permanently marginal,” wrote LeVine in his book. “But batteries were a different matter.”

LeVine further expanded on this idea in an interview, saying:

Executives in the oil industry aren’t “worried about biofuels, and they’re not really worried about any of the renewables posing any kind of existential threat. But if there is a big breakthrough in batteries, that’s something that would be a huge risk for them.”

Battery research and development will not only affect the oil industry, according to LeVine, but it will also be a significant influencer on business and science.

“I think I can make a very firm case that batteries are one of the single most important engineering and scientific pursuits currently going on. It’s the Holy Grail,” he said.

For years it appeared to the oil industry that battery-electric cars would stay on the fringe as a permanent but minute niche market, explained LeVine. ExxonMobil noted in one long-term forecast that electrification would indeed become mainstream. But though they predicted this technology would be present in almost half of the world’s vehicles by 2040, ExxonMobil thought electrification would mostly exist in the form of plug-in hybrids like the Prius.

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LeVine noted that advances in battery development are certain. But that doesn’t guarantee that battery electrics will rise as the preeminent vehicle class.

“It doesn’t have to happen in the way some people are imagining. A big breakthrough can happen by twinning a hybrid model of battery – a super capacitor with a battery, or a fuel cell with a battery,” LeVine said.

And, even with a major shift towards electrification, LeVine said that the oil industry wouldn’t completely vanish.

“Demand for oil isn’t going to disappear,” he said. “It’s going to be with us. It’s such a convenient and powerful and dense store of energy – even if every car on the planet was an electric car, for example, using fuel in jets is much more efficient than batteries will ever be. There’s going to be liquid fuel for a long time.

“But the demand for it could plunge. It could really plunge.”