Gene J. Puskar/AP Photo
A Tesla sedan gets a charge at a Tesla Supercharger station in Cranberry, Pennsylvania.
On Tuesday, BP announced plans to increase oil and gas production, dispensing with cutbacks that were originally signaled at the beginning of the COVID-19 pandemic. The oil colossus seeks a $1 billion-a-year hike in production above its earlier plans until 2030. That announcement, plus the profits the industry already vacuumed up as energy costs spiked in the wake of the Ukraine War, is sending expectations that the planet can stave off climate catastrophe onto the shoals of lost causes.
But BP pivoted to temper the justifiable outrage that followed its announcement by reiterating a commitment to electromobility through an $8 billion investment in so-called energy transition growth engines like EV charging. It’s just one of several ways in which Big Oil has stepped up its own investments in EV infrastructure.
These new investments, in tandem with production decisions going in the wrong direction, have raised concerns about whether electric vehicles are headed for a “Who Killed the Electric Car?” sequel. What does the movement of oil companies into EV charging infrastructure networks ultimately mean, at least in the short term?
Part of it is that federal money is available, through massive investments like the Biden administration’s $5 billion national electric charging network, to pay for the buildout. Part of it represents the oil and gas sector hedging its bets on adoption of EVs, and having a business after it happens. And part of it could be finding ways to lengthen the timeline of that adoption, which gives oil firms leeway to argue that they also must satisfy current energy demands by burning more carbon.
Oil companies have been snatching up struggling electric charging companies at a furious pace. In Western Europe, which is of course light years ahead of the United States on EV adoption, the electric-vehicle infrastructure has matured accordingly and oil companies are all in. In late January, BP Pulse, its electric-vehicle charging division, opened the first nearly 400-mile-long charging corridor in Germany for heavy and medium e-trucks traveling between North Sea ports and the Mediterranean port of Genoa, Italy. A BP official told Reuters in January that fast charging is heading toward being more profitable for the company than fuel in Europe.
In the U.S., BP has been busy as well. It acquired Amply Power, an electric-vehicle fleet charging and energy management company, in 2021, and then moved on to sign a memorandum of understanding to develop a national network of fast chargers with Hertz, the car rental company, to service its fleet. Taxi and rideshare drivers and the general public would also have access.
Meanwhile, Shell recently acquired Volta, its second U.S. EV charging company acquisition, in a $169 million deal. This was a relative bargain, as lagging EV adoption in a high-niche market helped tank the San Francisco company, which operated more than 3,000 charging stations in the U.S. and Europe and planned to add thousands more.
Unlike the smaller EV charging companies, which have struggled to build out locations, the oil giants have the capital and then some to build EV charging infrastructure and invest resources in engineering and maintenance, while waiting for EVs to mature in a country where widespread adoption is going to take at least a decade. Fewer than 1 percent of vehicles in the U.S. on the road are electric, a rate far lower than in Europe. Domestic sales of EVs totaled less than 5 percent of total vehicle sales last year, an increase over 2021. But worldwide, EVs make up almost 10 percent of all sales.
What the oil companies see in all of this is opportunity.
The U.S. timeline for the market transition to EVs is fluid, and there is a wide variation in the projected domestic adoption numbers. The Biden administration and the auto industry project that EVs will be roughly 50 percent of total sales by 2030. An August 2022 report by S&P Global Mobility Forecast for the Fuels Institute has projected that by 2030, EVs will constitute about 6 percent of vehicles in operation and about 17 percent of sales. The Inflation Reduction Act’s $7,500 tax credits set EVs on a course for healthier sales (but not as much as a rebate regime might have produced, given the various conditions placed upon it).
When it comes to EVs, there are a host of drawbacks for the average car buyer, including the desire to squeeze every last mile out of their existing vehicle (gas-powered cars run longer than they have in the past). High price tags for new EVs don’t help, nor does range anxiety produced by a sporadic charging network outside of major metropolitan areas.
John Eichberger, executive director of the Fuels Institute, a transportation energy research group of industry, government, and nonprofit partners, likens the charging environment to a “Wild West” that will eventually be tamed. “There are so many companies, so many startups, so much venture investment and so much subsidization,” he says. “Eventually, the number of players is going to contract and you are going to have the most viable players remaining.”
What the oil companies see in all of this is opportunity. Today, most fuel is sold at retail convenience stores. Until recently, major oil companies and others had a negligible presence in the retail convenience market of about 150,000 outlets. However, oil companies like BP, Shell, and ExxonMobil have about 15,400 franchises today, and are moving into the retail convenience store sector. “Many of these companies have programs to support dealers installing fast chargers to their sites to help them maintain customers who have switched [to EVs],” says Eichberger.
Contrary to some fears that oil companies have some nefarious goal to sabotage EV charging infrastructure in a bid to destabilize the sector, Eichberger counters that the oil companies are going to make sure their chargers work. “Their entry is going to make the standard for reliability increase because they’re not going to jeopardize their brand value and they’re going to invest in making sure those chargers they’ve helped install are operating appropriately. They will also deploy technicians to make sure that they are in good working order.”
He adds, “Other EV charging companies don’t want to be saddled with a reputation for unreliability but may not have the resources to provide fast chargers and properly maintain the infrastructure.” (It’s true that routinely broken chargers have bedeviled EV owners, prompting California to establish a standard for ensuring properly functioning chargers and holding locations accountable.)
As for public dollars, the bipartisan infrastructure law invests $5 billion over five years to build a national network of 500,000 EV chargers. Through the National Electric Vehicle Infrastructure (NEVI) Formula program, monies will be distributed to all states, plus the District of Columbia and Puerto Rico, on an 80/20 split (federal to state/private funds) and can only be used for the charging of a vehicle (as opposed to other highway formula programs) and for charging networks that are available to all drivers.
Some NEVI provisions have already rankled state officials. Wyoming, a fossil fuel producer with few resident EV drivers, has balked at accepting federal dollars. Requirements that chargers be installed every 50 miles are viewed as impractical in a state with severe winters and vast, empty stretches of land.
Wyoming has proposed alternatives to the federal requirements, such as chargers near national parks that attract EV drivers. (Federal officials rejected the idea.) For good measure, Wyoming deemed EV infrastructure “likely to fail,” while state lawmakers introduced a proposal to ban the sale of EVs, as a symbolic counterweight to California’s decision to ban gas-powered cars by 2035. The two sides are still attempting to resolve the impasse. The Dakotas, Idaho, and Montana have expressed similar concerns.
If a state decides not to accept the federal money, there is a fail-safe for EV proponents. The funding could potentially go to a local community or group that wants to pursue comparable projects, a lesson learned from the Obama administration’s high-speed rail grant failures that led to Republican states like Florida, Ohio, and Wisconsin returning federal grant dollars that were, in turn, redistributed to other states. Unfortunately, if EV charging devolves into another red state/blue state food fight, count on the oil companies to swoop in and sweep up the crumbs spit out by the public sector—which does not bode well for an affordable network ultimately serving rural areas and other underserved and disadvantaged communities.
