Electric cars, oil and the struggle for market leadership

IT HASAfter years of climate scientists and environmentalists sounding the alarm about the future of our planet, governments and politicians have only recently begun to act.

This has enabled energy production to be reallocated away from oil and other pollutants to more sustainable and renewable sources such as solar and wind. Then came the rise of electric vehicles.

Although not a new invention or technology, in recent years it has proven itself to be the next step in sustainable and green transportation.

Green gold will replace black gold

The electric car has become a very popular topic of discussion, but, above all, its sales have skyrocketed. In 2021, EV (electric vehicle) sales more than doubled compared to 2019, reaching 9% of the global market. Elon Musk and his electric car company Tesla have played an important role in this trend.

Tesla has been able to convince consumers that electric vehicles can indeed replace combustion engine vehicles and, in addition, offer a number of benefits, such as fuel efficiency and less need for maintenance.

As the world shifts to electric vehicles, Tesla has become one of the most popular financial assets to trade in the form of share CFDs.

This is possible thanks to online multi-asset brokers such as Exness, which offer investors the opportunity to trade CFDs of their choice on various asset classes such as stocks, cryptocurrencies, indices, precious metals, and currencies.

However, the individual efforts of Tesla and other automakers, whether established automakers like BMW or start-ups like NIO, likely wouldn’t have had the same impact if politicians hadn’t committed to achieving zero emissions by 2050, especially in the West.

In particular, the EU, the US and the UK have signed commitments and initiatives to ensure that they significantly reduce their carbon emissions in the coming decades.

Similarly, governments around the world have taken steps to ensure the adoption of electric vehicles. These include financial incentives for car owners, building and expanding charging infrastructure, and requiring car manufacturers to sell a high percentage of electric vehicles over the next decade.

Norway, energy transition model

While governments have only recently started moving towards greener technologies and alternatives, Norway has clearly been at the forefront of renewable energy and EV (electric vehicle) adoption for about 30 years now. The Scandinavian country already generates 98% of its electricity needs from renewable energy sources, primarily hydropower, and it is estimated that EV adoption will reach 80% by 2022. Interestingly, 9 out of 10 cars sold in Norway are powered by batteries.

To reach this level, the Norwegian government has introduced a number of incentives since the early 1990s, such as tax cuts and tax exemptions, and the rapid development of a large and reliable charging station infrastructure. Today, many governments are following in Norway’s footsteps, primarily to meet their commitment to achieving zero emissions by 2050.

The Chinese government, in an effort to position itself as a technology leader and reduce heavy pollution in urban areas, has put in place a mandate for all automakers to sell at least 40% of electric vehicles by 2030.

Similarly, the US government is working to fund the domestic electric vehicle industry by building its charging infrastructure and offering tax breaks to buyers. Europe is working along the same path with a proposal to phase out combustion engine vehicles from 2035.

Oil in decline?

With more than 66% of petroleum products used for transportation and almost half for road transport, the spread of electric vehicles and changing trends in the automotive and transport sectors pose a threat to the dominance of oil.

However, his power and dominance remain, OPEC (Organization of the Petroleum Exporting Countries) is trying to maintain its interests by maintaining the strength of the barrel and its price.

This gives an advantage to oil-producing countries. They are still able to influence decisions with oil supplies and price increases. Oil, after all, is the most traded commodity and one of the most traded assets in the world.

Power over oil supply decisions, as well as changes in the geopolitical landscape of energy-producing countries such as Russia, can have a significant impact on the entire macroeconomic environment, including financial markets.

Thus, traders will not turn their backs on black gold just yet. Oil is another asset available for online CFD trading from reputable brokers such as Exness; and with the ability to go long and short, Exness traders can take advantage of the directions and trends they think a commodity might be following.

Towards a more sustainable future

Given the heavy dependence of the OPEC budget and economy on oil and the undeniable shift towards renewable energy and energy independence, some countries have already begun to rethink their strategies. Saudi Arabia is a good example: it is currently aiming to become a regional center and diversify its economy away from oil.

According to Reuters, the oil-producing country has already issued licenses to 44 international companies to open their regional offices in Riyadh. This initiative will bring $18 billion into the economy and create 30,000 jobs by the end of the decade. It is worth noting that by 2030 Saudi Arabia intends to issue an additional 480 licenses.

The world’s largest oil exporter is following in the footsteps of Norway, the world’s third largest gas exporter, and plans to provide the country with 50% renewable energy by 2030. This move speaks to the seriousness of the changes that are looming on the horizon. .

Despite the threat that greenwashing poses to the development of a greener future, and in addition to the importance of changing the dynamics of power in the global energy sector, it is worth questioning the importance of such development for the future of the world and humanity.

This development has contributed to the emergence of a new trend – investing in ESG (environmental, social and governance) and the ethical investor. The question is, can this new trend open a new chapter in the markets, one that promises not only profit but a brighter, healthier and more sustainable future?


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