How quickly Canadians switch to electric vehicles (EVs) will impact Canadian oil, gas, power and utilities companies in the years ahead, according to a report published Monday by Ernst & Young (EY).
EY research shows that rapid adoption could mean as many as 13.2 million EVs on the road by 2030.
Already, Canada is the 10th-fastest adopter of EVs in the world, says EY, with sales growing 165% year over year in 2018.
“Electric vehicles have the potential to profoundly reshape everything from local transit to global commerce, and Canada’s energy players are not going to be immune from this impact,” said Lance Mortlock, EY Canada oil and gas leader, in a statement.
“Companies should be asking themselves not only how quickly EV adoption will unfold, but also whether they’re taking the right strategic steps to prepare for this momentous shift. Now is the time to invest in future-proofing.”
Rapid adoption — with EVs representing 30% of Canada’s vehicle stock, compared to less than 3% today — would reduce domestic oil consumption by roughly 252k barrels per day, EY research finds, and could trigger convergence among energy companies.
“Diversifying portfolios will be crucial for oil and gas companies in a rapid-adoption future,” Mortlock said. “To stay relevant and ensure profitable revenue streams, they’ll need to invest more in clean energy, petrochemical products and access to tidewater to enter new markets.”
Rapid adoption could also cause an 11% spike in Canadian electricity demand, EY said, requiring utilities to make significant investments in existing grid infrastructure to allow consumers to charge cars at home and in public spaces. Distribution network upgrades would also be required to improve power transmission across the country, including to rural areas.
“A dramatic increase in electricity demand would likely result in new power and utilities players coming to market,” said Daniela Carcasole, EY Canada power and utilities leader, in a statement. “This could open up a number of collaboration opportunities for existing companies — either through M&A or joint ventures with hotels, restaurants, technology companies and retail stores to offer easy and convenient vehicle charging to consumers.”
Availability of charging infrastructure, price premiums, battery performance, subsidies and time to complete the charge remain key barriers deterring Canadians from purchasing an EV, according to EY.
However, even a moderate adoption scenario — with 6.5 million EVs on Canadian roads by 2030 — would require a 5.5% increase in electricity demand, EY said.
“Growing electric vehicle adoption is inevitable,” added Carcasole. “By proactively developing strategic plans that position them strongly for the future, companies can avoid analysis paralysis and turn the challenges of this market inflection point into a significant opportunity.”