5. Smart city planning
Cities worldwide are looking to improve mobility and transportation through updated infrastructure and increased connectivity. Current infrastructure is aging and unable to meet these evolving needs. With oil and gas sector leadership, EVs could serve as a crucial enabler for upgrades.
Smart city planning creates investment cases for the EV market by addressing traffic flows, adoption rates and location feasibility for supply equipment. Oil and gas companies can design detailed EV routes and establish a profit analysis model to gauge the return on current and future routes.
6. Battery swapping and management
Battery-related services are an excellent opportunity for oil and gas players to broaden and connect with their customer base. Consumers see EVs as pieces of technology and feel wary that the manufacturer is the sole refuge for service.
Charging stations and EV battery banks that let consumers swap depleted batteries for charged ones provide peace of mind and convenience. Fuel retailers could provide this service, including options to rent or lease batteries.
This framework also creates a secondary market for batteries. Oil and gas players could trade the batteries or recycle them as storage for renewable energy sources.
Market scenarios and strategies
As oil and gas companies develop strategies for these six markets, they must evaluate them against global scenarios for how an energy transition might unfold. In any of these Fueling the Future scenarios, oil and gas companies eventually shift capital toward alternative and emerging energy technologies. In any transition, business lines that enable vehicle electrification financing, smart city planning and PoI will be appealing. All that's in question is how fast a transition occurs.
Regional differences are already affecting strategic decisions. A few players, mostly European, are setting clear and aggressive goals to go green and carbon-neutral by 2050. At the other end of the spectrum, another group — mostly US players — are skeptical; previous investments in renewables have shown meager returns, and they prefer to wait for the industry to further develop. In the middle, some IOCs are “putting a toe in the water” — exploring new solutions without committing too much capital or re-engineering their core businesses.
Enabling a transition from gasoline pumps and oil changes to charging stations and battery banks will require a multi-faceted capital approach. The opportunities are large and complex, and traditional sector boundaries are dissolving. Acquisitions, partnerships, alliances, joint ventures and horizonal diversification will all play a role in building this new world.
The views of third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made.