The global shift towards electric vehicles (EVs) is not just a revolution in transportation; It is a seismic shift that resonates throughout the energy sector. As the adoption of EVs accelerates, their impact on energy production, distribution and consumption becomes increasingly profound. Now, what impact will this transition have on the global energy landscape in the future?

Increase in electricity demand: With the widespread adoption of EVs, electricity demand is set to skyrocket, expected to reach 2,000 TWh by 2030 (IEA, 2023), an increase of more than 7% of all global generated electricity. This presents challenges and opportunities for energy providers. On the one hand, it requires a significant investment in infrastructure to meet the charging needs of EVs. On the other hand, it offers a new source of revenue and will grow demand for utility companies.

Renewable Energy Integration: The synergy between EVs and renewable energy presents a tantalizing prospect for a cleaner, more sustainable energy future. EV charging infrastructure can be strategically deployed to support renewable energy generation, helping to mitigate intermittency issues and maximize renewable energy utilization.

Energy Storage Solutions: EV batteries not only power vehicles, but also serve as distributed energy storage devices. As EV penetration grows, the aggregate battery capacity of EVs becomes a valuable resource for grid stability and resilience. It is expected that by 2030, EVs could provide 900 GWh of storage for global energy (Global EV Outlook, 2023). Vehicle-to-grid (V2G) and vehicle-to-home (V2H) technologies enable bidirectional power flow, offering flexibility and backup power capabilities.

Impact on Oil Demand: The electrification of transportation has significant implications for the oil industry. As EVs replace internal combustion vehicles, demand for petroleum products, such as gasoline and diesel, will decline. Currently, transportation is responsible for 40% of oil demand, and it is expected that the adoption of EVs will save 5 million barrels of oil per day by 2030 (S&P Global, 2023). This shift presents challenges for oil producers and refiners, who must be vigilant when making long-term investments as they must adapt to changing market dynamics and explore diversification strategies.

The electrification of transportation represents a paradigm shift with far-reaching implications for the energy sector. As EV adoption accelerates, it underscores the interconnection between transportation, electricity, and renewable energy. Embracing this transition requires collaborative efforts from policymakers, energy providers and technology innovators to realize a sustainable and resilient energy future. At Alza, we believe that the automobile industry is going through its greatest transformation since Henry Ford invented the Model T in the 20th century. For this reason we are addressing different solutions that encourage the adoption of new trends and technologies.

Ignacio Paz – Analista de Inversiones

• Translated to English by Sadie Cheston Harris.