Why Electric Cars will Crush Chevron (NYSE: CVX)

Jeff Siegel

Written By Jeff Siegel

Posted April 18, 2023

This “hail mary” is going to fail miserably.

As reported in Bloomberg this week, Chevron Corp. (NYSE: CVX)  is planning to showcase “renewable gasoline” that it claims will eventually offer similar emissions savings to electric cars.

A Toyota Motor Corp. hybrid RAV4 running on renewable gasoline would have a similar carbon footprint to a pure-electric vehicle in 2040, the company forecasts. Although battery vehicles require no fossil fuels to run, they can be linked to carbon emissions if the power supply that charges them runs on natural gas or coal.

Of course, the future of the global energy economy will be renewable energy dominant, so the argument that EVs are just as pollutive as internal combustion vehicles because they have to be connected to a grid powered by coal and natural gas is misleading.

Today, renewable energy accounts for about 30% of global electricity generation.  By 2030, that number will exceed 50%, and by 2050, exceed 70%.

It should also be noted that the transition from internal combustion to vehicle electrification isn’t just about reducing CO2 emissions, anyway.  Truth is, for the most part, battery-powered vehicles are just superior to internal combustion.  Less moving parts, less required maintenance, faster acceleration, cheaper “fuel” costs.  The only obstacle for EVs today is range and lack of charging infrastructure.  But those obstacles will be overcome in less than ten years.

By the end of the decade, most electric cars will offer a minimum of 300 miles per charge, and upwards of around 620 miles per charge.  Or about 200 miles more than the average range of an internal combustion vehicle.

**Worth noting, there is one EV maker right now that’s expected to have a 1,000-mile-range vehicle on the market next year.  That’s enough to get you from Baltimore to Orlando without having to stop once. And you’d still have more than 100 miles of range remaining.**

And in terms of charging times, we could see 5-minute charging times before the end of the decade.

Point is: any obstacles we see today with EV adoption will be short-lived.  And quite frankly, those obstacles really haven’t been enough to stop the market from growing so rapidly, anyway.

By the end of 2030, more than half of all new cars sold will be electric.  And this figure was published before the EPA announced new requirements that’ll ensure EVs make up as much as 67% of all new car sales by 2032.

So why on earth would Chevron seek to develop a new “renewable gasoline,” when internal combustion vehicles are on their way out?

Sure, there will always be some percentage of vehicles on the road still using internal combustion engines.  But by 2050, the percentage of new car sales will exceed 70%.  Perhaps Chevron is just looking to profit from the scraps that’ll be leftover after EVs become the dominant mode of personal transportation?

I suppose that’s possible.  

There was one interesting take on this from Andy Walz, president of Chevron’s fuels and lubricants Americas division, who said …

Chevron will demonstrate the renewable gasoline by taking three Toyotas on a road trip across the US Gulf Coast. But selling it widely may be some years away due to its cost. For commercial viability, the low-carbon fuel will need fiscal incentives like those built into California’s Low Carbon Fuel Standard.

I guess if Chevron can lock in some of that lucre from California, it doesn’t have to take on much of a financial risk, and could probably secure some points with regulators.

Still, trying to sell this idea of a renewable gasoline to counter the rapid development of the EV market is kind of like trying to sell the idea of a more efficient rotary phone just five years before the first iPhone gets released.

I’m sure Chevron could benefit from this in some way, but mark my words: you’ll never see this renewable gasoline in the marketplace.  It will NEVER happen.

What will happen, however, is the continued, and very rapid growth of the electric vehicle market.  And that, dear reader, is where the money’s at.

Why else do you think GM (NYSE: GM), Ford (NYSE: F), Hyundai (OTCBB: HYMTF) and Tesla (NASDAQ: TSLA) continue to plow billions of dollars into their EV efforts?

I can assure you, it has nothing to do with carbon emissions or hugging trees.

Electric vehicles are the future.  Plain and simple. Investors who embrace this truism now will make a lot of money.  And those who don’t, will fall victim to its success. 

Invest accordingly.

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