Posted on November 01, 2016 by Matt Pressman
We recently reported on how fossil fuel companies could soon experience an "Investor Death Spiral" based on the growth of electric cars from companies like Tesla Motors [NASDAQ: TSLA] and overall advances in clean energy. And, with Tesla's forthcoming merger with SolarCity, CEO Elon Musk is evolving its mission beyond sustainable transport — Tesla is actively positioning itself to be the "world's only integrated sustainable energy company." That said, Tesla appears poised to take advantage of a paradigm shift happening within the energy sector. And, early signs indicate that this shift is already beginning.
Above: The battle between clean and dirty energy intensifies (Instagram: @mrchespa)
According to The Guardian, "Institutions worth $2.6 trillion have now pulled investments out of fossil fuels." This includes 400 institutions and some 2,000 individuals (including high-profile names like Leonardo DiCaprio) with analysis showing, "the value of the funds committed to selling off their investments in coal, oil and gas companies has rocketed in the last year, rising 50-fold." It turns out that DiCaprio just debuted a new climate change film this week, Before the Flood, which could also prove detrimental to the fossil fuel establishment in the court of public opinion.
Above: Leonardo DiCaprio chats with Tesla CEO Elon Musk in a scene from National Geographic's new climate change film, Before the Flood; note - to view the whole film for free, scroll to the bottom of this post (Youtube: National Geographic)
And, according to Bloomberg, "If rapid improvements continue in renewable energy, electric vehicles and other disruptive technologies, petroleum consumption will peak in 2030 and decline thereafter, according to a report from the World Energy Council... Disruption could spread to the oil industry as electric vehicles become more economic than gasoline or diesel cars, potentially displacing millions of barrels of daily fuel use by the late 2020s."
Above: World Energy Council sees oil demand declining after 2030 (Source: Bloomberg)
Alex Blein, a London-based energy-portfolio manager at Amundi holding more than $1 trillion of assets, explains: “Given the advances in [electric vehicle] battery technology, by 2030 carbon-powered vehicles will be the exception rather than the norm.” Furthermore, Bloomberg points to "Tesla temptation," pointing out that, "there’s some evidence this is [already] happening. Tesla Motors Inc.’s Model S accounted for almost a third of all U.S. luxury sedan sales in the third quarter, surpassing the BMW 7-Series and the Mercedes-Benz S-Class." And it's not just Tesla. The electric vehicle segment, as a whole, is rapidly growing.
Above: Electric vehicle (EV) sales, as a whole, are on the rise — selling 145,000 EVs in the last 12 months (Source: Union of Concerned Scientists via InsideEVs)
According to the Union of Concerned Scientists, "EV sales in the US just hit a new record. Over 45,000 EVs were sold in the third quarter of 2016, up more than 60 percent from the same time a year ago... EV sales reached this new high-water mark despite... continued lower-than-average oil prices, a factor often cited as hampering EV sales." Furthermore, in a addition to electric vehicles, clean energy is gaining momentum (see below) and solar, in particular, is having a massive impact.
Above: International Energy Agency summarizes findings in its latest report (Source: Electrek)
According to Electrek, "the International Energy Agency (IEA) confirms that renewable energy has overtaken coal as world’s largest source of power capacity as of last year." And, "IEA estimates that about half a million solar panels were installed every day around the world." Furthermore, the IEA expects that renewables “will remain the fastest-growing source of electricity generation, with their share growing to 28% in 2021 from 23% in 2015.” In addition, Tesla just introduced a solar game changer a few days ago — beautiful solar roof tiles that can be customized for the home.
Tesla is taking full advantage of these shifting preferences in the energy space. Tesla's merger with SolarCity soon promises, "a vertically integrated energy company offering clean energy products." With Tesla's reputation, having established a strong brand with customers worldwide, the pressure is on for fossil fuel companies to defend their turf against fast-approaching advances, from Tesla and others, in the clean energy sector.
BONUS: Free Movie
Above: New film, Before the Flood, in which Tesla's Elon Musk joins DiCaprio along with other luminaries including the Pope, two Presidents (Barack Obama and Bill Clinton) and Secretary of State, John Kerry, among others discuss to discuss climate change and a transition away from fossil fuels (Youtube: National Geographic)