As more car brands go electric, Nigeria’s oil future dims

Just as the rise of Ford’s mass-produced cars in the early 1900s led to the demise of the horse and carriage, some of the world’s biggest carmakers are adopting Electric Vehicles (EVs), signalling that crude oil is no longer a priority thus shrinking the market for producers.

Global electric car sales rose 43 percent last year to more than 3 million, despite overall car sales falling by a fifth during the coronavirus pandemic. Tesla, an electric car maker, delivered about 500,000 cars alone last year.

Oil-dependent economies like Nigeria with markets in Europe where electric car adoption is on the rise, especially in Spain and France, will see a shrinking market.

Some analysts question Nigeria’s inability to articulate a strategic response to the reality that electric vehicles will be the next disruptive market force.

“The world is turning its back on oil and Nigeria seems docile,” Ademola Henry, team leader at the Facility for Oil Sector Transformation (FOSTER), said, noting, “We have absolutely nothing to fall back on, yet we act as if we are Norway.”#

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Norway, with huge oil and gas revenues, aims to become the world’s first country to end the sale of fossil-fuel-powered cars, setting a 2025 deadline. Fully electric vehicles make up about 60 percent of monthly sales in the country.

“Countries that are richer than Nigeria have a strategic plan with deadlines,” Henry said, as “most of the car makers’ EV plans will shrink Nigeria’s share in the global market.”

The world’s biggest carmakers are in a race to transform their business to meet strict CO2 emission targets set by governments across the world hence are increasingly turning to EVs.

Early this month, Volvo, a Chinese-owned carmaker, announced plans to stop selling cars that run on fossil fuels by 2030 in response to climate change impacts.

“I am totally convinced there will be no customer who really wants to stay with a petrol engine,” said Håkan Samuelsson, Volvo’s CEO, told reporters when asked about future demand for electric vehicles. “We are convinced that an electric car is more attractive for customers.”

This means before 2030, Volvo brands such as V60 and V90, which are among the world’s biggest petrol guzzlers, may become uncompetitive while popular Nigerian brands such as Volvo XC90, Volvo XC60, and Volvo V60 may go out of circulation.

In January 2021, Volvo sold 59,588 cars, a 30.2 percent increase from the January 2020 record of 45,752.

American carmaker Ford recently said it plans to sell strictly electric cars in Europe by 2030. The company said it would invest $1 billion in converting a vehicle assembly plant in Cologne, Germany, to become its first electric vehicle manufacturing facility in Europe.

The company also said it would ramp up spending on EVs to $27 billion through the mid-decade. The investment includes plans to develop its own electric cargo vans and a plug-in version of its bestseller F-150 pickup truck.

Ford said on Twitter that all of its passenger cars in Europe would be “zero-emissions capable, all-electric or plug-in hybrid,” by mid-2026, before ramping up its ambitions to be “completely all-electric by 2030.”

Another American carmaker, General Motors, plans to sell electric vans to commercial delivery companies, disrupting the market for delivery logistics. It plans to phase out gasoline- and diesel-powered vehicles globally by 2035.

General Motors sold 2.55 million vehicles in the US last year, only about 20,000 of these were EVs. It said in November, it would invest $27 billion in electric and autonomous vehicles over the next five years, up from $20 billion planned before the coronavirus pandemic.

Japanese multinational, Toyota Motor, said it would introduce its first mass-market all-electric vehicles in the US later this year.

The company helped pioneer and popularise hybrid vehicles, which lean on electric motors to reduce emissions and increase fuel economy. But unlike most other major automakers, it has not gone all the way investing in EVs outside China.

The trend of cutting carbon emissions has seen the UK announce a ban on the sale of new cars and vans powered wholly by petrol and diesel from 2030. In the EU, environment ministers struck a deal in October to make the bloc’s 2050 net-zero emissions target legally binding,

Early this year, Joe Biden, the US president, announced plans to replace the government’s fleet of cars and trucks with EVs.

The implication of these developments, analysts say, is that time is running out on oil, and oil producers have little time to make the most of their natural resources.