Electric vehicle (EV) sales are experiencing booms in some of the biggest buyers of Nigerian crude oil, threatening the country’s earnings from petroleum and its ancillary products.
France, Spain, India and the United States were four major importers of Nigerian oil in the first quarter (Q1) of 2024, but they saw significant rises in EV adoption in the same period.
In France, EV sales grew by 24.3 per cent in the first quarter of 2024 over the corresponding period of 2023, with India’s EV adoption rising by 40 per cent when compared with the same period of 2023.
This was worst in the United States where EV sales rose significantly by 50 per cent in comparison to the corresponding period of 2023. Spain saw an EV sales’ growth of 12 per cent in Q1 2024 as against the same period of 2023.
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Tunde Ayeni, a senior energy analyst in a Lagos-based consulting firm, said Africa’s biggest oil-producing country is yet to come to terms with the reality of a post-oil economy as it lives as though the demand for black gold would be there forever.
“This is despite a rising push for electric vehicles sales across Europe, which may undermine Nigeria’s most valuable export,” Ayeni said.
Forecasts from the International Energy Agency (IEA) showed electric and plug-in hybrid car sales will jump to a new global record in 2024 despite slowing growth in some markets.
The Paris-based forecaster said that 17 million battery electric vehicles and plug-in hybrid electric vehicles will be sold in 2024, up by over 20 percent compared with 2023 numbers.
Fatih Birol, the energy economist who heads the IEA, acknowledged that sales are stronger in some countries than others, but added that there is clear momentum for the transition.
“Rather than tapering off, the global EV revolution appears to be gearing up for a new phase of growth,” he said.
“The wave of investment in battery manufacturing suggests the EV supply chain is advancing to meet automakers’ ambitious plans for expansion. As a result, the share of EVs on the roads is expected to continue to climb rapidly.”
In the first quarter of 2024, there were more sales of electric and plug-in hybrids (which combine a petrol engine with a battery) than in the whole of 2020, the IEA said.
The rise in electric vehicle adoption does not bode well for oil producers, especially Nigeria, which is unable to exploit its crude oil resources fully. Energy think-tank groups say high oil demand may end by 2030.
International trade data from the Nigerian Bureau of Statistics (NBS) showed Nigeria’s oil is chiefly sold to countries in Europe like France, Spain, India, USA, Indonesia, among others.
According to NBS data, the value of total exports from Nigeria in the first quarter of 2024 stood at N19.167 trillion, of which more than 88 percent was crude oil exports.
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Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, said worries over the future value of crude oil are particularly acute in Nigeria, where over 90 per cent of export value is generated by fuels, oils, and distillation products.
“I shudder when Nigerian lawmakers still shout their voices hoarse on the relevance of oil, rather than challenge themselves in building knowledge-driven economies which can truly create wealth,” Mohammed said.
France
In France, EV sales grew by 24.3 percent in the first quarter of 2024 after President Emmanuel Macron set a goal for the nation’s carmakers to produce two million electric or hybrid vehicles by the end of the decade, even as they face tough competition from top producer, China.
Findings show that French carmakers are racing to get more electric models on the roads after Chinese rivals stole an early march with rapid market share gains only reversed recently after the government revamped its consumer bonus scheme to favour the purchase of Europe-made cars.
Bruno Le Marie, the country’s finance minister, told Reuters that building up France’s electric car industry is essential for the country’s independence from oil producers and major car exporters.
“The choice that has to be made is whether we want to be a country of (car) producers or a country of consumers. We have made the choice to be a big electric vehicle producer nation,” Le Maire told a news conference.
A finance ministry source said the state had earmarked $1.6 billion to support the production and purchase of electric vehicles this year through various programmes.
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Spain
Data sourced from Electromap, a platform that tracks EV sales in Europe, said 36,000 electric vehicles were sold in the Spanish market in the first quarter of 2024, representing a 12 percent increase over the same period in 2023 when 32,000 electric vehicles were sold.
“These trends reflect the challenges facing the Spanish automotive market as it makes the transition to green mobility. But the growing interest in hybrid vehicles is encouraging,” Benjamin Vindry, an analyst at Electromap, said.
India
Electric vehicle (EV) sales in India reached a record 486,669 units in the first quarter of 2024, a jump of over 40 percent against the 347,676 units sold in the same period of 2023, JMK Research & Analytics, an India-based specialist research and consulting firm, said.
BusinessDay’s findings showed the EV market consistently exceeded the 100,000-unit threshold each month during the quarter, and March witnessed the highest-ever monthly sales figure of 204,337 units.
EVs account for 7.9 percent of overall automobile sales, which totalled 6,157,070 units in Q1 2024, according to data released by India’s Ministry of Road Transport and Highways.
The country’s official data shows India now has over 3.95 million registered EVs.
USA
Data compiled by Bloomberg showed six of the 10 biggest EV makers in the US saw sales grow at a scorching pace in the first quarter of 2024 compared to a year ago — up anywhere from 56 percent at Hyundai-Kia to 86 percent at Ford.
“We’re still seeing growth in demand, just not at the same pace for every brand,” said Stephanie Valdez-Streaty, director of industry insights at Cox Automotive, one of largest auto car companies in Atlanta.
He added, “Right now Tesla doesn’t have new models, Ford doesn’t have a lot in the pipeline. But Hyundai, BMW, Kia, Cadillac — they’re moving the needle forward.”
The US and worldwide EV sales are both expected to grow roughly by 20 per cent this year. That’s less than the blistering 46 per cent expansion the US experienced in 2023, according to BloombergNEF.
“If the global market for EVs continued at this ‘slowdown’ pace indefinitely, virtually all cars would be electric in a decade.”
Implication for Nigeria
Nigeria will be hard hit by this latest development as crude oil accounts for most of the foreign exchange earnings and two-thirds of government revenue.
The country has not yet recovered from the precipitous drop in oil price of mid-2014 due to a supply glut caused by the shale oil producers who used fracking to inundate the market with the product.
Oil theft and pipeline vandalism have crimped output. Oil output hit 1.48 million barrels per day (bpd) in February, but it is still below a budget target of 1.78 million bpd.
The economy has been battered by severe foreign currency scarcity, red-hot inflation and corruption.
“Nigeria would do well to prepare for a future where the price of crude oil no longer tops the global economic agenda,” Mohammed added.
