Electric Vehicle impact on Oil Operators in Five – seven Years Case Study Solution
Introduction
Lately in 2011, the Ford Motor inaugurated its first electric car in the US market followed by the European market in 2013.The chief technology officer of Ford identified the growing need for electric and hybrid cars mainly and desired the long term strategy of producing or procuring the electric cars for US and European markets.
With the change in market trend and boom of technology and customer convenience software the demand for electric cars has increased. It has also made other companies like Hyundai, Honda, Chevrolet, BMW and GE to enter into the electric car market industry. By the end of 2011, many dominant industry players took the new approach to enter the electric car industry making the consumption of gasoline and petrol to decline to adapt towards the environment friendly consumption and emission of gas in the air, moving towards the sustainable operations in the long run. Under such scenario the proposed question to research is;
"How willthe Electric Vehicles growth impacts the national Oil Operators in 5-7 years?"
Since with the passing time and the change in Social and economic cursors of the US and European economy, the change has been analyzed on electric vehicle adaption and oil consumption. It is analyzed that with the growing demand of electric cars in the US and European market, the impact on the oil sector will be felt.However, according to Reuters and other researches, it is analyzed that though the surge of electric cars in the Western world will increase, the decrease in the barrel usage will be offset by the increasing demand in Asian regions for the fuel. Since the economy of the emerging markets is on the rise, the usage for cars will be increasing, establishing a direct relationship with fuel consumption. Also, it is estimated that the market for electric cars will only remain confined to the Western or developed countries, effecting the barrel usage by 1.8 barrel, which is quite low as compared to the profits generated by increasing demand for automobiles in emerging markets and Asian region. Hence, the impact of electric cars on the oil producers is uncertain however, with the increase in electric cars in US and Europe, the impact may be amplified but not in the near future.
Such drivers of change are discussed under the DRIVE Frame work followed by the PESTEL Framework in the discussion.
DRIVE Framework
Demographics and Social Change
Over the period of time, with the rising population the demand and consumption of national oil and CFCs gases have increased in the environment.This has given rise to the emergence of using greener technologies that on one hand offer fuel efficiency and replaces gasoline and petrol that pollutes the environment and disturbs the ecosystem. From late 90’s, the idea of using greener technologies has taken hold of the US and European market, making the big companies like Honda, Hyundai, Ford and BMW to switch to produce electric cars, that consume less gasoline and are fuel-efficient.This reduces (1) Oil consumption and emission and (2) also makes the suitable operations of the company, aligning it with the social change in the market. This trend elevates Ford strategy to develop the electric cars that reduces the national oil consumption while on the other hand sustains the position in the market by offering suitable energy solutions.
Resource Scarcity
Since with the passing time, the fossil fuels are depleting and cannot be resumed again to use, along with the growing population in the US and Europe, the government has put a limit to the usage of natural resources. The emergence of electric cars is a byproduct or elevation of the economic trend in the region. (Lambert, 2017)
Electric Vehicle impact on Oil Operators in Five – seven Years Harvard Case Solution & Analysis
Inequalities
The national oil is reserved or controlled mainly by the government of different nations which procure oil from the oil producing nations.In doing so, many countries having good relationship with OPEC members may receive high portion of oil at reduced rates as compared to others. The population is also another factor that counts under inequality. Since different regions have different population ratio, many companies face the restriction on production of such engines that consume large amounts of petroleum or gasoline, hence effecting the national budget of the region. Such restriction can be found in US, since the population of US is increasing on a greater level, hence the demand for consumption of energy and fuel is also on the rise........................
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