Will “Lower For Longer” Become “Lower Forever”? Well, No

Ben Van Beurden, the CEO of Royal Dutch Shell, set off a minor media firestorm last week in an interview with Bloomberg TV when he made the following remarks:

  • “The whole move to electrify the economy, electrify mobility in places like northwest Europe, in the U.S., even in China, is a good thing.”
  • “We need to be at a much higher degree of electric vehicle penetration — or hydrogen vehicles or gas vehicles — if we want to stay within the 2-degrees Celsius outcome.”

Following the interview, a spokesman for the company told Bloomberg that Mr. Van Beurden plans to purchase an electric car as his next personal automobile.  It’s great that a CEO of a major integrated oil company makes enough money to afford a Tesla or one of the other very expensive electric vehicles being turned out by European and U.S. automakers.

We can all hope that, over time, the technology will advance to the point where it is competitive with cars powered by internal combustion engines, and thus become affordable to the masses in the middle- and lower-classes of the developed world.  But we’re not there yet.  For proof, one only needs to look at the lesson Tesla learned when it tried to market its electric vehicles in Hong Kong, where the government ended its substantial subsidies for EVs in April of this year.  There, the company registered zero sales in April, after having sold more than 3,000 of its Model S cars during the first quarter of the year.  These subsidies matter, bigly.

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