EVs seem to be taking over the world whether we like it or not. But while a lot of us embrace the change, many people have concerns about what that means for certain industries.

It is no secret that the US Big Three are facing a lot of issues. At the same time, the oil industry carries its own controversies, in which electric cars play no small part. We have even talked about it in our article on swapping one dependency for another with EVs. However, I think we are all missing one key point – business is all about survival.

We are way too busy taking sides instead of looking at what is happening right under our noses. You may be a fan of EVs, or not – that does not matter. What matters, though, is the actions of the most threatened industries. For example, are they fighting the EV trend or are they looking to join it? Or maybe they have no clue what to do either… Let’s unravel the mystery together!

A quick look at the state of Big Oil and US automakers

For quite a long time, oil has been one of those things you cannot really do without. The whole world depended on it (and still does, to be honest). Because of oil, we can have groceries from across the world, our workplaces and homes can be far apart, and we can go pretty much wherever we want.

Cheap and abundant oil resources also have to do with the boom of the car industry. Big vehicles with powerful engines became a thing because we were not concerned with efficiency. Many people thought that SUVs even spelled the end of the American sedan. All in all, Big Oil and automakers made quite the great team. They forged the perfect consumption cycle. Well, until EVs managed to break it!

Of course, we cannot say that EVs alone disrupted Big Oil. The turmoil in the Middle East, US foreign relations, and climate change awareness all had a play in it, along with other factors. That being said, electric vehicles definitely tipped the scales further.

A similar thing happened to US automakers. Lack of innovation, bad worldwide market penetration, and the better initiative of foreign competitors put them in quite the trouble. Yet, just as they started coming up with solutions, Tesla entered the picture and disrupted everything. See, a Ford SUV may sound nice, but what about that cool looking Model X? People just prefer new stuff!

So a combination of many factors put both the oil industry and US automakers at risk. What makes it even worse for them is that people will not believe “gas is better” anymore. That means marketing cannot turn the tides around this time. Can anything do it though?

How Big Oil will try to stay afloat

We all know how big the oil industry is. Some could even flaunt the saying “too big to fail”. Recently though, a famous psychologist claimed that if something gets too big, failing is a matter of “when”. Even huge companies, such as Amazon and Google, are actually a bunch of smaller operations. That is the only reasonable way to not crumble with time.

The main problem of Big Oil then is adaptability. Since it is not a very diverse industry, its dependence on consumption can also lead to its downfall. In the past, oil abundance and low prices led to more cars being sold, thus more oil being used. Today oil is not exactly scarce, but the demand is not rising either.

So where does the oil industry stand now? What strategy does it have to adapt to the inevitable rise of EVs? As it turns out, Big Oil may just be stuck. The only move companies in the sector have made so far is to invest in some startups for EV charging stations.

Of course, we cannot expect businesses to just lay out their plans. They have internal competition, which they need to counteract. But here are just a few things Big Oil can do to adapt:

  • Shift focus to developing countries – Poorer countries will wait a while longer to adopt EVs. Even some EU countries rely primarily on used cars. That means that ICE vehicles will dominate such places for longer. This will not necessarily save Big Oil, but it can buy it time.
  • Switch industries – If oil companies decide, they can start to transition to other energy industries. While not impossible, this option is the hardest to pull off and requires a lot of investment. This makes it a hard pill to swallow for many businesses in the industry.
  • Push for innovation – Companies can squeeze out their operations to the fullest and use the resources to develop a disruption of their own. An example can be the development of a cleaner way to use oil. Even if cars fully transition to electricity, the oil may still have its place.

Are Big Oil companies blind?

We have to remember that Big Oil is inherently conservative. The supermajors still believe that oil demand will rise because many industries will not be able to transition to electricity. Some analysts even claim that EVs will not displace ICEs, but actually, coexist. That may be possible, but to me, it seems too risky to base your entire backup plan on it.

The problem is that Big Oil only pays attention to what is currently going on. But who can predict innovations though? A business that is not actively looking to adapt will inevitably fail.

Take the airplane industry, for instance. Currently, oil companies think demand will continue to rise because of planes. However, we know that Uber is developing flying taxis. It is not even the only company to do it. Yes, right now it is only a city-scale thing, but that can change. Is it far-fetched to think that air travel will see a disruption too? Of course not!

I cannot speculate further if the oil industry can make the leap. To be honest, the oil companies may be able to survive somehow, but I think it is obvious they will need to change. However, we have still to say something about how the lagging automakers are going to adapt to the EV revolution.

Will US automakers jump on the EV bandwagon?

Do we even have to argue that automakers actually have a much easier way to transition? It is rather obvious – Ford, GM, and Chrysler can just turn to EVs as a whole. Which they are already doing.

Have you even heard of Rivian? It is a relatively small car manufacturer, which focuses on innovation in the EV sector. Rivian has been making the headlines recently, with quite the buzz. One of the major things now is the fact that Ford (and also Amazon) have invested in this startup!

We cannot say if this is a sound decision yet, but it seems promising. Foreign manufacturers have already taken steps in that regard. For them, it is a common practice to invest in innovations. It was a matter of time before the Big Three saw the merits in that. Well, at least one of them anyway.

I do not have much to say about Chrysler and GM right now. We know they are all developing some EVs, but we will have to wait and see. If I have to guess, they hold the same hopes as Big Oil – that gas cars will coexist with EVs. Is that reasonable though?

Will there be a place for ICE vehicles?

Whatever we discuss here is going to be pure speculation. Although we can still make some educated guesses as to what will happen with the car industry.

Many people think that the internal combustion engine will slowly be phased out. It will supposedly become an obsolete technology, much like the steam engine. Nevertheless, I think that does not necessarily have to be the case.

Check out this scenario. When EVs become the norm oil prices will probably drop. In any case, the US will likely increase its reserves. Now, what if companies somehow come up with an innovative solution to make cleaner energy out of it, as I mentioned a moment ago? This would definitely put ICE back on the radar.

However, even if innovation strikes, it will probably be after the major shift towards electric cars. So in any situation, both Big Oil and automakers need to have a better backup plan.

Are you optimistic about the future of Big Oil and US automakers?

Truth be told, everything can happen right now. We have seen tremendous disruptions in the market that nobody expected. Then again many “innovations” have simply died off (check out our article on the all-electric Toyota we have never seen).

I am still thinking that Big Oil has a lot of catching up to do. And my optimism about US automakers has never been strong. What do you think though? Will the oil industry and the Big Three make it in the new era of vehicles? Or will we forget about them in half a century?


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