As we enter the final week of the profit reporting season it is clear that sensible chief executives are keen to keep the market updated with their latest modelling of the energy transition and what it will mean for their businesses.
Companies reliant on fossil fuels for their survival, such as fuel distributor Ampol, have no choice because they are potentially facing an existential crisis.
Ampol chief executive Matt Halliday must turn his petrol service stations into EV charging stations because the electrification of the passenger vehicle fleet will wipe out 60 per cent of his gross profit pool.
Halliday is confident the assumptions built into his energy transition scenarios are robust and that oil-derived fuel will comprise more than 90 per cent of road transport energy consumption by 2030.
He says up to 80 per cent of new car sales will be EVs by 2030, but that percentage share could change if EV prices become more competitive with internal combustion engines sooner than expected.
Halliday says EV prices should be in the $20,000 to $25,000 bracket after 2025. Under Ampol’s scenario planning the big driver of EV uptake will be businesses renewing their vehicle fleets, which would then be recycled into the second-hand market.
But Origin’s early closure of the Eraring coal-fired power station and the takeover bid for AGL by the “Cannon-Brookfield” consortium point to the volatility and unpredictability of energy markets.
The confident assumptions about fuel use in the economy could be turned upside down by any number of factors including geopolitical events that push up oil prices and a change in the federal government at the May election.
A Russian invasion of Ukraine could cause a global fossil fuel energy crisis that makes energy security through electrification of vehicles a first-order political imperative.
This could change all the accepted notions about EV subsidisation within the ranks of a Liberal-National coalition government.
The election of a Labor government headed by Anthony Albanese would see the implementation of $250 million in EV subsidies, increased government funding of a national network of EV chargers and significant reductions in the cost of EVs for business because of the exemption from paying fringe benefits tax.
Extracted in full from: Ampol’s survival plan for the EV era (afr.com)