A lot of my readers have sent in multiple questions. Asking me about the electric car revolution that is taking place and how it would affect the new massive Dangote refinery being built in Lagos. In fact, in one of the emails I received, the guy asked if Dangote is not aware that the world is gradually moving away from gasoline cars to fully electric cars. Funny question. Today I want to take out time to address this major issue.
First of all, anyone, who tells you there is no real threat from the electric car revolution and it can’t affect huge oil companies and refineries are telling you a BIG LIE. Analysts have predicted that by 2025, there will be 26 million electric cars on the road. That is 26 million cars that will NOT be using fuel. That also means the demand for oil and gasoline will reduce as well. There is a serious threat from this revolution but the impact isn’t really much on the oil industry yet. But with time the impact will be felt.
Tesla alone sold a jaw-dropping 245,240 cars in 2018 with the Model 3 the best selling electric car in the world with over 145,000 units sold.
Interestingly that figure will continue to rise every year with more car companies like Nissan, Ford, Audi, Mercedes Benz, Volkswagen, GM, Toyota etc joining the electric car bandwagon. That means the more electric cars that are sold, the less fuel will be consumed by car owners worldwide.
Now about Dangote refinery, the truth is that even though he knows the threat is there, he is not really bothered about it. At least not yet. That’s because the electric car industry is still very small right now compared to the oil industry.
Number one: It will take a very long time for electric cars to take over
Even though there are tremendous benefits of owning an electric car today, it’s still a minority in the world of cars. Electric cars are becoming cheaper, have more driving range, easier to maintain and more sophisticated. We know, but it will take decades for electric cars to begin to phase out normal gasoline cars in the market by then Dangote must have made lots of profits from his new refinery. That’s because the car companies are very slow in adapting to the new technology of manufacturing electric cars. So yes gasoline cars are not going anywhere anytime soon.
Number two: There are numerous products that can be refined from crude oil apart from fuel or gasoline.
Crude oil is a very rich natural resource. It is a blend and mixture of that occur in the form of a black liquid called petroleum. So even if electric cars saturate the car market in future and people are no longer buying fuel. Refiners still have lots of other products they can make from crude oil and generate their profits. So if demand for fuel reduces, Dangote refinery will just change what they produce and keep making their profit in billions.
Crude oil is a blend of different hydrocarbons and products which are all very useful. There’s no waste product as far as crude oil is concerned. Apart from gasoline, there’s aviation fuel to produce, petrochemicals which are used as raw materials and sold to other companies. Plastics also come from crude oil, vaseline, diesel, kerosene, wax, petroleum jelly, insecticides. Ammonia for fertilizers, lubricating oil. Asphalt and bitumen which are used for building roads and bridges. At least I’ve not seen an electric aeroplane yet.
The industry is full of engineers and scientists who can adapt to any change. Embrace new technology and discover new ways to stay in business. So Mr Dangote is a very intelligent man and knows exactly what he’s doing. When he started building the refinery even though he knows that electric cars are coming. Yes, electric cars are coming but it will never and can never put the oil companies or Dangote refinery out of business. Not in a million years.