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July 14th 2017 Friday Big Picture Report

Electric Vehicles Charging up

The share of electric vehicles (EV) in today’s passenger vehicle fleet is small. According to the IEA, they represent 0.2% of light-duty vehicles. These EVs rely heavily on government subsidies; they lack the driving range and physical size that much of the market currently demands; the batteries that power them face severe production capacity constraints. But none of this stops oil analysts worrying about the damage they will do to oil demand. And as each successive government or car manufacturer adds themselves to the list of advocates (most recently Volvo, which last week announced it will only sell new EVs from 2019) those worries mount. When should investors in oil tankers start taking this threat seriously?