It's been a dizzying week for crude traders as a schism in the OPEC–Russia alliance caused oil prices to plunge 24% on Monday. The burgeoning electric vehicle industry, which has developed a hub in Greater Los Angeles, might face headwinds if gas prices remain cheap for too long. At the same time, low prices could steer investors away from capital-intense fossil fuel exploration to more promising investments in green energy.
In this newsletter, we examine the EV market in SoCal and consider how cheap oil prices could be a blessing in disguise for the climate. Keep scrolling for more and we'll see you in a fortnight.
Kim Taylor CEO, Cluster
All-Electric Vehicle Registrations in California
SoCal Transforms into an EV Hub
A new report from the Los Angeles Economic Development Corporation (LAEDC) reveals that Southern California has become a hub of EV manufacturing as vehicle manufacturers, battery manufacturers, charging system manufacturers, suppliers and service operators flock to the region.
California logged 275,600 EV-related jobs in 2018, 119,200 of them in SoCal. Electric-vehicle industry employment in the region is growing almost twice as fast as jobs in general, with an average salary of $91,300 statewide.
State environmental goals, subsidies, and other government support has fostered a thriving EV ecosystem. The LAEDC recommends continuing EV subsidies, local support for EV infrastructure, more publicity about available subsidies, and more EV jobs education in order to further nurture the industry.
State policymakers have set a goal of 5 million registered passenger EVs in the state by 2030 and for all new vehicles to have zero-tailpipe emissions by 2050. Currently, there are less than 400,000 pure-electric cars registered so there’s work to be done.
EV sales in California grew 77% in 2018, but plummeted to only 5% in 2019. LAEDC believes environmental concerns will set the EV market up for rapid growth, however, the report was published before the crash in oil prices.
Some $1.2 trillion has been poured into renewable energy since 2014. Bloomberg NEF estimates that another $10 trillion will be poured into clean energy over the next 40 years.
Oil’s plunge from $55 to sub-$35 will likely incentivize the use of more fossil fuel products, driving up emissions that cause climate change. But sustained low prices could actually turn out to be a good thing.
Renewable energy has matured in the last five years and is no longer seen as a risky investment. Concurrently, low and volatile oil prices make expensive oil exploration less attractive. Spooked by the crash in oil prices, investors may trim oil investments and add more renewable projects to their portfolio.
Low oil prices give governments the chance to curb fossil fuel subsidies and raise taxes on consumption in order to move toward more sustainable and price-stable energy solutions.
When oil prices plummeted between 2014 and 2016, India slashed annual fossil fuel subsidies from $29 billion to $8 billion and even increased taxes on consumption. Some of the money raised was funneled to renewable-energy subsidies for solar and wind power, helping to expand the country's green energy infrastructure.
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Upcoming Events in SoCal
Mar 17-19: Aerotech Pasadena Convention Center Pasadena SAE International's annual industry-leading, comprehensive aviation conference is coming to Pasadena in 2020. Covering everything from FAA regulation updates and supply-chain trends to the latest aerospace and defense tech, Aerotech is for principle engineers, researchers, aerospace engineers, and aviation engineers. Info
Mar 21-22: Self Racing Cars Thunderhill Raceway Willows, CA Interested in racing self-driving cars? This event is for engineers looking to demo their autonomous vehicles around a full-sized 2.1 mile track. Start-ups VectorZero, Renovo Motors, Qibus, OpenCart, Righthook and Point One Navigation are all confirmed to attend. Info
Check out our calendar for all the latest SoCal events here
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