Jun 15, 2020

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Good morning. As I was grappling with how to get around in a pandemic without owning a car, I thought countless others are likely in the same boat. So I wrote my column about it! 

  • I'll share that and then Ben Geman will get you up to speed on other news. 
  • Today's Smart Brevity count: 1,275 words, < 5 minutes.
1 big thing: Pandemic clouds shared-mobility future

Illustration: Aïda Amer/Axios

The coronavirus is creating new health worries and exacerbating economic woes for the whole concept of shared cars, bikes and scooters.

Why it matters: To what degree our society doubles down on car ownership as the pandemic wears on and eventually recedes could have big repercussions for oil demand, climate change and our own daily lives.

The backstory: I’m presumably one of countless people grappling with these decisions in real time. I moved in late March from a city with a robust public transit system (Washington, D.C.) to one with a less robust one (Seattle).

  • I haven’t owned a car since I moved to D.C. in 2008, and I was not planning on getting one any time soon, despite skepticism among many Seattleites that you can live in this city without one.
  • Then COVID-19 hit. Like most of us, my best-laid plans made no provisions for a pandemic.

Flashback: Seattle once represented the great promise of America’s shared mobility. As a high-tech city, it became a breeding ground for mobility experiments. Over the last few years, it offered around 10 different car, ride and bike-sharing options, in addition to buses and a limited light-rail network.

Where it stands: Various financial hurdles, which began forming before the pandemic and then were exacerbated by it, have now driven many of those firms out of business and thus also out of Seattle and other American cities.

What they’re saying: Kevin McLaughlin, a veteran in the shared-mobility space, recalls creating one of North America’s first car-sharing companies in the late 1990s, called AutoShare, now owned by Enterprise Holdings.

  • McLaughlin said he managed to turn a profit — but barely — due to the high costs of maintaining the fleet and other operational hurdles: “If you can’t get bums in the seat, your profit margins evaporate.”

My thought bubble: I am resisting getting a car and clinging to our shared economy despite the pandemic, largely because it's the most financially sound choice for me.

  • I work remotely from my downtown apartment, eliminating the biggest need to have a vehicle (commuting). But I still need to get around for errands, hiking and socially distant park hangouts, so I use a mix of a bike and shared cars like Zipcar.

Threat level: Public transit is the biggest danger when it comes to potential coronavirus spread. Other shared mobility forms present far less risk, though doctors still urge precautions.

“I wouldn’t hesitate myself to use a Zipcar or scooter. I think the bigger danger on the scooter would be crashing the scooter than getting the coronavirus from the scooter.”
— Amesh Adalja, infectious disease doctor working on pandemic policy, Johns Hopkins University

Go deeper: Read my detailed transportation plan in my full column

2. BP says the pandemic is changing everything

Illustration: Aïda Amer/Axios

BP is writing down the value of its assets by up to $17.5 billion and is slashing its long-term oil price assumptions as it projects the pandemic will have an "enduring impact on the global economy."

Why it matters: Monday's announcement signals how one of the world's most powerful energy companies sees COVID-19 changing the industry's landscape in lasting ways.

  • "BP's management ... has a growing expectation that the aftermath of the pandemic will accelerate the pace of transition to a lower carbon economy and energy system, as countries seek to ‘build back better’ so that their economies will be more resilient in the future," the company said.
  • CEO Bernard Looney, in a statement, said the pandemic reinforces BP's long-term climate plan announced in February to shift its business toward low-carbon sources and become a "net zero" company over several decades.

Driving the news: The oil-and-gas giant, in announcing the second-quarter charges and write-offs, sees the potential for weaker energy demand for a "sustained period."

  • BP is also reviewing whether to develop some of its discoveries, the company added when announcing that it cut its long-term oil price assumption by roughly 27%.
  • The company now sees Brent crude prices averaging $55-per-barrel in the 2021–2050 period, and lowered its long-term natural gas price forecast sharply too.

Go deeper: BP writes off billions as COVID-19 redraws rules of oil demand (Bloomberg)

3. Big this week: Oil markets, Biden, Congress

Oil-and-gas: Tomorrow the International Energy Agency will release its closely watched — and often market-moving — monthly oil market analysis.

  • What we're watching: We'll check their latest view on the trajectory of oil demand recovery from COVID-19 lockdowns. In mid-May they estimated that oil demand this year would be 8.6 million barrels per day lower than in 2019.
  • Today, the Energy Information Administration will unveil its monthly look at shale production, while on Wednesday OPEC will provide updated supply and demand data.

2020 election: Joe Biden will be part of the League of Conservation Voters' "ClimateVote2020" launch event tomorrow.

  • What we're watching: Biden has signaled that he expects to add new provisions to his current climate and energy plan, so we'll be looking for any hints this week.
  • Another thing on our radar: upcoming recommendations from the joint Biden-Bernie Sanders policy task forces, which include one on climate. They're slated to unveil their proposals in mid-June, but exact timing is unclear.

Capitol Hill: This week brings hearings on the pandemic's effects on the energy sector and House efforts to advance a big transportation package with climate provisions.

  • What's next: The energy hearings are both Tuesday. Witnesses at the Senate Energy and Natural Resources Committee session include senior officials from IEA, EIA and trade groups. Experts at the House hearing include former Energy Secretary Ernest Moniz.
  • On Wednesday, the House Transportation and Infrastructure Committee will mark up Democrats' five-year, roughly $500 billion transportation proposal.
4. COVID-19 weighs on automakers' EV plans

Illustration: Aïda Amer/Axios

The coronavirus pandemic has left global automakers and suppliers burdened with debt and in a much weaker position to navigate a historic transformation toward electric, self-driving cars, Axios' Joann Muller reports.

Why it matters: The industry was already entering what AlixPartners called a multiyear "profit desert" because of the massive upfront investments they are making in future technologies.

  • Now carmakers will likely be forced to delay or cut spending on many of those innovations as they crawl out of a giant COVID-19 hole.

Threat level: In just a matter of weeks, automakers and suppliers took on an astonishing $72 billion in new debt to survive the economic jolt from the pandemic, per AlixPartners.

What to watch: I recommend reading Joann's whole story, but here's some info on what the industry's woes could mean for automakers' EV plans...

  • "You still have to invest in the future," Mark Wakefield, global co-leader of AlixPartners’ automotive and industrial practice, told the Detroit News. But, "the cash available for that is just less."
  • So far, companies seem to be protecting their electric vehicle projects — likely because government regulations require them to do so.
  • Still, AlixPartners expects EV spending between now and 2024 to be cut or delayed from $234 billion to about $200 billion.
5. By the numbers: Global state of EVs
Reproduced from EIA, Global EV Outlook 2020; Chart: Axios Visuals

Speaking of EVs, this morning the International Energy Agency's is out with its latest data and analyses of electric vehicles.

The big picture: EVs had a "banner year" in 2019 with sales topping 2 million, but they still represent just roughly 1% of cars on the road worldwide, the annual report shows.

But, but, but: The pandemic is creating sales headwinds this year, though EVs are affected less than traditional cars.

  • But even without that problem, EV growth remains far off the pace of what's needed in IEA's scenario consistent with the Paris climate deal.
  • Under current and planned policies, the number of electric cars, trucks and buses worldwide grows to roughly 140 million in 2030.
  • That's far below the 245 million in IEA's "sustainable development scenario."
6. Catch up fast: climate, shale, EVs

Corporate pledges: "Unilever Plc said on Monday it will invest 1 billion euros in a fund to invest in climate change projects and reduce to net zero greenhouse gas emissions from all its products by 2039, 11 years ahead of the Paris Agreement deadline." (Reuters)

Oil-and-gas: "Extraction Oil & Gas, whose share price soared threefold during a frenzy of buying last week, declared bankruptcy late on Sunday, making the large US shale producer the latest victim of the worst oil-price crash in decades." (FT)

Electric cars: "Registrations of Tesla Inc. vehicles rebounded last month in China, suggesting demand is picking up for the U.S. carmaker’s electric sedans as the world’s largest auto market recovers from the coronavirus pandemic." (Bloomberg)

Ben GemanAmy Harder