Axios Generate

The flurry of high-profile electric vehicle rollouts lately makes it easy to look past a big problem for the sector: tepid consumer demand means it's unclear when the EV age will begin in earnest, at least in the U.S.

Driving the news: Several recent stories underscore how drivers remain cautious about ditching gas pumps for plugs — even as automakers make big bets on bringing a slew of new models to market.

Why it matters: Year-end sales data tells the story of a sector struggling to find footing once you look past the big year by Tesla (which by the way saw its valuation hit $100 billion in trading yesterday before receding).

This Los Angeles Times story, citing Edmunds data, notes that 325,000 electric and plug-in hybrid vehicles sold in the U.S. last year, down from 349,000 from 2018.

• “The number of battery-electric models available more than doubled last year, but EV sales didn’t budge much. That’s troubling,” AlixPartners' Mark Wakefield tells the paper.
• Sales also slumped badly in China, the world's biggest auto market, starting in the middle of last year when the government slashed incentives.

The intrigue: Bloomberg points out that Tesla saw record sales last year, but cautions that the Silicon Valley company's success isn't spilling over into the wider EV market — yet.

• "Look at every other corner of the U.S. auto industry — the world’s most valuable automaker, dealers, consumer surveys and market forecasts — and a more ominous picture emerges," they report.
• A growing number of models will be fighting for space in what will remain a small market for a while. Jeff Schuster of the firm LMC, quoted in Bloomberg, says of the EV future, "It’s a long road and there definitely could be some carnage along the way.”
• A Wall Street Journal story this week features pessimistic comments from Subaru officials.

What we're watching: Whether the sluggish sales and policy headwinds in the U.S. and China are enough to substantially change long-term global forecasts.

• The research firm BloombergNEF studies the EV future especially carefully and tends toward the bullish side, seeing major growth as battery prices fall.
• Its last big outlook projected that annual global passenger EV sales will reach 10 million in 2025 and 28 million in 2030. The next one arrives in May.

Breaking Wednesday: Bloomberg reports that big oil CEOs huddled behind closed doors in Davos at the World Economic Forum to discuss adopting more robust carbon emissions targets.

• Top execs with companies including Chevron, Shell, BP, Total and Saudi Aramco were present, Bloomberg reports.
• The meeting comes as the industry faces growing pressure over climate change.

Why it matters: The story says the companies discussed setting targets for emissions from the use of their products in the economy, called "Scope 3."

• Scope 3 emissions are much larger and just a small number of players currently have targets for them, as opposed to the more widespread industry adoption of goals for emissions from direct operations.
• "Among major energy groups, only Shell, Total and Repsol SA have publicly announced that they are either targeting or monitoring Scope 3 emissions," Bloomberg notes.
• The CEOs at the meeting were in "broad agreement" on the need to address the topic, but didn't make any final decisions, Bloomberg reports.

Separately, Reuters reports this morning that BP is preparing to join the small list of oil giants with Scope 3 targets.

It's part of a wider expansion of climate efforts that incoming CEO Bernard Looney is mulling that could lead to the company "selling its most carbon-intensive businesses such as oil and gas fields in Angola and Canada," Reuters reports.

Cruise unveiled a six-passenger, electric, driverless vehicle in San Francisco Tuesday night, heralding it as the start of a new era of low-cost, shared transportation that will save the average household $5,000 a year, Axios' Joann Muller reports.

Why it matters: With no steering wheel, pedals or gasoline engine, the boxy Cruise Origin, co-developed with Honda, represents "the transportation system you’d build, if you could start from scratch," according to Cruise CEO Dan Ammann, a former president of General Motors.

Yes, but: It's not clear how Cruise — which scrubbed plans to launch a robo-taxi service in San Fransisco in 2019 — would turn that vision into reality, much less a viable business.

The math is a bit sketchy and based on some unproven assumptions, but there are some intriguing nuggets:

• Unlike most cars, which sit idle 95% of the day, the Origin would operate 24/7 and last for 1 million or more miles — about six times longer than a typical car.
• It's based on General Motors' newest electric vehicle platform — the basis for 20 upcoming EVs by 2023 — which will help reduce costs, Ammann said.

Go deeper

The International Energy Agency is a pretty diplomatic bunch, so this relatively blunt assessment of the oil industry caught my attention:

"[O]verall, there are few signs of the large-scale change in capital allocation needed to put the world on a more sustainable path."

Driving the news: That's from IEA's press release for its new report on what large oil-and-gas companies are — and aren't — doing to speed deployment of climate-friendly sources.

Why it matters: The report and its framing of the findings can be read as a shot across the industry's bow.

• The assessment of nearly two dozen of the world's largest players finds that average investment outside their core fossil fuel lines averages about 1% of their capital spending, though it's around 5% for the most active companies.
• The report that explicitly pushes the industry to do much more is also a sign of IEA's increasingly vocal stance on climate — even as it remains under fire from some activists for reasons beyond the scope of this blurb.

What they're saying: A note from the research firm ClearView Energy Partners explores IEA's evolving role, in an age of oil abundance, from its 1974 founding as a multilateral oil-security organization.

"[I]n recent years, the IEA seems to have recast itself more as an arbiter of international climate security than of oil supplies."

Go deeper:

• Oil and gas industry must do more to address climate change, report says (Canadian Press)
• Exclusive: IEA to track oil companies’ efforts on clean energy (Axios)

Fourth-quarter filings are showing up in the handy Lobbying Disclosure Act database.

Why it matters: The totals are a periodic reminder of the money going into influencing federal policy and Congress.

The filings, while they vary in detail, often provide specifics on which bills and policy areas the efforts address.

Here are a few totals based on what's available and links to the filings...

• The American Petroleum Institute, the industry's biggest trade group, reported $1.98 million in Q4 lobbying, up from $1.6 million in Q3 of 2019.
• Exxon reported $2.65 million, up from $1.94 million in Q3.
• Chevron reported $1.81 million in Q4, down from $2.25 million in Q3.
• BP reported $1.5 million, compared to $1.26 million in Q3.
• Shell reported $2.16 million in Q4, up from $1.68 million in Q3.
• The Edison Electric Institute, which lobbies for investor-owned power companies, reported $2.1 million, similar to the roughly $2.2 million in Q3.

The spread of the coronavirus in China and elsewhere could dampen travel — and hence jet fuel demand — enough to cut oil prices by around $3 per barrel, Goldman Sachs analysts said in a note.

What they found: Their analysis uses the 2003 severe acute respiratory syndrome (SARS) outbreak as a model for how the current illness could affect markets.

• "Such a demand impact (without an OPEC supply response) would point to an only $3/bbl impact on oil prices, although the initial high uncertainty could lead to a larger sell-off, as was the case in March 2003."

The big picture: Nine deaths have been reported in the outbreak of a new coronavirus strain that originated in Wuhan, China, in early January, and several hundred people have become ill there.

CDC officials said Tuesday there's one case in Washington State, and Hong Kong, South Korea, Japan and Thailand have also confirmed at least one case.

Go deeper: Coronavirus outbreak in China claims 9th victim