Opinion: BP's EV charging strategy is a clue that its futurology is faulty

BP is both, at least for now, a player in the EV ecosystem and, as a producer of crude and a refiner and distributor of liquid motor fuels, a firm with something to lose from mass EV adoption. So it seems fair game for an EV inFocus analysis of its strategic pivot, even if these thoughts will necessarily rove beyond the EV space and into the broader electrification megatrend and future oil demand.

So, with that plea to bear with me, please indulge me a little futurology. After all, we have to hope some crystal ball gazing is exactly what BP's strategists holed up in the panelled rooms of St James' Square have been doing for the past few months.

I want to take you ten years into the future. I'm driving to my business partner's handsome Victorian terraced house in North London, from where I now live outside the city. In my BEV, obviously.

I'm in my own car, because I have the family with me, we have stuff to deliver, and then we're heading off somewhere else for the night, so have overnight bags. The faff of loading and unloading — plus the amazing ADAS technology my car boasts as bog standard — means personal transportation beats out the ride-hailing I now tend to prefer for a majority of my journeys.

Fully charged at home, I drive to London without needing to stop and, when I hit the N1 postcode, I fire up my remote park'n'charge app, which I've already told where I'm going and how long I'll be there. Because finding a spot in an area of non-offstreet parking is tricky.

Non-offstreet parking revolution

Every space on every road is designated to a property within under-pavement cabling distance of it, so that these properties can plug their V-2-X chargers into their BEVs when they are parked. And thus their humble car can earn money from being grid storage, as well as delivering the cheapest possible household energy and mobility costs.

Even those householders who have yet to commit to electrified heating and/or rooftop solar to maximise returns only have to buy a BEV and a V-2-X charger, install some software, and they will see some optimisation benefits. And for those that do not drive, giving up the parking space is not an option for fear of significantly reducing the value of their home.

But my park'n'charge app will be able to direct me to any spaces within easy walking distance to my destination where there will be no car using it within the timeframe I have specified. I can park up there, set the minimum level of charge I want to have when I return, and plug my BEV into the cable.

Minute-by-minute optimisation

And here's the really cool bit. My app will already have been able to tell me to what set-up the space I've chosen is connected, e.g. solar panels and fully electrified household; or just a V-2-X charger at a property with gas heating and no decentralised generation, informing my choice.

As soon as I've plugged in, my car will 'talk' to the property and to the grid and, on a minute-by-minute basis, dispatch will be optimised between what each of the the three need and can offer. When I return, I will know that there is enough juice in the battery to take me where I need to go next and those electrons have either entered — or left, if I arrived with more charge than I needed, or if there was dispatch at higher prices during the stay — at the best possible price.

The app will tally up who owes what to whom and the required payments will flow between car owner, home owner and grid owner. And off I drive, none the wiser as to what magic has transpired beyond being able to see where my state of charge is and whether the stop has made or cost me money.

Does all that seem especially far-fetched? Largely the hardware already exists and is just waiting to be built out. And if we believe all the hype about AI, it seems to me more ridiculous to assume that, ten years' down the line, cars, household electrical energy systems and grids will NOT be optimising on a real-time basis.

From both an entrepreneurial and practical — visiting cars will need somewhere to park in areas where residents will otherwise jealously guard their spots to take advantage themselves of this optimisation — perspective, allowing third-party vehicles to utilise these spaces when it is both frictionless and you can set the parameters so the space is available when you need it, also seems like a no-brainer.

Challenging existing models

So, err, what does this have to do with BP again? Briefly, the oil major's CEO Murray Auchincloss announced this week his firm is going to spend more in oil and gas production, less in renewable generation and make "selective investments" in preferred carbon-reducing sectors that include EV charging as well as biofuels. In order — perhaps ironically, as I will argue — to "deliver long-term [my bold] shareholder value".

There is a term for gasoline and diesel often used by EV enthusiasts on social media: 'dinosaur juice'. Leaving aside accuracy concerns, I really don't like it, it's sneery and we-know-better. But I do think that BP here is guilty of 'dinosaur thinking'.

Let's go back to my future scenario. What is one thing I haven't done in my hypothetical journey? And indeed what would be a really rubbish thing to have to do, at least based on extending current business models a decade ahead?

Yes, highway charging, as opposed to charging at home and destination. In other words, exactly the one nod to the electrification mega-trend that BP has retained within its strategy.

And why is it retained? Because it's something that leans on BP's existing infrastructure and is in its comfort zone of selling a means of mobility, just as biofuels are.

But not just selling electrons alongside liquid molecules, continuing to sell overpriced comestibles and groceries from the adjoining retail as well. I'm sure I've said it before in these missives: there are few things in my professional life that have struck me as more strange than the most senior executives at BP (and Shell, to be fair) earnestly discussing the basket size of their forecourt retail outlets on an analyst call.

Because, lets face it, no-one wants to buy stuff to eat and drink from a filling station — it is the last resort option. The problem for BP, and indeed for any public charging firm, is that current business models also make the overpriced public charger electrons the last resort option compared to the cheaper at-home service BEV drivers can access which is not afforded to their ICE counterparts, not just the comestibles they hope to flog in the increased wait time.

Public charging firms need to anticipate a future where optimised charging is considered a bare minimum and start preparing for that. So highway locations need to, at the very least, leave space for renewable generation and battery storage infrastructure to be installed — in order to both futureproof for when drivers will just assume that charging sites optimise to get them the best possible deal on electrons by communicating to the grid, and also for the generation and battery storage give them a revenue stream to compensate for usage rates that will be far lower than they're currently modelling.

New and purpose-built highway sites will likely be easier and more economical to furnish with these capabilities than retrofitting existing locations, which will put pressure on BP's motorway services network. As for suburban filling stations, perhaps ripping out all the liquid fuel infrastructure to make room for optimisation facilities — and short-to-medium parking in constrained areas for visitors or those in shared properties without a designated charging space — may be the only salvation. Otherwise these locations might be best valued by investors as a property play.

What a difference 10 years makes

So BP's EV charging ambitions are going to face significant headwinds. But its whole pivot fails to grasp how much the world will change in a decade.

Let's look at Norway. In January, 95.8pc of new cars sold were BEV. Basically, beyond hire cars where rental firms are understandably concerned about non-Norwegian tourists being confronted with an unfamiliar technology, pretty much all cars sold were all-electric.

In 2015, 10 years previously, that figure was under 20pc, or where Europe is now.

Now BEV naysayers will say that Norway is different, its consumers have an environmental consciousness that cannot be translated to elsewhere. I would contend that is nonsense.

Norway does have a slight quirk in terms of being a country that has largely already electrified heating — ironically not using the gas it exports in vast quantities. But, without widespread V-2-x rollout, that is probably only a minor factor in the country's embrace of BEVs. The far more telling lever is a motivation as old as time.

I had the privilege of living in Oslo in the late 2000s, and car buying was a topic of debate. But it was nothing to do with EVs, it was media concern that young Oslo-ites were buying large, blingy SUVs that flew in the face of the Norwegian self-image of humble non-ostentation.

And the reason why first jobbers in their early 20s were buying shiny 4x4s too large for the streets of Majorstuen? Economics, pure and simple. Purchasing their premium vehicle on credit created debt that could be offset against punitive taxes on income, creating an unintended incentive to buy expensive cars as soon as young Norwegians started earning.

The same motivation, people's personal pockets, is behind the almost universal adoption of BEVs. In January, the first and third best-selling cars in Norway were the frankly mediocre Toyota bZ4X and Nissan Ariya; we are not talking here about some sort of super-sophisticated buying public won over by complicated arguments over the advantages of all-electric over other drivetrains.

No, we are talking economic self-interest. The Norwegian state has driven the switch to all-electric through tax and incentive policies — in another irony, subsidised by the fiscal cushion that oil and gas sales afford the national economy — that makes it a no-brainer to buy BEVs over any other option.

And, to go back to the future, that is why EV inFocus firmly believes that, if we fast-forward ten years, a vast majority of the developed world has 'done a Norway' and is almost exclusively buying BEVs.

Simply because almost every household is connected to the power grid. The option will be: buy a vehicle that is both cheaper to run and contributes to lower bills by acting as battery storage for large swathes of time; or buy something that doesn't offer either of these things AND you've got to take somewhere to fuel (given that rollout of home charging even for those without off-street parking — which will likely include connected parking garages acting like a collective battery for complexes of shared accommodation — will become the norm, given the economic demand for frictionless electricity optimisation at a household level).

Megatrend

But let's also widen the lens beyond just EV adoption and charging. This vision of the future places electricity front and centre of domestic energy consumption; with the ability of each household to optimise in real-time, not only does a BEV become the default choice, so too does switching heating from gas (or even oil) to power and investing in solar.

And thus huge swathes of oil and gas demand goes away. By no means does fossil fuel demand magically disappear overnight, but its erosion in road transport and domestic heating is inexorable and gathers pace. Even more crucially for BP and its international oil company (IOC) peers, the remaining oil demand, in particular, will be served by the low-cost production held by national oil companies (NOCs), most notably Saudi Aramco. An ever decreasing portion on top will be available for non-NOC supply.

In contrast, demand for power is only going to rise. And the biggest winners by the middle of the next decade will be IOCs pivoting to international energy companies (IECs) that still boast access to some profitable oil and gas production in a much lower demand world (and maybe a bit of bioenergy, although this will largely be a sideshow), but, crucially, also have businesses that address the full electricity value chain, from production through to end consumer, and hugely sophisticated optimisation capabilities.

This is the long-term value future from which BP is further cutting itself off with this week's decision-making, just as peer Shell has done under the tenure of its CEO Wael Sawan. Why? To some extent, it is just simple short-termism; BP's executive team want to get the share price higher as quickly as possibly — and, to some extent, that is their mandate — and they believe this is the immediate remedy to lagging stock value.

But there are, in EV inFocus' view, two larger structural factors: 1) a lack of desire to shrink before growing again; and 2) a genuflection to insidious American corporate culture.

Let's take the second before the first. On a personal level, I have great respect and affection for the US. To me, one of the more frustrating assumed British political truisms of recent years is that one must choose be an Atlanticist or a Europhile, rather than seeing rare advantage in being able to be both.

So it is with great sadness that in several interlinked ways — its culture wars, the dysfunctional polarisation of its politics, and its disgusting corporate greed that helps fuel the first two by funnelling money towards, largely, the US right — I conclude that the US is currently broken, even as its economy continues to motor along for now.

US oil really does want to destroy the planet

Having worked in the oil and gas industry for two decades, I would judge its corporate cultural disconnect between the US and Europe perhaps even more pronounced than in other industry boardrooms. Quite simply, the US oil industry and its ecosystem — its bankers, lawyers and consultants — in general still think it will be okay to pump CO₂ into the atmosphere, in the name of preserving 'quality of life', until the planet's climate collapses. And then cynically pivot to profiting from the developed world's investment in mitigation.

Europe's oil and gas industry, to give credit where it is due, largely does not share that view. But elements within it are susceptible to falling into groupthink with US attitudes.

That may be particularly true of BP — which has a secondary listing in New York and with its historic acquisitions of US oil producers Amoco and Arco making it an Atlantic-straddling behemoth — and Shell, which is mulling a switch to a US listing, as they benchmark themselves against US peers ExxonMobil and Chevron.

France's TotalEnergies continues to stand out as a major that is far more successfully straddling a 'European' strategy of continuing to produce as much profitable oil and gas as it can for as long as that window remains open, but also going all-in on electrification. Crucially, it continues to build out a power business across the value chain, from renewable generation and PPAs to domestic end-user customers, with lots of grid-edge optimisation bolt-ons being acquired in-between to build a truly formidable electricity supply and trading business.

It is difficult to say exactly while TotalEnergies has been better able to avoid the American finance bro push to abandon the businesses that will deliver value in the long term to focus almost exclusively on non-NOC oil and gas that has a diminishing returns window. It is not enough to lazily cite its Frenchness; it too is mulling a US listing, seduced to some extent by American capital's hard-on for destroying the planet, and also benchmarks against its US peers.

It may simply be that TotalEnergies is more cannily led, with its CEO Patrick Pouyanne able to articulate a future short-to-medium-term oil and gas strategy that doesn't scare the horses while getting on with fixing the roof for when low-cost NOCs will dominate the remaining shrinking oil and gas market and IECs will need to play mainly in the electricity space.

Another route

That option may have been closed off to Auchincloss, given the failure of his predecessor Bernard Looney to project a similarly coherent strategy for BP in its current form. But that did not mean that going down a path of least resistance in trying to placate US activist shareholders was his only lifeline.

BP had another route, to shrink and, at the same time, de-Americanise. As flagged above, few CEOs want to captain smaller ships, unless they are really made to do so by overwhelming market pressure to divest and split. By defaulting to a pivot back to oil and gas, Auchincloss took an available escape route that allowed him to continue running a major.

A braver choice would have been to parcel up the US assets, both shale and Gulf of Mexico, and, during a period of 'drill, baby, drill' enthusiasm, either sell them at a premium or spin them off. This would have promised shareholder returns, reduced the risk posed by potential US political instability — there is not a zero percent chance of administration interference in the November '26 midterm election schedule, in EV inFocus' view — and swung BP back to being more of a European oil firm.

Grading the hydrocarbons portfolio on a benchmark of competitiveness in a 40-50mn bl/d oil demand world or in a global gas market stripped of material gas-for heating demand — and putting anything that did not qualify up for sale — would have been another bold move. Again, it would have brought in cash to distribute if necessary, but also emphasised to the stock market the long-term value of the remaining assets.

And what remained of BP, a smaller energy firm much less in the crosshairs of US capital, would have enjoyed the far greater flexibility to invest in a twin-track approach from which European midcap oil firms such as Spain's Repsol and Austria's OMV currently benefit.

A non-US exposed, identifiably European BP boasting high-graded oil and gas that continues to deliver acceptable revenues as the firm builds out a future electricity portfolio to eventually catapult it back in the top tier of IECs is the opportunity missed this week. Instead, it's an oil dinosaur, being led by the nose by short-term US climate change-ignoring capitalism towards extinction by the middle of the next decade. And, writing as a former employee, that's a real shame.