Loren Steffy, UH Energy Scholar
The Houston Auto Show perhaps seemed an odd place for Ford Motor Co. to unveil its all-electric Ford F-150 pickup last month. On the one hand, a lot of Texans drive pickups. On the other, many of those pickup-driving Texans work in the oil business and view electric vehicles as an existential threat to their jobs.
But perceptions are changing rapidly, and Ford seems intent to use the electric F-150, dubbed “Lightning,” to bring a whole new type of customer to the EV market, even in the oil business.
The F-150 is Ford’s best-selling vehicle, and the automaker clearly hopes the pickup’s popularity will lure customers who snicker at the bubble-like sedans from Elon Musk. The Lightning looks like a truck, and it has all the hauling power of a traditional F-150. It also has an optional onboard generator that can power a typical home for several days, which could come in particularly handy in Texas where we struggle to keeps the lights on.
Both the auto and energy industries are in early stages of a transformational shift toward more dependence on electricity generated by renewables and natural gas-power plants and away from traditional fossil fuels like oil and coal.
Mike Ramsey, an analyst who follows the EV market for Gartner, an independent research firm, points out that Ford learned a decade ago, when it switched to aluminum body panels on the F-150, that these sorts of largescale shifts are not a time to be timid.
“That was probably an even bigger deal than electrifying their F-150,” he said. “It was a huge decision, and incredibly risky. And they took the risks with their biggest, most important product. Ford learned the lesson that sometimes if you’re going to make a transformational change, it’s better to do it with your biggest bet rather than with some experiment. By doing it with the F-150, there’s no backing out.”
At face value, the Lightning stands as an attempt to vault ahead in the race for EVs. Ford previously fell behind Musk’s Tesla and even General Motors, which pledged an all-electric fleet by 2035. GM has focused on the smaller Bolt, electric vans and an all-electric Hummer, a 9,000 pound behemoth that may cost more than $100,000 and targets not just the eco-conscious but also the “ego-conscious,” Ramsey said.
Overall, automakers are pumping some $200 billion into the EV transition — more than NASA spent to put a man on the moon, according to estimates from the consulting firm KPMG. But not all automakers will be able to navigate the transition. One or two may miss the mark badly enough that they go under in the next decade, a recent KPMG study found.
Ford said it received 100,000 pre-orders for the Lightning in the three weeks after the rollout, compared with about 750,000 F-series trucks it sells annually. [JNM1] Clearly, it’s still counting on traditional pickups for most of its truck sales, but the Lightning’s share could continue grow rapidly, especially as more companies look to reduce their carbon footprints.
Which is why, at least initially, Ford may not be targeting its traditional truck-buying consumer. Instead, it has its eye on corporate customers — including oil companies — looking to replace fleet vehicles. Transitioning fleet vehicles away from fossil fuels is an easy way for companies to show they are serious about cutting carbon. EVs have lower maintenance costs, battery range is less of an issue and Ford’s sub-$40,000 sticker price for the Lightning all could make it an affordable option.
“The market will absolutely be there for a competent, not overly expensive, electric truck—on the commercial side,” Ramsey said. “With consumers, whatever they get from them will be gravy.”
Oil companies, of course, are facing their own pressures to reduce carbon output. Public sentiment and policy have shifted away from the oil business because of climate change concerns. Last month, the International Energy Agency said that producers must stop all oil and gas exploration this year to meet the zero-emission guidelines required under the Paris Climate Accord.
The majors are already shifting their focus. Shell, for example, said its oil production has peaked, and it will basically draw down reserves through 2050. [JNM2] BP vowed to cut oil and gas production by 40% in the next decade while beefing up investments in wind and solar power. ExxonMobil, the industry’s one-time standard-bearer, lost control of three board seats to nominees of an activist investor unhappy with the company’s foot-dragging on climate change.
But like Ford, sustainable options comprise a tiny percentage of these companies’ revenue. Although these larger producers possess financial resources to invest in renewables even as they still produce oil and gas, smaller companies may not.
Nevertheless, the oil industry has no choice but to embrace change. Capital increasingly flows toward climate friendly investments. This year, for the first time, “green” bonds and loans from the global banking sector surpassed the value of fossil fuel financing. A Bloomberg examination of 140 financial service institutions found at least $203 billion in bonds and loans to renewable projects through mid-May, compared with $189 billion to businesses focused on hydrocarbons.
Big oil companies fail to find much sympathy in the halls of government either. Policy makers increasingly favor “green” energy. For an industry that took demand for granted, largely ignored public sentiment and used its lobbying power to create favorable regulatory environments, the oil sector suddenly finds itself increasingly left behind in both the financial and political realms.
The result is that major oil companies seek future markets that minimize fossil fuels.
“The energy companies are realizing there's a massive market opportunity in renewable power,” said Greg Bolino, CEO of DG Reimagined, a Michigan-based consultancy that specializes in EVs. “They can create massive investments in renewable energy and feed it through their already-built retail networks. And they will see incredible growth and returns from renewable power, especially as the technology curves continue to make it more and more attractive.”
And what better way to show sincerity about embracing the switch to a low-carbon future than stocking your fleet with EVs? If companies factor in emissions from their workers’ commutes, even if not everyone returns to the office full-time post-pandemic, then the Lightning may be just exactly what the industry needs.
Public acceptance of electric vehicles could decide the fate of two industries, each trying to step into the future with balance sheets that remain firmly tied to the past. How widespread that acceptance becomes may soon be measurable by the number of Lightnings parked in the garages and refinery lots around Houston.
Loren Steffy is a writer-at-large for Texas Monthly, an executive producer for Rational Middle Media and a managing director for 30 Point Strategies, where he heads the 30 Point Press publishing imprint. He is the author of five nonfiction books: “Deconstructed: An Insider’s View of Illegal Immigration and the Building Trades” (with Stan Marek), “The Last Trial of T. Boone Pickens” (with Chrysta Castañeda), “George P. Mitchell: Fracking, Sustainability, and an Unorthodox Quest to Save the Planet, The Man Who Thought Like a Ship,” and “Drowning in Oil: BP and the Reckless Pursuit of of Profit.” His first novel, “The Big Empty,” was published in May 2021.
Steffy is the former business columnist for the Houston Chronicle and previously was the Dallas (and Houston) bureau chief and a senior writer for Bloomberg News. His award-winning writing has been published in newspapers and other publications worldwide. He has a bachelor’s degree in journalism from Texas A&M University.
UH Energy is the University of Houston’s hub for energy education, research and technology incubation, working to shape the energy future and forge new business approaches in the energy industry.
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