<p>Geopolitics, as the name suggests, is the interaction between geography and<br />
politics. Geography offers resources and politics determines who benefits.<br />
That entails the recognition of resources. A resource is something that we want to<br />
use and know how to use. The value and commercial status of resource changes<br />
over time.<br />
&nbsp;What was once a resource may no longer be, for example, six<br />
decades ago asbestos was a resource but now its hazards far outweigh its<br />
usefulness. Many people now see crude oil in the same way. Although oil has<br />
played leading role in shaping geopolitics for more than a century, the pressing<br />
nature of environmental issues has forced automotive companies to invest in the<br />
widespread adoption of alternative energy for their vehicles. One such innovative<br />
alternative option is electric vehicles. Switching to electric vehicles would reduce<br />
greenhouse gas emissions and significantly improve the air quality, eliminate our<br />
dependence on oil for transportation and save the taxpayers. Moreover, EVs are<br />
safe, cheaper to operate, more efficient, and accelerate faster.&nbsp;<br />
But this transition from petrol cars to electric vehicles has sparked a question- if<br />
electric vehicles are a thing of the present or the future then what happens to<br />
crude-oil demand in an all-electric car future? Will crude consumption will die out<br />
or peak out and when and how the EV market will affect the geopolitical status<br />
quo that has been so far centered on oil-producing countries?&nbsp;<br />
Crude oil is the key source of energy, which is the heart of all economic activities<br />
and growth. Land, sea and air transport, power, industries, agriculture, and even<br />
housing are all dependent on energy. Passenger vehicles account for only one-<br />
quarter of oil demand. Even if passenger vehicle oil demand use were to decline,<br />
total oil demand use wouldn&rsquo;t necessarily decline, if growth is seen for other<br />
sectors. Finding substitutes for these biggest oil demand growth sectors is difficult<br />
and costly. . According to International Energy Agency, EVs still have a long way to<br />
go before reaching deployment scales capable of making a significant dent in the<br />
development of global oil demand.<br />
&nbsp;EVs might bring about geopolitical changes on many fronts like:<br />
1. Access to resources.<br />
New technologies usually require new resources that shift the global balance of<br />
power and EVs are no exceptions. Their batteries and motors require copper,</p>

<p>nickel, lithium, cobalt, graphite, and rare earth metals, therefore their demand<br />
will skyrocket which is where the real environmental and geopolitical knock-on<br />
effects come into the picture. For example, Lithium, used in batteries for<br />
storing electricity, is currently plentiful. Chile, Bolivia, and Brazil are currently the<br />
top exporters of metal and Australia is home to the largest lithium reserve in the<br />
world. But the current problem is not the raw supply but scaling the extraction<br />
process which is currently more technically challenging than many other<br />
metals. Similarly, cobalt, needed for the production of rechargeable batteries, is<br />
not difficult to mine but presents a trickier set of supply chain<br />
challenges. It is primarily found in the Democratic Republic of Congo,<br />
a highly unstable country. Doing business in this country highly challenging and<br />
the mining industry, in particular, has been followed by mismanagement,<br />
corruption, and violence. This makes sourcing a major challenge for the cobalt<br />
industry.<br />
2. Energy security.<br />
&nbsp;If electrification reduces oil demand in the future then revenue from oil would<br />
decline in oil-producing countries, many of which are in regions already at risk<br />
of instability. This might aggravate the problem by leading to a rise in<br />
unemployment, internal instability, therefore, becomes a failed state. A failed<br />
state is often home to extremist violence leading to mass migration and can have<br />
a huge implication on the world. This potential disruption might not be confined<br />
to Gulf. Russia is also one of the biggest exporters of gas and oil in the world and<br />
its economy hugely depends on revenues that bring in. If oil demand decreases<br />
then it might affect its stability and transform its relationship with Europe.<br />
3. Trade.<br />
The integration of international EV markets may heat trade tensions given the<br />
potential disruption of existing industries particularly in the EU, United States, and<br />
Japan, where car manufacturing is a significant source of jobs and growth. . Some<br />
countries that fall behind in EVs and batteries could respond by imposing tariffs<br />
and other barriers, resulting in trade disputes.<br />
Finally, EVs will have ripple effects with complex geopolitical implications that are<br />
difficult to predict. Although the adoption of electric cars will help us to achieve<br />
the IPCC target of being carbon neutral by 2050 but can wipe out US$19 trillion in<br />
revenue from the oil industry by 2040. That is a risk not just for oil-producing</p>

<p>states but for institutional investors globally, including pension funds, which<br />
means it also poses a financial risk for consumers.</p>
