How I think autonomous driving affects BP

Many investors think the emerging technology of autonomous driving will substantially disrupt the car industry over the coming decades. Given that most cars today consume petrol, the technology could also affect other companies in the oil and gas sector such as BP (LSE: BP).

BP’s oil and gas operation

As it stands, I think autonomous driving will benefit BP’s oil and gas operations. 

I think this because many autonomous vehicles in the future will likely be electric. Electric vehicles (EV) are in many ways easier for a computer to control than gasoline cars are. Many car makers will also want to pair full autonomous driving with electric vehicles. Consumers perceive both EVs and autonomous driving as ‘new’ technologies.

Furthermore, regulations could make the autonomous driving/EV combination more likely in the future. BloombergNEF’s head of intelligent mobility, Nick Albanese, notes, “Many of the tier-one cities where we expect to see self-driving cars are incentivising or requiring fleet cars to be zero emissions“. 

Given that autonomous driving could enable more efficient driving, the technology could also potentially reduce fuel consumption. Petrol-fuelled autonomous cars could consume less fuel by taking more efficient routes, for example. They could also consume less fuel by traveling at more fuel friendly speeds more often. 

Green pivot

While autonomous driving could be a challenge for BP’s oil and gas operations, I think the company still has a number of years to adjust. 

Despite the recent tech advancements in the field, autonomous driving is still in development mode. Many analysts think widespread adoption of the technology is still at least several years away. 

When autonomous driving does become more widespread, I think the technology could be a boost for BP’s green tech operations, especially for the company’s EV charging business. This assumes that many autonomous driving cars are EVs. 

In terms of EV charging, management has invested in the technology over the years. 

In 2018, the oil giant bought Chargemaster, UK’s largest EV charging company. At the time, Chargemaster operated more than 6,500 charging points across the UK. Chargemaster also manufactures, designs, and sells EV charging units for other locations such as for home charging. 

In the future, management plans to have an even bigger EV charging network. According to the company, BP plans to have 70,000 EV charging points by 2030, up from around 7,500 today. 

BP is also working on fast recharging EV technology. In 2019, the company said,

Working closely with global vehicle manufacturers, we are developing the solutions that electric vehicle drivers need to enable them to charge confidently and conveniently, wherever they are in the country. BP’s forecourts are ideal locations for this technology, which will provide an expected dwell time of 10-12 minutes, not dissimilar from the average of around seven minutes spent by drivers of petrol and diesel cars on a forecourt today.

Foolish conclusion

As it stands now, I think autonomous driving makes BP’s pivot to green tech more urgent. 

Given the rather high valuations given to many green companies, I think BP has an opportunity with its green pivot if management made the right choices. 

Based on BP’s current valuation and its competitive advantages, I’d consider buying the stock if management executed on its green initiative smartly over the next decade.