Image Credit: Tesla

Economists and reporters have been saying that electric cars could actually kill the oil industry for a little while now, but it hasnā€™t made a lot of real-world impact so far. But now Fitch, an enormously influential financial ratings agency, is issuing dire warnings over electric cars.

It actually seems impossible at this point to overstate just how screwed the oil industry as we know it appears to be by electric vehicles. ā€œResoundingly negative,ā€ ā€œserious threat,ā€ and ā€œinvestor death spiralā€ were all actual terms used by Fitch Ratings in a report detailing the future of oil in a world of electricity, the Financial Times says:

ā€œAn acceleration of the electrification of transport infrastructure would be resoundingly negative for the oil sectorā€™s credit profile,ā€ says the Fitch report.

ā€œIn an extreme scenario where electric cars gained a 50 per cent market share over 10 years about a quarter of European gasoline demand could disappear.ā€ļ»æ

The ā€œdeath spiralā€ scenario entails a situation in which nervous investors start selling all of their assets attached to oil companies, the Fitch report says, making loans more expensive, which depresses the companiesā€™ value further, which makes investors more nervous, which makes them sell, which makes loans more expensive, which depresses the oil companiesā€™ value further, and on and on.

The electric car could completely eliminate the oil industry, and it wonā€™t even take a complete lack of gasoline-powered cars to do it.

And itā€™s not just the oil companies themselves, either. Energy utilities that have banked for decades on traditional fossil fuel power plants could go out of business, too, since the same batteries that power electric cars could be used to store vast amounts of electricity, thus smoothing out and eliminating the problem of the peaky nature of solar and wind power plants.

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But the FT article goes on to cite people saying that this is sort of a worst-case scenario, and itā€™s very unlikely:

One director at a state-controlled oil company who declined to be identified said unless there was a breakthrough in the pricing of electric cars that made them affordable in developing countries, such vehicles were not likely to have a big impact on demand for crude. He added a bigger threat to demand was the improving fuel efficiency of conventional cars.ļ»æ

And this guy is right ā€“ if electric cars get any cheaper, things could get really bad, for oil.

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The Tesla Model 3 and Chevy Bolt should both start seeing deliveries in 2017.