EVs To Cut U.S. Gas Demand By Up To 20% In Next 2 Decades

2019 Chevy Volt

JUL 12 2016 BY STEVEN LOVEDAY 69

Chevy Bolt

Chevy Bolt

Energy consulting firm Wood Mackenzie is releasing a new report showing that gasoline demand could be cut by as much as 20% over the next two decades due to electric vehicles. Earlier reports put the reduction at only 5%, but the new information shows that it could be much more.

BMW i3 And Tesla Model S

BMW i3 And Tesla Model S

If electric cars gain over a 35% market share by 2035, the numbers Wood Mackenzie is projecting will become a reality. The U.S. uses over nine million barrels of gasoline per day. The 35% increase in electric vehicle market share would hypothetically save about two million barrels a day.

For this to come to fruition, Tesla Motors, GM, Nissan and other competitors will have to have quick and consistent, continued successes with delivering low-cost, long-range electric vehicles.

Parajit Ghosh, author of the Wood Mackenzie report said:

“The Model 3 is planting a flag. With time, it has the potential to be a disruptive force in the market.”

Tesla’s 400,000 Model 3 orders, paired with the top competition in the Chevy Bolt arriving soon and the second generation Nissan LEAF thereafter, and now other companies rushing to catch up, is a recipe for the forecast to come true. BMW, Hyundai, and VW are all working on long-range electric vehicles and Ford is investing billions into 12 new electric vehicles over four years. Volvo is set to produce one million electric vehicles by 2025.

However, on the conservative end of the scale, Wood Mackenzie said electric cars making up 10% of the market share by 2035 would drop U.S. gas demand 5%. With the above companies moving forward and the Model 3’s potential to push electric cars into the mainstream by 2025, much can happen in the years ahead, and the demand for gasoline will decrease significantly over time.

Source: MarketWatch

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69 Comments on "EVs To Cut U.S. Gas Demand By Up To 20% In Next 2 Decades"

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If we pushed harder we could do much better.

But it is going to be really hard because of feedback loops. As oil demand flattens and even drops, the weakened demand will drop oil prices. Thus lots of people will (foolishly IMHO) continue to buy oil-burners. :-/

That is an important point. Decreases in the demand for gasoline will lead to mild improvements in the price of gasoline (or, more likely, reduced increases in the price).
Combine BEV/PHEV using electricity instead of gasoline and higher EPA/CAFE mpg requirements for ICE vehicles going forward, and you end up with gasoline prices staying relatively low in the short to mid-term.
So battery prices need to keep dropping for quite a while to get to the point where BEV’s aren’t luxury cars.

Ziv said: “Decreases in the demand for gasoline will lead to mild improvements in the price of gasoline… you end up with gasoline prices staying relatively low in the short to mid-term.” That sounds very reasonable and logical, but markets don’t act logically. I suspect what’s going to happen will be quite similar to what happened with the switch from whale oil to kerosene. As the price of whale oil spiked up, some users switched to kerosene. The contraction in demand was followed, naturally, by a glut on the market and therefore a reduction in price. This was of course followed by some reduction in supply, as those suppliers who could no longer make a profit went out of business. (Just as some of the fracking oil suppliers are now going out of business.) With the contraction in supply, naturally prices went up, prompting more whale oil users to switch to kerosene… and the yo-yo effect continued. Here’s the thing: Once a user switched from whale oil to kerosene, they never went back. So it was a unidirectional change, and thus it was inevitable that whale oil would become obsolete. I predict that we will see a similar yo-yo-ing of… Read more »

Very interesting comparison! Are the figures for US use/pricing or international? I ask because I wonder what impact the rapid industrialization of the US during and following the US Civil War had on both the use/production of sperm oil and the production of crude oil after the Drake well was drilled in Titus PA in 1859. This would make a great book!

Well, yeah, and neighbors see your EV, and how (relatively) clean your garage/driveway is, and how you don’t have the fumes leaking into the house above (depending on house/garage design).

Price of gas is a significant factor, but the superior driving experience, safety (faster reaction times for traction controls, etc.) and ergonomics are going to move the needle toward EVs faster than the price of gas.

Not if we price carbon emissions properly, as in through a tax…

+1

TAX FREAKIN’ CARBON NOW!

scott franco (No M3 FAUX GRILL!)

What a shame taxing stupidity won’t make it go away….

Fortunately it’s not that simple. If oil prices drop enough oil becomes worthless to produce. Just look at what’s happening in Venezuela. Crash and burn.

Within limits you are right, but generally speaking it’s not that simple; oil is a commodity without great price elasticity because of the energy inputs required to extract it in the first place. Only the upper price limit is flexible, and that largely because of cartels.

In other words, if the price of oil drops below even modest values, energy companies start crashing and liquidating. We have seen this recently. The supply simply can’t exist at cheap costs. This breaks the {low demand > low price > high demand} cycle.

Since the “easy” oil is gone, we are now entering the late stage of oil, where supply and prices are highly volatile. Variance in price matters too, not just the average.

I respectfully disagree. I could imagine that a low oil prize depends on stagnant or slowly increasing demand. When demand goes down, the economy of scale will suffer, distribution networks will become more expensive, refineries will run below capacity, etc. Producers will be driven out, production infrastructure will be more difficult to be maintained… Because of this, lower gas prices will be temporary, in my opinion, and prices bound to go up.

scott franco (No M3 FAUX GRILL!)

Right, supply and demand continually struggle for equality. Artificial price supports have an effect, but not as much as basic market forces. The two artificial price supports here being cartel agreements and taxes. If you add $1 of tax, you get $1 more expensive gas, without much change in the demand or supply.

What?? So when the price of oil increases because of Alberta’s wildfires tightening supply, that affects demands, but the same price increase due to a hypothetical carbon tax would not have the same effect? What you say makes no sense.

Weakened demand may drop oil prices but at the same time oil is getting harder and harder to extract which drives costs up so they might cancel each other out. That will make it harder to make a profit from oil so we should be seeing a lot of oil companies folding soon.

20 years is a long time. I cut 99% of my oil consumption right now, without even trying very hard. Last time I filled up my Volt was last year.

Yes, but that is still preferable to a spike in oil prices. $4 a gallon gas hurts a lot of people. EVs will succeed because they are better cars. If they need expensive gas to help them along, then they’re not a good enough product yet. They need to stand on their own terms. Which they will, eventually, whatever the price of gas.

You are turning the thing on its head. Gasmobiles are heavily sibsidizies because their greatest expense is not included in the price paid by the consumer making the purchasing decision – instead the cost is dumped on EVERYONE.

What you think is “artificial help” to EVs is in fact just the removal of artificial help to ICE.

Excellent point – that would be a good argument to make.

Weakened demand will quite possibly lead to less oil infrastructure and fewer refineries producing oil. The refiners need volume plus profits to remain open and especially to replace ageing equipment.
I would expect prices to remain steady with a gradual upswing in prices for profitability on diminished volumes therefor.

But it is going to be really hard because of feedback loops. As oil demand flattens and even drops, the weakened demand will drop oil prices. — speculawyer Not necessary true. Remember oil production isn’t static. Over the last few years oil prices fell to around $20 bucks a barrel at the price new oil production pretty much stopped and only existing wells were producing and in some cases some of the companies doing the existing wells started going out of business because it was costing them $40 bucks a barrel to pull the oil out of the ground. As the supply started to drop the price went back up and when it hit $40 a barrel the companies costing around $40 stopped going out of business and supply stabilized and has been bouncing around the $40 to $50 mark. As demand starts to drop the price will go down short term but then production will start to reduce do to even more companies going out of business and new exploration being none existent. Prices will start to go back up again until the current companies are making a profit and will stabilize. If to many companies go out of… Read more »

That is logical fallacy.

You somehow just from the conclusion that fuel price is not significant to buyers to the notion that they are actually gas/oil lovers and buy cars so that they can burn more of it…

Buyers switched from small cars to bigger cars (less efficient).

However as EU sales from last year prove, buyers DID NOT picked ICE cars over EVs. They picked bigger SUVs over smaller sedans/compacts.

EU simply had good SUV EVs available and that was what buyers bought. Hence EU 70% increase in sales compared to USA 11% slump.

SUVs vs compacts.

2016? USA have at last good EV SUV sold in quantities, and maybe Outlander adds to the sales latter in the year.

In fact when oil prices will go up, people will buy more EVs… As they will be able to afford maintenance of EVs SUVs!!! (While ICE SUVs will loose sales)

Easy Fix.

End oil subsidies. Stop protecting the oil with our troops.

Oils true costs will present themselves, and PV/EV/Alt. Energy will win.

End subsidies *and* add an emissions tax.

There’s no reason someone that chooses not to drive a gas car should have to pay for someone elses negative externalities. Make the buyer factor that into their decision making.

scott franco (No M3 FAUX GRILL!)

We could pants everyone buying a gas car…..

Actually, the main subsidy IS the absence of a tax. That is, the COST of fossil fuels are much higher than the PRICE because they are external. Having others pay these costs is what constitutes a subsidy.

Trimming the national budget with things like less funding for parks and combat vets sounds like a better plan *sarcasm for some people*

James G. Watt, Ronald Reagan’s Secretary of the Interior, is quoted at length about how polluting trees are… He would take you seriously and defund Parks or sell them off to developers, in a heartbeat.

“Yeah, kill all the horrible, polluting trees! That will fix E V E R Y T H I N G.”

Same group of folks that told us Ketchup was a Vegetable and Acid Rain wasn’t real because you couldn’t see it. Same thing with Climate Change, today. Do we never learn? 😛

Vote. Don’t let the greater evil win.

Ending Oil subsidies is the key, even if they are phased out. However, once people pickup on the whole economic picture with EVs it will dramatically change. Plus, there will be a fad-like component. The next cool thing to buy. I predict shortages for 200+ mile EVs and a dramatic shift much sooner than the decades long transition currently assumed.

Have you ever watched videos of large ice chunks falling off glaciers or ice shelfs…that’s going to happen to the auto industry and petroleum industry and coal producers…the splash at the end is devastatingly spectacular.

It is spectacular, mixed emotions notwithstanding….

If Tesla sells 500,000 by 2018, can anyone tell me what the demand be like in 2019?

Surely the demand will be huge. As Tony says
http://tonyseba.com/ it will take 10 years. So I don’t trust the Wood Mackenzie opinion. A similar thing happened with AT&T and the got it wrong by a large factor. So the Wood Mackenzie Oil boys are wrong to say the least.

Can you please quantify “huge.” And stop calling me Shirley! 😉

Well look at it like this Sven; today Tesla has about 400,000 orders for the M3. Last year Tesla sold about 50,000. This years it is about to sell 80,000. I say 80,000 to keep you happy. Now let us look at some facts. 115,000 ordered the M3 before they even see it. They also paid $1,000. So they were serious. In a few days Tesla said they have 375,000 orders. Remember the car was not even test driven by anyone outside Tesla. So here is what huge could be. 50,000 lead to 400,000 So we can safely assume that 500,000 will lead to 4 million cars Sven. That is from Tesla alone. Is that big enough for you?

Reservations… not orders.

IIRC there are something like 350 million cars/light trucks in the US “fleet”. It will take significant time to change over the fleet mix. The first step was a desirable 200 mi car (Roadster), next was a car that could be sold in more than “boutique” quantities (the Model S). Now we are on the verge of 200 mi cars that are “affordable” (Bolt, Model 3, Leaf2, etc). As Pushmi-Pullyou has commented many times, the key question is when we hit the sweet spot of the S curve on mass-market adoption. Clearly we are getting closer – but I don’t know when I would bet that 20% of new car sales are electric.

fasterthanonecanimagine

“something like 350 million cars/light trucks in the US “fleet””

These ICE cars will flood the used car market, as more and more new car buyers will buy EVs, and owners of ICE cars will be seeing the value of their cars crumbling and wanting to get rid of them asap. One will get top tear, top shape, top whatever used ICE cars for a token (or 2). This will a) depress prices for new ICEs making them uninteresting for manufacturers and b) will depress the demand for new ICEs and c) in very few years lead to a complete stop of ICE R&D, so no improvements and novelties anymore. ICEs will soon be history – faster than one can imagine.

These ICE cars will flood the used car market, as more and more new car buyers will buy EVs, and owners of ICE cars will be seeing the value of their cars crumbling and wanting to get rid of them asap. — fasterthanonecanimagine

Or they will hold on to them longer since they wont be getting a good price on their trade in. Not everyone leases their cars and trades them out ever 3 years or even buys them and trades them ever 10 years. Some people buy cars used and drive them into the ground.

Napkin spreadsheet math:

Assuming EV sales double from 2015 to 2019 and a 40% growth year over year after that point, it will be 2030 before EVs make up 20% of new car sales (assuming ~200 million new cars sold in 2030).

550K EVs sold in 2015 world wide
1.1mil EVs sold in 2019 world wide
44mil EVs sold in 2030 world wide

Following the same projection, ~80% of all new car sales would be EVs by 2034 (171mil/yr). At some point, the S curve shifts and you get a long tail to pick up the remaining ~20%.

Rich,

I hate to quibble with “napkin” math, but saying only a “double” between 2015 and 2019 is low, very low…that works out to be only a ~19% increase per year. Over the past three years the worldwide gains have been 53% (2014), 71% (2015) and 44% (2016 YTD respectively)…of which 2016 is already cutting hard into your projections.

First 3 quarters of 2016 is a bit of a lull as well – even though we are up 44%. As the end of the year hits, we see the true start of the 2nd generation cars start to arrive.

2017 will be a huge ramp year as more cars come online and start volume deliveries throughout: Bolt EV, LEAF 2.0, Prius Prime and Model 3.
2018 will see many more models of course, but also those “big 4” that debuted over the course of 2017, will see all 4 get a full year’s worth of selling.

Basically (imo) you are likely looking at something like this (the numbers below – trying to be conservative) for the short term (likely a fool’s errand for anyone to try and have visibility more than 36 months out)

2016: 45%
2017: 50%
2018: 45%
2019: 35%

Hi Jay. I’m easy. I still had the spreadsheet open, so I plugged in your numbers and then assumed the same 40% year over year after that point. I also corrected an error. Here’s the results.

550K EVs sold in 2015 world wide
2.3mil EVs sold in 2019 world wide
67mil EVs sold in 2029 world wide

Of course this is all in fun. Who knows what this S curve will look like. It’s going to be exciting to watch. With any luck, we’ll see 60% or higher year over year growth.

Yes, just a fun little exercise, (=

The nice part about doing/reading them, is that it doesn’t matter who is doing them (pessimist or optimist), all the assumptions now are pretty high…and we are working off a large base (.5 million).

Unthinkable numbers really if this was 10 years ago.

Wouldn’t it be grand if future terrorists would just hate us for being ourselves, and not for protecting our oil reserves which just so happen to be under their feet.

scott franco (No M3 FAUX GRILL!)

We have more reserves than Saudi Arabia… Under whose feet?

Don’t the upcoming fuel standards achieve way more of a reduction? If my memory is correct fleet mileage goes up to 54 mpg by 2025. Given that we are currently at something below 30 mpg now, it is hard to busty anything below 20% with or without EVs.

I think you are forgetting that fuel number is for cars not, trucks/SUVs. They have a separate lower requirement.

So in reality, people will just shift from cars to SUVs (which is already happening) and the demand won’t drop as fast as you are thinking. Also there are diminishing returns on the number of gallons saved as the fuel economy gets higher and higher. Trucking, airlines etc. also account for much of the consumption which is outside of CAFE.

I think those 54 mpg in real world translate to something like 38 mpg fleetwide.

Time is on the side of high MPG cars in the major metropolitan areas. I remember when I bought my 2nd gen Prius in October, 2003. The rare sighting of another Prius driver would prompt at least a nod, wave, etc. Now when I drive home I count the cars coming the other direction that get 50+ mpg. Easily 10% of commuters in the Bay Area are driving high MPG cars (Prius, Leaf, Energi, Teslas, Volts, etc.). Just a matter of time.

The big unknown lurking in all projections is the possibility of fleets of self-driving cars rented out by one big company, or even shared by their private owners, radically changing our average miles driven. If the costs are low, all the cranky old people might leave their SUVs in the driveway more and more as they find it less of a hassle to be scooted around by tiny electric-powered robots. However, we don’t know how much driving the robots will have to do to hunt us down, and later to get back to their home bases. I’m 52, and I have to admit I think I’ll be ready for a robot when I hit 70.

“Electric Vehicles To Cut U.S. Gasoline Taxes By Up To 20% In Next 2 Decades, furthering America’s issues with infrastructure cost and maintenance”

That’s why there should be a tax based on mileage from a simple odometer reading and the curb weight of the vehicle. Even more fair would be a tax based on miles driven for all new cars that have the ability to log miles driven in each state by gps.

Of course the problem with this is it would never happen because of the resistance from those that would scream bloody murder that the government is tracking us. But it sure would be a fair way to tax road wear and tear.

Meanwhile they will do what they have already done here in GA. They will use the transition to figure out how to tax us even more than they did with gas tax. In GA there is a flat $200 fee added to EVs at yearly registration. That’s more than what a large SUV that drives 15,000 miles a year pays annually in gas tax.

Tolls are still the best option. How else would a state collect money from out of state/country drivers who use the roads?

NPNS! SBF!
Volt#671

They could still tie the out of state miles from GPS to tolls somehow.

It would certainly be better than relying on people to stop for gas and to buy the correct amount to pay the correct tax for road use. Many smaller pass through states might get very little gas tax if people aren’t stopping on their way through.

Toll roads work but there’s nothing more 20th century and inefficient than a patchwork of tolls littering the interstates requiring traffic to come to a halt with cash and coins on hand while traveling.

I know tolls are 20th Century but we have many Canadian cars traveling up and down the east coast.

NPNS! SBF!
Volt#671

I have to wonder just which State (or States) it is which you think is subsidizing travel by people from other States. People from your State drive on roads in other States, too.

The I-70 corridor in Missouri between St. Louis and Kansas City is very heavily traveled by Interstate trucking, and as a result the road is generally in terrible shape, needing a lot of repairs. But I’d never claim this is overall a bad thing for the State, as Kansas City is a major transportation hub, and so obviously enjoys a great economic benefit from all that freight coming into the city.

Advocating a proliferation of toll roads would return us to the sort of patchwork transportation system we had in the early days of the United States, before the national highway system. If you think this would be a good thing, then you really need to read up on what a nightmare it was to travel long distances in those days.

As they say: “Those who do not learn from history are doomed to repeat it.”

We could just pay for infrastructure out of the general budget, as a common good, instead of insisting that it continue to be financed by regressive user fees.

That ship has sailed. In the next 2 decades gasoline demand will drop by up to 100%.

Yes, more seems unlikely 😀

while gas prices are relatively low now would be a good time for the girls in Congress to start raising the gasoline tax to pay for infrastructures. But no, all they talk about is how do we get Highway dollars from people driving electric cars. An additional $.10 a gallon federal tax to be spent on highway infrastructure would be no big deal. Then increase it 2 cents a gallon each year for the next 20 years. ( no disrespect meant to the ladies in Congress, just the men up there who have been neutered)

You can say ‘no disrespect meant’, but when you use the word ‘girls’ as an insult, it kinda gives the opposite message.

Its been happening since 2005, when hybrids began to sell in large quantities.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=a103600001&f=m

NPNS! SBF!
Volt#671

MEANWHILE PLANET EARTH HEATS UP AS HUMANS DEBATE OIL PRICES

Absolutely! The real price of oil is FAR greater than the price we pay at the pump.

If by market share you mean new car sales (and not total fleet) I would be surprised if it’s less than 95% for BEVs by 2035. BEVs are far superior than ICEs in every way except for range. Once we manage to push down the battery price below $100/kWh and even marginally increase energy density it’s all over for the ICE. We should reach that level well before 2025 and it will continue after that.

Sure they’re better, but the trick is in getting the general public to realize that.

In 2014 global production of passenger vehicles was 71.18 million. In 2015 there were 73.5 million passenger cars sold world wide, almost all of them with internal combustion engines running on gasoline, diesel or natural gas.

This represents a growth in world wide demand of 2.3 million ICE in just one single year.

In contrast just under 540,000 plug-in vehicles were sold in 2015. In other words Plug-ins can’t even keep up with increasing ICE sales let alone put a dent in the 73 million overall sales for ICE last year.

It’s probably going to be at least another 2-3 years before EVs can even catch up to the yearly growth sales increases of traditional ICE vehicles (appx. 2.3 million vehicles per year.)

To make things even more challenging, there were also some 18.1 million commercial vehicles produced world wide in 2015 for a grand total of 92.6 million additional cars and trucks on the road just in 2015 alone.

For Plug-ins to capture 50% of this whole market would require sales of 46.3 million electric vehicles, and that’s just to stay even with the Icemobiles before we will actually start to displace them.

“Feet don’t fail me now.”

Most everyone I know, under 60, who knows ‘anything’ about a plug-in vehicle, want a plug on their next vehicle. I think the new Volt and the Model 3 and Bolt will do more for EVs than any electric vehicle so far. They all eliminate the daily limitations of an EV, while at an affordable price. A next gen 200+ mile Leaf that should come soon I think will boost that adoption rate even faster. Also, I think China’s EV incentive tied to at minimum 31 miles of electric range, will be of great benefit globally. Finally most all plug-in hybrids will be able to handle the daily commute on electric power alone. But….what the new 200+ mile EVs will bring are a flood of inexpensive used sub 100 mile EVs to be bought as commuter cars and for new drivers/students. Unfortunately for EVs, the oil industry learned too quickly from their mistake, by jacking up gas prices to $5 and giving a big boost to the plug-in market. But even with gas at $2/gallon, zero gas is the goal. Then add the home power packs that are getting big enough to hold enough power to charge the car and… Read more »

Yes, 200+ miles for a decent price will cause a huge boost for EVs. $35k is still not good for everybody so the next step is then 200+ miles for around $25k which I think will happen around 2022. Some people are not happy with 200 miles though so I think EVs will also move towards 300+ miles for less than $40k around that time.

Two decades?

It’ll be 100%. Nobody will use gasoline in *2036*, because that would be stupid.

100% in 2036? No way, we needed 6 years to from 0-1% just for cars. So 99%-100% will take another 6 years. Are you saying we will have 99% market share pf EVs in 2030?

And Trucks will still use diesel in 2036 with 60-90% share. That is my prediction…