STATE OF TRANSPORTATION ENERGY AND VEHICLE ELECTRIFICATION - WHITE PAPER AUGUST 2 020
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WHITE PAPER STATE OF TRANSPORTATION ENERGY AND VEHICLE ELECTRIFICATION A U G U S T 2 02 0
©2020 Fuels Institute Disclaimer: The opinions and views expressed herein do not necessarily state or reflect those of the individuals on the Fuels Institute Board of Directors and the Fuels Institute Board of Advisors, or any contributing organization to the Fuels Institute. The Fuels Institute makes no warranty, express or implied, nor does it assume any legal liability or responsibility for the use of the report or any product or process described in these materials.
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N Contents INTRODUCTION ............................................................................................................................................................... 02 THE FLEET IS BECOMING MORE EFFICIENT .................................................................................... 03 I C E S W I L L S U RV I V E F O R D E C A D E S .......................................................................................................... 10 T H E S TAT E O F V E H I C L E E L E C T R I F I C AT I O N ....................................................................................... 14 CONCLUSION .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 A B O U T T H I S W H I T E PA P E R This report was written by the Fuels Institute, combining public and proprietary data as well as industry insights gained from members and other industry relationships. ©2020 Fuels Institute
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
Introduction
The transportation market is Rather, a more measured pace of transition is
likely to occur with a broad mix of powertrains
transitioning to lower-carbon-intense
moving people from one place to another. This is
sources of energy and more efficient not to say that disruption cannot occur — it most
use of existing energy resources, but certainly can, and there are a number of market
the transition is proceeding at an areas in which a more rapid restructuring of market
fundamentals could take place — but as of now,
evolutionary pace. While many are
there does not appear to be the impetus for such
advocating a rapid transition to an dramatic change and consumers do not seem
electrified transportation market, the poised to force a revolution. An objective look
realities of market fundamentals and at the numbers as they stood at the end of 2019
provides a solid foundation upon which to evaluate
the nature of consumer choice stand in
the future of the market’s evolution.
the way of radical reform.
2
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
The Fleet Is Becoming
More Efficient
It is no illusion that the vehicle fleet is performance of every class of vehicle has improved.
becoming more efficient and that the According to the U.S. Environmental Protection
Agency (EPA), carbon dioxide (CO2) emissions and
impact on overall liquid-fuel demand
MPG for pickups, minivans, sport utility vehicles,
will be pronounced. crossover utility vehicles, and sedans improved
According to the U.S. Bureau of Transportation significantly between 2004 and 2018.
Statistics, the average fuel economy of new light What is impressive about these achievements is the
duty vehicles improved by more than 35% between technologies used by the automotive manufacturing
2000 and 2017.1 As a result, the environmental industry to achieve them. Through 2018 the use of
1 “Average Fuel Efficiency of U.S. Light Duty Vehicles,” U.S. Department of Transportation, accessed June 3, 2020, https://www.bts.dot.gov/content/average-fuel-
efficiency-us-light-duty-vehicles.
26.6 29.2 32.8 35.8 39.4 41.4 39.9 41.2 41.3
Low Medium High Variation
F I G U R E 1 : AV E R A G E F U E L E C O N O M Y O F N E W V E H I C L E S
Passenger Cars Light Trucks
40
39
35
30
MPG
29
25
20
1980 1990 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2015 2017
Source: U.S. Bureau of Transportation Statistics
3
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
FIGURE 1. CHANGE IN CO2 EMISSIONS AND MILES PER GALLON (2004–2018)
CO2 MPG
PICKUP
M I N I VA N / VA N
TRUCK SUV
CAR SUV
S E D A N / WA G O N
-40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40%
Source: U.S. Environmental Protection Agency
electrified powertrains was very limited. Engineers • Stop start, which shuts off the engine when idling
leveraged a variety of other strategies to achieve to save fuel and then automatically restarts, first
improved efficiency, reduced emissions, and appeared in 2012 and in 2018 was found in 28%
enhanced performance (a vehicle characteristic of the market
many consumers were most aggressively seeking).
10%Equally impressive is how engineers leveraged
According to the EPA, some of the emerging
transmission technology. Anyone who has
technologies brought to market to deliver these
Percentage of ever
Creditsridden
Generateda bicycle knows that the more gear
improvements have been adopted at rapid rates:2
selections you have at your disposal, the easier
• Multi-valve cylinders
2 0 11
debuted
2012
in 1986
2 0 13
and in2 0 14 it2 0is1 5to climb hills, go 2faster,
2016 017
and2 0travel
19
further
2 0 11 - 2 0 1 8
2018 represented 92% of new engines without exhaustion. By increasing the number of
Fossil Natural Gas Biomethane Electricity gearsBiodieselavailable in a vehicle,
Renewable automotive
Diesel engineers
Ethanol
• Turbo boosting was a relatively niche product
are able to get the most performance from their
until the mid-1990s and are now available in 31%
engines. By 2018, vehicles equipped with seven
of new vehicles Lorem ipsum or more gears, including continuously variable
• Variable valve timing debuted in 2000 and within transmissions, accounted for 58% of new vehicles.
18 years was installed in 96% of new vehicles The number of vehicles equipped with four- or
five-speed transmissions, which were once the
• Gasoline direct injection was first introduced
dominant transmissions in the market, became
in 2008 and by 2018 was found in 51% of
virtually non-existent by 2015.
new vehicles
2 U.S. Environmental Protection Agency, 2018 Automotive Trends Report, March 2019, https://www.epa.gov/automotive-trends/download-2018-automotive-trends-report-
previous-year.
4
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
F I G U R E 3 . M A N U FA C T U R E R S ’ U S E O F E M E R G I N G T E C H N O L O G I E S ( M O D E L Y E A R 2 018 )
TURBO 31%
GASOLINE DIRECT INJECTION 51%
C O N T I N U O U S VA R I A B L E
TRANSMISSION 22%
7+ GEARS 36%
26.6I O N 29.2 32.8 35.8 39.4 41.4 39.9 41.2 41.3
C Y L I N D E R D E A C T I VAT 12%
S T O P S TA R T
28% More than 25 years 11 to 15 years
HYBRID 4% 21 to 25 years 6 to 10 years
P H E V / E V / FFE
C VDE R AL TAX CR E DIT 16 to 20 years 0 to 5 years
3%
0 10 20 30 40 50 60
$57,067 $54,200 $60,390
Source: U.S. EPA, “The 2018 EPA Automotive Trend Report”
FIGURE 4. SHARE OF TRANSMISSIONS BY NUMBER OF GEARS
4 or less 5 Gears 6 Gears 7 Gears 8 Gears 9+ Gears CVT
100%
80%
60%
40%
Percentage of Credits Generated
20%
0% 2 0 11 2012 2 0 13 2 0 14 2015 2016 2017 2019 2 0 11 - 2 0 1 8
1974 1980 1985 1990 1995 2000 2005 2010 2015
Source: U.S. Environmental Protection Agency
Fossil Natural Gas Electricity Biodiesel Renewable Diesel Ethanol
Biomethane
Lorem ipsum
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
The fact is that automotive
$52,500 engineers
$54,568 have boosted fuel economy and reduced emissions by improving upon
$69,262
technologies within the internal combustion engine (ICE). An executive for a major global automaker was quoted
in the July/August 2019 issue of Automotive Engineering saying, “The way things are being covered right now, you
would think we had just stopped everything, and everything is electric, and that certainly is not the way things
are going to develop …. In the end you want to provide what the customers want: fuel economy, performance,
quality, reliability …. We are doubling the number of resources that we have on [battery electric vehicles], but we
still have a tremendous amount of work to do on ICEs.”3
3 Paul Seredynski, “GM’S Ken Morris Lives the Pace of the Powertrain Revolution,” Automotive Engineering, July/August 2019, 26, https://www.nxtbook.com/nxtbooks/
sae/19AUTP08/index.php?lre=1%3A3532383635454233363938363332434244393037393833333637314646424144#/0
5
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
The EIA forecast for
light-duty vehicle (LDV)
fuel economy remains
relatively bullish
and results in a 47%
improvement in fleet fuel
economy by 2040.
Despite recent progress, there remains room today. Even so, their forecast for light-duty vehicle
to improve, and the federal Corporate Average (LDV) fuel economy remains relatively bullishand
Fuel Economy (CAFE) standards require such results in a 47% improvement in fleet fuel
improvements be achieved by 2025. In its Annual economy by 2040 with total passenger cars on the
Energy Outlook 2020,4 the U.S. Energy Information road delivering 42 MPG and light trucks delivering
Administration (EIA) forecast new vehicle and fleet 30 MPG. New vehicles are projected to deliver
fuel economy through 2050. In framing its forecast, greater fuel economy, but the impact on the fleet
the agency assumed the CAFE program that existed is determined by new vehicles sales and overall
at the end of 2019 would remain in place and that fleet turnover, which takes a significant period of
no further required efficiency improvements will time. The diesel freight fleet is likewise projected
be enacted. Some change in the CAFE program to become much more efficient, delivering
beyond 2025 is likely, but with no policy guidance approximately 30% more MPG across the market
to inform its model, EIA used what standards exist by 2040.
4 U.S. Energy Information Administration, Annual Energy Outlook 2020, January 29, 2020, https://www.eia.gov/outlooks/aeo/.
6
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
F I G U R E 5 : P R O J E C T E D L I G H T- D U T Y V E H I C L E F U E L E C O N O M Y
80
Passenger Cars Light Trucks Car Fleet Trucks Fleet
70
60
50
MPG
40 42
30 30
28
20 20
10
2019 2020 2021 2022 2023 2024 2025 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
26.6 29.2 32.8 35.8 39.4 41.4 39.9 41.2 41.3
Source: U.S. Energy Information Administration AEO2020
Low Medium
2019 High Variation
F I G U R E 6 : P R O J E C T E D AV E R A G E D I E S E L F U E L E C O N O M Y O F N E W A N D S T O C K V E H I C L E S
New Light Medium New Medium New Heavy Stock Light Medium Stock Medium Stock Heavy
20
17.9
15
14.3
MPG
12.2
10
8.9
7.6
6.1
5
2019 2020 2021 2022 2023 2024 2025 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Source: U.S. Energy Information Administration AEO2020
The market effect of these projected gains in efficiency could be significant. Although EIA projects overall
2019
vehicle miles traveled to increase between 7% and 20% (depending on the oil price scenario evaluated) and
the number of licensed drivers to increase 12%, the efficiency gains are still projected to reduce gasoline
consumption between 13% and 26% and diesel fuel consumption between 3% and 15%, with the ranges
reflecting the difference between the high oil price and low oil price scenarios.
7
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
F I G U R E 7 : P R O J E C T E D L D V M I L E S T R AV E L E D P E R Y E A R
4000
VMT VMT High and Low Range
3500
Billion Miles
3000
2500
2019 2020 2021 2022 2023 2024 2025 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Source: U.S. Energy Information Administration AEO2020
26.6 29.2 32.8 35.8 39.4 41.4 39.9 41.2 41.3
FIGURE 8: LIQUID FUEL DEMAND
Low Medium High Variation
Gasoline Diesel Ethanol Biodiesel Other Biomass
10
1980 1990 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 -13%
20 1 1 2to
0 1 5-26%
2017
8
Million Barrels per Day
6 17.9%
4 -3% to -15%
12.2%
2
0
2019 2020 2021 2022 2023 2024 2025 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Source: U.S. Energy Information Administration AEO2020
2019
8F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
Achievements in fuel efficiency are likely to into markets that are governed by some sort of
continue despite domestic policy decisions. In April efficiency/emissions program. Consequently, while
2020, the EPA finalized the SAFE Vehicles Rule that U.S. policy has a major influence on the market, the
reduces annual efficiency improvements from 5.0% demands of the global market are likely to compel
to 1.5% per year. The original proposal and the the industry to continue delivering more efficient
final rule raise questions about the impact it might vehicles, perhaps at a rate greater than mandated
have on overall vehicle efficiency improvements. by the U.S. In addition, automakers have made it
It is important to remember that the automobile a practice to market their vehicles’ fuel efficiency
manufacturing industry is producing vehicles relative to competing models, seeking to capitalize
for more than just the U.S., and soon more than on consumer’s interest in purchasing more fuel
90% of the vehicles sold globally will be sold efficient vehicles.
F I G U R E 9 : G L O B A L F U E L E C O N O M Y E F F I E N C Y S TA N D A R D S
Has Set Standards In the Planning Process to Set Standards
LDV=Passenger Cars, Light Trucks and Sport Utility Vehicles (SUVs)
IEA World Energy
Outlook 2018:
“By 2040, there
are no cars sold
that have an
efficiency worse
than 6.5 liters/100 km
(approximately 36 mpg).”
Source: Compiled by Future Fuel Strategies citing numerous sources including “Global Fuel Economy An update for COP23,” Global Fuel
Economy Initiative; September 2018
9F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
ICEs Will Survive
for Decades
The registered improvements in vehicle It is clear that electrified powertrains will be entering
efficiency to date have been achieved the market and will play a significant role in the
transportation sector, but even if the government
with improved ICEs. Engineers have
were to mandate a 100% transition, the impact
successfully delivered more miles from would not be immediate.
each drop of fuel through better engine
For example, assume every single vehicle sold
design and application of technologies, beginning January 1, 2018, included some new
and that is not slowing down. Such technology. Given projected sales and scrappage
continued improvement is critical rates at the time, it would take nine years before
50% of the vehicles on the road were equipped with
because ICEs will be a significant part
the new technology. This assumes that the new
of the market for the foreseeable technology did not increase the price of vehicles to
future. This is because the LDV market such a level that sales would suffer and that the new
is substantial, and any change will take technology did not dissuade consumers from buying
new vehicles at the expected pace.
time to have a tangible impact.
1026.6 29.2 32.8 35.8 39.4 41.4 39.9 41.2 41.3
Low Medium High Variation
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
F I G U R E 10 : N E W V E H I C L E S A S S H A R E O F F L E E T O N T H E R O A D
Data and Assumptions:
U.S. EIA LDV Fleet Size - 243.8 million in 2018
U.S. EIA LDV Sales Forcast - 16.1 million/year average
80%
39
70%
60%
At least 9 years for New Vehicles to Amass 50%
50%
40%
29
30%
20%
10%
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Source: U.S. EIA Annual Energy Outlook 2018
Since ICEs are expected to be around for decades to The ability of higher octane to enable improved
come, the pursuit
2 0 1 8 2of
0 1lower
9 2020carbon
2 0 2 1 emissions
2 0 2 2 2 0 2 3may
2 0 2 engine
5 2 0 2 6 efficiency
2024 2 0 2 7 2 0 2is
8 supported
2 0 2 9 2 0 3 0by2sound
0 3 1 2 0science.
32
require changes to the fuel being consumed—by The U.S. Department of Energy’s Co-Optimization of
both legacy and future engines. Already, the market Fuels and Engines Initiative research estimates that
is witnessing policies, regulations, and incentives higher octane fuels, with a greater spread between
encouraging the use of alternative fuels such as E15, the RON and MON (known as sensitivity), can enable
B20, and renewable diesel. But other blends have the design of engines with high compression ratios
captured the attention of engine manufacturers and and turbo boosting that can increase efficiency by up
some refining interests. to 7.5%. Although the policy pursued last Congress
was unsuccessful for a variety of reasons, automotive
During the 115th Congress, a coalition of automobile
engineers are still looking for ways to fuel new
manufacturers and refiners sought legislation to
engines with a higher octane fuel to deliver greater
raise the bar on fuel octane to 95 RON (research
performance and efficiency with lower emissions.
octane number), which would be essentially
The question remains how (or when) to get there.6
equivalent to today’s 91 pump octane.5
5 This is expressed as the antiknock index and calculated by averaging the fuel’s measured RON with its measured motor octane number, or MON.
6 Fuels Institute, Analysis of the Potential for Increasing Octane in the U.S. Fuel Supply, March 21, 2019, https://www.fuelsinstitute.org/Research/Analysis-of-the-Potential-
for-Increasing-Octane-in.
11F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
F I G U R E 11 : P O S S I B L E E F F I C I E N C Y G A I N S A S S O C I AT E D W I T H O C TA N E R AT I N
8% 7.5%
Efficiency Improvement
7%
6%
5% 4.1% 4.4%
4%
3% 2.5%
2%
1%
91 RON, S=8 95 RON, S=8 95 RON, S=10 98 RON, S=8 98 RON, S=12
BASELINE
Source: U.S. EIA Annual Energy Outlook 2018
Meanwhile, as the effort to reduce carbon emissions continues, one tool that states and regions have
considered are programs that require the industry to deliver to the market fuels with lower carbon intensity.
The California Low Carbon Fuel Standard (LCFS) is the first fully implemented program of its type in the
nation and is viewed by many as a model for success. Consequently, many other states and regions are
working to develop similar programs. Specifically, Oregon has done so, Washington has made a valiant
attempt to do so, a collection of midwestern governors have signed a memorandum of understanding (MOU)
to explore a regional regulation, and the Transportation and Climate Initiative in the Northeast seems to be a
combination of a low-carbon program and a carbon tax.
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
F I G U R E 1 2 : U . S . P R O G R A M S T H AT R E Q U I R E M A R K E T F U E L S W I T H L O W E R C A R B O N I N T E N S I T Y
Carbon tax measure
failed in Maine last year
LCFS Policy in Place
LCFS Legislation Failed in 2019
Midwest LCFS– Maybe?
Considering Carbon Tax on Fuel
TCI States – Cap
and Trade on Fuels
Source: Future Fuel Strategies
12F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
The lessons learned from analyzing the
California LCFS program provide some
insight into what might result should such
programs spread to other regions. California
has found that the greatest contributor
to reducing the carbon intensity of its
fuel supply has been through increased
use of biofuels. The latest projection
estimates that 80% of the required carbon
reduction in 2020 would be satisfied by
using ethanol, biodiesel, and renewable
diesel. If the California LCFS program serves
as the foundation for other programs, it
is likely that biofuels will assume a much
more significant role in the overall U.S.
transportation market in the coming years.7
7 Fuels Institute, Market Reactions to Low Carbon Fuel Standard
Programs, February 22, 2019, https://www.fuelsinstitute.org/
26.6 29.2 32.8
Research/Market-Reactions-to-Low-Carbon-Fuel-Standard-Progr. 35.8 39.4 41.4 39.9 41.2 41.3
More than 25 years 11 to 15 years
21 to 25 years 6 to 10 years
FE DE R AL TAX CR E DIT 16 to 20 years 0 to 5 years
F I G U R E 1 3 : C A L I F O R N I A’ S E V O LV I N G P R O$57,067
J E C T E D$54,200 $60,390
LCFS CREDIT POOLS FOR 2020 COMPLIANCE
100%
57.3%
80%
Renewable Diesel
Biodiesel
Natural Gas
60%
Renewable Gasoline
Percentage
Hydrogen
Electricity
40%
Low-CI Ethanol
Sugar Ethanol
Starch Ethanol
20%
20.0 %
0.0
2009 2 0 11 2015 2018 LD/High ZEV
Source: Fuels Institute Report by Trinity Consulting and Stillwater Associates
13F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
The State Of Vehicle
Electrification 26.6 29.2 32.8 35.8 39.4
The momentum of public opinion, FEDERAL TAX CREDI T
FIGURE 14. PLUG-IN ELECTRIC VEHICLES SOLD
government policy, and the leaders $57,067 $54,200
of the automobile industry indicate BEV PHEV Highlighted numbers
that the future for electric vehicles will
are year over year
changes in sales
be bright. The technology that will 350000
74.7% -0.6%
enable electric vehicles to satisfy a
300,000
growing segment of the transportation
market is developing rapidly, and soon 250,000
consumers will have a competitive 200,000 26%
Total Sales
economic choice between similarly
29.7%
equipped vehicles powered by 150,000
traditional or electrified powertrains. 100,000
As the market grapples with reducing carbon
50,000
emissions and the transportation industry seeks
sustainable solutions, it is essential to understand
0
the fundamentals of the market and to make
business decisions based upon facts and realistic 2015 2016 2017 2018 2019
expectations for the future. This requires taking Source: Wards Intelligence
a fresh look at the data. There are many exciting
developments in this space, and electric vehicles are
2008 2009 2010 2011 2012 2013
becoming more capable, affordable, and convenient
Plug-in vehicle sales
$52,500 in 2018$54,568
beat 2017 by 75%, and
(e.g., charge times are coming down), but they are $69,262
many assumed this rate of growth would continue
still in the early stages of market growth.
— this optimism was supported by rapid technology
Even with the expansion of sales of plug-in vehicles advancements and the introduction of more models
over the past five years, there has been inconsistency to the market. By June 2019, sales of BEVs were up
in market penetration. The year-over-year change in 96% over the previous year, and it seemed indeed
sales of plug-in hybrid electric vehicles (PHEV) and like 2019 was going to be an exceptional year. But
battery electric vehicles (BEVs) since 2015 shows the then everything slowed down, and overall plug-in
challenges of penetrating the vast LDV market. sales for the year ended lower than in 2018.
1426.6 29.2 32.8 35.8 39.4 41.4 26.6 39.9 29.2 41.2 32.8 41.3 35.8 39.4 41.4
F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
More than 25 years 11 to 15 years
There are a variety of potential
21 to 25 explanations
years for 6 to 10 years
FIGURE 15. SHARE OF SALES BY POWERTRAIN
this, but one that should 16
betoconsidered
20 years
is the 0 to 5 years
100% expiration of the federal tax credit for electrified
models offered by Tesla and General Motors (GM).8
It is uncertain how this policy affected sales, what
other factors may have contributed to the decline
in plug-in vehicle sales, or how trends may continue
in coming years. One interesting fact to note about
2019, however, is that BEVs ended the year up 17.1%
over 2018 while PHEVs dragged down the sector by
80%
dropping 30.6%.
A fact that is often missing from the discussions
about transitioning to an electrified future is that
gasoline-powered ICEs remain dominant. Since
2015, sales of vehicles equipped to run exclusively
on gasoline-powered ICEs have yielded just 1.6%
of market share and continue to represent 92.4%
60%
of total LDV sales. Reflecting on how long it will
take to transition the market to a new technology
assuming 100% immediate conversion of all new
Total Sales
vehicles, the dominance of the gasoline engine
94% 92.4%
further demonstrates the challenge of transitioning
the market to something new.
40%
FIGURE 16. SHARE OF SALES OF NON-GASOLINE
POWERTRAINS
8%
7%
6%
Non-Gasoline Powertrain Sales
5%
0.7% 0.5%
20%
1.2% 1.4%
4%
Fuel Cell
3%
Hybrid
PHEV 2%
Electric
Diesel 1%
Gasoline
0.0 0.00
92.4%
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
Source: Wards Intelligence
8 Once a manufacturer sells 200,000 qualified electrified vehicles, the federal tax credit phases out for additional vehicles sold by that manufacturer. The tax credit is still
available to other manufacturers until they reach the 200,000-unit threshold.
15F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
When analyzing the market for non-gasoline-powered vehicles, slight shifts in consumer purchasing behavior
become apparent. In the electrified sector, BEVs did gain some market share, but at the expenses of PHEVs.
Combined, they still represented only 1.9% of sales — the same market share they commanded in 2018. This
is not to say that electrified vehicles do not have a promising future — they certainly do, especially considering
interest from both automakers and policymakers and the number of new models expected to be introduced
in the coming years. But as for right now, they are still struggling to gain market share.
Even if PHEVs and BEVs were to continue recording strong year-over-year sales, it would take many years
before they would significantly impact the overall LDV fleet. Figure 17 presents three scenarios (Low, Mid
and High) in which PHEV and BEV sales would increase by 10%, 15% or 20%, respectively, every year from
2020 through 2040. (No assumptions were made in creating this chart other than as stated that sales would
increase by a consistent percentage every year.) In these scenarios, electric vehicle sales could capture
between 16.6% and 94.5% of LDV sales. However, given fleet turnover rates, the number of plug-in electrified
vehicles on the road would represent between 7.4% and 26.6% of the fleet. As mentioned before, the LDV
market is large and currently dominated by gasoline-powered ICEs, and it will take many years of sales
expansion to change the dynamics of the market.
F I G U R E 17 : P O T E N T I A L G R O W T H O F B AT T E RY E L E C T R I C A N D P L U G - I N H Y B R I D V E H I C L E S
Assumptions: High Growth % Sales High Growth % Stocks
U.S. EIA Annual Energy Outlook 2020 LDV Fleet Size and Sales
Mid Growth % Sales Mid Growth % Stocks
Annual of Sales Growth for BEV & PHEV:
High Growth: 20% increase in sales each year Low Growth % Sales Low Growth % Stocks
100% Mid Growth: 15% increase in sales each year
Low Growth: 10% increase in sales each year
Scrappage Rates: LDV 5.5%, PEV 5%
80%
39
60%
40%
29
20%
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Source: Fuels Institute
16F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
ELECTRIFIED VEHICLES ARE
OVERCOMING CONSUMER CONCERNS
Despite the slow start and the challenges facing
electric vehicles (EVs) in their quest to penetrate
the LDV market, there is tremendous cause for
optimism about their future. Research indicates that
consumers who are not yet ready to purchase an
electric vehicle primarily are concerned with range,
recharge time, and purchase price. The EV market
has responded. Vehicles are consistently delivering
more than 200 miles per charge, with GM most
recently announcing a battery system for its BEVs
that will deliver 400 miles per charge. In addition,
batteries are becoming more durable, and fast
charging is much more of a viable option. Tesla has
announced that their new V3 Supercharging system
will be able to deliver up to 75 miles of range in five
minutes of charge 26.6
time. 29.2 32.8 35.8
39.4
41.4 39.9 41.2 41.3
F I G U R E 18 : 2 4 B E V S AVA I L A B L E I N 2 0 2 0
150,000
Taycan Turbo
120,000 Model X
Performance Model S
MSRP After Incentives (Virgiinia)
Performance
90,000 Model X
Long Range
e-tron Plus Model S
I-Pace Long Range
Mach E Premium Mach E Model 3 Performance AWD
60,000 First Edition Plus
Mach E Select Mach E GT
Model 3 Long
Cooper S E i3 Bolt Range AWD
Hardtop 2
30,000 Door Electric Kona Electric
Leaf
Ioniq Electric Mach E California Rt. 1
e-Golf Leaf Plus Model 3 Standard Range Plus
Niro EV
0
100 150 200 250 300 350 400
RANGE IN MILES
Source: Plug-In America (PlugStar.com)
17
7.5%F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
Despite these advancements, purchase price to decline as batteries become more affordable.
remains a challenge. The majority of vehicles Since 2014, the price per kilowatt-hour of BEV
available in 2020 that offer 200 miles or more batteries has come down 73%.
of range are also priced $40,000 or higher and
Within a few years, consumers will have the option
average $44,272 (excluding
26.6 the three 32.8
29.2 vehicles 35.8 39.4 41.4 39.9 41.2 41.3
to purchase a BEV that is priced competitively with
with MSRPs of $100,000 or more). This purchase
a comparable ICE vehicle, has a range of 250 miles
price may be outside the realm of affordability for
or more, and can substantially recharge within 15
most families to achieve a scale of mass adoption.
minutes. Add the fact that maintenance for a BEV
Adding to this challenge is the fact that the federal
is significantly less expensive than for an ICE and
tax credit of $7,500 is limited to the first 200,000
the option of an electric vehicle could be attractive
units sold by a manufacturer and already has
for many customers. This reality leads to many
expired for Tesla and GM. That being said, prices
optimistic forecasts for the future of the EV market.
are coming down and are expected to continue
F I G U R E 19 : P R I C E O F E L E C T R I C V E H I C L E B AT T E R I E S ( $ / K W H )
$1,160
$1,200
$1,000 $899
$4,800 $707 $650 $577
$600
$373
$400 $288 $214 $176 $156
$200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: CarGurus, Bloomberg NEF, Statista
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
18F U E L S I N S T I T U T E | S26.6 29.2
TAT E O F T R A N S P O RTAT I32.8
O N E N E R G35.8
Y A N D V E H I39.4
C L E E L E C T R41.4
I F I C AT I O N 39.9 41.2 41.3
F I G U R E 2 0 : M U LT I - S TAT E Z E V TA S K F O R C E S H A R E O F U . S . N E W V E H I C L E R E G I S T R AT I O N S —
2 0 1 8
11.7%
10%
Percentage of U.S. New-Vehicle Registrations
8%
6%
6%
4% 3.50%
2% 2.10%
2% 1.60%
1% 1%
0.40% 0.30% 0.30%
CA C0 CT ME MD MA NJ NY OR RI VT
Source: NADA.org
In addition to these market forces creating Ten other states have signed an MOU with California
opportunities for electrified vehicles, government establishing the Multi-State ZEV Task Force,10
policies also provide momentum. California’s committing to have at least 3.3 million ZEVs
Zero-Emission Vehicle (ZEV) Program requires operating on their roadways by 2025. Signatories
most automobile manufactures to ensure a certain to the MOU include Colorado, Connecticut, Maine,
percentage of their sales into the state are ZEV.9 Maryland, Massachusetts, New Jersey, New York,
Qualified vehicles generate credits based upon Oregon, Rhode Island, and Vermont. According to
their electric driving range. California increases the National Automobile Dealers Association,11 in
the credits required each year from 4.5% in 2018 these states combined to represent 30% of
2018 to 22% in 2025. California estimates that new registered vehicles in the U.S., creating a strong
compliance with the 2025 requirement will equate incentive for vehicle manufacturers to increase
to about 8% of new vehicles sold being ZEVs and production and delivery of electrified vehicles into
plug-in hybrids. these markets.
9 “Zero-Emission Vehicle Program,” California Air Resources Board, accessed June 3, 2020, https://ww2.arb.ca.gov/our-work/programs/zero-emission-vehicle-program.
10 Multi-State ZEV Task Force (website), accessed June 3, 2020, https://www.zevstates.us/.
11 “Auto Retailing: State by State,” National Automobile Dealers Association, accessed June 3, 2020, https://www.nada.org/statedata/.
19F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
Within a few years, there
will be a competitively
priced BEV with a range
of 250 miles or more that
can substantially recharge
within 15 minutes. Add lower
maintenance costs and the
option of an electric vehicle
could be attractive for
many customers.
20F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
I M PA C T O F R E TA I L G A S O L I N E P R I C E S
Fuels Institute research has demonstrated that consumers are most focused on alternative-fueled vehicles
when retail gasoline
26.6
prices are
29.2
high. For
32.8
example,
35.8
during a39.4consumer survey in39.92014, when
41.4 41.2
gasoline
41.3
was $3.64
per gallon, 84% of consumers said they would consider a hybrid electric vehicle (HEV) for their next purchase.
Low Medium High Variation
However, during a survey in 2016, when gasoline was $1.74, only 44% of consumers said they would consider
an HEV. Likewise, HEVs garnered their greatest share (3.2%) of the LDV sales market in 2013 when the average
price of gasoline was $3.49, but that share dropped to 1.9% in 2016 when gasoline prices averaged $2.13.12
FIGURE 21: INTEREST IN HYBRID ELECTRIC VEHICLES AND GAS PRICES
Gasoline Price Consider HEV
100%
$3.50
80%
$3.00
$2.50
% Consider HEV
60%
Gas Price
$2.00
$1.50 40%
$1.00
20%
26.6 29.2 32.8 35.8 39.4 41.4 39.9 41.2 41.3
$0.50
Low Medium High Variation
2013 2014 2015 2016 2017
Source: Fuels Institute, PSB, OPIS
FIGURE 22: SALES OF HYBRID ELECTRIC VEHICLES AND GAS PRICES
10.36%
Average Gas Price Hybrid Sales
$4.00 42.94% 4.0%
$3.50 3.5%
$3.00 3.0%
$2.50 2.5%
% of Fleet Sales
Gas Price
$2.00 2.0%
$1.50 1.5%
$1.00 1.0%
$0.50 0.5%
2013 2014 2015 2016 2017 2018 2019
Source: OPIS, Wards Intelligence
12 Fuels Institute, Consumers and Alternative Fuels 2017, December 08, 2017, https://www.fuelsinstitute.org/Research/Consumers-and-Alternative-Fuels-2017.
21F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
FIGURE 23: GASOLINE AND DIESEL PRICES FORECAST
Gasoline
$4.00 Diesel Fuel
17%
increase
forcasted
$3.50
Retail Price
$3.00
$2.50
$2.00
2019 2020 2021 2022 2023 2024 2025 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Source: U.S. Energy Information Administration
Of course, market dynamics have evolved over the
past several years, and the attraction of electric
vehicles for current customers may not be directly
related to fuel prices. But if EVs are to gain a scale of
mass adoption, consumers will consider the retail
price of fuel as a metric in their search for their next
1980 1990 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2015 2017
vehicle. If the advancements in fuel efficiency result
in a drop in demand for liquid fuels as projected by
the EIA, then the impact on retail pump prices would
likely be to the advantage of consumers. EIA’s Annual
Energy Outlook 2020 projects that gasoline prices
could climb 16.5% and diesel fuel 18.0% by 2040,
putting gasoline at about $3.10 per gallon and diesel
at about $3.59. It is unclear whether these prices
will be sufficiently high to strengthen the appeal of
alternative powertrains like EVs.13
13 U.S. Energy Information Administration, Annual Energy Outlook 2020, January
29, 2020, https://www.eia.gov/outlooks/aeo/.
22F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
Conclusions
The future of transportation energy The pace of that transition, however, could be
accelerated through government policies that
will be a mix of different powertrains
drive adoption of new technologies, market forces
leveraging different sources of energy, that combine to reduce the cost of entry for new
the majority of which presumably technologies (such as fleets purchasing large
will be lower in carbon intensity and quantities of electrified vehicles), or fuel economics
compelling consumers to seek more efficient and
more beneficial to the environment.
lower cost mobility options.
But the transition to new powertrains
At the end of 2019, these accelerating factors were
or energy sources will take time. This
not wielding significant influence over the market,
is not due to opposition to such and the transition to alternatives beyond traditional
technologies or resources but because powertrains and liquid fuels was minimal. However,
the market is substantial, and it will there are signals that some fundamentals may
be evolving to create opportunities for the new
simply take time to transition.
technology to gain greater market share in the
coming years. It is a dynamic worthy of frequent
evaluation to better understand the market forces at
work, the trends affecting consumers and the data
that tells the true story of change.
23F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
About the
Fuels Institute
The Fuels Institute, founded by NACS in 2013, is a 501(c)(4) non-profit
research-oriented think tank dedicated to evaluating the market issues
related to vehicles and the fuels that power them. By bringing together
diverse stakeholders of the transportation and fuels markets, the Institute
helps to identify opportunities and challenges associated with new
technologies and to facilitate industry coordination to help ensure that
consumers derive the greatest benefit.
The Fuels Institute commissions and publishes comprehensive, fact-based
research projects that address the interests of the affected stakeholders.
Such publications will help to inform both business owners considering
long-term investment decisions and policymakers considering legislation
and regulations affecting the market. Research is independent and unbiased,
designed to answer questions, not advocate a specific outcome. Participants
in the Fuels Institute are dedicated to promoting facts and providing decision
makers with the most credible information possible so that the market can
deliver the best in vehicle and fueling options to the consumer.
For more about the Fuels Institute, visit fuelsinstitute.org
F U E L S I N S T I T U T E S TA F F
JOHN EICHBERGER AMANDA APPELBAUM
Executive Director Director, Research
jeichberger@fuelsinstitute.org aappelbaum@fuelsinstitute.org
JEFF HOVE D O N O VA N W O O D S
Vice President Director, Operations
jhove@fuelsinstitute.org dwoods@fuelsinstitute.org
FOR A LIST OF CURRENT FUELS INSTITUTE BOARD MEMBERS AND
FINANCIAL SUPPORTERS, PLEASE VISIT FUELSINSTITUTE.ORG
24F U E L S I N S T I T U T E | S TAT E O F T R A N S P O RTAT I O N E N E R G Y A N D V E H I C L E E L E C T R I F I C AT I O N
The Fuels Institute was founded in 2013 by NACS, the international
association that advances convenience and fuel retailing. Through
recurring financial contributions and daily operational support, NACS
helps the Fuels Institute to invest in and carry out its work to foster
collaboration among the various stakeholders with interests in the
transportation energy market and to promote a comprehensive and
objective evaluation of issues affecting that market and its customers
both today and in the future. NACS was founded August 14, 1961, as the
National Association of Convenience Stores and represents more than
2,100 retail and 1,600 supplier company members.
www.convenience.org
25(703) 518-7970 FUELSINSTITUTE.ORG @FUELSINSTITUTE 1600 DUKE STREET SUITE 700 A L E X A N D R I A , VA 2 2 3 1 4
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