Wood Mac: U.S. gasoline demand to fall due to electric vehicles
HOUSTON – A new report from Wood Mackenzie suggests that the U.S. gasoline demand will fall decline 5% to as much 20% by 2035 due to increasing use of electric cars.
The U.S. currently consumes gasoline at the rate of about 9 MMbopd. According to the report, if electric cars gain more than 35% market shares by 2035, the U.S. could see a drop in gasoline consumption to as little as 2 MMbopd.
Positive trends contributing to the rise of electric cars are more stringent air pollution regulations that are difficult to meet through internal combustion engines. The market share for electric car remains miniscule due to low gasoline prices and short battery life.
Tesla’s decision to build the Model 3 by 2017, with a sticker price of $35,000 mileage range of over 200 miles before recharging, promises to be a gamechanger. The other automobile manufacturers have announced competing models. For example, Ford Motor has announced plans to spend $4.5 billion to produce 13 different electric vehicle models.
The vehicle market is about 675 million in 2015. This market is expected to grow to over 700 million by 2025. The market in advanced economies is flat, but the market in emerging countries nearly quadruples from 15 million to almost 60 million in the next decade. If over the next 10 years, electric car manufacturers can drop the price of a 200-mile range vehicle to $25,000, its market potential expands to almost 750 million drivers.
On the positive side for the fossil fuel industry, the report concludes that the rising use of electric cars will lead to greater consumption of natural gas for electric power generation.
Tesla’s decision to build the Model 3 by 2017, with a sticker price of $35,000 mileage range of over 200 miles, promises to be a gamechanger.