HOUSTON -- Assuming that Tesla’s Model 3 and other mass-market electric vehicles (EVs) take off—really take off—gasoline demand could drop by up to 20% within less than two decades.
That’s the finding of a new report by Houston-based Wood Mackenzie, a provider of market intelligence to the energy, mining and metals industries. Analysts modeled a few different scenarios of EV adoption, ranging from modest to aggressive. All of the models suggest some erosion in gasoline demand.
“Our study and modeled scenarios identify signals of a possible disruption,” said Prajit Ghosh, Wood Mackenzie’s research director for Americas power and renewables, in a statement. “This disruption would not be a result of the Tesla Model 3 alone, [but] rather its role as a catalyst for wider growth in electric-car production by other manufacturers, which is already happening.”
Tesla 3 (above), available in late 2017, has 215 miles of range and starts at $35,000 (before any state or federal EV incentives). Chevrolet’s 2017 Bolt, which will have an estimated range of more than 200 miles and a pre-incentive price tag starting at $30,000, will be available in late 2016. Other automakers, including Volkswagen, Nissan, Hyundai, Ford and Volvo, are making their own pushes into the EV market.
“The Model 3 is planting a flag,” Ghosh told TheWallStreetJournal. “With time, it has the potential to be a disruptive force in the market.”
Wood Mackenzie analysts considered a few scenarios to determine the possible implication of growing EV market share on gasoline demand. They include a 2016 first-half base case in which gasoline demand falls from its current 9.3 million barrels per day (bpd) to 6.5 million barrels per day (bpd) by 2035, with EVs responsible for a 5% or 300,000-bpd drop. In this “more likely” scenario, EVs, including the Chevy Bolt shown above, would gain more than 10% share of the U.S. fleet by 2035.
A more aggressive EV adoption scenario models a 350,000-bpd decline to settle at 1 million bpd of demand by 2035, or a 5% to 15% decrease off the base-case scenario. This would fast-track growth in power demand by two to four years, which Wood Mackenzie analysts described as “significant for a market that has seen no load growth in the past seven years.”
In the most aggressive scenario, EVs (Nissan Leaf, above) make up all new car sales and command more than 35% of market share. This would chop gasoline demand up to 2 million bpd by 2035 vs. base-case levels. It also assumes that EV manufacturers such as Tesla are able to introduce mass-market models on schedule.