An Overview of Vehicle Sales and Fuel Consumption Through 2025

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An Overview of Vehicle Sales and Fuel Consumption Through 2025 Tomorrow’s Vehicles An Overview of Vehicle Sales and Fuel Consumption Through 2025 Tomorrow’s Vehicles An Overview of Vehicle Sales and Fuel Consumption Through 2025 Executive Summary 2 Market Overview 4 Scope Methodology Findings 11 Gasoline and Ethanol Diesel and Biodeisel Electricity Hydrogen Natural Gas Propane Autogas Conclusion and Recommendations 19 About the Author 20 About the Fuels Institute 21 ©2017 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. Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 2025 1 Executive Summary Low oil prices resulting from a sustained global oversupply are likely to rise, as production must eventually subside to balance demand. The balancing process will likely play out for some time as new vehicle fuel efficiency improvements and alternative fuel vehicles (AFVs) make advancements to road transportation, oil’s largest market, limiting price gains from production constraints. Though low oil prices place downward pressure on alter- native fuels and fuel-efficient vehicles, growth of particular technologies in various vehicle segments will not likely abate. Both governments and consumers in major light duty and commercial vehicle markets have shown particular interest in electricity and natural gas, and automakers are responding accordingly. As a result, the energy supply chain for road transporta- tion in North America is quickly changing. Increasing vehicle fuel efficiency is limiting gains in gasoline and diesel fuel sales that might have been made through increasing vehicle This report seeks to provide a comprehensive analysis on registrations, while AFVs are creating opportunities for new the North American light duty and commercial vehicle mar- fuel retail business models and services. Navigant Research kets by projecting the diffusion of new fuel-efficient vehicles projects that alternative fuel light duty and commercial vehi- and AFVs within the North American vehicle fleets. Projec- cles in use will grow from 8.4% of the North American market tions on vehicle sales, registrations, fuel efficiency, and fuel in 2016 to around 11.4% by 2025 under the Base scenario consumption through 2025 are provided by vehicle class, conditions outlined in this report. powertrain technology, and supporting fuel. 2 FuelsInstitute.org chart 1.1 FFVs PHEVs NGVs 12.0% HEVs FCEVs PAGVs 10.0% BEVs 8.0% 6.0% 4.0% 2.0% 0.0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 editable 12.0% 10.0% FFVs PHEVs NGVs 8.0% HEVs FCEVs PAGVs 6.0% BEVs 4.0% 2.0% 0.0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Figure 1 Alternative Fuel Vehicle Share of Overall Vehicle Registrations by Powertrain, Base Scenario, North America: 2016-2025 12.0% 10.0% 8.0% 6.0% 4.0% (% of Vehicles in Use) 2.0% 0.0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 FFVs HEVs BEVs PHEVs FCEVs NGVs PAGVs (Source: Navigant Research) Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 2025 3 Market Overview The energy supply chain for road transportation in North increase fuel efficiency and reduce GHG emissions charac- America is changing quickly due to increasing vehicle effi- teristics of new vehicles, while RFS2 mandates blend levels ciency and new vehicle technologies that use alternatives to of biofuels within the transportation fuel pool. Additional gasoline and diesel. Spurred both by geopolitical and environ- mandates for zero emissions vehicles (ZEVs) are also found mental concerns, governments globally are seeking to reduce in 10 U.S. states. oil consumption through a number of policies targeting oil The U.S. federal government also subsidizes the purchase consumption in the transportation sector. of most alternative fuel vehicles (AFV), and a number of U.S. In North America, road transportation energy policy is state and local governments provide additional subsidies and largely influenced by the U.S. federal government corporate incentives for AFV owners. The Canadian national govern- average fuel economy (CAFE) and greenhouse gas (GHG) ment has aligned GHG emissions standards with U.S. CAFE emissions standards and the second renewable fuel standard and GHG standards; however, biofuel mandates and AFV (RFS2). CAFE and GHG standards mandate that automakers purchase subsidies vary by province. Despite strong government interest in AFVs, gasoline- and diesel-powered vehicles still lead U.S. and Canadian fleets. This is a function of a number of challenges AFVs must overcome to achieve market acceptance, with the biggest ob- stacle being consumer awareness and understanding of these new technologies. Other issues that also must be addressed include technology costs, operating costs, accessible infra- structure, vehicle capability, and automaker support. The severity of these challenges by technology depends on the vehicle type, class, and use case. 4 FuelsInstitute.org Figure 2 North American Vehicle Market Hierarchy (Source: Navigant Research) Scope The vehicle technologies evaluated in this report are This report provides a comprehensive analysis and projections listed in Figure 3 below alongside the fuels capable of pow- through 2025 of the North American light duty and commercial ering them. Technology and fuel pairing vary by vehicle class; vehicle markets by vehicle class, powertrain technology, and for instance, liquefied natural gas (LNG) is not consumed in supporting fuel. Figure 2 above demonstrates the hierarchy of light duty vehicle (LDV) or medium duty vehicle (MDV) con- market segmentation provided within this report, as well as ventional markets, and diesel is not consumed within the light the types of vehicles that belong within each vehicle segment. duty hybrid or plug-in hybrid markets. Figure 3 Vehicle Technologies and Fuels Vehicle Technology Fuel Conventional Gasoline or Diesel Flex Fuel Vehicle* Gasoline and all ethanol blends up to E85* Hybrid Gasoline or Diesel** Plug-in Hybrid Gasoline, Diesel, and Electricity Battery Electric Electricity Fuel Cell Electric Hydrogen Natural Gas CNG or LNG** Propane Autogas LPG * Light duty market only ** Commercial Market only (Source: Navigant Research) Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 2025 5 Methodology Navigant Research maintains a series of models to produce This Executive Summary and Overview provides a gen- global sales projections of major AFV technologies. Core ele- eral assessment of the vehicle market through 2025 by pow- ments from each of these models have been combined in two ertrain for North America and presents fuel consumption higher-level models that forecast the penetration of all AFV implications for each. Specific and more detailed analysis of technologies. One model produces sales projections for the the LDV and commercial vehicle markets and resulting fuel global LDV market, and the other for the commercial vehicle demand scenarios, for both the United States and Canadian market. markets, is presented in the companion publications, Part 1- The resulting sales forecasts by technology are then fed Tomorrow’s Vehicles: A Projection of the Light Duty Vehicle into an additional model that projects vehicle fleet sizes and Fleet Through 2025 and Part 2 - Tomorrow’s Vehicles: A Pro- fuel consumption. An overview of the core model elements jection of the Medium and Heavy Duty Vehicle Fleet Through that produce the Navigant Research projections for this 2025. report are provided in the influence diagram below. Figure 4 Alternative Fuel Vehicle Penetration Model Influence Diagram Government Policy Vehicle Roadmap Vehicle Sales Vehicle Life Technology Costs Net Outlay Consumer Choice Alt. Fuel Prices Operating Costs Utility/Capability Vehicles in Use New Vehicle Average in Use Oil Prices Fuel Efficiency Vehicle Efficiency Major Inputs Midstream Calculations Vehicle Fuels Report Outputs Utilization Consumption (Source: Navigant Research) 6 FuelsInstitute.org Scenarios For the purposes of this report, Navigant Research created two scenarios, Base and Aggressive, by modifying the follow- ing core model inputs: oil prices and lithium ion (Li-ion) bat- tery prices (an element within technology costs). In the Base scenario, Navigant Research predicts oil prices will remain low in 2016 and rise slightly in 2017 as oil producers gradually trim production levels—from 2017 through 2025, the price of oil is expected to rise gradually but is not expected to surpass $80/barrel. In the Aggressive scenario, prices are forecast to rise more sharply in 2017 to almost $80/barrel and then continue to rise modestly to nearly $110/barrel in 2025. Price increases in oil positively affect all AFV technologies, which are assumed to have rel- atively stable but rising costs throughout the forecast period. Oil price increases also have a marginally negative effectchart on 2.1 average LDV travel and the penetration of light duty trucks within the light duty market. Figure 5 Oil Prices by Scenario, World Markets: 2016-2025 $120 Aggressive $100 Base $80 $60 ($/Barrel) $40 $20 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 (Source: Navigant Research) Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 2025 7 editable 120 Aggressive 100 Base 80 60 40 20 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 chart 1.1 0% -10% Aggressive Base -20% -30% -40% -50% -60% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 editable 0% -10% Aggressive Base -20% Li-ion-30% battery packs make up a significant portion of plug- in electric vehicle (PEV) costs. Li-ion cell prices have wit- nessed sharp declines over the last decade due in large part to -40% the growth of mobile electronic devices.
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