EVs - Big Numbers, Hard Math

Preview of some numbers we are modeling

EVs - Big Numbers, Hard Math
We've been building a U.S. Power model, sensitizing Inflation Reduction Act spending with power capacity and generation

Part of the goal is to model out power generation demand from EVs and while we are at it, measure the flip side of EV penetration growth - forward gasoline demand

State level gasoline and diesel demand data suggests U.S. fuel growth has been uneven, explained by economic differences, EV penetration rates and population growth, among other items

The math to allow EVs to move U.S. gasoline demand materially appears hard

Data Preview

Despite the push in Europe, the U.S. and elsewhere to accelerate the renewable movement and step on the pedal of the green transition, the U.S. currently finds itself beholden to tight global gasoline and diesel markets.  Refining cracks and diesel cracks in particular are at record high levels.

As we dive into a U.S. Power model, the data allows us to think about how EVs impact power generation and U.S. gasoline demand.

Some of the data

U.S. gasoline gallons sold the last ten years have grown by just 0.34% per annum.  18 states have seen negative cumulative gasoline growth the last decade.

Diesel demand has grown at a much healthier 2% rate, with 45 of 50 states showing positive 10-year growth.

We plotted U.S. refining growth vs gasoline and diesel demand growth to highlight the difference isn't material.

Total gasoline and diesel demand versus net petroleum product exports tells a different story.  State level growth can't even be distinguished with the scale of export growth dwarfing domestic demand growth.

2021 U.S. state EV penetration rates were used to determine if there was any relationship to gasoline gallons sold - does higher EV penetration equal lower gasoline demand.

There appears to be a relationship, with many of the higher penetration states in the negative 10-year growth shading.

Now for the punch line

The U.S. light vehicle fleet is 270 million vehicles strong.  U.S. EV and PHEV vehicles will total just over 3 million registrations this year, with an estimated 850,000 new EV/PHEV registrations.

The U.S. electric vehicle fleet approaches 21 million vehicles in 2031 on our fairly aggressive assumptions.

If we assume 1% U.S. fleet growth and just under 25% annual growth for the EV fleet, EV penetration doesn't reach 6% until 2031+.

The law of large numbers is in play with EV math.  It is simply hard to move the needle quickly.  Using miles traveled and gasoline sold data we can estimate future gasoline demand.  

Perhaps surprisingly, gasoline demand barely drops despite an aggressive EV build-out.

As we'll discuss in future work, change is hard.  Change of the scale needed to retool the U.S. power stack is really hard.  EV penetration won't significantly alter transportation emissions over the next decade, in our opinion.  Green power does appear poised to continue to take share from fossil fuels, however, and power markets appear to be the easiest place to target emissions between now and 2030.