PHEVs: Opportunity or Distraction?

While it may be possible for Plug-in electric vehicles (PHEVs) to reduce oil imports, the real question is, how quickly can they do so?

Will it take decades for PHEVs to have any significant impact on oil usage? Or can they cut oil usage more quickly?

A recent article based on data supplied by Pike Research said there would be 841,000 PHEVs on the road in the United States by 2015. This is an impressive number considering sales of PHEVs won’t start in earnest until 2012.

This is against a backdrop of approximately 237 million light vehicles on the road today. Therefore, according to Pike Research, PHEVs will represent about one-third of one percent (0.36%) of the light vehicles on the road in 2015; obviously, an insignificant number of vehicles in so far as oil usage is concerned. Light vehicles include cars and SUVs.

So what will it take to cut oil usage by around 30%, or about 2.5 million barrels per day?

Roughly speaking, it would require that 71 million vehicles (30% of total on the road) are PHEVs (or EVs), assuming PHEVs always used battery power and didn’t use any gasoline. No one believes this to be possible.

More realistically, if PHEVs used batteries for half the miles driven, it would require 142 million PHEVs to achieve a reduction of 2.5 million barrels per day (assuming no increase in the number of vehicles on the road.)

According to Pike Research, PHEV sales will be approximately 65,000 units in 2011 and 272,000 in 2015. Using this data it’s possible to extrapolate how long it would take before 142 million vehicles were PHEVs.

The average growth rate for PHEVs between 2011 and 2015, according to Pike Research, was around 70% per year. Using the 70% growth rate, it would take until 2030 before there were 142 million PHEV vehicles on the road. But this would require that PHEVs were 1/3 of all new car sales by 2020, which isn’t likely, and would require that 100% of new car sales of 15 million be PHEVs by 2023 – something that is virtually impossible.

I realize that the math is boring, but please stay with me. If not, jump to the last three paragraphs to see my conclusions – then return here, if you want, for the facts supporting the conclusion.

While it’s very possible that there will be a total of 841,000 PHEVs sold in the United States by the end of 2015, it’s very unlikely that sales will continue to increase at such a rapid rate. A sales growth rate of 30%, let alone 70%, would be remarkable.

Using a sales rate of 30% after 2015, it wouldn’t be until 2036 before 142 million cars were PHEVs – but this is hardly possible since it requires that 100% of new car sales of 15 million be PHEVs beginning around 2031.

These are back of the envelope rough estimates, but I did a more thorough computer projection four years ago that reached the same conclusion. It wouldn’t be until around 2050 that PHEVs would substantially reduce oil consumption.

The computer projection done four years ago accounted for increased sales due to population growth, the scrapping of vehicles after they were 15 years old, and assumed gasoline mileage for PHEVs of 100 mpg, with PHEV sales capped at 80% of total new car sales.

Specifically, the computer projection resulted in there being 320 million vehicles on the road in 2050; that oil consumption wouldn’t start to decline until 2038 and we would still be consuming 4 million barrels of oil every day in 2050.

An important variable in the computer projection is whether we would reach 320 million vehicles on the road in 2050, though that would reflect the same per capita percentage of vehicle ownership that has existed in recent history.

The point of this exercise is to highlight that it will be several decades in the future before PHEVs, assuming people buy them, can significantly cut oil imports.

If PHEVs can’t cut oil usage by any significant amount until decades from now, it means we must continue to explore and develop oil resources in the United States.

It also means it’s a serious mistake to base our energy policy on the assumption that PHEVs or EVs can significantly cut oil imports.

0 Replies to “PHEVs: Opportunity or Distraction?”

  1. I don’t think there are 227M vehicles on the road. That would imply that the average car on the road is 15 years old (as we have only be selling 15M cars per year) and that a cars useful life is over 30 years. Today we consume around 125B gallons of gasoline a year. So even if the 22M were true was the case the vast majority of vehicles (with low gas mileage) would be retired over the next 10 years.

    A different way to look at this issue is 814k of new cars sales would represent around 8% of car sales in 2015. With improvements in battery performance and mandates to raise fuel economy PHEV verhicle sales could reach 50% of sales by 2025. Assuming a cars useful life is 15 years by 2025 about 30% of all vehicle would be PHEV and assuming 70% of drivetime is on electricity, PHEV could potential reduce gasoline consumption by 20% or 28B gallons. In combination with biofuels (target of 36B) could reduce consumption by total of 64B gallons or 50% of current gasoline consumption.

  2. Thanks for your comment, however here are my thoughts:
    In 2008 there were 238,314,692 cars, SUVs and pick-up trucks on the road according to the Bureau of Transportation Statistics. A few of these may be vans rather than SUVs.
    Your hypothesis assumes a 25% annual growth rate, which is not impossible, but not likely for cars that have a $10,000 cost premium. Maybe the cost premium is reduced over time, but it’s not likely to get below $5,000.
    Cumulative sales with a 25% growth rate would equal 34,648,829 vehicles, which is 14.5% of the cars currently on the road, not 30%
    If 70% of drive time is on electricity, then about 9.5% less oil would be used, not 20%.
    In so far as biofuels are concerned, I doubt we will use anywhere near the amount you suggest. Biofuels is another complex subject, but for starters scroll down on the Power America blog and read the article: What happened to biodiesel?
    Anything is possible with PHEVs, but I doubt they will accomplish very much in the way of savings of oil until mid century, assuming people buy them.

  3. Great question.
    We get 50% of our electricity from coal-fired power plants and 20% from natural gas fired power plants.
    PHEVs will not, therefore, reduce CO2 emissions by any significant amount.
    The book Carbon Folly goes into greater detail.
    For more information go to http://www.carbonfolly.com

  4. Pingback: October 2010 « Pike Research

Leave a Reply

Your email address will not be published. Required fields are marked *

*