IHS Markit: GM announcement latest sign that peak gasoline demand from light vehicles has already come and gone
18 February 2021
The recent announcement by GM that it aspires to phase out sales of oil-powered light vehicles (LVs) by 2035 (earlier post)—part of a broader proposal to make the automaker a net-zero-carbon company—is a prominent signpost that oil demand from LVs has already peaked, according to a new analysis by Jim Burkhard and the IHS Markit Crude Oil Market Service.
IHS Markit places the global peak for oil demand (gasoline and diesel) from LVs in 2019 when the demand averaged 29.1 million barrels per day (MMb/d). Demand peaking is due to the impact of rising vehicle fuel economy and emission standards, and as time goes by, from more sales of electric vehicles.
The GM announcement is a notable signpost on the road to decarbonization of road transportation. It demonstrates growing acceptance of tighter vehicle emission standards and of the energy transition beginning to move at a faster pace. When it comes to oil demand from light vehicles, it’s the latest sign that the 2019 peak is permanent.
—Jim Burkhard, vice president, oil markets and mobility and energy future, IHS Markit
For the oil market, what matters is the amount of demand that will be displaced by electricity.
Previous IHS Markit research has projected that electric vehicles (including battery, plug-in hybrid and fuel cell electric) will comprise 60-80% of all new car sales in 2050 (compared to just 2.2% of new car sales in 2020, according to IHS Markit data).
Nevertheless, oil will still be the dominant energy source for transportation for years to come due to the sheer size of the global car fleet and the amount of time it takes for it to turn over.
In 2020, there were about 9.2 million light plug-in electric vehicles (PEVs) in the global light vehicle fleet. When you include 20,000 fuel cell electric vehicles, these vehicles displaced about 150,000 barrels per day (b/d) of oil consumption—less than 0.2% of world consumption. When you include electric city buses and two-wheelers, the amount of oil displaced by electric vehicles totals 370,000 b/d, or just 0.4% of world oil demand in 2020.
By 2020 electricity use in road transportation had only displaced about 370,000 b/d of oil demand—0.4% of world oil consumption. But it is clear that this will rise. By 2025, as much as 1.5 MMb/d of oil wil be displaced.
—Jim Burkhard, vice president, oil markets and mobility and energy future, IHS Markit
The amount of oil displaced by electricity will continue to rise, led by growth in PEV sales. IHS Markit estimates that by 2025 light PEVs will displace about 0.9-1.1 MMb/d of world oil demand. Adding in electric buses and two wheelers, oil displacement by electricity in road transport could hit 1.5 MMb/d—the equivalent of 1.4% of what IHS Markit projects for total world oil demand in 2025.
That much displacement—while still relatively small—is significant in the sense that oil-powered LVs were the biggest source of aggregate oil demand growth from 2000 to 2019. Increased electrification, along with rising fuel economy and emissions standards, will play an important role in the plateau and then decline of world oil demand that IHS Markit expects to emerge at some point over the next 10-15 years in its base case outlook.
The GM announcement is the latest piece in a much larger story. It’s further proof that, while the road ahead is still a long one when it comes to dislodging oil as the predominant transportation fuel, it is very much a one-way street and there is no turning back.
—Fellipe Balieiro, director, mobility and energy future, IHS Markit
These linear extrapolation projections will probably be completely wrong in predicting the S curve disruption.
Posted by: GdB | 18 February 2021 at 10:57 AM
I thought IHS were reputable market analysts.
If you were, you would realize a few simple points.
1) LCA lifetime CO2 analysis of BEVs, their LiBs, mining to LiB manufacturing, to vehicle manufacturing, to lifetime vehicle emissions, to scrap smelting have illustrated only modest 6% BEV lifetime CO2 reduction vs same vehicle in std ICE configuration. Of course this analysis is skewed showing 1 BEV, which lasts only 10-years 200,000 km (124k miles) lifetime vs an ICE at the same 200,000 miles. The flaw in these analysis are that ICE vehicles, especially the Volvo XC40 expected lifetime is 20 years 400,000 km. Revising the LCA lifetime CO2 emissions to compare two BEVs with 200,000 km lifetime versus one ICE at 400,000 km puts the ICE in a clear winning position emitting 26% less than the BEVs. This is recharging with the average global power grid of today. In future years with higher renewables, the gap narrows. Message 1) BEVs are not Zero Emmisiion, and in true full lifetime, lower emission than short life BEVs.
2) Li Ni Co V mineral requirements to scale full BEVs like Zero Emission Mandates countries have demanded, ban not only ICE vehicles but hybrids and PHEVs with small LiBs too. The net effect of this ridiculous move is to force more large LiB BEVs with an average 75-85kW LiB, weighing 1,200 pounds each. The sheer mineral requirements to scale from today’s 2.3M BEVs + 2M hybrids + 0.5M PHEVs ( or more simply 200 GW) of LiBs to meet the global zero vehicle emission pledges is 15TWs of LiBs. That’s a scale of 60x from today in terms of Li, Ni, Co, V etc. run the analysis, like analysts are supposed to be capable of and realize your article claims ICE is dead are ridiculous.
ICE peak likely will be 2030 FYI. The worlds largest PGM and Ni mining companies both agree with me on this.
3) Before you go claiming FCEVs can help fill the zero emission needs, stop and look at the platinum loadings vs today’s auto catalyst. Let me help you. The lowest Pt loadings FCEV is the Toyota Mirai which today uses 80x the Pt in the gas ICE vehicle catalytic converters. FCEVs use 5x the Pt in the diesel LDV vehicle, and 8x the Pt as in the HDV Diesel vehicle. There is only enough Pt for about 1 million Toyota Mirai’s a year. Future design thrifting will improve, but not resolve these gaps. Note I ran Biz Dev fir the world biggest Pt FC Catalyst provide, I know this space.
So go kill the ICE in your misguided article, or go play analyst IHS and figure this out yourself. We are going to have to go mine the planet to electrify everything, and it’s contribution to lowering emissions is negligible. Other than that it was a great article.
Posted by: Matt Watson | 18 February 2021 at 07:54 PM