The electric vehicle market is tiny, but it's created some very big questions about the future of gasoline demand.
Morgan Stanley analysts Wednesday issued a forecast for global miles driven rising to 32 trillion by 2030, up from 11 trillion currently, with emerging markets a big driver of the growth. They say that forecast is not only bullish for electric cars and light trucks, but also for gains by gasoline-fueled vehicles.
For example, they expect China, the largest and fastest adapter of electric vehicles, to increase miles traveled to nearly 9 trillion by 2040, up from 1.5 trillion currently.
"Even allowing for an aggressive penetration of EVs, we forecast gasoline demand for light vehicle transport to roughly triple by the mid-2030s before beginning a slow decline," the Morgan Stanley analysts wrote. "It's little wonder why the Chinese government is so focused on encouraging the development of a sustainable electric transport ecosystem on the grounds of energy security and environmental sustainability."
Electric cars and light trucks, including hybrids, in the last year displaced only about 50,000 barrels a day of oil in a world that is using 100 million barrels a day for the first time this year, according to IHS Markit. That's small, but energy experts say when combined with other trends, like fuel economy standards, the reduction in oil demand will start to add up.
"We have [electric vehicles] going up to be 30 percent of new car sales by 2040 from 1 percent now," said Jim Burkhard, who heads oil research and energy and mobility research at IHS Markit. Last year, he said there were 2.8 million electric cars on the road compared to 1.5 billion oil fueled vehicles, and the electric vehicles could reach 36 million by 2025.
"Each year it will impact more and more…There's no doubt about that but the bigger demand story is fuel economy. EVs on their own are not disruptive," he said. He said the fuel efficiency efforts around the world alone should result in savings of 18 million barrels a day of fossil fuels by 2040.