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Electric Vehicles, Oil Demand and a Challenge to Cathie Wood

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Electric Vehicles, Oil Demand and a Challenge to Cathie Wood


Enersection revised its U.S. EV penetration and oil demand model in response to Cathie Wood tweeting oil demand forecastsWe likely previously underestimated the impact of EV penetration on oil demand2022 oil demand for gasoline and diesel usage was roughly 12 million barrels per day in the U.S. - we see that declining to 10.8 million barrels per day to 11.8 million barrels per dayOil demand for gasoline and diesel production will decline 2.5% to 10.5% between now and 2031We provide the model, show you our numbers and challenge Cathie Wood to show us hers

How Much Do EVs Impact Oil Demand Anyway

Cathie Wood, the founder and CEO of ARK Invest, recently Tweeted that electric vehicles "will continue to destroy oil demand."  We decided to revisit prior work in order to scrub our numbers, which previously showed no such oil demand destruction.

While working through our U.S. gasoline and diesel demand model, we did realize the assumptions should be improved to be more robust and defendable. More specifically, the build-up was changed to a manufacturing and sales driver rather than existing fleet growth.

Our prior method likely understated oil demand destruction from EV penetration, but even with the new methodology there is no material oil demand 'destruction.'  In our revised base case, oil demand drops from 12 million barrels per day for associated gasoline and diesel demand in 2022 to 11.5 million barrels per day in 2031.

Hardly material 'destruction' by 2031 even if we admit the trend isn't the friend of oil demand in any of the cases shown.  

U.S. Backdrop

Full battery electric vehicles (BEV) continue to be the primary driver of U.S. EV growth, far outpacing hybrids.  Approximately 900,000 BEV and Plug-in Hybrid Electric Vehicles (PHEV) sold in the U.S. in 2022.

Growth rates have moderated significantly since 2021.

U.S. EV Sales & Sales Penetration

Light-duty vehicle (LDV) fleet sales in the U.S. are roughly 15 million vehicles per year, approaching 60% of LDV sales by 2031 compared to 6.6% in 2022 is aggressive, in our opinion.

U.S. EV Fleet

Even at 60% penetration of sales by 2031, only 15% of the U.S. fleet will have converted.  In the base case, only 10% of the U.S. light-duty vehicle fleet has converted to electric.  

It should be noted the U.S. LDV fleet has grown at a 1.6% five-year compounded growth rate.  We could be understating gasoline and diesel demand by only modeling only 1% going forward.

Disagree with the fleet growth assumption?  Want to play around with our numbers or assumptions?  Here is the model.

We showed you our numbers Cathie.  Show us yours.  We challenge you to a debate on U.S. oil demand between now and 2030.