Monday Chart
Monday 11 September 2023
EV sales in the United States are making their breakout move, having finally exceeded the key 5% market share level last year. Data also shows the broader vehicle market is now entering a fresh cycle, after 3-4 down years. Light-duty vehicle sales are up 11.7% through the first seven months of 2023, compared to last year. But EV sales are up an enormous 56% through the same period, and are on course to deliver 1.43 million units for full year 2023 compared to 0.918 million sold last year. That’s an advance of over half a million EV. Another useful benchmark is to compare this growth path to the leading edge EV market, California. The Golden State saw EV market share finally get above the key 5% as early as 2018; and this year is on course to see EV take a 25% share. When it finally happens, it happens fast.
In the chart, 2023 growth is simply projected forward based on the first seven months of data. Note also that ICE sales are on course to rise a little too, compared to last year, but will still be (just) below 14 million units. US ICE sales peaked at 17.3 million units in 2016.
The original Oil Fall forecast made in 2018 projected that eventually the US vehicle market would have a downcycle, and by the time the next upcycle began that EV would take all the marginal growth. And here we are. A factor in the surge is that the US market has been historically overweighted, and thus overdependent on Tesla offerings while other automakers tinkered around the edges. But model choices have also undergone a transition, with Volkswagen, Hyundai, GM and now Rivian getting into the action. A good example of poor strategy on the part of the US legacy automakers is the way in which GM killed the very popular PHEV, The Volt, in order to focus on a BEV, The Bolt, which (again at the height of its popularity) GM also killed but then simultaneously resurrected by reversing its decision. This kind of herky-jerky marketing has no doubt filled the EV marketplace with uncertainty. And that’s never helpful. Indeed, some of us are old enough to remember GM’s Mary Barra being hailed as a strategic genius.
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If you are thinking however that EV adoption alone will solve emissions in the US transport sector, well, that’s only true if we use the word eventually. Rapid EV adoption does get to work on the problem of oil demand growth, but without any policy action on existing ICE vehicles, years must pass before declines can appear. A concise way to think about this: if the US followed Europe and used two policies for EV and ICE, rather than just one for EV, we could move directly towards emissions declines in the transport sector this decade. But the US is afraid politically to undertake any new national ICE policy, so no matter how aggressive EV policy appears, transportation emissions declines are now pushed off into next decade, after 2030.
Global oil consumption is already being displaced by the sum total of EV now unleashed upon the world. This displacement curbs oil growth. It does not lead to oil consumption declines, yet. Work just released by BNEF, for example, claims that 1.5 million barrels a day (mbpd) of oil consumption have been displaced so far, with more to come. That is great news of course, as it means in our current 100 mbpd market, demand would be 1.5% higher without EV trucks, buses, cars, and 2-3 wheelers.
Just to remind: The current global oil demand forecast of The Gregor Letter is that consumption peaked above 100 mbpd in 2019, and that consumption will travel along that plateau for years, not declining or advancing, but instead oscillating 1% - 1.5% above and below that level. The global oil business is a no growth business now. It has been this way for several years; the industry is fully aware of it, and has been planning for it since last decade.
—Gregor Macdonald
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