Electric car sales predictions are all over the map

Electric car sales predictions are all over the map

Are electric cars poised to accelerate in sales? Or will will they be stuck in neutral? Recent forecasts have swerved all over the map.

The latest forecast comes from the Energy Information Administration (EIA) in its "Annual Energy Outlook 2017." Each year's "Outlook" is the government's most influential forecast of U.S. energy markets, aiming to predict what would occur under existing policies as technologies continue to evolve.

Previous "Outlooks" had expected electrics to remain a tiny share of U.S. vehicle sales for decades to come. The new "Outlook" foresees a brighter future for electric vehicles, with annual sales topping 1.2 million cars by 2025 plus an additional 186,000 light trucks. That's nearly double its forecast from last year, and nearly 10 times its forecast from 2014.

The predicted mix of electric cars has shifted sharply as well. In 2014, the EIA predicted plug-in hybrids, capable of running on electricity or gasoline, would dominate the electric vehicle market well into the 2030s. Now, the EIA expects fully electric cars with at least 200-mile range to lead the way.

The shifting forecasts are driven by dramatic revisions in expected costs. The EIA now expects long-range fully electric compact cars to cost $35,200 in 2025, down sharply from the $45,800 it predicted in last year's Outlook.

But the EIA's cost estimates have probably not fallen far enough. Chevy has already debuted its fully electric Bolt, with an estimated 238-mile range, for under $38,000. As battery costs continue to fall, Chevy, Tesla and Nissan all plan to sell fully electric cars for about $30,000 within a few years. Yet the EIA doesn't expect inflation-adjusted prices to fall that low until after 2050.

Could the EIA's price forecasts really be three decades behind the curve? The Outlook appears to overestimate electric car costs near-term, and then expects them to fall less than 1 percent per year for decades to come. Others expect prices to fall far more sharply as battery technologies improve.

The latest Outlook puts electric vehicles at just 8 percent of U.S. sales in 2025. The EIA forecasts electric vehicle sales would stall from there, as scheduled tightening of federal fuel economy standards comes to an end. Those standards provide automakers with bonus treatment for electric car sales that makes it easier to meet their overall corporate fuel economy requirements.

This creates the perverse effect that electric car sales can actually increase fuel use and emissions from the overall fleet for now.

Underpredicting the future of electric vehicles could have huge implications for auto markets and beyond. An 8 percent market share would be a huge step up from 1 percent today. But it's not nearly enough to reshape an auto market that for a century has depended upon burning petroleum-based fuels in internal combustion engines.

Other forecasters foresee a far different future for electric vehicles. Bloomberg New Energy Finance expects electric vehicles to represent 35 percent of new car sales globally by 2040. Greentech Media Research expects 11.4 million electric vehicles on the road in the U.S. in 2025, compared to 7.5 million in the EIA's latest Outlook.

Policies for electric vehicles in other countries could accelerate those global trends. China aims for new-energy vehicle sales to top 3 million per year by 2025, dwarfing the U.S. projection. Germany, India, Norway and the Netherlands are all considering electric vehicle mandates by 2025 or 2030.

This could leave the U.S. behind as a laggard in adopting cleaner vehicle technologies.

For now, the ability of electric cars to reduce climate warming emissions is small, since much of the electricity still comes from fossil fuels. However, the White House strategy for deep decarbonization by 2050, released in November, envisions decarbonizing the electric grid while electrifying everything possible. Electric vehicles are a crucial component of that vision, as plunging costs for wind and solar make a greener grid far more feasible.

Electric vehicle forecasts are crucial to oil markets as well. Both the EIA and the International Energy Agency anticipate that oil demand will continue to rise into the 2040s. However, faster adoption of electric vehicles could enable oil demand to peak within five to 15 years, according to Shell.

With the EIA's multidecade outlooks of electric car sales soaring by a factor of eight in just three years, there is little reason to believe that forecasts will stabilize soon. If electric car prices fall faster than EIA projects, sales will likely far exceed expectations. That could bring a bumpy ride to oil producers and automobile manufacturers after a century of dominance for oil-fueled vehicles.

Only time will tell the true future of electric car sales. As Yogi Berra noted, "It's tough to make predictions, especially about the future." But the latest Outlook highlights the need for alternate scenarios to consider a future with far lower electric car prices than currently forecast.

Until then, we'll be driving blind in predicting the future of auto markets, oil and climate-warming emissions.

Dan Cohan is an associate professor in the Department of Civil and Environmental Engineering at Rice University.

The views expressed by contributors are their own and not the views of The Hill.

Original Article thehill.com

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