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IEA World Energy Outlook view on the transport sector to 2035; passenger car fleet doubling to almost 1.7B units, driving oil demand up to 99 mb/d; reconfirming the end of cheap oil

Change in primary oil demand by sector and region in the central New Policies Scenario, 2010-2035. WEO 2011. Click to enlarge.

The International Energy Agency (IEA) last week launched the 2011 edition of the World Energy Outlook (WEO), the current edition of its annual flagship publication assessing the threats and opportunities facing the global energy system out to 2035. At a high level, the report notes that there are few signs that the urgently needed change in direction in global energy trends is underway.

Under the WEO 2011 central scenario, oil demand rises from 87 million barrels per day (mb/d) in 2010 to 99 mb/d in 2035, with all the net growth coming from the transport sector in emerging economies. The passenger vehicle fleet doubles to almost 1.7 billion in 2035. Alternative technologies, such as hybrid and electric vehicles that use oil more efficiently or not at all, continue to advance but they take time to penetrate markets.

Without a bold change of policy direction, the IEA warned at the launch, the world will lock itself into an insecure, inefficient and high-carbon energy system. While there is still time to act, the window of opportunity is closing.

Although the recovery in the world economy since 2009 has been uneven, and future economic prospects remain uncertain, global primary energy demand rebounded by a remarkable 5% in 2010, pushing CO2 emissions to a new high. Subsidies that encourage wasteful consumption of fossil fuels jumped to over $400 billion. The number of people without access to electricity remained unacceptably high at 1.3 billion, around 20% of the world’s population. Despite the priority in many countries to increase energy efficiency, global energy intensity worsened for the second straight year. Against this unpromising background, events such as those at the Fukushima Daiichi nuclear power plant and the turmoil in parts of the Middle East and North Africa (MENA) have cast doubts on the reliability of energy supply, while concerns about sovereign financial integrity have shifted the focus of government attention away from energy policy and limited their means of policy intervention, boding ill for agreed global climate change objectives.

—WEO 2011

The WEO analysis includes three global scenarios and multiple case studies:

  • The New Policies Scenario—the central scenario for this WEO—assumes recent government policy commitments will be implemented in a cautious manner, even if they are not yet backed up by firm measures.

  • The Current Policies Scenario assumes no new policies are added to those in place as of mid-2011, and is used as a basis for comparison with the New POlicies Scenario.

  • The 450 Scenario works back from the international goal of limiting the long-term increase in the global mean temperature to two degrees Celsius (2 °C) above pre-industrial levels, in order to trace a plausible pathway to that goal.

The wide difference in outcomes between these three scenarios underlines the critical role of governments to define the objectives and implement the policies necessary to shape our energy future.

—WEO 2011

Under the New Policies Scenario, primary energy demand increases by one-third between 2010 and 2035, with 90% of the growth in non-OECD economies. China consolidates its position as the world’s largest energy consumer: it consumes nearly 70% more energy than the United States by 2035, even though, by then, per capita demand in China is still less than half the level in the United States.

Under the central New Policies Scenario, automotive sales in non-OECD markets exceed those in the OECD by 2020, with the center of gravity of car manufacturing shifting to non-OECD countries before 2015.

The share of fossil fuels in global primary energy consumption falls from around 81% today to 75% in 2035. Renewables increase from 13% of the mix today to 18% in 2035; the growth in renewables is underpinned by subsidies that rise from $64 billion in 2010 to $250 billion in 2035, support that in some cases cannot be taken for granted in an age of increasing fiscal austerity. By contrast, subsidies for fossil fuels amounted to $409 billion in 2010.

Short-term pressures on oil markets are easing with the economic slowdown and the expected return of Libyan supply. But the average oil price remains high, approaching $120/barrel (in year-2010 dollars) in 2035. Reliance grows on a small number of producers: the increase in output from Middle East and North Africa (MENA) is over 90% of the required growth in world oil output to 2035. If, between 2011 and 2015, investment in the MENA region runs one-third lower than the $100 billion per year required, consumers could face a near-term rise in the oil price to $150/barrel.

Oil and the Transport Sector: Reconfirming the End of Cheap Oil

World transportation oil demand by mode in the New Policies Scenario. Click to enlarge.

Demand. The outlook for oil demand differs sharply between the three scenarios, primarily as a result of the different assumptions about government policies, such as fuel efficiency standards, removal of end-user subsidies and support for alternative fuels, and the extent to which they succeed in curbing oil demand.

  • The Current Policies Scenario sees oil demand reaching 107 mb/d by 2035, a 24% increase over 2010 levels, or an average annual increase of 0.8%.

  • The New Policies Scenario sees oil demand reach 99 mb/d by 2035, a 15% increase over year 2010 levels (0.5% per year).

  • In the 450 Scenario, oil demand falls between 2010 and 2035 as a result of strong policy action to limit carbon-dioxide (CO2) emissions; oil demand peaks before 2020 at just below 90 mb/d and declines to 78 mb/d by the end of the projection period, over 8 mb/d, or almost 10%, below 2010 levels.

The transport sector—which depends almost entirely on oil products, with 93% of all the fuel used in the sector being oil-based in 2010—remains the main driver of global oil demand as economic growth increases demand for personal mobility and freight. Transport oil demand reaches almost 60 mb/d in 2035, a growth of about 14 mb/d over 2010 levels, outweighing a drop in demand in other sectors.

World PLDV oil demand in the New Policies Scenario. Click to enlarge.

Road transport. Road transport will continue to dominate total oil demand in the transportation sector. In the New Policies Scenario, road transport is responsible for about 75% of global transport oil demand by 2035, down only slightly from 77% in 2010. Oil demand for road freight grows fastest, by 1.7% per year on average, despite significant fuel-efficiency gains.

Passenger light-duty vehicles (PLDVs) remain the single largest component of transport oil consumption, although shrinking from about 45% share today to 39% by 2035. This trend is driven by major improvements in fuel economy in many countries, especially in the largest car markets in the United States, China, Europe and Japan.

Increased use of alternatives to oil-based transport fuels (gasoline, diesel and LPG) also help to temper oil-demand growth, though to a much smaller degree than efficiency gains in vehicles with internal combustion engines. Biofuels make the biggest such contribution, as use grows from 1.3 million barrels of oil equivalent per day (Mboe/d) today to 4.4 Mboe/d in 2035, an annual rate of increase of 5%. The share of biofuels in total transport fuel demand rises from less than 3% today to just above 6% by 2035. Although biofuels are mainly used in the road transport sector, the aviation industry has recently done several tests on aviation biofuels and, if large-scale projects were successfully implemented, aviation demand could increase strongly.

Natural gas also plays a growing role in the transport sector, its share rising from 3% to 4%. The use of natural gas grows most in road transport, where its share rises from 1% to 3%. Currently the dominant use of gas in the transport sector is in gas compression for pipeline transport and distribution. While the economic case for natural gas vehicles is often promising, for example in the United States, there is often a lack of the policy support needed for a more significant uptake. Electricity use is mainly confined to the railway sector in the New Policies Scenario. Electricity makes only minor contributions to the road transport energy mix, but the share of electricity in total transport fuel demand grows from 1% today to about 2% in 2035.

While theoretically many options exist for replacing oil-based fuels in road transport, for various reasons none of the potential candidates and technologies has so far grown out of niche markets. There are barriers to the uptake of each alternative fuel and vehicle technology, including their applicability to different road transport modes, the need to develop vehicle drive-trains to accommodate the specific properties of the fuel, their cost-competitiveness and their environmental performance relative to oil.

Where the alternative fuel cannot be used directly in existing oil distribution networks and applications, it requires the build-up of a dedicated infrastructure. To compete today, the majority of alternative fuels need government support of one form or another. Where such support is provided, it is often justified by the energy-security or environmental benefits that those fuels can bring...For alternative fuels to grow faster than projected in the New Policies Scenario, stronger and more concerted policy action, improved international co-operation and long-term planning would be needed.

—WEO 2011

With limited potential for substitution for oil as a transportation fuel, and with slow penetration of alternative vehicle technologies, the concentration of oil demand in the transport sector makes demand less responsive to changes in the oil price (especially where oil products are subsidized).

Electric vehicles
WEO 2011 estimates that investment in manufacturing capacity to deliver the government-targeted number of electric vehicles (assuming the targets will be met) would be approximately $85 billion in the period to 2020.
Providing the recharging infrastructure will require roughly an additional $50 billion. Consumers will be required to pay more for EVs, currently at least $15,000 more than an equivalent conventional vehicle.
Assuming that this cost increment could be reduced by 50% by 2020, then the additional spending on electric vehicles until 2020 would be about $230 billion. These costs would need to be carried by the consumers or, to the extent that they are subsidised, by governments. It is still unclear how much more the consumer is willing to pay for an electric vehicle or what is the desired payback period, i.e. the time it takes for the fuel savings to offset the higher upfront purchase price of the vehicle.
Some recent tests of public acceptability by individual car manufacturers have given promising results; but for electric vehicle adoption to become widespread, it is estimated that payback times will need to be reduced by a factor of about three to four, or mitigated by innovative manufacturer-consumer business models.”
—WEO 2011

Passenger light-duty vehicles. PLDVs currently use about 20 million barrels of oil each day—about 60% of total road oil consumption—and remain the largest oil-consuming sub-sector over the Outlook period. PLDV demand for oil is based on four factors, according to WEO 2011:

  • the rate of expansion of the fleet;
  • average fuel economy;
  • average vehicle usage; and
  • the extent of the displacement of oil by alternative fuels.

For example, in the New Policies Scenario, the projected expansion of the fleet would double PLDV oil consumption between 2010 and 2035 if there were no change in the fuel mix, vehicle fuel efficiencies or average vehicle-kilometers traveled. Instead, the projected increase is limited to about 15%, as a result of switching to alternative fuels and, to a much larger extent, efficiency improvements and the decrease in average vehicle use as non-OECD vehicle markets (where average vehicle use today tends to be lower than in the OECD) become increasingly dominant.

Demand for mobility is strongly correlated with incomes and fuel prices. So as incomes rise—especially in the emerging economies—the size of the global car fleet will inevitably rise in the long term. However, vehicle usage patterns are also affected by incomes and prices. A rise in fuel prices (whether caused by higher prices on international markets or a rise in domestic prices) or a drop in incomes (such as during the global financial crisis) can lead to short-term changes in behaviour. But vehicle-miles travelled usually tend to rebound as consumers become accustomed to the new level of price or as the economy recovers.

The United States, one of the largest car markets in the world, is a good example of this phenomenon, partly because public transport infrastructure is limited and most people rely on cars for commuting. Government policies to promote modal shifts, like the extension of rail and urban transport networks, can change the long-term picture. The growth in oil demand from expanding vehicle fleets in countries with large inter-city travel distances, such as China, will be critically influenced by the availability of non-road travel options. However, we assume little change in vehicle usage patterns over the Outlook period. Efficiency improvements, therefore, remain the main lever to reduce oil demand.

—WEO 2011

Supply. Oil companies will be forced to turn to more difficult and costly sources to replace lost capacity and meet rising demand. Production of conventional crude oil—the largest single component of oil supply—remains at current levels before declining slightly to around 68 mb/d by 2035.

Major changes in liquids supply in the New Policies Scenario, 2010-2035. Click to enlarge.

To compensate for declining crude oil production at existing fields, 47 mb/d of gross capacity additions are required, twice the current total oil production of all OPEC countries in the Middle East. A growing share of output comes from natural gas liquids (more than 18 mb/d in 2035) and unconventional sources (10 mb/d, largely from Canada and Venezuela). The largest increase in oil production comes from Iraq, followed by Saudi Arabia, Brazil, Kazakhstan and Canada. Biofuels supply triples to the equivalent of more than 4 mb/d, bolstered by $1.4 trillion in subsidies over the projection period.

Oil imports to the United States, currently the world’s biggest importer, drop as efficiency gains reduce demand and new supplies such as light tight oil (e.g., from the Bakken shale) are developed, but increasing reliance on oil imports elsewhere heightens concerns about the cost of imports and supply security.

In non-OECD Asia, some 80% of oil consumed comes from imports in 2035, compared with just over half in 2010. Globally, reliance grows on a relatively small number of producers, mainly in the MENA (Middle East, North Africa) region, with oil shipped along vulnerable supply routes. In aggregate, the increase in production from this region is more than 90% of the required growth in world oil output, pushing the share of OPEC in global production above 50% in 2035.

A shortfall in upstream investment in the MENA region could have far-reaching consequences for global energy markets. Such a shortfall could result from a variety of factors, including higher perceived investment risks, deliberate government policies to develop production capacity more slowly or constraints on upstream domestic capital flows because priority is given to spending on other public programmes. If, between 2011 and 2015, investment in the MENA region runs one-third lower than the $100 billion per year required in the New Policies Scenario, consumers could face a substantial near-term rise in the oil price to $150/barrel (in year-2010 dollars).

—WEO 2011

Other Findings from WEO 2011

The use of coal—which met almost half of the increase in global energy demand over the last decade—rises 65% by 2035. Prospects for coal are especially sensitive to energy policies – notably in China, which today accounts for almost half of global demand. More efficient power plants and carbon capture and storage (CCS) technology could boost prospects for coal, but the latter still faces significant regulatory, policy and technical barriers that make its deployment uncertain.

Fukushima Daiichi has raised questions about the future role of nuclear power. In the New Policies Scenario, nuclear output rises by over 70% by 2035, only slightly less than projected last year, as most countries with nuclear programmes have reaffirmed their commitment to them. But given the increased uncertainty, that could change. A special Low Nuclear Case examines what would happen if the anticipated contribution of nuclear to future energy supply were to be halved. While providing a boost to renewables, such a slowdown would increase import bills, heighten energy security concerns and make it harder and more expensive to combat climate change.

The future for natural gas is more certain: its share in the energy mix rises and gas use almost catches up with coal consumption, underscoring key findings from a recent WEO Special Report which examined whether the world is entering a “Golden Age of Gas”. One country set to benefit from increased demand for gas is Russia, which is the subject of a special in-depth study in WEO-2011.

Key challenges for Russia are to finance a new generation of higher-cost oil and gas fields and to improve its energy efficiency. While Russia remains an important supplier to its traditional markets in Europe, a shift in its fossil fuel exports towards China and the Asia-Pacific gathers momentum. If Russia improved its energy efficiency to the levels of comparable OECD countries, it could reduce its primary energy use by almost one-third, an amount similar to the consumption of the United Kingdom. Potential savings of natural gas alone, at 180 bcm, are close to Russia’s net exports in 2010.

In the New Policies Scenario, cumulative CO2 emissions over the next 25 years amount to three-quarters of the total from the past 110 years, leading to a long-term average temperature rise of 3.5 °C. China’s per-capita emissions match the OECD average in 2035. Were the new policies not implemented, we are on an even more dangerous track, to an increase of 6 °C.

As each year passes without clear signals to drive investment in clean energy, the “lock-in” of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals.

—Fatih Birol, IEA Chief Economist

Four-fifths of the total energy-related CO2 emissions permitted to 2035 in the 450 Scenario are already locked-in by existing capital stock, including power stations, buildings and factories. Without further action by 2017, the energy-related infrastructure then in place would generate all the CO2 emissions allowed in the 450 Scenario up to 2035. Delaying action is a false economy, the report finds: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.



Stan Peterson

The Official government propaganda for much more governmental taxation and governmental spending. It is undercut by the graphs supplied, which provide a different picture from the text.

The thrust of the article is utter drivel and nonsense. Governmental taxation is not needed to hold consumption essentially static. Increasing numbers of cars offset by efficiency gains provided by governmental dweebs.

The only believable part of the projections is the efficiency gains. These have been occurring for a decade in the industrialized World and will continue and spread around the World. Having achieved the technology to improve efficiency and producing such cars, the automakers will continue to use that technology and their customers will continue to demand it. There is little likely hood having achieved the ability to produce 30 mpg cars, the automakers will revert to 6-9 mpg versions of the same vehicles. Who would buy them? The World simply does not act that way.

Nor is the situation such that only governmental R&D can save the day. It is less and less needed, now. The route to efficiency has been mapped, and achieved with more to follow; and much more to come from merely spreading the achieved gains to all automakers.

This DOES NOT require more governmental spending or autocratic direction espite the desires of the authors, reflecting the desires of their bosses.

Only the crazy growth statistics projected for two countries are unbelievable. China and India will not grow to the heavens just like Jack's mythical Beanstalk.

Doltish linear economic projections always result in and housing bubbles. The China and India growth projections for the next 25 years are just that, pure, utter drivel.

So while I can accept the decline in demand of 7 million bbls/day in the industrialized World, offset by 5 million bbls/day increase in the rest of the industrializing World, I do not accept the Wild growth projection in the two countries of China and India.

I know in these days, DOOMSDAY sells. But in reality these Doomsday projections never appear. Reality is much more sanguine.

oil demand rises from 87 million barrels per day (mb/d) in 2010 to 99 mb/d in 2035
Who are they kidding?
To compensate for declining crude oil production at existing fields, 47 mb/d of gross capacity additions are required, twice the current total oil production of all OPEC countries in the Middle East.
You might as well say "not going to happen".
as incomes rise—especially in the emerging economies—the size of the global car fleet will inevitably rise in the long term. However, vehicle usage patterns are also affected by incomes and prices.
Economies dependent upon cheap oil (for transportation or anything else) will be forced to contract as oil production falls. This halts the rising incomes required to add to the ICEV fleet. If there's going to be an on-going expansion, it's going to be led by non-petroleum energy supplies of which batteries are one of the most likely.
Bob Wallace

"Alternative technologies, such as hybrid and electric vehicles that use oil more efficiently or not at all, continue to advance but they take time to penetrate markets."

2035 is 24 years from now.

Imagine that the cost of EV batteries drop to the point where EVs with a 200 mile range are cheaper than ICEVs within the next five years.

Not an unrealistic possibility, there are no pounds of "unobtainium" in lithium-ion batteries nor does it take hours of skilled labor to assembly them. Batteries will be cranked out by highly automated plants and the inputs will cost less than the inputs for internal combustion engines. (Just consider the platinum in catalytic converters.)

How long would it take buyers to change from fuel to electric cars? I'd guess almost no time. By the time battery prices drop to 'very affordable' people will already be well acquainted with EVs. 'Fear of the new' will have passed. Public charging points will be well established.

I can see a majority of our personal vehicles being EVs in 15 years.

I can see the majority of our personal driving being done with electricity even sooner. Around 50% of all US driving is done with cars five years old or newer. People who drive more are going to realize more savings with EVs.

It took roughly ten years for digital cameras to replace film. It took about the same amount of time for personal computers to replace typewriters on workplace desks.

Some drop in price and some increase in range and I think the transition rapidly accelerates.

Stan Peterson

All this blather about CO2 is just that blather. Increasingly, the Warmist tax-extracting excuses are being refuted by 21st Century Science.

A doubling of trace CO2 levels from a mere trace to a little more more of a mere trace, will result in global warming of no more than 0.25 degrees by empirical evidence. Not the contrived idea that 5 or 6 degrees of Warming is possible from such a slim thread of change.

At that level it is wholly benign, while "Greening" the Earth as has been observed from Space. You might even say Man is repairing the eco-catastrophe the Plant Kingdom has created. Plants by eating-out so much of the atmospheric CO2,has reduced the CO2 levels so much so as to stunt their growth. Already three continents are NET CO2 SINKs, producing no NET CO2 to the enviropnment even while nuturing their plant growth.

You might as well say the Boogeyman will get you.

Bob Wallace

Well, Stan, isn't that "special"....


I'm seeing the following around the web...

"Toyota say they have developed a solid-state battery in collaboration with the Tokyo Institute of Technology and the High Energy Accelerator Research Organization which is less susceptible to cold, can hold enough charge for a 1000km range and will cost as much as 90 per cent less to produce. But not until 2020."

Does anyone know if there is anything to this or is it a case of internet rumors run amok?

Doesn't it suggest that a lot of "coulds" and "mights" have been left out given that they are talking about almost a decade to bring to market? Seems like if they actually had such a wondrous battery they would be bringing it to market in months.

Someone markets a 600 mile range battery that costs $40/kW and the era of the internal combustion engine ends that day.

Chad Snyder

That would be nice Bob, but i think your projections don't hold much water.

First there is the legacy effect. At today's rate of vehicle replacement in the US, it takes almost two decades to replace the fleet. Then think about the rest of the world and the economic interconnectedness.

Second, supply chain management is not built or upgraded over night. The idea that the majority of our vehicles will be EV in 15 years is completely illogical. The auto industry isn't even close to ramping up towards such an output, and to achieve such an output much more would have to be done almost immediately. It will take countless new factories for every element of automotive production and supply chain procurement. Unfortunately, that alone will take decades.

The auto industry simply doesn't change over night as the scale is unbelievably large and complex.

Third, your battery assumptions are not in line with almost all of the research. There are studies that have studied the economics of batteries broken down to just commodity costs -- about 75 percent cheaper than batteries in 2009 -- and they still aren't expected to be even close to being able to replace conventional vehicles.

Maybe a surprise breakthrough could change that, but implementing that on a wide scale -- 100+ million vehicles every year and growing -- takes a very long time. And, again, automakers are not moving that aggressively in such a direction.

In 15 years, almost every major automaker is planning, building and investing in more advanced ICE vehicles, while concurrently planning about 5 - 10 percent EV production. Until they drastically change course -- via the necessary planning, investing and building -- rosy predictions aren't worth the paper or the digital space they are printed upon.

Think like an investor, scour the financials of the major automakers and their suppliers and the story basically tells itself.

Changing this 15 year+ road map will take a monumental political effort or an almost unimaginable revolutionary battery breakthrough -- and automakers and their suppliers are OBVIOUSLY betting against both -- with their wallets, and that is ultimately the only metric that matters.

I wish that were not the case, but we have to at least accept the truth before we have any hopes of moving forward or alternating our current automotive trajectory.



I agree with you, most of people who post here don't understand the complexity and still remaining problems to be solved to move massively to an EV car industry. Like BW they stick to the fast transition from film to digital pictures as how easily industry can shift from one technology to another ignoring the fact that when it comes to energy industry, moves are much slower than in most of others industries. As you say there is nothing today going on in the car industry that prepares for a fast transition to EV. Even a dramatic breakthrough in battery technologies would takes decades to be massively implemented.

as for Stan Person if you can get your head out of your hatred blind denial for only one minute, I suggest that you read the following link that close the debate on if the global warming is true or false


IEA, a small Paris-based organization of some 28 self-appointed "expert" nations - is Malthusian in belief. They are mostly economists and are mandated to tell their Malthusain stories to any who'll listen.

But we have learned that though global command of media could once convince humans to cower and run scared from "imminent" disasters - they no longer do. Rassmussen Reports tells us now 69% of the polled population believe scientists falsified climate data.

And to further the absurd claims of the climate clan we now have UK's Guardian newspaper reporting in their SCIENCE section that space aliens will attack if humans do not pay off Algore's carbon tax.

All of which is to say reports such as IEA are speculative, doubtful - probably based on ET's ruminations. But if we are to give credence to the premise that indeed energy demands will increase - be it oil or electric - it is good to be reviewing global energy resources. And there is some data here that can help.

Clearly there is renewed fear of fission-based nuclear. And there is only so much oil feasibly extractable so... can weather controlled renewables fill the void? Doubtful the report says - only 6% in 2035. How about the timely introduction of Low Energy Nuclear Reactions technology? Could easily make up 44% energy demand by 2035 IF ADOPTED and supported by major industry. Er, sorry this is not in the report.

Like it or not, the powers are bringing this technology out of the lab to the people. It will be implemented in developed nations as CHP systems for residential and small industry and in the world as replacement for carbon burning stoves. It is on the way and it will be disruptive. Far sooner than rising sea level, or global warming.

However, in the metaphorical sense, LENR will warm and light and allow desalination on a vast global scale. THAT my friends, is good news.


"IEA self appointed expert of Maltusians Belief"

Reel before writing nonsensical like this one I suggest to check at the history of prediction of IEA, their record is that there were always on the over-optimistic side when it came to energy production forecast, they softened their optimism these 2 past years as obviously they optimistic prediction fall short of the crude reality

Bob Wallace

Chad, it takes three years or so to bring a new vehicle model to market. Essentially all car manufacturers are now designing and testing EVs. What we are talking about is ceasing manufacturing of internal combustion engines and increasing manufacturing of electric motors and batteries. The rest of the car stays about the same.

We already manufacture electric motors and batteries.

Nissan is increasing their manufacturing capacity to 500,000 per year, should be at that point in 2012. Ford has designed their three Focus assembly lines so that they can be quickly converted from gas or diesel to electric if market demand develops.

There's no doubt that we could switch a very large portion of our manufacturing from liquid fuel to electric very quickly if battery prices drop and market demand grows.

We've built several battery plants in the US in the last three years. It does not take many years to build a new battery plant. We've opened new lithium mines.

I've no doubt that we could transform our manufacturing in only a few years if battery prices drop.

Yes, it will take many years to clear the last of the existing fuel vehicles off the market. But if battery prices drop steeply we're going to see some of those vehicles converted to EVs. And many of the remaining ICEVs are going to be relegated to short distance driving.

Again, most driving is done with newer model cars, not 20 year old relics.

Battery prices have dropped from $1,000/kW to $400/kW with rumors of 2012 delivery contracts for 2012 at even lower prices. Obviously if battery prices stay high then the switch to EVs will be slower.

Camera buyers switched from film to digital very, very quickly as soon as digital became "good enough" and "reasonably affordable". The same is likely to happen with cars.

Give people adequate range (about 200 miles) and a purchase price difference which can be recovered in about three years and we are likely to see the same abrupt change in purchasing behavior.

If you read the reports of people who have driven EVs, even those who only had a couple days use, you'll find the reports unanimous in their praise of the 'feel' of an EV. The peppy acceleration, the lack of noise and vibration. You'll also find people reporting their joy at not having to stop at gas stations. Those 'perks' will be like the immediacy of digital photography. They will cause people to switch before price becomes a major driver.

Now, let me underline the "if". The if is affordable batteries. If/when battery prices drop to not much more than the price of an internal combustion engine and it's cooling/exhaust system I think we'll see a very rapid transition away from oil.

Car manufacturers are going to be ready to make the switch, they're ironing out the bugs right now.


I'd say it will be very efficient ICE based engines, probably hybridised, possibly PHEVs, depending on battery costs etc.
However, these will be more expensive than pure ICE only cars, so we may not see them in developing nations.
I do see huge expansion in car usage in developing nations, particularly China and India.
This really matters as these are HUGE countries - China is 4x the USA in population, and India is 3x. As they get richer, they are going to want hundreds of millions of cars.
So I see enormous demand for mobility, in particular personal mobility (cars), and hence fuel.
We might get battery breakthroughs, or we might just get steady evolution (as we have for the last 20 years).
We will get steady evolution in the cost reduction of the rest of HEVs + BEVs, so the price premium for HEVs will fall, enabling much deeper penetration of the market and the development of affordable hybrid diesels.
What could tip it would be pollution controls for cities which ban everything but EVs at certain hours. This could work this time if "real" evs (like the Leaf) were available and affordable.
Also, they could give people free road tax and very low insurance if you already had an ICE.

The energy density and fast refueling (22MW) of fossil fuels is hard to beat, so I do not see them going away any time soon.


As the world fleet doubles in the next 25 years (from about 1 to almost 2 B units) and as the fleet is replaced every 12.5 to 15 years or so, opportunities will exist to switch from ICE to electrified vehicles, special if the life time use cost is about the same or even less.

That being said, governments can continue to promote ICE with cheap oil or EVs with highly taxed liquid fuels + pro-active positive support such as direct subsidies on EVs and charging station purchases, reduced sale taxes, reduced registration fees, free public charge points etc.

A progressive liquid fuel tax of %0.05/gallon/month for the next 100 to 120 months would do a lot to convince people to buy many more EVs. Once demand is created, manufacturers will find ways to mass produce as many EVs as people want to buy, specially if all import tariffs and sale taxes are removed for the next 20 year.

IEA would have to re-visit their crystal ball every 12 months or so.


You had me (skipping down to the next comment, looking for signs of intelligent life) at propaganda.

There's a reason why your world is very dark and smells like something died. Hope you figure it out one day.


China & India are not going to follow U.S. path (2 SUV's in every driveway). They'll develop scooters and small vehicles (trikes) that consume very little fuel or are EVs.
Agree with bob-wallace: it won't take that long to switch to EVs once battery prices drop. There's a reason all the autoco's are sticking their toe in the water.


Yes danm....two e-scooters in every driveway or other similar low cost e-vehicles would make much more sense for China, India, Brazil, Indonesia, Vietnam, Pakistan, Malaysia and many other countries.

What will we do? Many of us are so set in our ways that changing our acquired behaviors may require an extended deep recession or a very hard to find savior.


China and India already have scooters and trikes etc.
They probably won't end up like the USA with 2 SUVs / house, but they sure as hell want 1 car per house and are going for it as fast as they can.
And, as their combined population is 7x that of the USA, that is a lot of cars.

I do not think people will switch to EVs like they switched to digital cameras.
If you own an ICE, you presumably want to keep it for a few years, and while it is easy to "park" an analog camera in the bottom of a drawer and just write it off, cars take up a lot of space and money, so you will have to sell the old ICEs which is a pain. I would imagine most people would hang on until they are replacing their cars at the usual time.

Also, digital cameras rapidly improved as they are information processing devices and thus exhibit "Moore's Law" style improvement in power and cost.
EVs will not do this as they are physical rather than information driven.
If you look at battery progress in the last 10 years, it is pretty incremental.

Also, high fuel prices may not push people to EVs: we have had high fuel prices in the EU for decades and have very few EVs (but loads of diesels (~70% of some markets)).

Bob Wallace

Let me make a differentiation between market and fleet.

Market, what new buyers choose to purchase. Fleet the sum of all vehicles on the road.

I suggest that once EVs drop a few thousand dollars in price and range increases to roughly 200 miles we will see a market flip. New car buyers will look at a vehicle option which is more enjoyable to drive and will cost them less to drive over a ~6 year span, significantly less to drive over a 12 year span and will largely cease to purchase ICEVs.

Once EV prices drop below ICEVs, the market will be close to 100% EV.

To flip the fleet will certainly take longer. People who drive less than the 12,000 miles per year are not going to experience the same savings with an EV. They will likely drive their ICEV until it's worn out. Or they will sell it on to someone who has a limited budget and a short commute.

But fleet miles driven will flip faster than vehicle count. Those people who drive most will benefit most by a switch to an EV. As I posted earlier, about 50% of all US driving is done with cars five years old and newer.

The market switch from ICEVs to EVs will mirror that of the film/digital switch and the typewriter/computer switch. In both cases the market flipped very quickly as soon as the new technology became reasonably affordable and 'good enough'.

The camera and typewriter "fleets" switched rapidly because owners did not have a large investment in their film cameras and typewriters. It was financially easier to abandon the old technology. The residual value of ICEVs and comparatively higher entry price of a new EV will make the EV fleet switch much slower than the camera/typewriter fleet switch.

But after twelve years those ICEVs are going to start wearing out. Given that there will be an affordable EV option older ICEVs, especially gas hogs, are likely to meet the crusher sooner than they would have in the past.


The idea that some massive build-out of supply chains is required for cars to electrify is mistaken. The only element which is reasonably unique to EVs is the traction battery, which has particular requirements for impact robustness and thermal stability. Power electronics and motors are common industrial items and often must operate in harsh conditions.

It's also mistaken to think that the fuel-saving contribution of EVs will be proportional to their fraction of the total fleet. Around half of all VMT is driven in vehicles under 5 years old, so an immediate switch to all-EV production would cut demand by around 50% over 5 years, probably faster at the beginning and tapering toward the end. A 13%/yr compounded curve fits about right.

Last, Stan the denialist has had his talking points comprehensively refuted by another independent study finding that the globe has already warmed 0.911°C in the last 50 years.

AGW denialism mostly serves the oil exporters (biggest revenue stream at risk). That's who Stan shills for, whether he knows it or not.


Bob Wallace

"if the battery cost drops" the cost of battery won't fall that much as long as they use liquid electrolyte that make them difficult to manufacture in large size and volume. You need a shift to polymer electrolyte battery than can be manufactured with a roll process. The date at which this type of batteries will be available is still a question mark, the rest is just speculation

Bob Wallace

Battery prices are dropping. A few years back they were $1,000/kW and now commonly reported to be $400/kW.

I've seen two comments that there are existing delivery contracts for 2012 priced at $250/kW. Don't know if they are true, but they follow predictions that prices will fall rapidly once we start large scale manufacturing.

We've got six new battery plants opening in Michigan and Nissan is opening one in Tennessee. There may be others in other states, I haven't followed this part closely. There certainly are new battery factories opening in other parts of the world.

It is expected that there will be a glut of batteries in the next year as all these new plants come on line during a period of low economic activity. Car sales are slow. That glut is likely to mean that battery plants will sell product at a margin which barely keeps them in business in order to avoid bankruptcy.

In 2010 the Nissan Leaf battery pack was estimated to cost $18,000. That's $750/kW (24kW battery pack).

Drop the battery price to $400/kW and the production price of the Leaf drops $8,400. That price drop alone would bring the current $32,500 MSRP to a very competitive price point. At that point an EV like the Leaf would cost little, if any, more to drive while the loan is being paid off and considerably less expensive to drive for the remainder of its life.

$250/kW would drop the manufacturing price $17,500, making the Leaf cheaper to purchase than a gas econbox.

Will we see battery prices dropping below $400/kW in the next few years? I've no crystal ball to answer that question. But I tend to not bet against dropping prices when a large portion of the world's industrial power is in the game.

Bob Wallace

Math mistake alert.

$750 - 250 * 24 = $12,000 and not $17,500.


$32,500 - 12,000 would still make the Leaf a market shifter, just not cheaper to purchase than an econobox.


BW...many good points. As soon as high initial cost is overcome and e-range reaches 350+ Km, I agree with you that BEV sales will accelerate rapidly worldwide. That will happen as soon as batteries have evolved and are mass produced in many countries sometime between 2015 and 2025.

By that time, much lighter vehicles will come out and will increase BEVs performance substantially.


Those six new battery plants in Michigan would not have been built without the support of the Obama Administration. But hey, tender mercies.


Bob, I agree that the $250/kWh will change the field - especially for BEVs as second cars. Americans still like the idea of long range - thus the serial hybrid Voltec drive train will be in play. 2012 VOLT sells for $32.5k after rebate and leases for $350/month. That's $4K more than what ADA says is the average new car sale price. We will get a better feel for EV adoption in the luxe market with Model S from Tesla.

What may drive EVs more than anything is Prius plugin which will condition owners to plug in. Though AER for Prius will be pitiful, just the idea of plugging in will appeal to green Prius followers.

Bob Wallace

Yes, PBO did a lot of good things with the stimulus money.

He also kicked car manufactures in the butt and got them to produce more efficient fuel vehicles.

As for the long range thing, 200 miles is enough. IMO. That's the "good enough" threshold for almost all drivers.

With <20 minute 80% Level 3 charging which we already have one could drive 200, charge, drive 160, charge, drive 160 and complete a 500 mile driving day with only two short breaks.

With an ICEV you've got to stop once for fuel in a 500 mile drive. The extra stop is not going to make a tiny bit of difference to almost all potential buyers.

With a 200 mile range and an adequate number of places to charge PHEVs are likely to fade away.

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