Report: 2025 Electric Vehicle Market Penetration Will Be Limited

ALEXANDRIA, Va. — Despite pledges from car companies and even some countries to go all-in on electric vehicles (EVs), market conditions will make it difficult for them to gain 2-percent share of vehicles on the road by 2025, according to a new study from the Fuels Institute.

Despite this, projected consistent sales growth indicates there is the potential for greater market impact in the years that will follow, reported NACS, the Association for Convenience & Fuel Retailing.

Under the most optimistic scenario for EV sales, which assumes high oil and low battery prices, the vehicles will make up at most 5 percent of new car sales by 2025, according to "Tomorrow's Vehicles." The report, which uses analysis based on sales and registration forecasts from Navigant Research, includes three publications that focus on fuel consumption, light-duty vehicles and medium- and heavy-duty vehicles respectively, with projections for both the United States and Canada.

The future of EVs includes pure electric, plug-in hybrid and traditional hybrid vehicles, according to recent announcements, but even considering all three forms of electrified powertrains, the share of vehicles sold in 2025 that might be so equipped is projected to be less than 12 percent, and in terms of vehicles on the road, electrified options will account for less than 6 percent of the entire fleet, NACS said.

"There is significant growth expected for sales of electrified vehicles," said John Eichberger, executive director of the Fuels Institute. "But even when adjusting the assumptions to create a more optimistic scenario for these powertrains, Navigant Research projects their market penetration by 2025 will remain extremely limited.

"It will not be until after 2025 that the impact on the market will be felt. The compounded influence of consistent growth rates in new vehicles sales is positioning electrified vehicles to have a greater influence on the market in the 2030s," he added.

Vehicles powered by liquid fuels, including gasoline, diesel, flex-fuel vehicles and traditional hybrids, will still account for more than 96 percent of vehicles on the road in the U.S. through 2025, with the balanced composed of battery electric, plug-in hybrids and a mix of hydrogen, natural gas and propane powered vehicles. This represents a slight drop in overall market share, but it remains an overwhelmingly dominant share of consumer demand.

"The traditional transportation energy delivery system will continue to satisfy consumer demand for decades to come," Eichberger said. "Meanwhile, the systems necessary to serve an emerging electric transportation market can be developed. Consumers should be confident that their transportation needs will continue to be met without interruption, as the transportation market slowly transitions to include a more diverse energy supply.

"With more than 272 million light duty vehicles in North America, more than one per licensed driver, the composition of the existing market will be slow to change," Eichberger said. "There is a lot of enthusiasm for growth in the alternative vehicle market, and with good reason. But bringing these new technologies to market and selling enough of them to influence a change will take time. The seeds of growth have been planted and, if sales expansion rates can be sustained, these alternatives will have a long-term impact on the market."

In "Tomorrow's Vehicles," the Fuels Institute analyzes sales and registration forecasts for two potential market scenarios, Base and Aggressive. For both the U.S. and Canada and for each category of vehicle, the report evaluates sales and registrations for each powertrain category: gasoline, diesel, flex fuel, hybrid, plug-in hybrid, battery electric, natural gas, propane and hydrogen. The full report and an executive brief are available for free download at www.fuelsinstitute.org/research.