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Nov. 16, 2022
Source: Terrain Situation Many worry that electrified vehicles, fuel economy standards, and improving battery technology will make the internal combustion engine (ICE) obsolete, illegal, or both, with wildly varying estimates of the timeline. Many of these forecasts overlook the growing age of America's light duty vehicle fleet and the implications for future liquid fuel demand. Finding The transition to electrification will be slower than anticipated, and as electrification includes plug-in electric hybrid vehicles (PHEVs), gasoline demand will still exist for an electrified market. Impact Ethanol continues to consume 35% of US corn production, and ethanol consumption depends on gasoline demand. Domestic ethanol demand will eventually decline, absent other changes in policy or automaker behavior, but will stretch much longer than is often anticipated, avoiding devastating destruction to corn prices or farmland prices. The driving force for governments toward vehicular electrification is the desire to curb global carbon emissions and atmospheric concentrations. Once fleets are electrified, governments and markets can alter the ultimate sources of transportation energy without having to modify the vehicle fleet again. Areas that are solar-rich could more intensely utilize solar electricity without requiring any differences in the fleet from an area that is rich in hydro or nuclear power. Even fossil fuels, such as natural gas, coal or petroleum could be used. Electrified vehicles are agnostic about the source of the electrons. Over time, nations can substitute cleaner sources of electricity. There are other alternatives to electrification for the post-liquid fuels era. Hydrogen fuel cell vehicles have been sold by multiple manufacturers. However, while hydrogen is the most abundant element in the universe, it requires significant energy to manufacture in its pure form and likewise requires a large infrastructure investment of production, storage, transportation and fueling facilities to make it useful as a fuel. Battery-electric vehicles (BEVs) likewise require the construction of charging infrastructure for mass adoption to occur, but the backbone of electrical generation and transmission exists and is well understood. Wide-scale adoption of BEVs require upgrades to existing infrastructure instead of construction of an entirely new infrastructure. The Realities of Electrical Vehicle Market Share Over the past few years, many governments and automakers have announced their movement away from internal combustion engine (ICE) vehicles. *Mercedes-Benz announced that all of their light duty vehicles would be electric by 2030. *Audi announced that they would phase out ICEs by 2033. *General Motors announced an end to all light duty ICEs by 2035. More recently, the California Air Resources Board (CARB), in its Advanced Clean Car II rule, mandated that by 2035, all light duty vehicles-passenger cars and light trucks-sold in California must be Zero Emission Vehicles (ZEV). Thirteen other states and the District of Columbia follow CARB standards. In total, these rules will apply to states that sell 40% of passenger cars. In all of these cases, the headline announcement reads much worse for renewable fuels than the fine print. In the case of Mercedes-Benz for example, they caveat their claim with "where market conditions permit." When announcing a move to electrification, Mazda considers plug-in hybrid electric vehicles (PHEVs) to be 'electrified.' In California's Advanced Clean Car II rule, up to 20% of major manufacturers' ZEVs can be PHEVs1. For smaller manufacturers, all of their sales can be made up of ZEV-compliant PHEVs. To read the entire report click here. Tweet |
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