Is Argonne Wrong About Gasoline Consumption Reduction By EVs In The United States During 2010-2017?

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Includes: BNO, DBO, DNO, DTO, DWT, OIL, OILD, OILK, OILU, OILX, OLEM, OLO, SCO, SZO, UCO, UGA, USAI, USL, USO, USOD, USOI, USOU, UWT, WTID, WTIU
by: Juan Carlos Zuleta

Summary

A recent report by Argonne National Laboratory on the impact of electrification of light-duty vehicles on gasoline displacement in the United States in the period 2010-2017 motivates this piece.

Specifically, Argonne’s calculation of gasoline reduction due to introduction of plug-in (both hybrid and battery) electric vehicles into the market was found to be overestimated.

In addition, it is shown that failure to account for fuel displacement by conventional hybrids constitutes a great omission in the pursuit of a complete view of the subject.

Overall, these findings are consistent with my previous results for the world in an article published more than two years ago.

They essentially boil down to more evidence of the definitive displacement of oil by lithium with tremendous implications for the world economy at large.

The Argonne National Laboratory Study

Published in January 2018, it was aimed at examining the impact of sales of plug-in electric vehicles (PEVs) on electricity consumption, petroleum reduction and battery production.

In this contribution we will concentrate on the second factor only, namely the effect of PEVs on consumption reduction of gasoline.

Explicitly, the Argonne report concludes that between 2010 and 2017 over 750,000 PEVs sold in the United States reduced gasoline consumption by 600 million gallons.

Since I first read the piece I found this last figure to be at odds with any reasonable thinking. To make my point, I went on to ask myself what if all those 750,000 PEVs are battery electric vehicles (BEVs) displacing the same quantity of gasoline vehicles? That being the case, we would expect a larger number (than 600 M gallons) for the reduced gasoline consumption during the period under consideration, right? As shown in Table 1, however, the result of this exercise turned out to be the opposite. What happened? It all indicates that the Argonne study simply overestimated without any valid reason the reduction of fuel consumption by PEVs.

Table 1

Calculation of PEV Gasoline Consumption Reduction by Argonne Study

2010-2017

Sources: Argonne for (1) and (2), and Fuel Economy for (3).

In what follows I first proceed to correct Argonne’s error utilizing essentially the same framework developed by the National Lab and then compare the new figure with my own calculations based on the procedure used in a 2016 piece of my authorship. In addition, I take one step further to estimate the impact of sales of conventional hybrids on gasoline displacement in the United States. Finally, based on data availability, and to discuss any new trends that may have emerged in the data, the analysis is extended to August 2018 in the first case and to June 2018 in the second.

Plug-In Electric Vehicles (PEVs)

In Table 2 sales of PEVs by EV maker, EV brand, type, and vehicle class for the period of study are presented. Notice the strong upward trend in the last two years after a slight fall in 2015. This is also reflected in the evolution of the market share of PEV sales in total auto sales that in 2017 surpassed the 1% barrier for the first time and in the first eight months of 2018 reached 1.65%.

Table 2

Plug-in Electric Vehicle (PEV) Sales

2010 – 2018*

Sources: InsideEvs for PEV sales; FuelEconomy for information on EV Makers, EV Brands, Type, and Vehicle Class, Hybridcars and Marklines for total auto sales for the period 2010-2017, and 2018, respectively.

* January – August.

From here, I continued as follows. After calculating Vehicle Miles Traveled (VMT) for each model by multiplying PEV Sales times the Average Vehicle Mile Traveled Per Year (AVMTPY)[i], I applied a utility factor[ii] (F) to the PHEV VMT figures to account for VMT fueled by electricity and, alternatively, gasoline (1-F). I then proceeded to compute Gasoline Consumption (GC) of Plug-in Hybrid Vehicles (PHEVs) and Battery Electric Vehicles (BEVs) dividing VMT by their corresponding fuel economy figures (in terms of average miles per gallon - MPG)[iii]. The next step was to calculate PEV gasoline consumption assuming all vehicles are powered by gasoline using fuel economy figures for Internal Combustion Engine (ICE) vehicles corresponding to each vehicle class[iv]. Final gasoline consumption reduction numbers were therefore computed subtracting gasoline consumption of the proportion of PHEVs that is fueled by gasoline from the corresponding quantities obtained under the assumption that all PEVs are powered by gasoline[v].

Table 3

PEV Vehicle Miles Traveled (VMT)

2010-2018

Sources: Table 2 and Argonne.

* January-August.

As shown in the Mathematical Appendix, Gasoline Consumption Reduction can be disaggregated into two factors: (1) Gasoline displaced by Fuel Efficiency improvement; and (2) gasolines displaced by all-electric range, where the first describes the technological advances in PHEVs solely related to fuel efficiency in the gasoline mode, and the second exposes the technological leap of both PHEVs and BEVs due to car electrification. An analysis of the relative importance and evolution of each of these factors is beyond the scope of the present study.

Table 4

PHEV Fleet Utility Factor (FUF)

2010-2018

Source: Argonne.

Table 5

PHEV Multi-Day Individual Utility Factor (MDIUF)

2010-2018

Source: Argonne.

Table 6

PHEV Fuel Efficiency in Gasoline Mode

(In Miles per Gallon)

2010 – 2018

Source: Fuel Economy.

Table 7

PEV Fuel Efficiency

(In Miles per Gallon)

(Assuming all PEVs are powered by gasoline)

2010-2018

Source: Fuel Economy.

Table 8

PEV Gasoline Consumption Reduction (Base Scenario)

2010-2018*

Source: Tables 2, 3, 5, 6 and 7.

* January-August.

Table 9

PEV Gasoline Consumption Reduction (Scenario II)

2010-2018*

Source: Tables 2, 3 (Adjusted), 4, 6 and 7.

* January-August.

Table 10

PEV Gasoline Consumption Reduction (Scenario III)

2010-2018*

Source: Tables 2, 3(Adjusted), 5, 6 and 7.

* January-August.

Table 11

PEV Gasoline Consumption Reduction (Scenario IV)

2010-2018*

Source: Tables 2, 3(Adjusted), 5, 6 and 7.

* January-August.

In Table 14, I compare the results for the baseline with the other three scenarios suggested by the Argonne study. In addition, a fifth scenario is included to estimate gasoline consumption reduction utilizing the same AVMTPY as the base scenario, and PHEV average fuel economy figures (i.e. mean MPG values of the gasoline mode and the all-electric mode)[vi], as put forward in a previous contribution of mine[vii]. The main results of this exercise can be summarized as follows. First, Argonne’s calculation of gasoline consumption reduction due to introduction of PEVs into the market was found to be substantially overestimated, regardless of what scenario is taken into consideration, making the National Lab results practically useless. And second, a striking similarity between the results of the base and fifth scenarios validate my previous calculations of displacement of Internal Combustion Engine (ICE) cars by lithium-powered EVs at the world level. In a series of previous articles, which can be found here, here, here, and here, I have elaborated on the causal relationship between oil prices and global economic and financial crises. If lithium is to substitute oil in its most important use (i.e. energy for transportation) in a substantial way, one can only imagine how significant the lightest metal on earth would become in the near future.

Table 12

Average PHEV Fuel Economy in Gasoline and All-electric Modes

(In Miles per Gallon)

Source: Fuel Economy.

Table 13

PEV Gasoline Consumption Reduction (Scenario V)

2010-2018*

Source: Tables 2, 3, 7 and 12.

* January-August.

Table 14

Comparison among different PEV Gasoline Consumption Reduction Scenarios

(In Millions of Gallons)

1 PHEV Average Fuel Economy used here was calculated as mean value between PHEV Fuel Economy in the gasoline mode and PHEV Fuel Economy in the all-electric mode. See my previous Seeking Alpha article.

Hybrid Electric Vehicles (HEVs)

A similar, albeit much more simplified, procedure was applied to Hybrid Electric Vehicles (HEVs) (See Tables 15-19[viii]. First, gasoline consumption was calculated assuming all cars are powered by gasoline. Second, gasoline consumption for HEVs was computed dividing HEV VMT by the corresponding fuel economy for each car. Third, gasoline consumption reduction resulted from subtracting gasoline consumption for HEVs from gasoline consumption assuming all cars are powered by gasoline.

See the Mathematical Appendix for further details.

Table 15

Hybrid Electric Vehicles (HEV) Sales

Source: Hybridcars.

* January – June.

Table 16

HEV Vehicle Miles Traveled (VMT)

Source: Table 15. Argonne.

* January – June.

Table 17

HEV Fuel Economy

(In Miles per Gallon)

(Assuming all cars are powered by gasoline)

Source: Fuel Economy.

Table 18

HEV Fuel Economy

Source: Fuel Economy.

Table 19

HEV Gasoline Consumption Reduction

2010-2018*

Source: Tables 15-18.

* January – June.

Lastly, in Table 20 we compare the results obtained under the different PEV scenarios with the gasoline consumption reduction due to displacement of ICE cars by HEVs where the dominance of conventional hybrids over plug-ins is most visible in the two periods of analysis[ix]. Nevertheless, this finding must be taken with caution, particularly in light of the closing gap between HEV and PEV sales, a trend I first identified last year in an article on the fundamental role of Tesla and California in the electrification of the U.S. automotive industry, which is likely to accelerate the displacement of oil by lithium in the years ahead.

Table 20

Comparison between different scenarios of PEV and HEV Gasoline Consumption Reduction

(In millions of gallons)

Source: Tables 14 and 19.

MATHEMATICAL APPENDIX

The procedure explained in the main text can be further specified in a mathematical format as follows:

PLUG-IN ELECTRIC VEHICLES (PEVs)

Vehicle Miles Traveled:

VMTPEV = VMTPHEV + VMTBEV

and

VMTPEV = SPHEV *AVMTPY + SBEV *AVMTPY

but

VMTPHEV = (1-F)*VMTPHEV + (F)*VMTPHEV

so

VMTPEV = (1-F)*VMTPHEV + (F)*VMTPHEV + VMTBEV

and

VMTPEV = (1-F)*SPHEV*AVMTPY + (F)*SPHEV*AVMTPY + SBEV*AVMTPY

Gasoline Consumption:

GCPEV = GCPHEV + GCBEV

Since PHEVs have a gasoline mode and an all-electric mode,

GCPHEV = (1-F)*VMTPHEV /MPGPHEVg + (F)*VMTPHEV /MPGPHEVe

But (F)*VMTPHEV /MPGPHEVe = 0, because in the all-electric mode PHEVs consume no gasoline.

It is also obvious that GCBEV = 0

Hence:

GCPEV = (1-F)*VMTPHEV /MPGPHEVg

Gasoline Consumption Reduction:

GCRPEV = GCRPHEV + GCRBEV

We needto assume that all PEVs are powered by gasoline

GCPEV- ICE = (1-F)*VMTPHEV /MPGPEV-ICE + (F)* VMTPHEV /MPGPEV-ICE + VMTBEV/ MPGPEV-ICE

Hence

HYBRID ELECTRIC VEHICLES:

Vehicle Mile Traveled:

VMTHEV = SHEV *AVMTPY

Gasoline Consumption:

GCHEV = VMTHEV / MPGHEV

Gasoline Consumption Reduction:

As with PEVs, we need to assume here that all HEVs are powered by gasoline,

GCHEVg = VMTHEV / MPGHEV-ICE

GCRHEV = GCHEV-ICE - GCHEV = VMTHEV / MPGHEV-ICE - VMTHEV / MPGHEV

where:

VMTPEV= PEV Vehicle Miles Traveled

VMTPHEV= PHEV Vehicle Miles Traveled

VMTBEV= BEV Vehicle Miles Traveled

VMTHEV= HEV Vehicle Miles Traveled

F = Fraction of PHEV VMT fueled by electricity[x]

1-F = Fraction of PHEV VMT fueled by gasoline

SPHEV= PHEV Sales

SBEV= BEV Sales

SHEV= HEV Sales

AVMTPY = Average Vehicle Miles Traveled per Year

GCPEV = PEV Gasoline Consumption

GCPHEV = PHEV Gasoline Consumption

GCBEV = BEV Gasoline Consumption

GCHEV = HEV Gasoline Consumption

GCPEV- ICE = Gasoline Consumption assuming all PEVs are powered by gasoline

GCHEV - ICE = Gasoline Consumption assuming all HEVs are powered by gasoline

MPGPEV - ICE = Miles per Gallon assuming all PEVs are powered by gasoline

MPGHEV - ICE = Miles per Gallon assuming all HEVs are powered by gasoline

MPGHEV = HEV Miles per Gallon (City and Highway combined)

MPGPHEVg= PHEV Miles per Gallon in the gasoline mode

MPGPHEVe= PHEV Miles per Gallon in the all-electric mode

GCRPEV = PEV Gasoline Consumption Reduction

GCRPHEV = PHEV Gasoline Consumption Reduction

GCRBEV= BEV Gasoline Consumption Reduction

GCRHEV = HEV Gasoline Consumption Reduction


[i] In Table 3 we can see VMT for each model for the base scenario of the Argonne study using an AVMTPY = 13,500. Note that this number is a bit higher than that recently estimated by the U.S. Department of Transportation (12,416).

[ii] Following Argonne, two different utility factors to reflect the proportion of PHEV VMT fueled by electricity were utilized, the Fleet Utility Factor (FUF) and the Multi-Day Utility Factor (MDIUF) as provided by the Society of Automotive Engineers (SAE). Since these numbers are not freely available on the web, they were (visually) estimated from Figure 12 of the Argonne study (See Tables 4 and 5).

[iii] Note that since PHEVs have a gasoline mode and an all-electric mode, fuel economy figures correspond to each of these modes. However, gasoline consumption in PHEV all-electric mode and in BEVs is equal to zero. Hence gasoline consumption in PEVs reduces to that related to the proportion of PHEVs that is fueled by gasoline. This is calculated dividing the proportion of PHEV VMT that is fueled by gasoline by PHEV fuel efficiency in the gasoline mode (See Table 6).

[iv] See Table 7.

[v] In Table 8 the PEV gasoline consumption reduction numbers are shown for Argonne’s base scenario, using an AVMTPY = 13,500; MDIUF, and a 15% reduction of BEVs under the assumption that due to range anxiety drivers tend to drive that percentage less BEVs than PHEVs). Tables 9-11 present the results of the other three scenarios analyzed by the Argonne study utilizing different data for the AVMTPY, utility factor and BEV reduction parameters.

[vi] See Table 12.

[vii] See Table 13.

[viii] In Table 15 we can perceive a HEV sales peak in 2013 followed by a general decline until 2016 and a slight improvement in 2017. This trend is clearly related to the behavior of oil prices, a point I first visualized in an article published in 2016. But this doesn’t explain why despite the oil prices went up in the first six months of the year, the overall hybrid take rate actually diminished. I have made a preliminary attempt to look more deeply into this issue in a recent contribution in the context of the fierce competition between the two best-selling HEVs (i.e. Toyota Prius and Ford Fusion) in the U.S. to conclude that acceleration technology and consumers’ preferences of performance over fuel efficiency rather than oil prices may have started to influence HEV sales in a significant manner.

[ix] Taken together PEVs and HEVs, gasoline consumption reduction would amount to 1,110 and 1,258 million of gallons in the respective periods of analysis. These volumes can be converted into 120,367 and 135,319 oil barrels per day (by successively dividing them by 25.47 and 365), which are consistent with my previous results at the world level for the period 2010-2015.

[x] F, the utility factor, is expressed here in terms of the Fleet Utility Factor (FUF) and the Multi-Day Utility Factor (MDIUF) as described in the Argonne study.

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