An Overview Of Vehicle Sales And Fuel Consumption Through 2025

Measuring Vehicle SalesMaintenance: The estimated required costs of vehicleNavigant Research constructs overall market sales forecastsupkeep relative to conventional vehicles.for the light duty and commercial vehicle markets usinghigh-level macroeconomic factors of gross domestic productAutomaker Support: The vehicle production roadmap of(GDP) and population in addition to vehicle density andautomakers and anticipated capacities for production by yearhistoric sales data sets.relative to the conventional vehicle.In North America, the light duty truck segment of the LDVmarket has grown increasingly popular over the last decade.Due to market variability, each factor is weighed differ-However, growth of this segment has fluctuated marginallyently based on how a market is likely to value each variablewith the rise and fall of retail fuel prices relative to personalrelative to all others. For instance, commercial vehicle mar-income. Therefore, the light duty truck share of the overallkets are assumed to be more concerned with vehicle costs,LDV market is stronger in the Base scenario where oil pricescapabilities, and maintenance than LDV markets, which areare low and weaker in the Aggressive scenario where oilassumed more likely to value infrastructure accessibility andprices are high.geopolitical and environmental concerns.Sales for each vehicle technology segment analyzed inUsing the above variables, a score relative to the othersthis study are determined by estimating the market share ofis created for each technology. These scores are evaluatedthe technology against the overall market as a function of aagainst past market performance and then used to calculatenumber of variables that feed into consumer choice. At a highhow changes to any or all of the above variables going for-level, these variables are as follows:ward will affect market share per technology.Technology Costs: The purchase price of the technologyrelative to conventional vehicles. This variable is affected byMeasuring Vehicle Fleetsfuel efficiency regulations, purchase subsidies, and econo-The vehicle fleet is a composition of past vehicle sales and themies of scale.number of vehicles that are likely still in use from when theywere purchased. For each vehicle technology analyzed in thisEnergy Costs: The per-mile costs of powering the technolo-report, Navigant Research constructed a distribution of thegy. This variable is affected by fuel efficiency regulations andvehicle population by age using estimates on the 2015 vehiclethe price of various alternative fuels.fleet size, historic vehicle sales, and average vehicle lifespans.The forecasts assume vehicles in light and medium duty mar-Vehicle Capability: The ability of the technology to satisfykets have average lifespans of 16 years, while vehicles inall consumer requirements; this is most tangibly conveyedheavy duty markets have average lifespans of 25 years.through driving range, power, and hauling capacity.Throughout the forecast period, Navigant Research does notAccessible Infrastructure: The availability of refueling/will increase or decrease.assume average vehicle lifespan by technology in any marketrecharging infrastructure relative to conventional vehicles.Geopolitical Concerns: The capacity of the technology toreduce oil consumption.Environmental Concerns: The capacity of the technologyto reduce carbon emissions and/or other regulated criteriaair pollutants.Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 20259

Measuring Vehicle UtilizationAverage vehicle travel will vary based on the age of the vehicle and the technology. Vehicles less than 8 years old tendto drive more miles than the average fleet vehicle. Someinitial market data suggests battery electric vehicles (BEVs)are driven less than conventional vehicles, likely the result ofrange limitations and infrastructure availability. Navigant Research assumes that as BEV ranges increase and recharginginfrastructure expands, average BEV travel will near conventional vehicle averages.Plug-in hybrid electric vehicles (PHEVs) use both gridsourced electricity and gasoline and thus avoid the range concerns of BEVs. Navigant Research’s analysis of PHEV energyconsumption in the United States suggests that PHEV carsdrive around half of their miles on electricity and the otherhalf on gasoline, while PHEV trucks are likely to drive moremiles on gasoline than electricity initially. PHEV truck electricity utilization is anticipated to increase to levels near thoseMeasuring Fuel Consumptionof the PHEV passenger car segment on behalf of new vehicleFuel consumption within this study is a function of the numberintroductions in economy and volume segments with largerof vehicles in use, average annual travel by vehicle, and fuelefficiency. The equation below demonstrates the high-levelbattery capacities.Overall average vehicle miles traveled will vary based onconsumption calculation wherein vehicles in use and fuel effi-the cost of retail fuels relative to personal income. Higherciency are indexed by the vehicle sales year or the year whenfuel costs relative to personal income have a marginally neg-the vehicle joined the fleet.ative effect on LDV travel; therefore, LDV travel is higher inFuel efficiency is increasing among conventional technolo-the Base scenario than in the Aggressive. Of note, Navigantgies in both light duty and commercial vehicle classes largelyResearch assumes commercial vehicle travel reactions to oilon behalf of fuel efficiency standards in the United States andprices are negligible compared to the LDV market and there-Canada (measured in miles driven per fuel unit consumed).fore commercial vehicle travel assumptions remain static ineach scenario.Equation 1Road Vehicle Fuel ConsumptionFuel consumed in year (y) vehicles in use in year (y) by vehicle sales year (x) * average vehicle travel in year (y)vehicle fuel efficiency by vehicle sales year (x)(Source: Navigant Research)10FuelsInstitute.org

FindingsThe following sections discuss the various technologies andGasoline/ethanol blends are consumed by vehicles in allmarkets analyzed by this study. Each section is organized byclasses by the following technology segmentations: conven-primary fuel consumed by the various vehicle technologies.tional, hybrids (HEVs), PHEVs, FFVs, and a small number ofSpecific and more detailed analysis of the LDV and commer-light-duty dual-fuel capable propane autogas vehicles (PAGVs)cial vehicle markets and resulting fuel demand scenarios, forand natural gas vehicles (NGVs).1both the United States and Canadian markets, is presented inthe companion publications, Part 1- Tomorrow’s Vehicles: AProjection of the Light Duty Vehicle Fleet Through 2025 andProjectionsPart 2 - Tomorrow’s Vehicles: A Projection of the Medium andConsumption of gasoline and ethanol is projected to expe-Heavy Duty Vehicle Fleet Through 2025.rience a compound annual growth rate (CAGR) of -0.2% inthe Base scenario and -0.3% in the Aggressive. Losses are expected to come mainly from LDV markets, which account forGasoline and Ethanolaround 90% of both fuels’ consumption. Fuel efficiency improvements to conventional vehicles alongside growing AFVIn the United States and Canada, gasoline is consumed inadoption in light duty classes is expected to drive down con-varying blends with ethanol. The U.S. fuel pool, as incentiv-sumption despite overall road vehicle market growth. Con-ized by RFS2, is effectively stagnant at a blend of 10% etha-sumption from commercial vehicles is expected to increasenol/90% gasoline (E10). A higher-level blend, E15, is availablemarginally, primarily from the heavy duty segment.in certain regional markets, but consumption of this blend isnegligible compared to E10. The highest-level blend, E85, ismore ubiquitous than E15, but can only be consumed by flexfuel vehicles (FFVs).In Canada, ethanol is blended within gasoline at varyinglevels depending on the province; however, the national average blend floats at just over 6%. While a number of vehiclesin Canada are FFVs, very few stations in the country provideE85, effectively limiting ethanol consumption to provincial1 Dual-fuel vehicle sales and populations are not segmented within thisanalysis and gasoline consumption on behalf of these vehicles is notprojected.blend mandates.Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 202511

Figure 7Gasoline and Ethanol Consumption by Market, North America: 2016–2025100,000,00090,000,000(Gallons HD - AggressiveTrucks - Aggressive40,000,000MD - AggressiveCars - Aggressive30,000,000HD - BaseTrucks - BaseMD - BaseCars - 022202320242025(Source: Navigant Research)Diesel and Biodieselety of products besides transportation. However, road transLike gasoline and ethanol, diesel is sometimes consumed asportation, specifically commercial vehicle transportation,a blend of the petroleum product and a biofuel: diesel andconstitutes around 55%-60% of U.S. and Canadian dieselbiodiesel. Biodiesel can be consumed within diesel-poweredconsumption. Within the commercial vehicle market, dieselvehicles in varying amounts; common blends are 2% (B2) andis consumed by conventional, HEV, and PHEV technology20% (B20). However, some diesel-powered vehicles can alsosegments.run on 100% biodiesel (B100). Biodiesel tends to gel in winterIn the LDV market, diesel consumption is limited to con-temperatures and therefore blend levels past B20 are uncom-ventional technology segments of both passenger car and lightmon to minimize potential cold weather fuel performanceduty truck classes. Consumption of diesel from LDVs is lim-issues.ited in North America as diesel-powered vehicles have failedThe blending of biodiesel within the diesel fuel pool isto gain significant traction in the market. In the last decade,incentivized by both U.S. and Canadian governments, anddiesel began to make headway in passenger car segments onbiodiesel makes up around 2% of the overall diesel fuel poolbehalf of clean diesel-branded technology.in both countries. Biodiesel is consumed in varying blendsThe primary supplier of clean diesel vehicles, Volkswagen,depending on the type of vehicle, its use case, and location.was investigated in mid-2015 for installing software in vehicleCommercial vehicles are likely to consume higher blend levelscomputers that made the vehicles comply with emissions stan-of biodiesel, usually B20, as vehicles in this market are moredards under test conditions but did not meet compliance inlikely to have dedicated B20 fueling facilities than LDVs.many other conditions. Navigant Research anticipates dieselIn North America, the diesel fuel pool powers a large vari-12passenger car sales will drop off significantly from 2014 levelsFuelsInstitute.org

over the next three years and slowly recover over the rest ofthe forecast period. However, the drop off in light duty dieselvehicle sales is expected to have only marginal impacts ondiesel fuel consumption in North America.ProjectionsConsumption of diesel and biodiesel is expected to risethrough the forecast period on behalf of gains made fromheavy-duty class consumption, which is forecast to more thanoffset losses coming from LDVs. By 2025, consumption is expected to be around 14% and 12% higher than 2016 levelsin the Base and Aggressive scenarios, respectively. However, annual growth in both scenarios is slowing throughoutthe forecast period, the result of impacts from fuel efficiencyimprovements and alternative fuel adoption in commercialvehicle classes.Figure 8Diesel and Biodiesel Consumption by Market, North America: 2016-202550,000,00045,000,000(Gallons Thousands)40,000,00035,000,00030,000,000HD - AggressiveTrucks - Aggressive25,000,000MD - AggressiveCars - Aggressive20,000,000HD - BaseTrucks - Base15,000,000MD - BaseCars - 22202320242025(Source: Navigant Research)Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 202513

tricityPenetration of PEV technologies in the commercial vehicleGrid-sourced electricity is consumed by PEVs, which en-market has lagged the LDV market. Commercial vehicle usecompasses PHEVs and BEVs. Mass-market LDVs using thiscases for PEVs are limited to various market segments withtechnology were first introduced to North American marketslow volume sales, specifically medium and heavy-duty busesin late 2010 and early 2011. Sales have since grown to overand medium-duty delivery and utility trucks and vans. Expect-120,000 in 2015, or about 0.7% of the North American LDVed 2016 sales are estimated to be below 0.3% of the market.market.Navigant Research projects sales will increase to nearly 1.5%PEV sales are expected to increase to over 5% and overin the Base scenario and over 1.8% in the Aggressive.8% of the LDV market in the Base and Aggressive scenarios,respectively. PHEV sales are expected to grow faster in thelight-duty truck class than in the passenger car class, whileProjectionsBEV sales are expected to grow faster in the passenger carConsumption of electricity is expected to rise at a CAGR ofsegment than light trucks. The introduction of a number of32.2% in the Base scenario and over 37.3% in the Aggressive.BEV passenger cars with ranges in excess of 200 miles at pur-Passenger cars are expected to account for a majority of elec-chase prices below 35,000 is expected to begin in late 2016tricity consumption throughout the forecast period, whileand 2017. These vehicles are expected to drive strong marketcommercial vehicles are expected to only amount to aroundgrowth from 2017 to 2018 as automakers ramp production2%–4% of road transportation market electricity consump-capacity.tion.Figure 9Electricity Consumption by Market, North America: 2016–202520,00018,000Cars - BaseTrucks - BaseCars - AggressiveTrucks - Aggressive16,000MD - Base14,000MD - AggressiveHD - BaseHD - 6201720182019202020212022202320242025(Source: Navigant Research)14FuelsInstitute.org

CVs in commercial classes have slowly penetrated theFuel cell vehicles (FCVs) in light-duty and commercial vehi-bus market. Navigant Research expects continued growth incle classes have been placed in a number of test pilots overthis segment; however, market share over the next decade isthe last decade in the North American, European and Asiaexpected to be low—Navigant Research projects FCV marketPacific markets. The technology has multiple challenges toshare will not exceed 0.04% of the commercial vehicle marketovercome, including technology costs, fuel costs, and acces-before 2025.sible infrastructure. Scale promises to drop technology andfuel costs as well as grow infrastructure; however, this scaleis heavily dependent on the automotive and government support that the technology currently enjoys.ProjectionsConsumption of hydrogen is expected to grow slowly as theThe introduction of FCVs into the North American LDVvehicle market finds a foundation. Anticipated technologymarkets began in 2015, and sales volumes are anticipated toand energy cost reductions (as well as infrastructure develop-be low initially with vehicle availability limited to marketsments) are expected to make FCVs competitive with conven-near hydrogen stations. Navigant Research assumes govern-tional and PEV technologies early in the next decade. Growthment supported infrastructure development will expand LDVin consumption is expected to follow.markets leading to increased sales later in the forecast period.Figure 10Hydrogen Consumption by Market, North America: 2016–20257,0006,000Trucks - BaseCars - AggressiveTrucks - AggressiveMD - Base5,000(GGE Thousands)Cars - BaseHD - BaseHD - AggressiveMD - 020212022202320242025(Source: Navigant Research)Tomorrow’s Vehicles: An Overview of Vehicle Sales and Fuel Consumption Through 202515

Natural GasThough natural gas has many advantages, a particular disNatural gas supply increased greatly over the last decade asadvantage is limited range caused by the relatively low-pres-production in North America grew considerably with the usesure storage of compressed natural gas (CNG) at 3,600 psi.of hydraulic fracturing techniques for oil and gas well stimu-This pressure requires large tanks to meet competitive con-lation. Natural gas does not travel as easily as oil between re-ventional vehicle ranges; however, the larger the tank, thegions; therefore, prices between countries tend to vary consid-greater the packaging issue. Due to this disadvantage, pen-erably. The increase of natural gas supply in North Americaetration of NGVs is effectively limited to fleet and commer-led to a price crash late in the last decade that was initially lim-cial vehicles, including light-duty trucks and medium- andited to the North American market and has slowly permeatedheavy-duty trucks and buses that can afford space losses forto other global markets. Natural gas prices in North Americafuel storage.had remained low relative to retail transportation fuel pricesSome government support has spurred development of re-until the global oil price crash that began in mid-2014; fuelgional publically accessible refueling infrastructure networksprices are now relatively equivalent to gasoline and dieselin the United States. A few automakers have produced natu-retail fuels in North America on a cost-per-mile basis.ral gas passenger cars, but in limited volumes. Interest withinNatural gas has been viewed positively as an alternativethe passenger car segment has waned of late, as evidenced byfuel in both light-duty and commercial vehicle markets. ThisHonda’s cancellation of its natural gas-powered variant of theis because consumption of the fuel has avoided (in varyingCivic in 2015. Fleets with dedicated refueling infrastructuredegrees) the environmental and geopolitical concerns tied tooffer the best opportunities for NGV penetrations within theoil consumption while providing similar performance char-light truck segment.acteristics to gasoline and diesel that other fuels cannot yetInterest in natural gas is higher in commercial marketsachieve. Natural gas prices are also low and stable, whereaswhere other alternative fuels cannot compete economically oroil prices are often high and volatile.physically with gasoline and diesel. A specific opportunity liesin long-haul trucking where diesel dominates. LNG is moreenergy dense than CNG and can therefore be stored in highervolumes within vehicles, allowing longer ranges between refuels that satisfy long-haul trucking needs. LNG infrastructureis being developed along major U.S. corridors to fuel a growing fleet of high mileage heavy duty NGVs. Navigant Researchforecasts that NGVs will grow from representing less than1.5% of the 2016 in-use fleet of heavy-duty trucks and buses tonearly 2.6% in the Base scenario and 2.9% in the Aggressive.16FuelsInstitute.org

1,500,0001,000,000ProjectionsConsumption of natural gas is expected to rise at a CAGR of9.5% in the Base scenario and 10.5% in the Aggressive sce-500,000nario from 2016to 2025. Heavy-duty vehicle consumption isestimated to accou

light duty vehicle (LDV) or medium duty vehicle (MDV) con-ventional markets, and diesel is not consumed within the light duty hybrid or plug-in hybrid markets. Scope This report provides a comprehensive analysis and projections through 2025 of the North American light duty and commercial vehicle markets by vehicle class, powertrain technology, and