While gas prices have fallen from their early summer highs, drivers are still feeling a lot of pain at the pumps. Unless, of course, you own an electric vehicle and therefore feel very smug driving past gas stations to charge at home.
More use of an electric vehicle is to be expected in times of high gas prices, but one of the open questions in the industry is whether electric vehicle drivers will consistently travel more miles on average than owners of petrol or diesel cars.
In many countries it is difficult to have a clear reading, mainly because electric vehicles still represent a very small share of the total number of cars on the road. But to get an idea of where things will go, we can look to Norway. The latest data released by the national statistics agency shows that battery electric vehicles now travel more miles per year on average than cars running on just petrol or diesel. The average distance traveled by these last two car segments has steadily decreased over the past 15 years.
It’s amazing. It highlights the growing capacity of the latest models of electric vehicles and also has implications for what happens to oil demand from road transport. The amount of oil moved by electric vehicles depends on how fast we go the number of kilometers or miles driven to electric, not on the number of cars.
To understand this better, consider a family of two cars, where one vehicle is electric and the other is internal combustion. Electric vehicles have much lower operating costs, so the family will likely start driving more miles towards the electric vehicle once they become familiar with the vehicle. Commuting, for example, involves a highly predictable route and often accounts for the bulk of a person’s driving. Thus, while the family still owns an internal combustion car and uses it for occasional longer trips, the electric share of the total number of kilometers traveled by the household increases faster than expected, especially if one considers only the number of cars.
This effect should not be surprising; people like to use more things that are cheaper. But that was not always the received wisdom in the market. A few years ago, some oil energy outlooks not only assumed that EV adoption would be moderate, but that each EV would on average move less than a comparable internal combustion vehicle. This now looks like a very flimsy assumption. Not only will higher ranges encourage people to use their EVs more, but even lower-range EVs can absorb some of the miles used to travel along predictable routes.
A few other things emerge from the data. The first is that you can actually see the moment the Tesla Model S, the first true long-range electric vehicle, hits the market. Average EV distance traveled jumped sharply in 2013 and 2014 – right after the Model S launched – then climbed for several more years and is now at an all-time high.
This again underscores the improved capability of electric vehicles, as well as the potential effect of moving them beyond an urban phenomenon and spreading them more widely across the country. With more long-range electric vehicles hitting the market, it seems reasonable to expect the 2022 data to show a continuation of the trend.
Another interesting point is that hybrid vehicles also posted relatively high numbers. Data for hybrids is only available from 2016, but it is currently neck and neck with pure electric vehicles and diesel vehicles, and it will be interesting to see how that plays out in the next few years.
Fully realizing the shift to electric mobility will take time. Electric vehicles still accounted for only 17% of all kilometers driven by the passenger car fleet in Norway last year, and only around 1.5% of all kilometers driven by the global passenger vehicle fleet. Until more of the fleet is fully electric, the total distance traveled by electric vehicles will still have some catching up to do.
Yet, at BNEF, we expect this same effect to start showing up in data from more countries in the coming years. The average annual mileage of electric vehicles in China, for example, grew rapidly from 2017 to 2020 before slowing slightly due to the pandemic, when ride-hailing usage plummeted.
Counting car sales and fleet sizes is always important, but for the impact on the energy market, it’s also best to keep an eye on distances travelled.
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