Electric vehicle demand to skyrocket, but won't kill gasoline just yet
Global demand for electric vehicles will surge during the next few decades, but gasoline is probably not going away soon, said a new research note from Morgan Stanley analyst Adam Jonas.
Jonas said in a note Tuesday that electric vehicles will make up 50 percent to 60 percent of all light vehicles sold around the world by 2040. But he does not expect that rise to coincide with a precipitous decline in global demand for gasoline, contrary to more bearish views.
That's because while electric car sales will grow, the impact from developments in the areas of shared and autonomous driving will reduce the cost of transportation around the world at a much faster pace. This will lead to an explosion of driving around the world that will continue to keep internal combustion engines relevant for the next two decades.
Specifically, Jonas envisions a model where private car ownership declines, while " megafleets " of autonomous cars ferry passengers around at low costs, reducing the cost per mile from as much as $1 per vehicle mile today (76 cents per mile in the U.S., according to AAA) to as little as 20 cents over time.
Currently, about 50 percent of the roughly $1.50/mile cost of an UberX, or 75 cents, goes to the cost of the human driver, he said.
"Our simulations," he said, "have suggested that replacing a human driver ($50k per year) with an autonomous car (<$5k of equipment up front) can yield payback periods as little as 5 or 6 weeks!"
Uber is not the only company at work on this. Tesla (NASDAQ: TSLA) has said it is working on an autonomous ride-sharing network, and traditional automakers, such as General Motors (NYSE: GM), have already begun experimenting with (non-autonomous) car-sharing services through its Maven brand.
Should this push continue, the number of total miles driven could double by 2030 and triple by 2040, Jonas said. He estimates the world's approximately 1 billion cars are driving about 10 trillion miles.
The impacts will be especially salient in emerging markets, Jonas said. While they took up about 30 percent of the global demand gasoline demand in 2015, they will make up about 70 percent of demand by 2040.
This does not mean gasoline is safe from competition — Jonas' base case assumes a compound annual decline of 0.2 percent through 2040.
But there will still be many cars in the world heading to the pump.
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