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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Tesla’s Model 3 Could Take 300,000 Bpd Off U.S. Gasoline Demand

Musk Tesla

The release of Tesla’s first affordable electric vehicle, the Model 3, marks a milestone in the EV industry that could shave off 300,000 barrels per day in gasoline demand in the U.S. by 2035, according to a report by Wood Mackenzie.

According to the research company’s analysts, the Model 3, based on the success of the Model S, and “the huge number of preorders” for the new car (around 400,000 worldwide), are a guarantee of success and the entrance of EVs into the mainstream, displacing part of the fossil-fuel guzzlers.

According to Tesla, the Model 3 will have a price tag starting at US$35,000 before incentives, will be able to accelerate to 60 mph in under 6 seconds, and will sport a battery capable of taking the car 215 miles before needing a recharge.

Production should start next July, although the date is not set in stone. Still, if indeed Tesla starts making the Model 3 in July, the first deliveries in North America will be made before the year’s end. There has been speculation, based on “hints” from Tesla’s President, Jon McNeill, that some of the new cars will be manufactured in China, which, added to reports that Asian customers will be the first to receive their preordered Tesla Model 3s, suggests that Tesla is far from focusing on its home market above all.

Regarding global EV markets, the lead author of the Wood Mac report, research director Prajit Ghosh, said that “The impact of Model 3 on the larger energy markets will not be in how many Model 3’s Tesla sells but what it has arguably done to spur wider electric-car production.”

This is where the Model 3’s game-changing potential lies, although it hardly makes Tesla itself happy as it means much more intense competition. Still, the company’s home market looks pretty rosy. According to Wood Mac, by 2035, some 12 percent of new car sales in the U.S. will be electric vehicles, a total of 16 million of them. Chances are that many of these will be a Tesla, or even most, depending on how quick its home-turf rivals are to catch up with the leader in the EV segment.

By Irina Slav for Oilprice.com

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  • USA on September 27 2016 said:
    I predict that by 2035 intelligent extraterrestrial life will have found us on Earth and provided an inexhaustible energy source. No need for that messy, polluting, oil and gas stuff.

    See - I can make completely speculative predictions all day long too - but it don't make them true.

    Wood Mac has obviously bought into the Elon Musk delusion since the Model 3 is just a concept car - it doesn't even exist! They'd had more credibility if they'd at least referenced the Bolt - which goes on sale in November.

    Trying to predict future EV use is a dangerous game. Remember, according to Back to the Future (part I), all cars should have been powered by Mr. Fusion by now.
  • P G BAILEY on September 27 2016 said:
    This article is complete nonsense. No consideration of any kind for the generation of the power to charge the batteries - for a long time this will still come from fossil fuels and the attendant emissions will also still be there. In addition, these "clean" cars absorb their own share of fossil fuels in their production, all the way back to lithium mining. Even the factory that produces them uses fossil generated power - no sign, yet, of solar panels, even there. The model3 is barred from the so-called "free" supercharger stations.
  • edward perry on September 27 2016 said:
    by 2035???
    now the optimists are projecting out 19 years.
  • Bully on September 27 2016 said:
    Again, how long does it take to recharge a Tesla's battery compared to a gasoline fillup??
  • Krum on September 27 2016 said:
    PG, those are interesting points you bring up, but they don't seem to be relevant to the point of this article. The article is stating that projected future uptake of electric cars like the model 3 will result in a noticeable reduction in US oil demand.

    The energy will of course be replaced by something else, most likely coal. That is the beginning of a very significant shift that will weaken the power of oil producers worldwide. The article does not mention "clean energy" anywhere. Even if ask the displaced oil gets made up with coal, that is still going to be a transition with geopolitical consequences.
  • Carmi Turchick on September 27 2016 said:
    I think people are overlooking some critical factors here. First, the Model 3 will displace more than one gas car per Model 3 sold. Once level 4 self-driving is available, electric cars will become the dominant kind of taxi service, taking advantage of their considerably lower per-mile costs and the ability to recharge without a human presence. With no human labor involved to speak of, costs to hire a Tesla to come take you somewhere will be low enough that many people will be able to give up their old gas guzzler cars and just hire a car when they need one. Second, because of the ability to make money for the owner like this, real costs of ownership can be considerably lower making sales jump once full autonomy is achieved. Third, as hybrids, plug in hybrids, and EVs flood into the market, causing gasoline sales to drop, gas stations will start closing. As more and more stations close, owning an ICE car will become increasingly inconvenient, pushing more and more people to pick an EV.

    I think the analysts are way underestimating EV sales by 2035. Once the ball gets really rolling, the ICE will be rapidly swept aside.
  • Adrian on September 28 2016 said:
    The Tesla fleet is currently displacing around 15kbpd. That's just the expensive ones, and even there sales are growing nearly 100% yoy...

    Getting to 300kbpd isn't going to take long. 2020, 2021, including other makers (particularly Chinese domestic brands).
  • GregSS on September 28 2016 said:
    One the Bolt and Tesla 3 are on the market, we should have a much better idea of how the EV market will grow. Until then it's just a massive guessing game as to how EV's and PHEV's will take off.

    To shrink gasoline demand by 300,000 bpd would require roughly 9 million EVs to be on the road. I can easily see that many being on the roads by 2035
  • Teri on September 28 2016 said:
    Looking forward to the Model 3. The cost savings is tremendous. If one is spending $100 per month on gasoline X 12 months = $1200.00 Savings. Multiply that by 5 years = $6,000 Savings !!
    Hooray for EVs!
  • Fallstaff on September 30 2016 said:
    And the Mr Fusion powered flying car "could" eliminate transportation oil consumption.

    The Tesla 3 is an intriguing design from a remarkable company, but, good grief, can the breathless wait until Tesla has produced *one* off a high volume production line (500K a year), by a company that has never run a high volume production line, in cars using battery packs from a factory that has not yet produced *one* pack for the 3 off a high volume battery production line, by a company that has never run a high volume battery factory.

    Musk himself has said manufacturing in volume is, I dunno, ten times, a hundred times harder than designing the car itself. In my experience, he's correct, and failure is certainly one of the options for a company that has mounted losses year after year.

    Meanwhile, PHEVS are already in production by multiple companies that have paid the price to prove they can do high volume mfn many times over. Amazingly, GM, Toyota will continue on producing these cars and reducing oil consumption and without the aid of breathless articles.
  • SolarI3 on October 01 2016 said:
    Lots of very well thought out comments so far.

    #1, someone mentioned fossil fuel is used to make EVs. Absolutely true, but the more you drive these cars, the less they pollute per mile. The converse is true with ICE.

    #2, another issue is how the electricity is generated. For example, most of the Midwest and the South are still using coal, which will certainly pollute. However, as power generation cleans up, the EV fleet gets cleaner. The prices for renewables are dropping fast, and their total percentage of overall power generation is increasing, all of which will make EVs cleaner and cleaner. ICEs will continue to pollute despite how clean the grid is.

    #3, someone else mentioned the speed of charging. That can be a problem. For example, we know of someone who drives from San Jose to San Diego at least weekly. Imagine stopping half an hour at the supercharger on each trip! Luckily for most of us we don't have to suffer that fate. Instead, most of us are looking at about 100 mile max on daily basis even in the most spread out suburb. That's enough for this newest generation of EVs and certainly the Bolt and M3. Most owners that do need to drive 100 miles daily will simply charge their EVs overnight while they sleep.

    As an EV driver with solar panels, I can't begin to tell you how addictive it is to be able to drive a car that you can fuel with fuel you essentially generate on your own. Put it to you this way, imagine living on an oil field, you got your own rig, you got your own refinery, and you can fuel up nightly. Except the rig, the refinery, and the pump are all maintenance free. Nor are you getting the smoke and noise and everything else that comes with these operations. I tell ya, even with my EV's lame 80 mile range, this type of generate your fuel setup is so enticing that I have managed to put 30k on the car within 22 months. And yes, we have another ICE that pretty much just sets in the garage as our second car.
  • Mntnmn on October 02 2016 said:
    Totally burned out on whining of libs about everything that "offends" them. If you don't like ICE cars, don't buy them. If you like cars that have to sit for a day recharging after going a hundred miles or so then buy one. Just plan extra weeks for recharging time for your cross country trips but for goodness sake stop the infernal whining and don't expect everybody else to like what you like. Just because you fell for the global warming hoax doesn't mean we all did.
  • avenger 426 on October 05 2016 said:
    Reading the comments tells me that there are a lot of dusional oil guys shaking in their panties. EVs are coming from every automaker and Tesla is leading the charge. Call Musk names, question his sanity all you want, the facts are that EVs and hybrids are the way of the future. Big oil has screwed so many companies and people long enough that development of alternative vehicles and energy sources has become economical and profitable. Oil won't go completely away, but it's relevance is starting to dwindle. I can hardly wait for the comments attacking me, but the facts remain, oil is a drag on the world economy and the world's people. And, by the way, I am not a libtard, just a conservative smart enough not to be sold a bill of goods from the oil Barron's and their mind - controlled minions.
  • AE on October 05 2016 said:
    It's easy to make a smart-ass comment on the web, but how often do the smart-asses square with reality?

    Here's the facts. We have installed 5.8kW of solar panels on our house. Living in a Mediterranean climate, we've met far in excess of our electrical needs since February, even after adding an electric heat pump in May for summer cooling (and winter heating with natural gas as a back-up). We also acquired a used Prius Plug-In hybrid with an 11-mile EV-only range. Now, almost all our local miles are EV, and we fill up with gas at most once a month. Most of our fuel is "free" solar energy. Yes, we're paying off our solar system. Yes, there are subsidies. But the reality is that gas & oil are far more subsidized. We'll have paid off our solar panels in eight years––and the panels are rated to be producing in the high 90 percentage points of their originally installed capacity after 26 years! Every bulb in the house is now LED, also subsidized largely by the eight bulbs mailed to us free by the utility. We pay $11 a month for the convenience of remaining attached to the grid and not requiring a wall of batteries to store power. So, we don't waste the power and every month since February we've actually shipped quite a bit back to the grid. With the next generation Prius hybrid (let alone an electric car), we will be able to use more of that power and ALL our local driving will be EV. At that point, we might go through a tank of gas every three or four months rather than every week as we once did. Oh, and when all the subsidies were toted up, we paid for 30 percent of the cost of installing our panels. Not too bad!

    The upshot is that this forecast isn't optimistic, it's probably over-cautious.
  • Deathknell Global on October 11 2016 said:
    Hydrocarbons cannot be removed from the equation fast enough --but they WILL be removed for our survival.
  • Edward Hujsak on October 20 2016 said:
    300,000 less barrels of gasoline per day. But replaced, maybe, by expansion of the coal burning power plant down the pike to take care of increased demand on the grid. Does this make sense?
    Two thirds of electrical power in the US comes from fossil fuel burning power plants. What's the likelihood that your electric car is a coal burner?
  • GregS on October 23 2016 said:
    @Edward Hujsak: I doubt it, in 2000 coal accounted for 50% of electricity production, we are now down to about 32% and it is falling rapidly. With the new mercury regs now in effect, they will also face higher costs. Coal's days are numbered, gas on the other hand will be around for quite a while.

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