EIA Electric Drive Forecasts – Running in Reverse Since 2009
The hardest part of blogging on subjects like energy storage and vehicle electrification is synthesizing the mass of data that's generated every year. While I'm not an engineer and don't have any special technical expertise beyond the lessons I learned as a director and officer of a small battery technology developer, my training as a lawyer and accountant stand me in pretty good stead when it comes to reviewing statistical forecasts and comparing the current version of a forecast with earlier versions of the same forecast.
Every year the US Energy Information Administration, a unit of the DOE, publishes the Annual Energy Outlook, a comprehensive statistical report and forecast that covers all sources and uses of energy in the United States and runs to a couple hundred pages. The supporting data for the reference case includes 128 Excel tables that lay out the detailed assumptions underlying the report. One of the most interesting tables for guys like me is Table 57, Light-Duty Vehicle Sales by Technology Type for the United States, a 25 year forecast that breaks light-duty vehicle sales down into cars and trucks, and then subdivides each category by drive-train and fuel. If you've ever wondered where the government's long-term vehicle production forecasts come from, the answer is Table 57.
Last month the EIA published the Early Release Overview for its Annual Energy Outlook 2011. When I pulled up the latest version of Table 57, it struck me that the forecasted ramp rates for electric drive technology seemed more conservative than they'd been in 2010. Since unanswered questions tend to keep me from focusing on other matters, I went back to the 2010 forecast and did a quick comparison that showed about a 30% across the board decline in forecasted electric drive penetration rates. Since big changes invariably lead to more questions, I decided to pull copies of Table 57 for the years 2007 through 2011 and do a detailed five-year comparison to see how the forecasts changed over time.
Frankly I was amazed by the results. Except for pure electric vehicles, which will apparently remain a quirky niche market for the next 20 years, the Department of Energy's forecasted ramp rate for electric drive vehicles has been running in reverse at breakneck speed since 2009!
For those who prefer numbers, the following table shows the DOE's forecasted sales of HEVs, PHEVs and EVs for 2010, 2015, 2020 and 2030 in the Annual Energy Outlook for each year since 2007.
For those who prefer graphs, the following 3-D presentation summarizes the same data.
In December I used a graph from the Electrification Coalition's November 2010 Fleet Electrification Roadmap that highlighted the differences between the 2010 EIA numbers and comparable forecasts from consulting firms and sell-side investment analysts. Since the DOE has been quietly backing down its forecasted ramp rates for electric drive since the last Bush Administration forecast was updated to include the expected impact of American Recovery and Reinvestment Act of 2009, I'd be more reluctant than ever to rely on optimistic reports from hopium dealers.
The EIA is a single data source and the EV faithful will almost certainly disagree with its forecast, but when the White House and its political operatives say, "we love electric drive and plan to push policy in that direction" and their own analysts and statisticians say, " there's no way it will happen that quickly," I tend to believe the staff.
Tesla Motors (TSLA) is the 2010 poster child for hype-induced overvaluation that bears no rational relationship to financial statements, business fundamentals or economic potential. It will be bleeding cash for years, just like A123 Systems (AONE) and Ener1 (HEV). These stocks may provide fun trading opportunities for professionals, but I wouldn't want to be holding their shares when the music stops.