March 30, 2016
Wellesley, Mass., March 30, 2016 – The market growth for alternatively fueled commercial vehicles over the next five years will depend on the future price levels of the mainstay diesel fuel, driven directly by the price of oil. BCC Research reveals in its new report that in the most likely scenario of the base case of $80-per-barrel oil, significant growth should double the market between 2015-2020.
Because of the plunge in the price of oil, and thus diesel fuel prices beginning in late 2014 and bottoming out in 2015, the market is estimated to have declined from $8 billion in 2014 to about $5.7 billion in 2015.
The global market for the incremental up-fit costs to equip commercial vehicles for alternative fuels was $8.1 billion in 2014. With the plunge in the price of oil, and thus diesel fuel, beginning in late 2014 and bottoming out in 2015, the market declined to approximately $5.7 billion in 2015. In the most likely growth scenario (base case of $80-per-barrel oil), the market should reach $13.2 billion in 2020, reflecting a five-year (2015-2020) compound annual growth rate (CAGR) of 18.4%.
The Asia-Pacific region is the least price competitive in alternative fuels, but many countries, specifically China, have significant national interests in shifting to alternative fuels, which is driving growth irrespective of economics. Thus, the CAGR at $120 per barrel oil is 28.7% against a significant starting base volume, declining to 13.1% at $40 per barrel, 15.6 percentage point spread and a 2.2-to-1 ratio.
Europe, the Middle East and Africa (EMEA) are the least sensitive to the price of oil in the adoption of alternative fuels because the price of diesel is so high that so many alternative fuels remain competitive at almost any oil price. The CAGR for the period from 2015 to 2020 would be 21.1% at $120 per barrel, off a much larger base 2015 volume than in most other regions, and only decline to 11.5% CAGR at $40 per barrel, a spread of only 9.6 points and a ratio of only 1.8 to 1.
North America is the most sensitive to oil prices in terms of the level of adoption of alternative fuels, varying from a 39.6% compound annual growth rate (CAGR) from 2015 to 2020 at $120 per barrel to only a 4.4% CAGR at $40 per barrel, a spread of 35.2 percentage points and a ratio of 9.0 to 1.
Latin America is a relatively mature market for alternative fuels, with certain countries well-established in ethanol and others in LPG (Autogas). Thus, it only varies from a CAGR of 22.5% at $120 per barrel to 12.1% at $40 per barrel oil, a spread of 10.4 percentage points and a ratio of 1.9 to 1.
“There are substantial differences in the behavior of the price of the diesel fuel incumbent in each region in relation to the oil price, particularly in the EMEA region, where very high taxation of diesel fuel raises its price from 50% to 100% above that of the other three regions,” says BCC Research analyst Jon T. Gabrielsen. “Thus, many more alternative fuels have favorable business cases at much lower oil prices in the EMEA region than in any of the other three regions.”
Alternatively Powered Commercial Vehicles: Global Markets (ENV031A) compares 10 alternative fuels and provides the cost benefit of each one in each of the four main global regions across the full range of oil and diesel prices The report also estimates current and future commercial vehicle demand for each alternative fuel, each category of commercial vehicle and each global region from 2014 through 2020. Data from 2014, estimates for 2015, and projections of CAGRs through 2020 are provided, as well.
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Alternatively Powered Commercial Vehicles: Global Markets( ENV031A )
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