Growing Consumer Demand For Options and Flexibility Can Accelerate E85 Sales
Editor's Note: New car and truck buyers want options and flexibility from their vehicle...purchasing a new car that is flex-fuel rated gives the owners an additional fuel option...they can fill up with fuel that offers much higher octane than regular at a cost that is much less than standard high test...and after 200,000 miles or more they will own a vehicle with an engine that has little or any harmful gasoline gum or carbon deposits... they will have contributed to America's economy and not have contributed their hard earned dollars to those countries who support terrorist organizations...so what's the problem here?
ALEXANDRIA, VA - November 13, 2014: NACSonline reported that there are opportunities to grow the E85 market — but only if prices remain significantly below those of regular grade gasoline and the automobile industry continues to produce flex-fuel vehicles at historic rates, according to a new report released today by the Fuels Institute.
Depending upon the likelihood of various scenarios, E85 sales will, at a minimum, double by 2023 — but could experience a 20-fold increase in sales over the same time period, according to the 40-page report, "E85: A Market Performance Analysis and Forecast."
Researchers evaluated the performance of more than 300 stores that sell E85, also known as flex fuel, and developed forecasts taking into account a variety of factors that could ultimately affect sales. The Fuels Institute projects that E85 sales will increase from 196 million gallons in 2013 to between 400 million and 4.4 billion gallons in 2023.
Biofuels have experienced remarkable growth over the past 12 years, from 1.75 billion gallons sold in 2001 to 14.54 billion gallons sold in 2013. While the bulk of that growth has been from the embrace of E10, future biofuels sales growth will be highly dependent upon increasing the sale E85, a blend of gasoline with 51 to 83% ethanol.
The growth of E85 is heavily dependent upon increasing both the number of fueling stations providing E85 and the number of flex-fuel vehicles on the road. The report found that there is room for growth on both fronts.
One of the factors currently restricting E85 consumption is its relatively limited availability at retail. Only 2% of retail fueling locations offer E85 and 60% of these are located in just 10 states. In examining both vehicle registrations and station counts, the report found that there are 5,289 flex-fuel vehicles per E85 station, compared to just 1,466 light-duty vehicles per retail fueling station, indicating great potential for E85 retailers.
"Increasing the E85 station count would improve the potential for additional E85 sales and introduce additional competition to the market. But several other factors also will determine the potential E85 market, particularly the relative price of E85 compared to unleaded gasoline and the number of vehicles on the road that can operate on E85," said Fuels Institute Executive Director John Eichberger.
The price that E85 is sold relative to gasoline will play a significant role in flex fuel's growth. Because E85 contains approximately 23% less energy per gallon than regular grade gasoline, consumer demand will be heavily dependent upon E85's price discount relative to gasoline.
Flex fuel vehicles represent 6% of all light-duty vehicle registrations in the United States. The growth in flex-fuel vehicle production was significantly aided by credits given to automakers for producing these vehicles. However, this credit is set to expire under the new Corporate Average Fuel Economy (CAFE) regulations. Further growth could be possible if the automobile industry continues to increase flex-fuel vehicle production at current rates, but it remains to be seen if the automobile manufacturers continue producing flex-fuel vehicles at the current rate in the absence of this credit.
The Fuels Institute, founded by NACS in 2013, is a non-profit research-oriented think tank dedicated to evaluating market issues related to vehicles and the fuels that power them. The report is available for download at Fuels Institute .