Digested insight - Fuel volumes and EV adoption: Lessons from Canada

Is the growth of EVs a factor in Canada's surprise drop in fuel volumes in the first quarter of the year?

As part of our commitment to helping fuel retailers understand demand in their markets, we analyze a variety of data points to gain indicators to the direction of travel.

In the first quarter of 2024, we saw an unexpected reduction in fuel volumes in Canada – and this was particularly noticeable in the Quebec market.

Quebec’s first quarter was down around 3.4% on the equivalent period in 2023.

 

 

There are a wide range of factors that can impact fuel volumes. Simply, the number of miles driven may have reduced, weather impacted travel plans, or the growth of electric vehicles (EVs) could also be beginning to erode volumes at the pumps.

It’s unlikely one factor is the entire answer – rather, multiple impacts are in play.

Let’s explore how we can gain insight into EV adoption rates to understand whether the growth of EV could be a contributor to fuel volume reduction.

This example site in Montreal saw a significant volume drop in Q1 2024 compared to the same period in 2023.

 

 

The darker green shading refers to the EV adoption profile, with higher levels of EV adoption present in its market. The EV adoption profile, developed by Kalibrate, looks at a range of demographic datapoints to assess the propensity to adopt an EV.

 

 

Mobility analysis reveals the site’s 70% trade area – i.e., the points of origin for 70% of its visitors. We see a high proportion of journeys originating from the north, the points of high EV adoption according to our analysis.

 

 

When we look at the profile of this trade area, we see around 19% of visits matching the Innovators (the first group to adopt EVs) profile. This would be considered high levels of the Innovator profile it’s likely EV adoption will be significantly more prevalent among visitors to this site.

 

 

So, could this segment’s move towards EVs begin to impact fuel volumes at this site? It looks likely. Analyzing sites across a portfolio, understanding where fuel volumes are shifting and how that corresponds to EV adoption within the trade area, would reveal more.

Ultimately, the goal of studying EV adoption alongside fuel volumes is to support strategic action.

Often reduced fuel volumes lead to pricing managers adopting an aggressive pricing approach to recover market share. However, where volumes are eroded due to EV adoption, reducing fuel prices may not recover fuel sales if demand is permanently reduced.

 

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