Latin America is already an emerging market for electric mobility. According to OLADE, the regional fleet of light electric vehicles reached 444,071 units at the end of 2024, a 187% increase over the previous year. Brazil accounts for more than half, with approximately 237,200 units.
However, most analyses focus on adoption rates and not on a key question for the energy industry: how much fuel will no longer be consumed as the fleet is electrified?
To answer this, Calden developed a model that combines Bass's technological diffusion with an economic threshold based on the investment payback period. He applied it to the state of São Paulo, the largest electromobility hub in the region.
Repayment, the driving force behind adoption
The model is based on a simple idea: the potential market for electric vehicles expands as the time it takes for the buyer to recoup the price difference compared to a combustion engine car decreases.
In São Paulo, that period decreased from about 30 years in 2011 to approximately 5 years in 2022. The reasons were the drop in battery costs and the elimination of import tariffs, which were nominally 35%. By 2045, the payback period is projected to be just 2 to 3 years.
As a result, the potential market would grow from around 20% of the fleet in 2025 to between 37% and 60% in 2045. The range depends on the trajectory of oil prices. The study uses the Baseline, High, and Low scenarios from the EIA's 2025 Annual Energy Outlook.
From 1% to more than a third of the fleet
The share of electric vehicles in São Paulo's vehicle fleet is currently around 1.1%, close to the model's estimate. This share is projected to accelerate, reaching between 5% and 10% by 2030. By 2045, it is expected to reach between 38% and 60%, within a light vehicle fleet that is projected to grow from 21 million to 27.2 million vehicles.
The turning point is between 2028 and 2032. During this period, the electric vehicle stock reaches between 1 and 2 million units, and the copycat effect boosts adoption. Two phenomena coincide at this time: the charging infrastructure becomes a visible constraint, and fuel demand begins to contract for the first time in decades.
The impact on fuels
The annual displacement of gasoline and ethanol, in thousands of tons of oil equivalent (toe), would be as follows:
In 2045, the baseline scenario implies 7.1 million tons of oil equivalent (toe) avoided per year, or about 0.14 million barrels per day. That's equivalent to 45.4% of the current fuel demand of the state's light fleet. The total range is from 0.12 to 0.19 million barrels per day.
A narrow window for the industry
For refiners, importers, and ethanol producers operating in São Paulo and its surrounding areas, the period 2030-2035 represents the adaptation horizon. During those years, demand projections, refinery processing levels, storage capacity, and biofuel blends will need to be reviewed.
The study suggests using that shift as a baseline for planning portfolio adjustments. This could include refocusing on specialty fuels, chemicals, or export capacity.
From a public policy perspective, the analysis concludes that the stability of tax incentives, such as the IPI and IPVA, and early investment in charging infrastructure are necessary conditions for sustained adoption. It also highlights the need for targeted support for lower-priced models to reach lower-income segments.
Calden at ROG.e 2026
Calden is participating this week in ROG.e 2026, an event organized by the Brazilian Institute of Petroleum, Gas and Biofuels (IBP), taking place from September 21 to 24 at Riocentro, Rio de Janeiro. His professional team will be presenting this and other current studies on the Latin American energy industry.