BNEF forecasts EVs to be 35% of global new car sales by 2040; cost of ownership below conventional-fuel vehicles by 2025
A new study by Bloomberg New Energy Finance (BNEF) forecasts that sales of electric vehicles will hit 41 million by 2040, representing 35% of new light duty vehicle sales worldwide. This would be almost 90 times the equivalent figure for 2015, when EV sales are estimated to have been 462,000, some 60% up on 2014.
Driving the sales increase is a forecast significant reduction in battery prices—the result being that during the 2020s EVs will become a more economic option than gasoline or diesel cars in most countries. BNEF will discuss its EV forecast in detail at its upcoming annual BNEF Summit in New York in April.
The projected change between now and 2040 will have implications beyond the car market. The research estimates that the growth of EVs will mean they represent a quarter of the cars on the road by that date, displacing 13 million barrels per day of crude oil but using 1,900 TWh of electricity. This would be equivalent to nearly 8% of global electricity demand in 2015.
At the core of this forecast is the work we have done on EV battery prices. Lithium-ion battery costs have already dropped by 65% since 2010, reaching $350 per kWh last year. We expect EV battery costs to be well below $120 per kWh by 2030, and to fall further after that as new chemistries come in.—Colin McKerracher, lead advanced transportation analyst at BNEF
According to Salim Morsy, senior analyst and author of the study, the central forecast is based on the crude oil price recovering to $50/barrel, and then trending back up to $70 or higher by 2040. Should fall to $20/barrel and remain there, it would delay mass adoption of EVs only to the early 2030s, according to the BNEF analysis.
The electric vehicle market at present is heavily dependent on early adopters keen to try out new technology or reduce their emissions, and on government incentives offered in markets such as China, Netherlands and Norway. Although some 1.3 million EVs have now been sold worldwide and 2015 saw strong growth, they still represented less than 1% of light duty vehicle sales last year.
The study’s calculations on total cost of ownership show BEVs becoming cheaper on an unsubsidized basis than internal combustion engine cars by the mid-2020s, even if the latter continue to improve their average mileage per gallon by 3.5% per year. It assumes that a BEV with a 60 kWh battery will travel 200 miles between charges. The first generation of these long-range, mid-priced BEVs is set to hit the market in the next 18 months with the launch of the Chevy Bolt and Tesla Model 3.
In the next few years, the total-cost-of-ownership advantage will continue to lie with conventional cars, and we therefore do not expect EVs to exceed 5% of light duty vehicle sales in most markets—except where subsidies make up the difference. However, that cost comparison is set to change radically in the 2020s.—Salim Morsy