BNEF Forecasts EVs to Hit 54% of New Car Sales by 2040; Decreasing Importance of PHEVs

Electric vehicles will make up the majority of new car sales worldwide by 2040, and account for 33% of all the light-duty vehicles on the road, according to a new forecast published by Bloomberg New Energy Finance (BNEF).  This represents an aggressive jump compared to BNEF’s previous forecast of 35% EV new car market share by 2040.  Under the new forecast, EVs will displace 8 million barrels of transport fuel per day and add 5% to global electricity consumption (1,800 TWh by 2040 up from 6TWh in 2016).

The forecasters said that while plug-in hybrid electric vehicle (PHEV) sales will play a role in EV adoption from now to 2025, pure battery-electric vehicles (BEVs) will subsequently take over and account for the vast majority of EV sales.  The engineering complexity of PHEV vehicle platforms, their cost and dual powertrains make BEVs more attractive over the long-run, BNEF said.  BNEF suggested that only in Japan will PHEVs continue to play an important role after 2030.

The forecast, put together by the advanced transport team at BNEF, relies on likely future reductions in price for lithium-ion batteries and of prospects for the other cost components in EVs and internal combustion engine vehicles.  It also factors in the rising EV commitments from automakers and the number of new EV models planned.

The forecast shows EV sales worldwide growing steadily in the next few years, from the record 700,000 seen in 2016 to 3 million by 2021.  At that point, they will account for nearly 5% of light-duty vehicle sales in Europe, up from a little over 1% now, and for around 4% in both the US and China.

However, the real take-off for EVs will happen from the second half of the 2020s when, first, electric cars become cheaper to own on a lifetime-cost basis than ICE models; and, second—arguably an even more important moment psychologically for buyers—when upfront costs fall below those of conventional vehicles.

Since 2010, lithium-ion battery prices have fallen 73% per kWh.  Manufacturing improvements and more than a doubling in battery energy density are set to cause a further fall of more than 70% by 2030, BNEF forecasts.

The result will be rapidly rising market shares for electric vehicles in the biggest markets, even with oil prices staying low.  BNEF sees them accounting for nearly 67% of new car sales in Europe by 2040, and for 58% in of sales in the US and 51% in China by the same date. Countries that have made early progress in EV uptake are expected to be among the leaders in 2040, including Norway, France, and the UK.  Emerging economies such as India are forecast not to see significant EV sales until the late 2020s.

Jon Moore, chief executive of BNEF, said that that growth in EV market share will proceed in tandem with the shift of the power system towards cleaner, more distributed generation.  “This means that not only do EVs surge, but their emissions profile improves over time.”

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