EVs to outnumber ICE vehicles in 20 years

About 57% of all passenger vehicle sales and over 30% of the global passenger vehicle fleet will be electric by 2040, global researcher BloombergNEF says in its Electric Vehicle Outlook 2019.

Sales of internal combustion engine (ICE) passenger vehicles have already peaked, it adds.

“Over 2 million electric vehicles were sold in 2018, up from just a few thousand in 2010, and there is no sign of slowing down,” the report says. “We expect annual passenger EV sales to rise to 10 million in 2025, 28 million in 2030 and 56 million by 2040.”

The way people and goods move is set to change dramatically over the next two decades, driven by a combination of policy, technology, economics, demographics and changing consumer preferences, BloombergNEF advanced transport head Colin McKerracher says.

“The Electric Vehicle Outlook is our annual long-term forecast of how electrification and shared mobility will impact road transport from now to 2040. The report draws on our team of specialists around the world and also looks at how these trends will affect electricity demand, oil use and demand for battery materials.”

The latest forecast includes new analysis on how shared mobility will impact vehicle sales patterns, on the long-term demand for freight, and on how electrification will play out in the commercial vehicle market.

“We have also included our latest analysis on the outlook for battery prices and battery chemistry.”

Battery prices keep falling.

“As a result, we expect price parity between EVs and internal combustion vehicles (ICE) by the mid-2020s in most segments, though there is wide variation between geographies and vehicle segments,” the report says.

Emissions regulations are tightening, and automakers are responding with a surge of new EV models launching in the next five years.

Despite the rapid growth in sales, there are over a billion vehicles on the road and EVs are still less than 0.5% of the global vehicle fleet. Changing this will take time, the report notes.

“The total passenger vehicle fleet continues to rise to 1.68 billion vehicles in 2040, driven mostly by demand in emerging economies. This is lower than many other forecasters, as we see ride-hailing, car-sharing urbanisation, demographics and – eventually – autonomy, cut deeper into vehicle demand growth, particularly in the 2030s.”

“By 2040 we expect 500 million passenger EVs on the road and over 40 million commercial EVs.” The ICE passenger vehicle fleet continues to grow until 2030 before declining.

Electrification is spreading to other vehicle segments as battery technology continues to improve and more models become available.

The electrification of the global bus fleet is already well underway with more than 400,000 electric buses on the road. Commercial electric van and truck sales are set to accelerate in the 2020s.

“By 2040, we expect 56% of light commercial vehicle sales and 31% of medium commercial vehicles in China, the US and Europe to be electric,” BloombergNEF says.

“Long-haul, heavy duty trucks will be harder to electrify; there, natural gas and hydrogen fuel cells will also play a role.”

Freight demand growth slows over the next 20 years and a higher share of freight moves to smaller vehicles due to urbanisation, city restrictions, and economics. The rise of e-commerce also contributes to this trend, the report notes.

China accounts for 48% of the passenger EV sales market in 2025, 34% in 2030 and 26% in 2040.

Europe quickly pulls ahead of the US as the number two EV market in the 2020s, driven by tightening fuel economy regulations and growing commitments from domestic automakers.

India and other emerging economies go electric much slower, leading to a globally fragmented auto market. In markets like India and South East Asia, two and three-wheeled vehicles are more attractive targets for electrification in the short term.

Japan, South Korea and Australia all see significant adoption of EVs by 2040 with EVs representing 63%, 52%, and 61% of passenger vehicle sales respectively.

Click here for more on the report.