OPEC quintupled its forecast for sales of plug-in EVs projecting that they will reduce oil demand 8 million barrels by 2040, more than the current combined production of Iran and Iraq. Meantime, Bloomberg New Energy Finance (BNEF) came out with its annual EV forecast projecting that 530 million plug-in EVs on the road by 2040, or a third of worldwide total number of cars and representing 54% of all new car sales. That’s an aggressive increase from its projection last year, which was that EVs would represent 35% of all new car sales by that same year. BNEF’s projections are shown in the charts below.
The forecast shows EV sales worldwide growing steadily in the next few years, from 700,000 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 U.S. and China, according to BNEF. The real take-off for EVs will happen from the second half of the 2020s when, first, EVs become cheaper to own on a lifetime-cost basis than internal combustion engine models; and, second, when upfront costs fall below those of conventional vehicles. (See related post on a recent Fuels Institute/Navigant research outlook which says that liquid fuels will continue to dominate the U.S. market through 2025.)
The result, BNEF says, will be rapidly rising market shares for EVs 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 U.S. 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.
Incidentally, BNEF also forecasted that the impact of autonomous driving will be limited in the next 10 years but will play an increasing role in the market after 2030, with 80% of all autonomous vehicles in shared applications being electric by 2040 due to lower operating costs.
Similarly, the Dutch bank ING projected that all new cars sold in Europe will be EVs by 2035. ING that it believed pure EVs would “become the rational choice for motorists in Europe” sometime between 2017 and 2024, as their car showroom prices fall, their ranges increase and charging infrastructure becomes more widespread. Nissan has projected that 20-30% of its sales in Europe will be EVs by 2025. The European Commission, meantime, is considering ZEV mandates for the EU following California’s lead. And, of course, I need to mention the Volvo announcement that it would transition its entire lineup of new models to vehicles to be powered either by batteries or hybrid electric-internal combustion engines by 2019.
Why it’s significant for fuels and vehicles: Kind of self-explanatory. Nevertheless, it’s important to highlight a couple of things. First, EV sales projections are increasing from organizations such as OPEC, Exxon, BP, Statoil and IEA while timelines linger around the 2030-2040 timeframe. Second, other countries such as India, China and Canada are also considering ZEV mandates along with the Commission and that trend may continue. Third, Volvo follows other automakers that are planning to offer more EV models (though not exclusively) in the years to come.
There are those in governments or who are major influencers of governments who believe electrification is the only decarbonization solution out there for the passenger fleet and they intend to bring that vision to fruition. There is nothing wrong with that at all, except I don’t believe in single solutions and I believe in keeping options open. That includes cleaner conventional fuels, advanced powertrains and advanced alternative fuels. Something more needs to happen on the communications side from industry and they need to work together (and quickly) because I don’t think some policymakers and influencers really understand what these options could be. Neither does the public. And I don’t think some in the fuels industry get what’s coming on the EV front. It is real and it is happening but some in industry talk as if it’s the year 2000 when the thought of real EV proliferation was a fantasy. When BNEF, IEA, OPEC, etc., etc. release their forecasts next year, my bet is they will revise their projections further upward.
Tammy Klein is a consultant and strategic advisor providing market and policy intelligence and analysis on transportation fuels to the auto and oil industries, governments, and NGOs. She writes and advises on petroleum fuels, biofuels, alternative fuels, automotive fuels, and fuels policy.