Electric vehicles to make up 35% of global new car sales by 2040

The electric vehicle revolution could turn out to be more dramatic than governments and oil companies have yet realized, according to new research by Bloomberg New Energy Finance.

The study suggests that further, big reductions in battery prices lie ahead, and that during the 2020s EVs will become a more economic option than gasoline or diesel cars in most countries.

The study, published today, forecasts that sales of electric vehicles will hit 41 million by 2040, representing 35% of new light duty vehicle sales. 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.

This 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 1,900TWh of electricity. This would be equivalent to nearly 8% of global electricity demand in 2015.

Colin McKerracher, lead advanced transportation analyst at Bloomberg New Energy Finance, said: “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.”

Salim Morsy, senior analyst and author of the study, commented: “Our central forecast is based on the crude oil price recovering to $50, and then trending back up to $70-a-barrel or higher by 2040. Interestingly, if the oil price were to fall to $20 and stick there, this would only delay mass adoption of EVs to the early 2030s.”

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.

EVs come in two categories – battery electric vehicles, or BEVs, that rely entirely on their batteries to provide power; and plug-in hybrid electric vehicles, or PHEVs, that have batteries that can be recharged but have conventional engines as back-up. The best-selling BEV over the last six years has been the Nissan Leaf, and the best-selling PHEV the Chevrolet Volt.

In separate analysis, the Centre for Solar Energy and Hydrogen Research Baden-Württemberg (ZSW) found that electric mobility is making significant inroads. The researchers’ fact-finding efforts revealed that the number of electric cars around the globe nearly doubled to currently around 1.3 million.

While China saw the steepest rise with more than 200,000 new vehicles last year, the USA has the world’s biggest fleet overall with more than 400,000 electric vehicles on the road. With 55.250 electric cars, Germany continues to lag far behind countries such as Japan, the Netherlands, Norway and France.

Last year the number of electrically powered cars increased worldwide by almost 750,000 to around 1.3 million. The ZSW came to this total in its latest assessment of developments in electric mobility. The researchers recorded around 550,000 new registrations in 2015, up 68% from last year when 330,000 new electric vehicles were sold.

Many of these new electric cars – just over 207,000 – are motoring on China’s roads. And with that, the fleet of electric vehicles in China has tripled in number to 307,000. More electric cars – a total of 410,000 – are registered in the United States than in any other country.

Norway defended its international lead in terms of electric vehicles’ percentage share of all cars nationwide: Around 3% of some 2.64 million cars in this Scandinavian country run on electricity. By comparison, the share in Germany is just 0.12 percent. What’s more, Norway nearly doubled the size of its fleet to about 79,000 cars. Every fifth new registration last year was an electric vehicle.

While customers in other countries such as China, Japan and France have long bought predominantly domestic models, this trend is also on the upswing in Germany thanks to a growing number of German models: Just over half of the 23,460 electric vehicles sold in Germany in 2015 were built by German manufacturers.

This was also the first year that a German-made model appeared on the list of best-selling e-cars worldwide with 36,550 BMW i3s on the road. The Nissan Leaf heads up this list with 193,260 sold since 2010.

The Tesla Model S took the top spot among new registrations in 2015 with 42,730 vehicles sold. The US carmaker’s model edged out a pair of Japanese models, the Mitsubishi Outlander (41,080) and the Nissan Leaf (40,270) in the rankings. It was also the first time a Chinese manufacturer earned a spot among the market leaders with 31,900 BYD Qin sold.

“The number of electric vehicles manufactured in the past year, 550,000, clearly indicates that industrialization is picking up momentum,” says Prof. Werner Tillmetz, a member of ZSW’s board of directors and head of the Electrochemical Energy Technologies division. “With the continued high growth rates, electric mobility-centered value creation is rapidly gaining in importance. We don’t want to miss the boat in Germany, a business location where the automotive industry and its suppliers figure so prominently. Key electric mobility technologies such as the lithium-ion battery have to find their place in the German manufacturing portfolio,” adds Tillmetz.

For many years now, around 95% of traffic on the road has been based on fossil fuels, which comes with all the associated problems for the environment and climate. Electric mobility is aimed to help mitigate these problems. “Our calculations show that just 1.7 percent of green electricity produced in 2015 in Germany would be enough to operate one million electric vehicles,” says ZSW researcher Andreas Püttner. “And everyone in Germany can draw on green electricity, even for his electric car, and thereby bring about an energy transition in the transportation sector,” says this expert in closing.

ZSW researchers tallied cars with battery-powered electric drives, range extenders and plug-in hybrids. They did not count motorcycles, trucks, buses or full and mild hybrid vehicles. The evaluation is based partly on data sourced from the German Federal Motor Transport Authority as well as from government agencies and NGOs abroad.