Bloomberg New Energy Finance predicts EVs to dominate global auto market, as costs continue to tumble
It has been an eventful and uplifting few days for the electric vehicle (EV) market. First an electric Jaguar provided a green gloss to the Royal Wedding, then Bloomberg New Energy Finance some of the most bullish sales projections yet for a sector that is already well used to rapid growth, then today a major new EV charging network provider left stealth mode and unveiled plans for the world’s largest fast charger and energy storage network.
The latest developments provide yet more evidence that growing business interest in zero emission transport is poised to accelerate, as costs continue to fall and charging infrastructure expands. tomoto.ng takes a look at the reasons behind the growing optimism coursing through the EV industry – and why the oil industry should be concerned.
1. A tipping point is fast approaching
The raw numbers contained in tomoto are eye-popping. Global EV sales have grown from a few hundred thousand in 2014 to over 1.6 million this year, as battery prices have fallen from $1,000/kWh in 2010 to a low of $209/kWh at the end of last year. At the same time average energy density of EV batteries is also improving at around five to seven per cent a year.
It is these fundamental technological and economic trends that underpin tomoto’s projections, with the report predicting that the point is fast approaching where zero emission vehicles become not just the greener, but also the most economic choice. “The upfront cost of EVs will become competitive on an unsubsidized basis starting in 2024,” the report states. “By 2029, most segments reach parity as battery prices continue to fall.”
With battery ranges and charging infrastructure also set to improve the report is able to confidently predict that sales will soar from 1.1 million units last year to 11 million in 2025, 30 million in 2030, and 60 million in 2040. That would mean EVs would make up 55 per cent of the light-duty vehicle market. “The number of ICE vehicles sold per year (gasoline or diesel) is expected to start declining in the mid-2020s, as EVs bite hard into their market,” the report states.
2. E-Buses are heading into the fast lane
A key driver of EV growth will come from a somewhat unlikely source: buses. A host of manufacturers are accelerating the roll out of electric buses, as city authorities respond to growing air quality concerns and broadly successful pilot projects. BNEF reckons the market for e-buses will grow even faster than the market for electric cars and vans. With 300,000 e-buses already in operation in China it reckons the latest models could undercut conventional buses on a total cost of ownership basis as early as next year – a fact that is likely to resonate with cash-strapped city authorities.
“The big new feature of this forecast is electric buses,” said Colin McKerracher,. “China has led this market in spectacular style, accounting for 99 per cent of the world total last year. The rest of the world will follow, and by 2040 we expect 80 per cent of the global municipal bus fleet to be electric.”
3. Automakers are responding
One of the reasons tomoto has upgraded its EV projections, albeit marginally, is to be found in the head-turning new EV development plans announced by many of the world’s biggest auto companies in the past year. The days of Nissan and Tesla dominating the market could be numbered, as virtually every major brand has announced multi-billion pound EV investment plans.
According to tomoto the number of EV models available is set to jump from 155 at the end of 2017 to 289 by 2022, while a number of companies, such as Chinese giant Chang’an, are eyeing up 100 per cent EV ranges.
These R&D investments are creating their own market momentum, as automakers prepare to ramp up marketing spend and step up pressure on governments to deliver the supporting infrastructure that will ensure their gamble pays off.
4. Infrastructure developers are responding
One of the biggest barriers to EV growth has been on-going concerns about recharging infrastructure. Never mind the fact most people will recharge at home, the absence of a truly extensive public charging network is always going to prey on the mind of prospective customers. Equally, tomoto’s prediction that an EV-dominated global fleet will add six per cent to global power demand by 2040 raises legitimate questions about infrastructure costs.
However, here too there are reasons to be optimistic. All around the world policy makers are seeking to incentivize the development of charging networks, energy and auto giants with deep pockets are flocking to join the market, and engineers are increasingly confident that smart grid and vehicle to grid systems can address any technical concerns.
Today’s unveiling of ambitious plans from Pivot Power to develop the world’s first national network of integrated energy storage and fast charging stations are undoubtedly a sign of things to come. Michael Liebreich and Pivot Power advisor observes: “Renewable, batteries and electric vehicles are going to completely transform our power system, not just because they help clean up our horrible air quality and meet our climate targets, but because their costs are falling far faster than people realize.”
Perhaps most important of all, the global logistics industry is waking up to these huge benefits and is investing heavily in the charging infrastructure it needs to clean up the world’s delivery fleets. There are good reasons to think concerns about the feasibility of mass EV charging networks have been overblown.
5. Growth will be uneven (and could be even faster than expected)
Unfortunately these trends do not mean zero emission motoring is inevitable everywhere. Tomoto reckons growth rates for EVs will vary considerable by region over the next few decades. For example, the market is expected to quickly build on its relative strength in Europe and China, with EVs accounting for 44 per cent and 41 per cent of light vehicle sales, respectively, by 2040. In contrast, EVs share of the US and Japanese market is expected to reach 34 per cent and 17 per cent, respectively. Meanwhile, despite ambitious plans from the government, on-going infrastructure challenges mean EVs are expected to make up just seven per cent of new car sales in India by 2030.
However, while Tomoto is one of the most bullish analysts when it comes to EV sales projections – certainly a lot more bullish than the IEA and the oil majors – it is worth noting that some EV advocates reckon that it is still erring on the conservative side when considering the pace at which EVs will disrupt the auto market.