The pace of electrification of road transport is set to grow starting from the second half of 2020. This would be due to reducing battery costs and large-scale manufacturing, which will translate to sales of electric cars accelerating to 28 percent, and electric buses to 84 percent, of their respective global markets by 2030. This is as per a new report from Bloomberg New Energy Finance (BNEF).
While the pace of electrification in transport will vary by country, particularly over the next 12 years as some markets jump ahead of others, BNEF forecasts that in 2030, EVs will make up 44 percent of European light-duty vehicle sales, 41 percent of those in China, 34 percent in the USA, and 17 percent in Japan. However, in India, a shortage of charging infrastructure and a lack of affordable models will hold back the market, so that EVs will make up just 7 percent of new car sales in 2030.
According to the BNEF forecast, global sales of EVs will reach 11 million units in 2025 from 1.1 million last year, and then surge to 30 million in 2030 as it establishes a cost advantage over ICE cars. The transition will be led by China, which will account for 50 percent of the global EV market in 2025 and 39 percent in 2030. While the sales of ICE vehicle per year (petrol or diesel) is expected to start declining in the mid-2020s, as EVs will start witnessing a bigger penetration in the vehicle market. By 2040, it expects around 60 million EVs to be sold or 55 percent of the global light-duty vehicle market, while ‘shared mobility’ cars will be a small but a growing element.
Electric buses to lead the charge
The report states that e-buses will see even more rapid advancement than electric cars. The analysis expects electric buses in almost all charging configurations, which will have a lower total cost of ownership than conventional municipal buses by 2019. With over 300,000 e-buses on the road in China, electric models are on track to dominate the global market by the late 2020.
Colin McKerracher, lead analyst on advanced transportation for BNEF, said: “Developments over the past 12 months, such as manufacturers’ plans for model roll-outs and new regulations on urban pollution, have bolstered our bullish view of the prospects for EVs. The changes to our forecast this time compared to the previous one a year ago are modest, at least as far as cars are concerned. We now think EVs will be 55 percent of light-duty vehicle sales in 2040, rather than 54 percent, and represent 33 percent of the total car fleet worldwide.”
“But the big new feature of this forecast is electric buses. China has led this market in spectacular style, accounting for 99% of the world total last year. The rest of the world will follow, and by 2040 we expect 80% of the global municipal bus fleet to be electric,” said McKerracher.
ICE to EV switch to cut consumption of 7.3m barrels of oil a day
BNEF expects the transition in transport sector to have major implications for electricity demand, and for the oil market. It estimates EVs and e-buses to consume/require around 2,000 TWh in 2040, adding 6 percent to the global electricity demand. Simultaneously, the switch from ICE to EVs is expected to reduce consumption of 7.3 million barrels of transport fuel a day.
The demand for metals such as lithium and cobalt resulting from the rise of electrified transport could lead to supply shortages for these key metals. Salim Morsy, senior transportation analyst, said: “While we’re optimistic on EV demand over the coming years, we see two important hurdles emerging. In the short term, we see a risk of cobalt shortages in the early 2020 that could slow down some of the rapid battery cost declines we have seen recently. Looking further out, charging infrastructure is still a challenge.”
The outlook for EV sales will be influenced by how quickly charging infrastructure spreads across key markets, and also by the growth of ‘shared mobility’.
Ali Izadi-Najafabadi, lead analyst for intelligent mobility at BNEF, said: “We predict that the global shared mobility fleet will swell from just under 5 million vehicles today to more than 20 million by 2040. By then over 90 percent of these cars will be electric, due to lower operating costs. Highly autonomous vehicles will account for 40 percent of the shared mobility fleet.”
BNEF’s projection foresees big opportunities for lithium-ion battery manufacturers, wherein China already sees a dominant position in this market accounting for 59 percent of the global production capacity in 2018, and this is expected to rise to 73 percent by 2021.
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