Electric Models To Dominate Car Sales By 2040, Wiping Out 13m Barrels A Day Of Oil Demand



Sales of diesel and gasoline vehicles will continue to decline, according to BloombergNEF’s Electric Vehicle Outlook 2019.

It may not seem like it now, but we may now be living in a world where sales of conventional passenger cars have already peaked, a development that will have widespread implications not just for the automotive sector but also oil and gas companies and metals and mining groups.

Electric vehicles (EVs) are set to make up more than half of global passenger car sales by 2040 and completely dominate the bus market according to new research.

Sales of diesel and gasoline vehicles will continue to decline, according to BloombergNEF’s Electric Vehicle Outlook 2019.

The report shows that electrics will take up 57% of the global passenger car sales by 2040, with electric buses dominating their sector, holding 81% of municipal bus sales by the same date.

Electric models will also make up 56% of light commercial vehicle sales – vans and light trucks in Europe, the US and China within the next two decades, and 31% of the medium commercial market. However, heavy trucks will be a harder nut for electric technology to crack because of their weight, but electric heavy trucks will still comprise almost a fifth of the market, although these will be mostly limited to shorter routes.

Conventional heavy trucks will, however face competition from other alternative fuels such as natural gas and hydrogen fuel cells.

Colin McKerracher, head of advanced transport for BNEF, commented: “Our conclusions are stark for fossil fuel use in road transport. Electrification will still take time because the global fleet changes over slowly but, once it gets rolling in the 2020s, it starts to spread to many other areas of road transport. We see a real possibility that global sales of conventional passenger cars have already passed their peak.”

Shared mobility services such as ride-hailing and car-sharing will become increasingly important in this evolving picture, the research group says. Shared mobility accounts for less than 5% of all passenger miles travelled globally currently, but this is set to rise to 19% by 2040, BNEF says. Autonomous driving will not have an impact on global transport and energy patterns until the 2030s, it adds, but as the sector grows it will have a disproportionate effect on the electric vehicle market.

Ali Izadi-Najafabadi, who leads BNEF’s coverage of shared mobility, said: “Providers of shared mobility services will choose to go electric faster than private individuals. There are now over a billion users of shared mobility services such as ride-hailing globally. These services will continue to grow and gradually reduce demand for private vehicle ownership.”

The growth of the EV market over the next 20 years will mainly be driven by continuing falls in the price of EV batteries. Policy support such as fuel economy regulations and China’s new energy vehicle mandate will also play a significant role in driving the market in the next five to seven years before economics takes over the latter half of the 2020s.

This will make electric cars cheaper than internal combustion engine (ICE) alternatives by the mid-to-late 2020s in almost every market, not just on a lifetime cost basis but also in terms of upfront costs. Since 2010, the average cost of lithium-ion batteries per kilowatt-hour has fallen by 85% on a mixture of manufacturing economies of scale and technology improvements, the report says.

China will continue to dominate the market in the near term, accounting for almost half (48%) of all passenger car sales in 2025. This proportion will fall to a quarter by 2040 as other markets catch up. The BNEF report sees China continuing to lead in electric cars, accounting for 48% of all passenger EVs sold in 2025 and 26% in 2040 as other markets start to catch up, with Europe set to overtake the US as the second-biggest market during the 2020s. Growth in emerging markets will be much slower, leading to a fragmented global EV market.

Growth rates will still be impressive, however. BNEF expects passenger EV sales to rise more than tenfold from 2 million worldwide in 2018 to 28 million in 2030 and 56 million by 2040. Meanwhile conventional passenger vehicle sales will more than halve to 42 million by 2040, from around 85 million in 2018.

BNEF calculates that the growth of the EV market will reduce the demand for road fuel by 13.7 million barrels per day, almost double its forecast last year. In part this is because electrification of commercial vehicles will occur faster than previously forecast and partly, paradoxically, because fuel efficiency improvements in internal combustion engines are now set to proceed more slowly than previously thought, which means that each new EV displaces a higher amount of fossil fuel.

At the same time, BNEF says, electric vehicles will add 6.8% to global electricity demand in 2040, and drive a growth in demand for Lithium-ion batteries from 151 GWh in 2019 to 1,748GWh by 2030. To avoid a supply crunch, new Li-ion mines will need to be opened to meet demand.

BNEF now estimates that EVs will add 6.8% to global electricity consumption in 2040, and that they will drive a surge in EV lithium-ion battery demand from 151 gigawatt-hours in 2019 to 1,748GWh in 2030. New mining capacity for all battery materials will need to come online to avoid this causing a supply crunch.

McKerracher said: “Transport is moving into a period of disruptive change, with many different factors coming into play.”

Nonetheless, the BNEF team says that the number of conventional cars on the road will continue to grow for the next decade, with a concomitant rise in emissions, which will then fall sharply in the 2030s.

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