Electric Car Sales Set To Accelerate As Costs Fall And Production Scales Up

The electrification of the transport system is set to accelerate in the late 2020s, with electric buses leading the way, a new report claims. Electric vehicle sales will surge thanks to tumbling battery costs and increasing scale in manufacturing.

Bloomberg New Energy Finance says that sales of electric vehicles (EVs) will reach 11 million by 2025 before racing to 30 million by 2030 as they become cheaper than petrol and diesel vehicles, up from just 1.1 million last year. By 2040, sales will have doubled once again to 60 million, which will be more than half of the market (55%). Electric cars will be 28% of the total market by 2030, while 84% of buses will be electric.

The transition will be led by China, which will account for half of sales in 2025, before falling back to 39% by 2030. Electric buses will dominate the market even earlier, by the late 2020s and here China is even more dominant – of the 300,000 e-buses on the road today, 99% are in China.

The rapid domination of e-buses will come about because the business case is so compelling – the total cost of ownership of electric buses is set to be cheaper than traditional models as early as next year.

This rapid growth means that oil demand for passenger cars is set to peak as early as 2022, just four years away, at 24.2 million barrels per day before declining to less than 16mpd by 2040. In the mid-2020s, sales of internal combustion engine cars will also start to fall as their cost advantage over EVs disappears and then goes into reverse. By contrast, the EV surge will require 2,000TWh of power in 2030, leading to a 6% increase in global electricity demand and displacing more than 7mpd of oil demand.

It will also lead to a significant increase in demand for lithium and cobalt, which are vital raw materials for battery production. Supply constraints for these two metals, along with the speed of the rollout of charging infrastructure and the rise of shared mobility – most of which will be electric –  could slow the market’s growth.

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 2020s that could slow down some of the rapid battery cost declines we have seen recently. Looking further out, charging infrastructure is still a challenge.”