Electric vehicles ‘will be cheaper than internal combustion engine cars by 2029’

The falling costs of battery technology means that electric vehicles (EVs) will be cheaper to buy, and have lower lifetime costs, than conventional internal combustion engine vehicles by between 2025 and 2029. So says research from Bloomberg New Energy Finance (BNEF), which also projects that, by 2040, EVs will make up the majority of cars sold worldwide and account for a third of all light-duty vehicles on the road.

The forecasts, which only take into account current policies, are outlined in BNEF’s Electric Vehicle Outlook 2017. The report looks at analysis of likely future reductions in the price of lithium-ion batteries and other EV components, as well as EV commitments from carmakers.

The report estimates that EVs will account for 54% of light-duty vehicle sales globally by 2040, a significant step up from BNEF’s 35% share estimate made in 2016. It says that this will displace 8mn barrels of transport fuel per day and add 5% to global electricity consumption.

The analysis says EV sales will grow from 700,000 in 2016 to 3mn by 2021, to make 5% of sales in Europe (from 1% now) and 4% in the US and China. But it then predicts a surge in the second half of the 2020s when costs drop below conventional vehicles.

Since 2010, lithium-ion battery prices have fallen 73% per kWh. BNEF predicts a further fall of 70% by 2030 due to improvements in manufacturing and a doubling in battery energy density. 

Salim Morsy, Senior Analyst on BNEF’s advanced transport team, said: ‘There is a credible path forward for strong EV growth, but much more investment in charging infrastructure is needed globally. The inability to charge at home in many local and regional markets is part of the reason why we forecast EVs making up just over a third of the global car fleet in 2040, and not a much higher figure.’

It’s been a busy summer for news on EVs. Swedish car manufacturer Volvo announced that every car it launches from the year 2019 will have an electric motor – ie they will at least be a hybrid vehicle. It says that it will introduce a portfolio of electrified cars which include full electric vehicles, plug-in hybrids and ‘mild hybrids’, which are seen as a bridging technology to full hybrid electric vehicles. Five fully electric EVs will be launched between 2019 and 2021. 

A day later the French government said it plans to ban the sale of any car that uses petrol or diesel fuel by 2040, as part of its commitment to the Paris Agreement on climate change.

Finally, Tesla’s Elon Musk unveiled the company’s long-awaited Model 3 electric vehicle (pictured). The $35,000 car will have an initial range of at least 215 miles, and is less pricey than Tesla’s earlier models. A small number of the vehicles have been produced, and production is expected to ramp up over the year from 1,500 vehicles in September to a rate of 20,000 cars a month in December.