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Long-term EV prospects remain undimmed despite COVID-19

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Sales of electric passenger vehicles are forecast to fall 18% in 2020, to 1.7mn worldwide – with the coronavirus crisis interrupting a decade of strong growth. However, sales of combustion engine cars are set to drop even faster this year, by 23%, and the long-term electrification of transport is projected to accelerate in the years ahead.

The latest annual Long-Term Electric Vehicle Outlook, published by BloombergNEF (BNEF), shows electric models accounting for 58% of new passenger car sales globally by 2040, and 31% of the whole car fleet. They will also make up 67% of all municipal buses on the road by that year, plus 47% of two-wheelers and 24% of light commercial vehicles.

The figures have major implications for oil and electricity markets. Transport electrification, particularly in the form of two-wheelers, is already taking out almost 1mn b/d of oil demand and by 2040 will remove 17.6mn b/d. Electric vehicles (EVs) of all types are seen adding 5.2% to global electricity demand by 2040.

Colin McKerracher, Head of Advanced Transport for BNEF, comments: ‘The COVID-19 pandemic is set to cause a major downturn in global auto sales in 2020. It is raising difficult questions about automakers’ priorities and their ability to fund the transition. The long-term trajectory has not changed, but the market will be bumpy for the next three years.’

BNEF’s analysis suggests that global sales of internal combustion engine (ICE) cars peaked in 2017 and will continue their long-term decline after a temporary post-crisis recovery. BNEF sees overall new passenger vehicle sales peaking in 2036 as changing global demographics, increasing urbanisation and more shared mobility outweigh the effects of economic development – though the fleet size keeps growing. Electric models are seen accounting for 3% of global car sales in 2020, rising to 7% in 2023, at some 5.4mn units. 

Further falls in lithium-ion battery prices will mean that the lifetime and upfront costs of an electric car ‘cross over’ with those of ICE equivalents around 2025, on average. However, the date will vary greatly depending on the market, as early as 2022 for large cars in Europe but 2030 or after for small ones in India and Japan. 

The report also examines prospects for the growth of electric two-wheelers and fuel-cell vehicles, using hydrogen. It sees the latter technology accounting for 3.9% of heavy-duty commercial vehicle sales and 6.5% of municipal bus sales globally by 2040, but with higher shares in East Asia and parts of Europe. Fuel cells are not seen encroaching far into lighter-duty commercial or passenger car markets.

The report sees fully autonomous vehicles or ‘robo-taxis’ beginning to play a much larger role in the late 2030s, helped by the growing deployment of advanced driver assistance systems (ADAS) and the build-out of sensor supply chains.

Aleksandra O’Donovan, Head of Electrified Transport for BNEF, says: ‘We’ve taken our closest look yet at EV charging infrastructure. We estimate that the world will need around 290mn charging points by 2040, including 12mn in public places, involving cumulative investment of $500bn.’

BNEF estimates that home, workplace and private commercial charging will account for 78% of this investment. Investment in public charging infrastructure is seen as a cumulative $111bn across all countries by 2040. Most of this can be provided profitably by the private sector as utilisation rates rise in the 2020s, but government support may be needed in some regions. 

There are currently over 7mn passenger EVs on the road, together with more than 500,000 e-buses, almost 400,000 electric delivery vans and trucks, and 184mn electric mopeds, scooters and motorcycles on the road globally. The majority of the e-buses and electric two-wheelers on the road today are in China. 

The report also discusses the impact of the coronavirus crisis on public transit. It sees more than a short-term effect as lockdowns ease. Instead, there is likely to be a lasting reduction in ridership of municipal bus and metro services, and more traffic congestion in cities. Shared mobility operators have suffered, but will rebound quickly on the back of food delivery, logistics and micromobility services.

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