As battery costs decline, plug-in electrified vehicles could in coming years teeter into mainstream acceptance, competing favorable against conventional vehicles, and displacing 13 million barrels of oil per day.
This is the global prognosis of a report looking into next decade and through 2040 by Bloomberg New Energy Finance.
Published on Thursday, the report projected vehicle sales will reach 41 million by 2040, representing 35 percent of new light duty vehicle sales – or 90-times the levels they were in 2014.
“The research estimates that the growth of EVs will mean they represent a quarter of the cars on the road by that date, displacing 13 million barrels per day of crude oil but using 1,900TWh of electricity,” said Bloomberg New Energy Finance. “This would be equivalent to nearly 8 percent of global electricity demand in 2015.”
The forecast contemplated myriad variables in the new car market, factoring costs of petroleum and batteries in the equation.
“At the core of this forecast is the work we have done on EV battery prices,” said Colin McKerracher, lead advanced transportation analyst at Bloomberg New Energy Finance. “Lithium-ion battery costs have already dropped by 65 percent since 2010, reaching $350 per kwh last year. We expect EV battery costs to be well below $120 per kwh by 2030, and to fall further after that as new chemistries come in.”
Along with the variable of near-future battery prices, oil prices were a key variable to consider.
“Our central forecast is based on the crude oil price recovering to $50, and then trending back up to $70-a-barrel or higher by 2040,” said Salim Morsy, senior analyst and author of the study. Interestingly, if the oil price were to fall to $20 and stick there, this would only delay mass adoption of EVs to the early 2030s.”
Bloomberg New Energy Finance observed today the market is propped up by “early adopters” making plug-in hybrids and battery electric cars work for them when the mass market is sitting on the sidelines.
But that all is due to shift, says the report.
The total cost of ownership calculated by the study shows unsubsidized battery electric vehicles (BEVs) becoming cheaper than internal combustion engine cars by the mid-2020s. This would be true, it says, even if conventional vehicles improve their average mileage per gallon by 3.5 percent per year.
Looking ahead to the Chevy Bolt, Tesla Model 3, and more mid-priced comparable BEVs to follow, the study assumes that BEVs with 60 kwh batteries will be available and will travel 200 miles between charges.
“In the next few years, the total-cost-of-ownership advantage will continue to lie with conventional cars, and we therefore do not expect EVs [plug-in electrified cars] to exceed 5 percent of light duty vehicle sales in most markets – except where subsidies make up the difference,” said Morsey. “However, that cost comparison is set to change radically in the 2020s.”