It's become common to see the year 2030 as the tipping point when auto transportation will be historically transformed - with plug-in vehicles making up 100 percent of new vehicle sales in a few countries with mandates, and that electric vehicles will take up a big share of global sales. But a new study took a deep look into the numbers and found a more realistic scenario for when EVs could make up about half of global sales; and that will be far beyond 2030.
Making 2030 the magic year comes in large part from planned mandates being made across Europe, with some of them setting even quicker targets than 2030. Norway wants to have all its new vehicles sold to be battery electric or plug-in hybrid by 2025; Netherlands is considering banning all gasoline and diesel vehicles by that year; Germany could be banning internal combustion engines by 2030; and France is considering ending gasoline and diesel car sales by 2040. But these mandates have yet to be enacted outside of the UK and its more gradual "net zero" target. There's also zero emission mandates being pushed in China and California that would gradually mandate EV sales along with hydrogen fuel cell vehicles in growing volumes over the coming years.
The most commonly cited forecast on 2030 being the historic EV benchmark year comes from the International Energy Agency's New Policies Scenario. The study expects that by 2030, global plug-in vehicle sales will reach 23 million for that year and the stock of owned EVs will exceed 130 million vehicles (excluding two and three- wheelers). That's under one forecast including the impact of announced policy ambitions by several governments; the IEA scenario includes one other potential outcome where the number shoots up to 43 million with the stock coming to more than 250 million if even more stringent policies are adopted in key nations. Related: Oil Price Armageddon As OPEC+ Disintegrates
There've been other forecasts along these lines. In May 2019, mining and resources giant BHP forecasted that electric vehicles could achieve more than 50 percent share of global new vehicle sales by 2030, and 100 per cent of all vehicle sales by 2050.
The study, "Will we see transformation of ground transport by 2030?" published by auto industry newsletter, Green Auto Market, presented the numbers with year-over-year ratios on how plug-in vehicles sales have gone since their mass production first started in 2010.
The study sees it coming much closer to 2050 when new EVs could come near the 50 percent mark of new vehicle sales - based on government mandates, vast improvements in the technology, and the expectations that oil and motor fuel prices will be seeing a gradual increase over those years.
Between 2011 and 2018, new EV sales in the US averaged a 56.8 percent annual increase, and global sales had an average of 67.34 percent. To refine the numbers to more recent market trends, between 2014 to 2018 the average annual growth for US plug-in sales came to 33.69 percent. For global sales, the average annual sales growth between 2014 to 2018 was 57.14 percent with China leading the boom.
Last year saw a reverse in the market, with China's "new energy vehicles" seeing a downturn from overall new vehicle sales facing a dramatic drop along with tightening up of generous government incentives to purchase new EVs. The US had a similar trend that's been tied to the overall market, and fluctuations in demand similar to 2015 sales in that country. EV sales growth in Europe evened out the playing field with nearly a 10 percent growth mark for the global market; that was dramatically lower the previous seven years.
So let's say market conditions look similar in the next few years, without big changes enacted such as a fossil fuel ban in a sizable country. What would that look like?
At the rate of 57 percent in global annual EV sales increases, plug-in vehicles would make up 100 percent of the global new vehicles sales market during 2027. That scenario would be impossible to reach aside from an unforeseen miracle. Related: Does Saudi Arabia Really Fear A Bernie Presidency?
A much lower percentage growth rate is to be expected if China were to reduce its subsidies, blockades for mandates on fuel efficient and electric vehicles continue coming from the Trump administration, downward auto sales in several countries will continue for a while, gasoline prices are staying fairly low, and challenges persist for convincing consumers and fleets to transfer over to EV purchases - charging infrastructure, battery capacity, range getting much better, and perceived long-term value and trustworthiness of transitioning over from ICEs to EVs.
Perhaps 2040 to 2050 is a more realistic scenario for EVs playing a major role in new vehicle sales, emissions reductions, and having a major impact on oil prices - in terms of hitting the 50 percent mark, according the study. If government mandates are enacted and enforced, it would be closer to 2040. But that's yet to be seen with these policies still going through the review and approval process outside the UK.
BloombergNEF's "Electric Vehicle Outlook 2019" report came to a similar conclusion. The report shows that EVs will take up 57 percent of global passenger vehicle sales by 2040. Electric buses will dominate their sector, holding 81 percent of municipal bus sales by the same date, according to the report.
Norway, Germany, France, China, Costa Rica, South Korea, the UK, Japan, Spain, Taiwan, Portugal, Netherlands, Israel, India, Denmark, and Ireland have proposed a ban on fossil-fuel powered vehicles. Previous Prime Minister Theresa May in June signed the "net-zero" mandate that would cut emissions 80 percent by 2050 compared to 1990 levels. Britain is the first G7 country to commit to a net zero greenhouse gas emissions target for 2050. The latest Prime Minister, Boris Johnson, is continuing support for the net-zero emissions mandate.
EVs have the potential to become the leading powertrain system used in autonomous vehicles in the next three decades or more. The study also looked at self-driving vehicles along with adoption of other new, advanced technologies and mobility ride-sharing services. For these transformations, much is in the works, but 2030 looks quite unrealistic to see all of it reaching a tipping point by that year.
By Jon LeSage for Oilprice.com
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Jon LeSage is a California-based journalist covering clean vehicles, alternative energy, and economic and regulatory trends shaping the automotive, transportation, and mobility sectors. More
Comments
Let's face it, the cost of EV's should really be much less, given that there are far fewer major subsystems (no need for a radiator, catalytic converter, exhaust pipe, fuel pump, etc., etc.) and the maintenance req's will be far less given that an electric motor is far simpler and more reliable than an ICE. Two main reasons that we are still paying more the EV are:
1. to cover the upfront major R&D costs2. to compensate for the still non-existent economies of scale of EV manufacturers
With respect to the first reason, much of the initial R&D investment has been recouped and with the major investments now coming to the EVs, the R&D costs will no longer be a factor. With respect to the second reason, the larger EV producers, especially the new companies such as Tesla are ramping up their production exponentially and will soon have the economies of scale which the ICE companies have.
The older ICE club clearly had an interest in the higher pricing for their EVs so that EV sales would not bite into their ICE market. But Tesla and similar upstarts, have no such considerations, and once they inevitably start reducing pricing incrementally by at least 20%, the EV value proposition will be overwhelming. Even with the existing technology this would be the case, but with the fast-pace of EV technology innovation & adoption, combined with the soon coming aggressive pricing, the ICE engine will be finished except for some niche applications.
One of these projections is the claim that the year 2030 will be a tipping year for electric vehicles (EVs). Another one is the projection by the International Energy Agency (IEA) that 130 million EVs could be on the roads by 2030 rising even to 250 million if even more stringent environmental policies are adopted in key nations.
Hardly a day goes by without another media report about the impending demise of the Internal Combustion Engines (ICEs) as petroleum-powered cars and trucks are replaced by super-clean EVs.
Currently, electric and hybrid cars combined number an estimated 4 million vehicles out of 1.5 bN ICEs on the roads, or a negligible 0.27%.
The total number of ICEs is projected to reach 2.0 bn by 2025 rising to 2.79 bn by 2040 according to US Research.
The US Energy Information Administration (EIA) is predicting that cumulative sales of EVs (cars and light trucks) in the United States would reach 1.4 million by 2025.Growth in EV sales thus far has been supported by significant government subsidies.
Some experts are now saying that widespread EV use could spell the end of oil. The tipping point, they reckon, is 50 million EVs on the roads. This they believe could be reached by 2024.
However, 50 million EVs could hardly make a dent on the global demand for oil let alone replace it.
Bringing 50 million EVs by 2030 will reduce global oil demand by only 0.63 billion barrels (bb) equivalent to 1.73 million barrels a day (mbd), or 2.2%. This will neither be the end of oil as some experts are suggesting nor a tipping point. Even if there were 130 million EVs on the roads by 2030 as the IEA is projecting, that will reduce global oil demand by 1.64 bb (4.5 mbd) or 5.75%.
A tipping point for oil could only be reached once 1.13 bn EVs (50% of the global number of ICEs in 2030) are on the roads worldwide. This will neither be reached in 2030 nor in 2050 and not even throughout the 21st century and probably far beyond.
And while an increasing number of EVs on the roads coupled with government environmental legislations could slightly decelerate the demand for oil, EVs could never replace oil in global transport throughout the 21st century and far beyond.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
When will the price crash in the second hand market of combustion engine vehicles kick in?
You seem to be on a mission to downplay the coming impact of EVs, I feel your use of statistics is like the drunk using lampposts for support rather than illumination.
I agree that EVs will have a minor impact on oil demand in the next decade, but from 2030 we are sure to see an impact.
Right now, over a five year period EVs are already cheaper to own than an ICE. By 2030 EVs will also be cheaper at point of purchase, and far cheaper of the life of the vehicle. EVs are also faster, quieter, zero C02, and they do not kill you with air pollution. By 2030 no one will purchase an ICE vehicle. Especially given the second hand market for ICE vehicles will crash.
So then it is a question of how quickly the existing global fleet will be replaced. A conservative estimate is 20 years: 2bn cars, annual global production of 100m = 20 years to replace them all. So zero ICE vehicles on the road by 2050, with oil demand falling at 5% per year of 2030 levels.
If you doubt this please look at Norway, they will hit 10% of their fleet EV this year, and their petroleum consumption is falling year on year by a similar number. They have achieved this with a very small number of EV models available.
To give you some idea of how huge 2.2% really is, the IEA's latest oil market forecast, released four days ago, predicts that the current COVID-19 outbreak will cause oil demand in 2020 to decrease by, literally, -- wait for it -- 0.1% compared to 2019 levels of demand. Let that sink in. A mere 0.1% drop in oil demand has resulted in oil prices dropping by more than half! Imagine how much havoc a 2.2% demand drop represents. Now you have some idea of where things are headed.
The cost of DFF (dirty fossil fuels) is not just what we pay at the pump. Pollution causes expensive disease (asthma, bronchitis, cancer, and heart disease), expensive damage to forests and agriculture, expensive damage to buildings and car finishes.
Once we have a viable alternative to DFF cars, legislature will demand that the DFF cost for externalities in included in pricing. Hours later we will have no ICE or DFF cars, by any name they will be impossible to own. With no ICE or DFF cars on the road there will be no fuels produced, so even if you have a legacy car you will need to extract and refine your own crude because they will be no market for it.