Electric vehicle numbers to increase sharply by 2040

Battery prices are continuing to reduce which is in turn bringing down the cost of owning EV’s in comparison to conventional-fuel vehicles by 2025. Bloomberg New Energy Finance has warned that the electric vehicle revolution could be more dramatic than first realised. They anticipate a further significant reduction in battery prices in comparison to the cost of fuel in most countries.

The study estimates the sale of electric vehicles could reach 41 million by 2040. This is 35% of light duty vehicle sales. This would be almost 90 times the equivalent of the figure for the current year, where EV sales are estimated to be 462,000, 60% up on 2014.

Colin McKerracher, lead advanced transportation analyst at Bloomberg New Energy Finance, said: “At the core of this forecast is the work we have done on EV battery prices. Lithium-ion battery costs have already dropped by 65% 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.” Salim Morsy, senior analyst and author of the study, commented: “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 [1]. 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.” At present the EV market is dependent on early take up from those keen to try the new technology, or through government incentives in such countries as China, Netherlands or Norway. EV sales represent 1% of light vehicle sales last year.

There are two types of EV. The first is a battery-electric vehicle which relies entirely on batteries. The second is a plug-in hybrid which has electric supply but also a conventional engine as a reserve.

Morsy said: “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 to exceed 5% of light duty vehicle sales in most markets – except where subsidies make up the difference. However, that cost comparison is set to change radically in the 2020s.”