BNEF's latest electric vehicle forecast spells out a far more bullish future for electric trucks, and signposts a dire future for petroleum by 2040
Global sales of petrol and diesel cars may have already passed their peak, and in their place electric vehicles (EVs) will soon start dominating car, bus and van markets, paving the way for zero emission technologies to make similarly significant in-roads into the market for heavy goods vehicles (HGVs).
Those are the startling conclusions of BloombergNEF's latest annual Electric Vehicle Market Outlook, which for the first time incorporates not only data on cars and buses, but more detailed work on the commercial market for vans, medium-sized trucks and HGVs.
The report, which was published this week, expects EVs to make up 57 per cent of global sales by 2040, a slight uptick on its 55 per cent forecast last year. Meanwhile, electric buses are set to secure an overwhelming 81 per cent of bus sales worldwide by the same date.
BNEF's latest forecasts, while slightly more bullish, are not hugely different from last year's, and some commentators have argued exponential increases in demand could see EVs dominate key markets far earlier than 2040. But the new projections nevertheless demonstrate growing confidence that the EV market is poised for rapid and sustained growth.
BNEF argued that growing consumer acceptance and downward pressure on technology costs, could see electric car sales rise from two million worldwide in 2018 to 28 million in 2030 and 56 million by 2040. In contrast, fossil fuel car sales would fall to 42 million by 2040, from around 85 million last year.
It is also worth noting these global figures masks potentially vast regional variation in EV uptake, particularly given there is growing pressure on governments such as the UK's to ban fossil fuel car sales altogether far earlier than 2040 in order to reach climate targets and make the most of new market opportunities.
BNEF forecasts that while China will continue to dominate global EV sales with 48 per cent of the market in 2025, Europe is on course to make significant gains, overtaking the US as the number two EV market globally during the next decade. Electrification elsewhere, meanwhile, will be much slower, leading to a much more "fragmented" global auto market, it states.
The analyst house also has a notably bullish outlook for decarbonising larger commercial vehicles, which are widely seen as far more of a challenge to electrify. A number of companies are rushing to develop zero emission trucks, but they are yet to match the success of the electric bus market where orders are growing rapidly.
BNEF's projections show electric models taking 56 per cent of light commercial vehicle sales - which are, broadly speaking, vans - in Europe, the US and China within the next two decades, plus 31 per cent of the market for medium commercial vehicles, or smaller trucks.
Even for heavy duty trucks, or HGVs - the hardest segment for electric drivetrains to crack due to the size and weight of such vehicles - electric alternatives could make up 19 per cent of sales globally in 2040, it estimates. These EV sales will largely for be shorter-distances applications, BNEF argues, but fossil fuel trucks will also face major competition from other lower carbon alternatives such as natural gas and hydrogen vehicles in the coming years.
Overall, it suggests the impending electric revolution may well have the potential to spread into even diesel-dominated heavy goods segments previously seen as off-limits for green transport, and that fossil fuel engines could become a dying breed in the not-too-distant-future given the raft of low carbon alternatives now being developed.
Indeed, in one of the biggest shifts from its forecasts last year, BNEF estimates EVs could lead to a cut in road fuel demand by 13.7 barrels of oil per day in 2040, which is almost double the 7.3 million figure it had down last year.
"Our conclusions are stark for fossil fuel use in road transport," said Colin McKerracher, head of advanced transport for BNEF. "Electrification will still take time because the global fleet changes over slowly but, once it gets rolling in the 2020s, it starts to spread to many other areas of road transport. We see a real possibility that global sales of conventional passenger cars have already passed their peak."
The electricity and battery industries will also both be heavily impacted by the rapid rise of EVs, of course. Further sharp reductions in battery costs are expected, making internal combustion engines more expensive to buy and operate than their zero emission rivals in almost every market in the mid-late 2020s, according to BNEF. At that point the raw economics in favour of EVs should drive a further surge in demand.
And greater numbers of EVs on our roads will lead to increased demand for electricity, potentially adding 6.8 per cent to global electricity consumption by 2040. At the same time new mining capacity for battery materials to meet demand from EV manufacturers will likely be needed, BNEF predicts. As such, the race will be on to ensure the required electricity is sourced from renewables, rather than add to global emissions through increased fossil fuel generation.
The evolving road transport picture will be impacted as much by a change in habits as a change in fuel, however, with the rise in shared mobility services such as ride-hailing and car-sharing platforms eating into private car ownership in the coming decades, according to BNEF. While today shared mobility services account for less than five per cent of all passenger miles travelled globally, it estimates this is on course to rise to 19 per cent over the next two decades. It does now, however, expect autonomous driving technology to have a notable impact on wider trends until the 2030s.
Crucially, Ali Izadi-Najafabadi, BNEF's shared mobility lead, said providers of ride-hailing and car sharing services would opt to go electric at a faster rate than private individuals. "There are now over a billion users of shared mobility services such as ride-hailing globally," he said. "These services will continue to grow and gradually reduce demand for private vehicle ownership."
But while the outlook for fossil fuels from the already-disruptive impact of EVs is looking dire, a separate paper from UK law firm TLT this week points to a raft of wider economic opportunities from the shift to e-mobility - if investment, charging infrastructure, and regulatory hurdles can be overcome.
EV batteries are already opening up new opportunities for grid services, while the rollout of EV charging infrastructure will have implications for a range of other sectors including real estate, clean energy, financial services, retail, leisure, food and drink and the public sector, the paper argues.
Author of the paper Maria Connolly, head of clean energy at TLT, said the key to unlocking these benefits across various sectors of the economy would be driving up investment in charging points so that they are as widely accessible and easily operable for consumers as possible.
"EVs and their associated charging infrastructure are core components of the transition towards a sustainable energy future, but greater awareness and investment will be needed to drive the significant roll-out of this technology forward," she said. "The EV revolution provides an opportunity for unique partnerships across multiple sectors, as well as opportunities for innovative new players to enter the market. Electric vehicle charging infrastructure offers compelling investment potential and with limited government funding available, private investment will be essential."
The transport sector is set for its biggest transformation seen since the shift from horse and cart to the combustion engine over century ago, driven by economics, environmental regulation, and changing in consumer habits. But as our understanding of the extent of this disruption and its implications for businesses in almost every sector - from oil, energy, batteries, transport and beyond - grows by the day, the direction of travel towards a greener future remains the same.