Electrification will arrive 5 years sooner than previously expected – are we ready?

It feels like the electric vehicle has been on the cusp of a breakthrough for well over a decade. Ongoing innovations have increased journey range and there's been progress in the form of decreased EV battery cost (around 80 percent in the past seven years) as well as EVs gaining some economies of scale. Further, there have been financial incentives for EVs making them comparable with internal combustion engine vehicles. The recent combination of global government regulatory mandates, monetary incentives and changing consumer attitudes toward the environment have created the opportunity necessary for EVs to go more mainstream.

Take, for example, the U.S. where President Joe Biden is supporting the development and adoption of EVs. He has pledged to create 500,000 EV charging stations by 2030, which I think is ambitious considering where we are now. Yet, according to the BloombergNEF energy research group, that 500,000 may only cover 57 percent of the charging stations needed for implementation at-scale, leaving the door open for new solutions, including public-private partnerships, to pave the way forward.

Despite the long road to full-scale electrification, new data from the EY AI-powered Mobility Lens Forecaster predicts that ongoing advancements will be the push that propels EVs into the mainstream. The EY Mobility Lens Forecaster predicts EVs will represent most global sales by as soon as 2033 — five years ahead of previous expectations.

A confluence of factors colliding to create new opportunities for EVs across the globe, including changes ushered in by the COVID-19 pandemic. The forecasting model has been updated to account for a post-pandemic outlook of automotive and mobility user supply and demand through 2050, which shows a bright future for EVs. The Forecaster predicts that:

• By 2028, EV sales in Europe will surpass those of ICE vehicles (including hybrids). The same is expected to happen in China by 2033, and in the U.S. by 2036.
• Europe is expected to lead EV sales until 2031 (in absolute units), with China taking the lead from 2032 to 2050.
• By 2045, non-EV sales will shrink to less than 1 percent of overall sales globally.

There are many factors at play when considered the forecast, but one that is playing a major role is that there is a new generation of car buyers emerging as a result of the global pandemic. In fact, many people who had rejected ownership in lieu of ridesharing and public transport appear to have changed their minds. In November 2020, almost one-third of non-car owners said they planned to buy a car in the next six months (19 percent plan to buy new, 12 percent used), and about half (45 percent) of those looking to buy are millennials, as reported by the EY Mobility Consumer Index in November 2020. In China, millennials represent 51 percent of new car buyers. In the U.K., the Mobility Consumer Index shows millennials constitute 55 percent of buyers, and in the U.S. millennials represent a 30 percent share with Gen Z adding another 33 percent.

Equally telling, among both current car owners and non-car owners, 30 percent said they'd prefer a non-ICE vehicle for their next purchase.

This shift along with the factors around cost and journey range are tipping the scales toward EVs. For example, incentives to purchase electric vehicles are part of COVID-19 relief measures in France, Germany, Spain, Italy and Austria. The U.K. has announced that it will ban the sale of ICE vehicles starting in 2030. And automakers have also begun to set their own twilight dates for gasoline- and diesel-powered vehicles in favor of EVs. The Biden administration's commitment to continue EV incentives with $174 billion spending planned over the next decade, replacing the government fleet of around 650,000 vehicles with EVs, support for American automakers to build electric vehicles and batteries, and an investment in charging infrastructure that will also encourage consumers to move away from ICE vehicles.

At the EY organization, teams have already begun using the data from the Mobility Lens Forecaster to help business and government clients. This includes helping a leading energy company come up with a plan for their charging infrastructure roll-out based on expected EV penetration, as well as working with a major city council in the U.K. to develop it as a leading EV city and to support its deployment strategy for EV charging infrastructure.

I remain bullish about the future of EVs, but also recognize we have a long road ahead. Big barriers remain in the push toward electrification, chief among them are limited choice of models, inequity of ownership cost compared with ICE vehicles and range anxiety.

Yet it is my belief that with all the forward momentum happening across this industry, EVs will comprise the majority of global sales by as soon as 2035. And that's a future that truly shines bright.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.