BNEF: ‘Outlook for EVs remains bright, despite near-term challenges’

BloombergNEF’s Electric Vehicle Outlook 2024 shows that EV adoption is still growing worldwide. With advances in EV technology and battery prices further falling, the future is bright despite an apparent slowdown in some countries and car manufacturers revising their EV policies.

EVs are still the most cost-effective and commercially viable route to fully decarbonizing transport. Next year, 83 million electric cars, trucks, and buses will be on the road, and over 340 million electric two- and three-wheelers. By 2027, electric vehicles will avoid burning almost 4 million barrels of oil per day, the equivalent of what a country like Japan consumed in 2022.

Fossil fuel demand peak in 2027

The latter also means the peak in fossil road fuel demand will be reached by 2027. Without EVs and fuel-cell vehicles, fuel consumption by road traffic would continue to grow until 2041. Sales of cars with internal combustion engines (ICE) have already peaked in 2017, says BNEF. By 2027, sales of ICE are set to be 29% below their 2017 peak.

Still, only a few Nordic countries and California are on track to have a fleet of entirely zero-emission passenger vehicles by 2050. But BNEF warns, “The window for achieving net-zero emissions in road transport is closing quickly, and there is no room left for complacency. EVs are still the most cost-effective and commercially viable route to fully decarbonizing transport.”

ICE fleet no longer growing

The peak of the total global fleet of vehicles on fossil fuels will be reached next year in 2025. However, driven by stricter emission rules, hybrids will still play a meaningful role, BNEF estimates. Europe, the US, China, Japan, and South Korea expect full hybrid sales to surpass 15 million units annually by 2030.

Adoption rates can range between 20% and close to 50% in different markets. In Japan, for instance, the lack of EV commitment from major domestic carmakers like Toyota and the lack of new models in the mini-car segment (kei-car) are holding the BEV market back.

EV adoption slowdown

Several European countries like Germany scaled back government support for EVs sooner than initially planned, and that effect is showing. “The EV sales growth slowdown is real, but it is not the same everywhere in the world. Countries like China, India, and France are still showing healthy growth, but the report says the latest data for Germany, Italy, and the US are more concerning.

Although not mentioned by BNEF, Belgium, driven by a rapidly electrifying company car market that accounts for more than 60% of all new car registrations, is currently the third best-selling market for BEVs in Europe, according to the latest ACEA figures.

Revising near-term goals

With demand for EVs slowing down in some major markets, several automakers – including Tesla, Mercedes-Benz, General Motors, and Ford – have revised their near-term goals for electric vehicles downward.

However, Chinese automakers continue to do well with their EV sales, and the Koreans are not following the slowdown rhetoric. Hyundai and Kia announced affordable EV models and set ambitious targets. Volvo proved it can be done with its EX30, which was the driving force behind the 75% year-on-year increase in the automaker’s EV sales in Europe in April.

BNEF remains optimistic, saying improving the economics of electric vehicles will underpin the continued long-term growth in EV adoption, reaching 45% of global passenger-vehicle sales by 2030 and 73% by 2040 in BNEF’s Economic Transition Scenario. Nevertheless, less than 50% of the global passenger-vehicle fleet is set to be electric by 2040.

EV sales will rise from 13.9 million in 2023 to over 30 million in 2027. At that time, 33% of all new passenger car sales worldwide will be EVs. “Only China (60%) and Europe (41%) will be above that global average by then,” BNEF predicts.

However, in these next four years, growth will be slower, at an average of 21% per year, compared to the average of 61% between 2020 and 2023. Only 29% of US sales will be EVs in 2027. Some European car markets move faster than the global average, with the Nordics at 90% and Germany, the UK, and France above 40%.

Still, BNEF concludes that this won’t be enough to achieve zero-emission road transport by 2050. “For the world to achieve a completely zero-emission vehicle fleet by 2050, sales of combustion vehicles need to stop around 2038 in our Net Zero Scenario, with leading markets phasing out combustion in the early 2030s. In the Economic Transition Scenario, only the Nordic countries reach a full phase-out of combustion vehicles before 2038.”

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