New figures published this week by energy analysts Wood Mackenzie predict that electric vehicle (EV) sales will reach 45 million per year by 2040, with a total of 323 million EVs on roads around the world.
Wood Mackenzie’s figures, while impressive and a strong sign for the EV industry, are nevertheless down on previous forecasts. In fact, both annual sales and cumulative EV stock are down 2% compared to Wood Mackenzie’s forecasts released before the impact of the global COVID-19 pandemic.
Interestingly, though somewhat unsurprisingly, Wood Mackenzie are quick to point out that, despite the downward revision, responses from China and Europe have both “strongly supported” a transition to a green recovery, whereas “the US response has not been as favourable to transport electrification.”
“Despite EV stock growing to 35 times its current size, the transport emissions curve will flatten and not fall,” said Ram Chandrasekaran, Wood Mackenzie Principal Analyst. “The global CO2 emissions contribution of transport will increase by 1.3 megatons between now and 2040.
“Major automakers have set their sights on being climate neutral by 2050 and view battery electric vehicles (BEVs) as the strongest lever to achieving that target.”
Wood Mackenzie highlights in their figures two streams of EV adoption – commercial EVs and passenger EVs. Commercial EV adoption is expected to have fewer barriers to entry as compared to passenger EV adoption, and Wood Mackenzie expects it will be driven primarily by cost rather than emissions regulations.
Specifically, Wood Mackenzie expects to see adoption of commercial EVs experience a step change when the total cost of ownership slides far enough in favour of EVs as compared to traditional commercial vehicles.
As such, Wood Mackenzie expects commercial EV sales to top 5.5 million per year by 2040, hitting a cumulative stock on our roads of 40 million.
“Electric buses in China have represented the entirety of commercial EVs for the past few years,” Chandrasekaran explained. “Buses will lead the electrification of the global commercial segment until 2026. Post-2026, light-duty trucks will take over the charge.
“Unlike retail customers, fleet owners are well versed in the capital and operational expenses of their vehicles. They also have well-defined operating routes, as well as overnight parking locations.
“Electrification of the US pick-up truck market is hotly contested with several new players including Rivian, Bollinger, Lordstown Motors and Nikola receiving significant funding and each having at least one product on sale in the next two years.”
Nevertheless, emissions regulations will still play a significant role in driving EV adoption, as strict regulatory targets are mandated around the globe and, in their efforts to meet such targets, automakers are turning to EVs which are favoured by existing mechanisms for measuring emissions. These regulations, however, are more strict on passenger EV models and more lenient on commercial vehicles.
Further, a lack of EV charging infrastructure and the high prices associated with EVs have remained a consistent thorn in the side of passenger EV adoption. Conversely, however, Wood Mackenzie has seen some signs of progress on both fronts.
“The projected price of battery packs keeps dropping,” said Chandrasekaran. “We expect the US$100/KWh threshold to be breached by 2024, one year earlier than our previous projections.
“Cumulative residential and public charging points are projected to grow to 32.5 million and 5.4 million outlets by 2030 and will have an investment value of US$2.7 billion and US$3.3 billion, respectively.”
Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.