E-vehicles to be 35% of sales by 2040 thanks to falling battery prices

The new car market could change dramatically after 2020 with sales of electric vehicles set to rocket, according to research by the energy information and analysis service, Bloomberg New Energy Finance (BNEF).

BNEF has published a study based on the total cost of owning a car or van, which shows that e-vehicles will probably not account for more than 5% of the total global market up to 2020, but in the decade up to 2030 a lot of technical improvements will take place which will cause them to gain sufficient advantage over petrol and diesel cars. It estimates annual sales of 41 million e-vehicles by 2040, or 35% of all new car and van sales. (In 2015 e-vehicle sales were 462,000.)

The biggest technological advance BNEF expects is in car batteries. The study forecasts lithium-ion batteries will cost less than $120 per KWh by 2030, about one-third of the current cost, which means e-vehicles will become cheaper than internal combustion engine vehicles – even without subsidies – by the mid-2020s. It assumes an oil price of between $50 and $70 per barrel, and that a battery-powered car with a 60 KWh battery will travel 320km between charges.

The environmental impact will depend on what generates the electricity. BNEF estimates the move to e-vehicles will save about 13 million barrels of oil per day. That will be replaced by 1,900 TWh of electricity, amounting to 8% of global electricity demand by today’s numbers. Therefore, the split in the sources of electricity will be crucial to determining the extent to which e-vehicles reduce climate-changing emissions – the more renewable sources, the more emissions can be reduced.