PREDICTIONS that electric vehicles may take some time to attract buyers has proven to be wide of the mark after a Bloomberg New Energy Finance report showed buyers were ready and eager and the stumbling block of battery pricing was tipped to plunge.

Even Bloomberg was caught out, admitting in its 2016 report that it forecast EVs would account for 35 per cent of new-car sales by 2040. Last month it amended that to 54 per cent.

“We project 34 per cent of cars on the road will be EVs by 2040 – 530 million EVs in total – which will displace up to eight million barrels of transportation fuel per day,” the report said

In doing so, the EV growth will also add five per cent to global electricity consumption.

It said the growth in EVs would be driven by the falling price of batteries, stating: “The real take-off for EVs will happen in the second half of the 2020s due to plunging lithium-ion battery prices, which are set to fall by more than 70 per cent by 2030.

“We have increased our EV forecast from last year,” it said.

“We expect more aggressive EV adoption than we did in our 2016 forecast, due primarily to battery costs falling faster than expected and rising commitments from auto-makers.

“By 2040, 54 per cent of new-car sales and 33 per cent of the global car fleet will be electric.

“Falling battery prices will bring price-competitive EVs to all major light-duty vehicle segments before 2030, ushering in a period of strong growth for electric powertrain vehicles.”

Bloomberg’s report said that while EV sales to 2025 will remain relatively low “we expect an inflection point in adoption between 2025 and 2030, as EVs become economical on an unsubsidised total cost of ownership basis across mass-market vehicle classes.”

The winners in EV manufacture and sales will be China, the US and Europe which the report said would make up more than 60 per cent of the global EV market in 2040.
“The absolute size of these car markets are the primary drivers for high EV sales, though strong regulatory support in the 2015-2025 period will also spur demand that otherwise might not materialise.”

Bloomberg said that sales data in the third quarter of 2017 showed Chinese manufacturers were producing more EVs than other markets.

It said sales of BYD’s EVs comprised 25.7 per cent of its total vehicle sales – the highest percentage in the world. It was followed by Zotye (9.8 per cent), Jaingling (8.6 per cent) and BAIC (7.6 per cent).

Chinese car-makers occupy the first five places in the world before Porsche (with 4.5 per cent of sales) interrupts China’s stranglehold on EV production.

General Motors and Toyota each had 0.5 per cent to round out the top-19 EV producers that have strong EV sales compared with their internal-combustion engine vehicle sales.

Bloomberg said that the medium-car segment, which includes the Toyota Camry and Honda Accord, will account for much of this growth.

This is based on Bloomberg’s perception of the current size of the global mid-size car market as well as the favorable switchover costs from internal combustion engines to EVs beginning in the late 2020s.

The report also predicts that EVs will become price competitive on an unsubsidised basis beginning in 2025.

“Some segments will take longer, but by 2029 most will have reached parity with comparable internal combustion engine (ICE) vehicles,” it said.

“Real mass market adoption only starts after this point in most markets.”

The most popular power units will be from batteries as Bloomberg predicts battery electric vehicles (BEV) will leave plug-in hybrid vehicles (PHEV) behind.

“While we expect PHEV sales to play a role in EV adoption from now to 2025, after this we expect BEVs to take over and account for the vast majority of EV sales,” it said.

“The engineering complexity of PHEV vehicle platforms, their cost and dual powertrains make BEVs more attractive over the long-run.

“Only in Japan do we think PHEVs will continue to play an important role after 2030.”

It said lithium-ion battery demand from EVs will grow from 21GWh in 2016 to 1300GWh in 2030.

“We expect 270GWh of large format battery cell production to be online globally by 2021, led by global suppliers including LG Chem, Samsung SDI, Lishen, CATL, Tesla and others.

“The supply chain will need to scale up further in the 2020s to meet demand.”

With this comes a huge demand for electricity to recharge batteries. Bloomberg said electricity consumption from EVs will rise to 1800TWh by 2040 from 6TWh in 2016.

“While this represents just five per cent of our projected global power consumption in 2040, the ‘peakiness’ of fast-charging load profiles will need to be managed by utilities and regulators through the introduction of time-of-use rates to encourage off-peak charging, as well as storage solutions at the operator site which can mitigate high power demand from the grid,” Bloomberg’s report said.

Alarmingly, the report said charging infrastructure was still not solved.

“The amount of public EV chargers has grown significantly in the last five years, but more is needed.

“Even when EVs have reached cost parity with internal combustion engine vehicles, lack of home charging will be a significant barrier to adoption and will restrict EV sales from reaching 100 per cent.

“In our models, many countries that grab an early lead in EV adoption (China, US, parts of Europe) hit this ‘infrastructure cap’ in the mid-2030s and sales growth slows significantly.”

Bloomberg included an outlook for autonomous vehicles, saying they will be limited for the next 10 years.

“But ride hailing and car sharing services will have an impact sooner,” it said, adding that autonomous vehicles will be primarily shared and will begin to replace existing human-driven shared and hailed cars starting in 2030.

“This will start to impact vehicle sales and increase the average distance travelled per vehicle.

“We expect 80 per cent of all autonomous vehicles in shared applications to be electric by 2040 due to lower operating costs.”

By Neil Dowling