With 1.6 mn EVs on the road, oil demand may drop by 7 mn bpd by 2020: report
22 May 2018
Electric vehicles will become cheaper than the internal combustion engine in half a decade, while electric buses will completely “dominate” its sector by the late-2020s, according to Bloomberg New Energy Finance (BNEF).
According to BNEF’s just published Electric Vehicle Outlook 2018 report, EV sales will top 1.6 million in 2018, up from just a few hundred thousand in 2014. This could erase oil demand by 7 million barrels per day, the reports says
The acceleration in sales can be attributed to falling battery costs, which have declined by 79 per cent since 2010, falling from over $1,000 per kilowatt-hour to just $209/kWh at the end of 2017. Energy density has also increased by 5 to 7 per cent each year. BNEF estimates battery costs to drop to lows around $70/kWh by 2030.
The governments’ support to EVs and rising concerns about pollution risks as also volatile oil market have all combined to make EVs a more desirable form of transportation.
The electric mobility thrust is led by China, which offers both carrots and sticks in its promotion policy: China accounted for roughly 21 per cent of all EV sales in 2017. By 2025, China will account for roughly half of the entire global EV market, according to the BNEF report.
Also, automakers are now making available an array of new EV models and the number of EV models are expected to nearly double from 155 at the end of 2017 to as many as 289 by 2022, says the report.
EVs currently account for less than 2 per cent of the auto market in most of the world. And all is not rosy for electric vehicles with a lack of recharging infrastructure in most markets and rising costs of battery inputs.
Without significant investment in new cobalt capacity, for instance, there could be shortages within a few years. “If capacity does not grow as planned, cobalt prices could continue to spike and there could be a major cobalt shortage,” BNEF analysts said. “This would have serious implications on the electric vehicle market.”
Cobalt prices have already tripled in the past two years, and with supply lagging demand, prices could continue to rise. The problem is all the more worrying because new mines have long lead times, which sets the market up for some serious speed bumps in the early 2020s.
Nevertheless, the BNEF forecast is bullish for EVs. Sales are expected to continue to accelerate, topping 11 million units by 2025 and 30 million by 2030. By 2040, EV sales will hit 60 million, or about 55 per cent of the global market for light-duty vehicles. Cumulatively, about 559 million EVs will be on the roads in 2040, or about a third of the global fleet.
Electric buses will reach cost parity with conventional municipal buses as soon as next year, BNEF says. And whereas EVs will capture 28 per cent of the market by the late 2020s, e-buses will “dominate” its segment, making up 84 per cent of the bus market by the same date.