EVs could capture 80 percent of new car sales in China, Europe, and the U.S. by 2030

EVs could capture 80 percent of new car sales in China, Europe, and the U.S. by 2030

Energize Weekly, October 11, 2023

While it took six years for electric vehicles (EVs) to climb to from 1 percent to 10 percent of the passenger car market, in another seven, they could capture as much as 80 percent of new auto sales in leading countries, according to an analysis by clean energy consultant RMI.

“There is a clear exponential growth pattern for electric vehicle sales, established by the leaders such as Northern Europe and China, and driven by policy,” RMI said.

Both China and Europe have policy targets to ban the sale of internal-combustion vehicles by 2035. Meanwhile in the U.S., the Biden administration has set a goal of 50 percent of domestic auto sales by 2030.

In addition to policy initiatives, the economics for EVs continue to improve and with that their competitiveness with internal-combustion engine (ICE) vehicles.

“Because battery costs enjoy learning curves, total cost of ownership price parity has been reached, and sticker price parity will be reached in every major car market and segment by the end of the decade,” RMI said.

Since 2010, battery costs have fallen 88 percent. The average global battery price in 2022 was $151 per kilowatt-hour and $131 in China. Meanwhile, the energy density of batteries increased by around 6 percent a year, improving their performance.

The result is that the total cost of ownership (both the purchase with government rebates and operating the vehicle) reached price parity in leading markets outside the U.S. in the early 2020s. Key elements include cheaper energy (electricity is less expensive than oil), lower running costs and subsidies.

RMI has calculated that the Biden administration’s Inflation Reduction Act (IRA) will also bring total cost of ownership price parity in the U.S., as well.

While EVs are on the upswing, demand for new ICE vehicles peaked in 2017 and has been dropping at a rate of 5 percent a year. “Rising scrappage and falling sales mean that the ICE fleet is about to peak and will be falling rapidly by 2030,” RMI said.

Cars make up about a quarter of global oil demand and accounted for more than a third of the growth in oil consumption between 2010 and 2019, even as fleet fuel efficiency increased around 2 percent a year.

Oil demand for cars reached its peak in 2019, according to the International Energy Agency. BloombergNEF and Rystad Energy forecast that oil demand for cars will rise slightly above or to its 2019 level, but RMI said that demand will reflect no more than hitting a plateau.

A separate Rystad Energy study calculated that over the full life cycle – from mining, to manufacture, to use, to end-of-life – battery-powered vehicles (BEV) contributed about half the greenhouse gas emissions of diesel or gasoline cars.

“Switching to a BEV will reduce long-term emissions despite a larger environmental impact at the beginning of the vehicle’s life,” Abhishek Murali, senior clean tech analyst, Rystad Energy, said in a statement. “Contrary to some claims, electric car adoption is not a fool’s errand; it will slash emissions in the long run.”

RMI projects that ICE vehicle sales will make up no more than 14 percent to 38 percent of sales by 2030 – between 14 million and 38 million cars a year.

The biggest market is China where EV sales are projected to account for 90 percent of sales in 2030. Already China has sticker price parity with ICE autos, with the bestselling EV in 2022 costing about $5,000.

“EV penetration has been running ahead of targets in a number of markets, most notably in China,” RMI said. “For example, Beijing’s EV share target for 2025 was 25 percent, but it already reached 29 percent in 2022.”

Growing sales, however, will challenge electric grids and need an expanded charging network. “We need to upgrade electricity infrastructure, deploy more charging networks, recycle batteries, and solve a range of complex challenges,” RMI said.

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