Global EV sales bounce back from the pandemic, set to hit 14 million vehicles by 2025

Energize Weekly, September 8, 2021

Global electric vehicle sales have rebounded from the pandemic with a forecast of reaching 16 percent of all passenger car purchases by 2025, but the pace remains far short of what it will take to get to net-zero emissions for cars, trucks and buses by 2050, according to BloombergNEF.

In its 2021 Electric Vehicle Outlook, Bloomberg projects that annual passenger electric vehicle (EV) sales will rise from 3.1 million in 2020 to 14 million in 2025.

The 12 million passenger EVs currently on the road represent 1 percent of the global fleet. The total number will rise to an estimated 54 million vehicles by 2025.

While EVs will take a 16 percent share of the worldwide market in 2025, some national markets will have much higher penetration, such as Germany with 40 percent of all sales and China – the world’s largest auto market – with 25 percent.

“The combination of a gradual recovery in overall vehicle sales from the COVID-19 pandemic and faster EV adoption means that combustion vehicle sales in the passenger segment have almost certainly passed their peak (in 2017) and are now in permanent decline,” the Outlook said.

New regulations and policies in Europe and China, such as tighter vehicle emission rules in Europe and China’s new-energy-vehicle credit system, will continue to drive EV adoption, making them the two dominant EV markets through 2025.

U.S. policies, such as fuel efficiency standards, will have limited impact for 2021, but will begin to help increase adoption after 2022, particularly as more attractive local EV models come to market, especially in the pickup truck segment.

The challenge of getting to net-zero emissions rest largely on getting more penetration in the light truck, bus and heavy vehicle markets, the report said.

While there are about 600,000 e-buses on the road worldwide – 16 percent the global fleet, and 39 percent of new sales – China accounts for 98 percent of all those buses. China’s share of new sales will slow in as the market becomes saturated, Bloomberg said.

Some of that will be offset by a pick-up in e-bus markets in Europe, the U.S., South Korea and Southeast Asia with annual sales rising to 14,000 in 2025 from 5,000 in 2020.

“Adoption of EVs in the commercial van and truck market is further behind, but is picking up speed,” the Outlook said. “Electrification is also making inroads into heavier vehicles. In urban duty cycles, battery electric trucks of any size become the cheapest option for several use cases in the 2020s.”

Longer term, Bloomberg looked at two scenarios: an “economic transition scenario” based on technical, economic and market forces, assuming no new policies or regulations, and “net zero scenario.”

Under the economic transition scenario, the fleet of internal combustion passenger vehicles keeps growing until 2027 and then declines steadily. By 2040, there would be 600 million passenger EVs on the road and 750 million electric bikes and three-wheelers.

Still, the scenario has more than 900 million internal combustion vehicles on the road in 2040 – more than half the fleet.

Zero-emission vehicles make up 30 percent of the market sales in 2040 under the economic transition scenario.

To reach net-zero emissions by 2050, clean medium and heavy-duty vehicles need to have 95 percent market share by 2040 and across all segments internal combustion vehicles have to be phased out by 2035, the report said.

“Despite the rapid rise in EV adoption, road transport is still not on track for carbon neutrality by 2050 and aggressive action from policymakers will be needed, especially on heavier vehicles,” the Outlook said. “The window to stay on track for net-zero is closing quickly.”

Even under the economic transition scenario, oil demand from road transport peaks globally in 2027. Consumption has already peaked in the U.S. and Europe and will start to drop in China after 2026, the report said.

A number of elements are contributing to the decline in fuel demand including alternative drivetrains, fuel economy improvements of combustion vehicles, and the increase in shared mobility services, which go electric faster than privately owned vehicles.

The electricity used to charge electric vehicles on the road would add 9 percent to global demand by 2040 in the economic transition scenario and 14 percent under the net-zero scenario.