EVO 2020
Mobility is at the core of modern civilization, and the way people and goods move impacts many aspects of life. The next 20 years will bring...
Electric Vehicle Outlook 2020
Executive Summary
Introduction
What's new in EVO 2020 and how will Covid-19 impact the EV industry?
Mobility is at the core of modern civilization, and the way people and goods move impacts many aspects of life. The next 20 years will bring significant changes as electrification, shared mobility, vehicle connectivity and, eventually, autonomous vehicles reshape automotive and freight markets around the world.
Technology changes are at the core of this transition, but other factors are also playing an important role. Policymakers are driving the automotive market toward low-carbon options and improved fuel efficiency. Countries are competing to build the next clusters of high-value industry. Automakers and large fleet operators are taking long-term decarbonization targets increasingly seriously. Meanwhile, urbanization continues its steady march around the world, leading to increased concerns around congestion and urban air quality, and changing consumer preferences.
This is BloombergNEF’s fifth annual Long-Term Electric Vehicle Outlook (EVO). There are now over 7 million passenger EVs on the road and electrification is spreading to other segments of road transport.
"There are over 500,000 e-buses, almost 400,000 electric delivery vans and trucks, and 184 million electric mopeds, scooters and motorcycles on the road globally."
Electric Vehicle Outlook 2020, BloombergNEF
Battery prices continue to fall, policy pressure is rising in many countries, and compelling new EV models are hitting the market.
But the Covid-19 pandemic is set to cause a major downturn in global auto sales in 2020, and is raising difficult questions about automakers’ priorities and their ability to fund the transition. The long-term trajectory has not changed, but the
market will be bumpy for the next three years, and the difference in EV adoption between countries is set to widen dramatically.
This report updates our view of how road transport will evolve over the next 20 years. It includes forecasts for global EV adoption in:
- Passenger vehicles
- Commercial vans and trucks
- Two- and three-wheeled vehicles
- Buses
It also includes detailed analysis on shared mobility, autonomous driving, freight demand, EV charging infrastructure and fuel cell vehicles, and explores the resulting impacts on electricity, oil, battery materials and carbon emissions.
The important new areas of analysis in this year’s EVO are the following:
• Covid-19: this year’s forecast comes out at a time
of great uncertainty for the EV market and the auto market overall. We have added a new section on how this will impact vehicle sales, kilometers traveled, freight demand, shared mobility and the shape of the recovery ahead.
• Electrification of two-wheeled vehicles: there are now over 900 million mopeds, scooters and motorcycles on the road globally and this segment is going electric much faster than others. Some 30% of global two-wheeler sales are already electric.
• Hydrogen fuel cell vehicle forecast: this builds on BNEF’s analysis on the cost of the vehicles and ‘green’ hydrogen, and how adoption will look across different vehicle segments.
• Adoption of ‘Advanced Driver Assistance Systems’: this focuses on how features like lane keeping assist and automatic emergency braking are being added to vehicles. These features are sometimes referred to as ‘Level 2+ automation’ and we have added them to our forecast for fully autonomous vehicles to better show the expected evolution of autonomy.
• EV charging infrastructure forecast: this includes a new model to forecast how much public, workplace and private charging infrastructure will be needed under different scenarios. We have also updated electricity load profiles by segment, and our ‘infrastructure de-rating factors’ in our model with more detailed information on housing types and access to home charging infrastructure.
• Updated lithium-ion battery price and chemistry forecast based on our most recent market survey: we have developed a battery chemistry forecast for each of the new segments covered in this year’s report and updated previous ones with the latest data.
• Update on metals availability for batteries: this is based on our supply/demand forecast for key metals including cobalt, lithium and nickel.
• Implications for emissions: this year’s report includes more detail on how road transport emissions will evolve over the next 20 years. It also includes a review of which countries have put in place internal combustion vehicle phase-out targets and the seriousness of these.
• Finally, we have re-run our vehicle economics and bass-diffusion models using the most recent EV sales data and vehicle pricing for all segments. The EV market is still in the early stages so each additional year of data helps calibrate results.
Short-term outlook and Covid-19
We expect global passenger vehicle sales to plunge an unprecedented 23% in 2020, and EV sales to drop for the first time in the modern era. Global auto sales do not recover to 2019 levels until 2025. Commercial vehicle sales also fall, but recover by 2022 due to rising e-commerce and growing freight demand in China and emerging economies.
EV sales hold up better than combustion vehicles in most markets, due to a backlog of orders, new models, and supportive policy in Europe and China in particular. Even so, they drop 18% to around 1.7 million in 2020. The shape of the recovery varies around the world, with EV sales in China and Europe pulling ahead.
EVs’ share of global sales is relatively flat in 2020 at around 3%, but then continues rising and hits 7% in 2023 with sales of around 5.4 million. Some automakers delay EV launches in North America, but the timelines in Europe and China remain largely unchanged.
Public transit use has been hit hard by Covid-19. Lockdown measures will be lifted gradually and there will be a lasting reduction in ridership of municipal bus and metro services. This will lead to more traffic congestion in cities. Shared mobility operators have also suffered, but will rebound quickly on the back of food delivery, logistics and micromobility services.
By 2023, total kilometers traveled by road returns to 2019 levels. The pandemic highlights the value people place on private car ownership during times of crisis.
Long-term passenger vehicle outlook
The long-term outlook for EVs remains bright, as fundamental cost and technology improvements outweigh the short-term impacts of the pandemic. Some near-term EV model launches will be delayed, but manufacturers so far are sticking to their long-term electrification commitments.
By 2025, EVs hit 10% of global passenger vehicle sales, rising to 28% in 2030 and 58% in 2040.
Electric Vehicle Outlook 2020, BloombergNEF
Some markets achieve much higher penetrations, but low adoption in emerging markets reduces the global average.
Price parity between EVs and internal combustion vehicles is reached by the mid-2020s in most segments, but there is a wide variation between geographies. The first segment (large cars in Europe) crosses by 2022, while small vehicles in India and Japan do not hit parity until after 2030 due to very low average purchase prices in these segments.
Until these tipping points are reached, policy support is still required in most markets. Sales rise quickly thereafter, but charging infrastructure availability starts to constrain the market in the 2030s, for people without access to home or workplace charging options.
China and Europe combined represent 72% of all passenger EV sales in 2030, driven by European vehicle CO2 regulations and China’s EV credit system, fuel economy regulations and city policies restricting new internal combustion vehicle sales. Automakers focus their passenger EV efforts on the markets with the most stringent regulations for the next 10 years, leading to low rates of EV adoption in the Rest of World category.
The U.S. falls further behind leading EV markets over the next few years, but catches up in the 2030s. Nearly 60% of U.S. households have two or more cars – and many have the ability to install home charging – making them ideal adopters as EV economics, range and recharging options continue to improve.
South Korea also achieves high levels of EV adoption due to strong government support and a push from domestic auto and battery manufacturers. EV adoption in Japan is lower than in South Korea but picks up from 2025 as Japanese automakers launch more EV options.
Plug-in hybrids (PHEVs) account for a larger share of our short-term forecast than in the past, in particular in Europe as automakers push to meet the 2030 vehicle CO2 targets.
"Plug-in hybrids represent 28% of global passenger plug-in vehicle sales in 2025 and 26% in 2030, but their share drops quickly in the 2030s as battery electric vehicles continue to get cheaper."
Electric Vehicle Outlook 2020, BloombergNEF
Passenger vehicle sales peak in 2036 and never cross the symbolic 100 million per year mark. The motorization rate still rises steadily in India and other emerging markets, but this rise is not enough to offset the demographic-driven sales declines in mature auto markets, or offset the trends of more urbanization and more shared mobility.
Sales of internal combustion passenger vehicles peaked in 2017 and are in permanent decline, but the fleet keeps growing until 2030.
By 2040 there are just under 500 million passenger EVs on the road, out of a total passenger vehicle fleet of 1.6 billion. This means about 31% of the world's passenger cars are electric - but some regions go much higher, with China and parts of Europe at over 50%.
In 2040, there are still more kilometers driven globally by internal combustion passenger vehicles than EVs.
Some 13 countries and 31 municipalities or regions have announced targets for phasing out sales of new internal combustion vehicles, mostly by 2030 or 2040. Many of these are aspirational targets and it is not clear how they will be implemented, but a few are starting to receive legal backing. The 13 countries with targets represent 13% of global auto sales in 2019. Our forecast does not assume any of their targets are met. Click to see table in full below.
"Despite the dip from Covid-19, shared mobility plays a growing role, reaching 16% of all road kilometers traveled in 2040, from around 5% in 2019."
Electric Vehicle Outlook 2020, BloombergNEF
Fully autonomous vehicles, or ‘robotaxis’, begin to play a much larger role in the late 2030s, and the growing deployment of advanced driver assistance systems (ADAS) in the 2020s helps
build the sensor supply chain to enable this. Kilometers traveled go electric faster than the fleet, because EVs are operated at higher utilizations.
Colin McKerracher talks through the 2020 Long Term Electric Vehicle Outlook findings in this BNEF Talk -- video here.
Other vehicle segments
and fuel cell vehicles
Looking beyond passenger cars, several ‘killer apps’ are emerging for electrification in the 2020s. Two- and three-wheeled vehicles (scooters, mopeds, motorcycles, tuktuks and rickshaws) and municipal buses are already going electric quickly and accelerate further in the next five years, spreading beyond China.
Delivery vans and ride-hailing vehicles are the next segments to cross the tipping point.
Some 30% of global two- and three-wheeler sales and 20% of the existing fleet are already electric. China accounts for the bulk of two-wheeler electrification to date, but sales are growing rapidly in markets like Taiwan, Vietnam and India. Supportive policies, rising manufacturer interest and rapidly improving economics will soon push two- and three-wheeler electrification significantly higher.
"In 2040, the electric two-wheeler sales share reaches 77%, and the electric fleet share reaches 47%."
Electric Vehicle Outlook 2020, BloombergNEF
Our e-bus forecast remains unchanged from last year, with e-buses comprising over 67% of the global bus fleet in 2040. Electric buses do not fully take over the market. Diesel and eventually hydrogen fuel cell buses round out the rest of the fleet by 2040 in areas:
- Where installing charging infrastructure is difficult
- Where temperatures are extreme
- Near industrial clusters where hydrogen production is being deployed
- Where local incumbents favor such technology
Road freight demand continues to grow to 2040, but the growth is uneven between segments and countries. Small vans and trucks increase in importance, with demand rising more than 50% by 2040. In the U.S., Europe, China and India, growth will be even higher. In contrast, heavy-goods transport demand will grow much more in developing economies.
Commercial EV adoption is driven by cities, as urbanization and e-commerce are leading to new efforts to reduce local pollution and improve the quality of living. In several large markets, more than one third of commercial vehicles on the road – of any size – serving urban applications are electric or fuel cell by 2040. The economics of this are already favorable for some use cases.
Electric vehicle adoption for urban and some regional duty cycles is faster than for the overall commercial vehicle market. Even in heavy-duty segments, EVs reach more than a third of sales in cities in the U.S., Europe, China and elsewhere by 2040 as many of these operate relatively short trips.
Fuel cell vehicles
Fuel cell vehicles (FCVs) represent just under 1% of the global passenger vehicle fleet in 2040. Even achieving this requires a thousand-fold scale up from the 20,000 passenger FCVs on the road today, and a dramatic reduction in the cost of producing green hydrogen.
Hydrogen’s higher energy and power density makes FCVs better suited for applications involving heavier loads and/or daily long-distance travel. As a result FCVs achieve higher adoption rates in commercial vehicles and buses. By 2040, FCVs account for 1.5% of the medium-duty truck sales, 3.9% of heavy-duty and 6.5% of municipal bus global annual sales.
FCV adoption will be geographically limited, with higher adoption rates in California, China, parts of Europe, Japan and South Korea. These are all regions with active plans for the deployment of hydrogen refueling infrastructure.
Impacts for energy and emissions
Globally, passenger EVs consume 1,290TWh, commercial EVs consume 389TWh, e-buses consume 216TWh and electric two-wheelers consume 69TWh by 2040. Combined, these add just 5.2% to global electricity demand in that year.
The combined EV electricity demand profile flattens as electrification spreads to new segments with different usage patterns, and as more charging options become available. Some smart charging and time-of-use pricing will be needed to prevent localized constraints, but overall the power market can comfortably integrate the additional demand. In many advanced economies, EVs prevent overall electricity demand from falling.
"EVs across all segments are already displacing 1 million barrels of oil demand per day."
Electric Vehicle Outlook 2020, BloombergNEF
Most of this is from two- and three-wheelers and buses in China. This rises to 17.6 million barrels of oil demand per day globally by 2040.
Oil demand from passenger vehicles is hit hard by Covid-19 and never recovers to 2019 levels. But growth in heavy commercial vehicles keeps overall road transport oil demand growing until 2031, when it starts to decline. This is driven primarily by growth in emerging economies. Road transport oil demand in Europe and the U.S. has already peaked.
Direct road transport CO2 emissions drop in 2020, but then recover and continue growing until 2031 as the vehicle fleet mix slowly changes. Adding in emissions from the power sector pushes the peak back to 2033.
EVs and fuel cell vehicles reduce road CO2 emissions by 2.57Gt a year by 2040 – and are set for much larger reductions thereafter – but total emissions are still 6% higher in that year than they were in 2019. More stringent fuel economy regulations for commercial trucks and other policy measures will be needed to bend the curve faster.
Batteries and charging infrastructure
EV battery demand has a slow start to the decade, with 2020 shipments 14% lower than in 2019. But by 2030 demand grows almost 14-fold to 1,755GWh. Manufacturers have announced plans totaling 1,769TWh of annual capacity planned by 2025. China still dominates, but capacity is growing in other regions.
"By 2024, battery pack prices go below $100/kWh on a volume-weighted average basis, driven in part by the introduction of new cell chemistries and manufacturing equipment and techniques."
Electric Vehicle Outlook 2020, BloombergNEF
Simplified pack designs introduced for battery electric vehicle platforms also help. By 2030, pack prices reach $61/kWh, but high levels of investment will be needed to keep prices falling.
New EV battery chemistries are being adopted faster than in the past. Around 2023, lithium nickel manganese cobalt aluminum oxide (NMCA) will start to enter the EV market. This provides higher energy densities and a longer cycle life than the equivalent NMC or NCA material.
Lithium supply looks sufficient for the 2020s, but new cobalt mining capacity will need to come online to avoid a supply crunch. We do not expect any long-term shortage of these materials to persist.
About 290 million charging points are needed globally by 2040 to support the growing EV fleet. Home charging is by far the largest category, but around 12 million public charging points are needed as the number of EV owners with access to home charging options saturates.
Almost 1 million public charging points are already installed globally. This is rising much faster in Europe and China than elsewhere.
The ratio of EVs to public charging points varies widely today but converges at around 40-50 for Europe and the U.S. by 2040. China has a lower ratio (ie, more public chargers) due to its high-density housing stock and more emphasis on rapid charging. Then 150kW chargers become the speed of choice for fast charging, but higher speeds of 350kW and up also play a small role.
Cumulative investment in all types of charging hardware and installation reaches $500 billion globally by 2040. China accounts for 50% of global cumulative investment in 2025, but by 2040 it is split evenly between China, Europe, the U.S and the Rest of the World.
Home, workplace and private commercial charging account for 78% of all investment, so most of this is funded by private individuals and companies looking to take advantage of the lower costs of going electric.
Public charging investment is much lower, requiring a cumulative $111 billion across all countries by 2040. We expect most of this can be provided profitably by the private sector as utilization rates rise in the 2020s, but government support may be needed in some regions. Hardware costs fall rapidly as the technology becomes commoditized.
