EVO 2021
Mobility is at the core of modern civilization, and the way people and goods move impacts many aspects of life. The years ahead will bring significant...
Electric Vehicle Outlook 2021
Executive summary
Mobility is at the core of modern civilization, and the way people and goods move impacts many aspects of life. The years ahead will bring significant changes as electrification, shared mobility, vehicle connectivity and, eventually, autonomous vehicles reshape automotive and freight markets around the world.
This is BloombergNEF’s sixth annual Long-Term Electric Vehicle Outlook (EVO). There are now 12 million passenger EVs on the road and electrification is spreading to other segments of road transport. There are over 1 million commercial EVs, including buses, delivery vans and trucks, and there are over 260 million electric mopeds, scooters, motorcycles and three-wheelers on the road globally. Battery prices continue to fall, policy pressure toward ‘Net Zero’ is rising in many countries, and compelling new EV models are hitting the market.
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 window to stay on track for Net Zero is closing quickly.
This report updates our outlook for how road transport could evolve over the next 20 years. It includes outlooks for EV adoption in passenger vehicles, commercial vans and trucks, two- and three-wheeled vehicles and buses globally. The Outlook 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, hydrogen demand, and CO2 emissions.
"There are 12 million passenger EVs, one million commercial EVs, and over 260 million electric two- and three-wheelers on the road globally today."
Electric Vehicle Outlook 2021, BloombergNEF
This year marks the first major increase to our EV adoption outlook in the last five years. This is driven by rising policy support in core auto markets, new battery technologies and lower expected costs, accelerated investment in charging infrastructure, and rising consumer adoption despite the Covid-19 pandemic. Progress on electric commercial vans and trucks is also picking up and is higher in this year’s outlook.
The important new areas of analysis in this year’s EVO are the following:
- Net Zero Scenario. Based on our economic analysis of competing technologies in each segment, we have developed a scenario for what a
vehicle fleet capable of zero CO2 emissions could look like. Despite the rapid growth of EV sales, most countries are currently not on track to reach net zero by 2050 and will need additional policy interventions in the years ahead. The focus of the Net Zero Scenario is on tailpipe emissions, and it does not explicitly bring upstream emissions from electricity generation, hydrogen production or vehicle manufacturing to zero. The Net Zero Scenario also looks at impacts on oil demand, electricity demand, battery metals demand, emissions and required charging infrastructure.
- Additional countries covered. We have added outlooks for passenger vehicle markets in Italy, Canada and South East Asia. EV sales are picking up in these markets, but each has its own unique characteristics and progress varies between segments.
- EV charging infrastructure outlook: We have further improved this after adding a charging infrastructure outlook last year. This includes new analysis on charger utilization rates, maintenance costs, overall economics, and the grid infrastructure investments needed to support these chargers.
- Updated lithium-ion battery price and chemistry forecast based on our most recent market survey: We have developed a new battery chemistry forecast for each of the new segments covered in this year’s report and updated previous ones with the latest data. In the two- and three-wheeled vehicle market, we have also looked in more detail at how lithium-ion batteries will displace lead-acid ones in the years ahead.
- Update on metals availability for batteries: This is based on our supply/demand outlook for key metals including cobalt, lithium and nickel. We have also included new analysis on metals demand and available reserves for our Net Zero Scenario.
- 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.
Near-term outlook to 2025
The outlook for EV adoption is getting much brighter, due to a combination of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 2025.
- Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany, for example, EVs represent nearly 40% of total sales by 2025, while China – the world’s largest auto market – hits 25%.
- China and Europe continue to be the dominant EV markets out to 2025, driven primarily by Europe’s vehicle CO2 regulations, China’s fuel economy regulations and the new-energy-vehicle credit system. Policy changes in the U.S. will have limited impact in 2021 but will start to increase adoption in 2022 and beyond as more compelling local models come to market, particularity in the pick-up truck segment.
- By 2025, the global auto market is already very fragmented, with electrification running far ahead in China, Europe, and some smaller markets. This presents challenges for automakers with global portfolios. Low levels of adoption in emerging economies reduce the global adoption rate, as automakers focus their passenger EV efforts on the markets with the most stringent regulations.
- Plug-in hybrid sales rise quickly in Europe in the near term to meet tightening vehicle CO2 targets, but then fade as battery prices continue to fall. There is growing evidence that plug-in hybrids are often not charged, and the current favorable policy treatment could change quickly. PHEVs do not gain any significant share in other markets beyond Europe and Japan, and nearly 80% of global plug-in vehicles sales by 2025 are battery electrics.
- 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. There are currently 12 million passenger EVs on the road, representing 1% of the global fleet. This rises to 54 million by 2025.
- Other segments of road transport are already much further along on EV adoption. Some 44% of global two- and three-wheeler sales and 25% 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.
- The global EV adoption rate in the two- and three-wheeler segment slows in the next 3-4 years as the Chinese market saturates, but then starts rising quickly from 2025 as sales pick up in other markets. Rising manufacturer interest in high-powered models, and rapidly improving economics push two- and three-wheeler electrification significantly higher.
- There are currently almost 600,000 e-buses on the road globally, representing 39% of new sales and 16% of the global fleet. China accounted for the vast majority of all e-bus sales in 2020, with over 74,000 units sold, and continues to account for 98% of the global e-bus fleet.
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This share begins to decrease as some Chinese city bus fleets start to saturate and adoption picks up in Europe, North America, South Korea, South East Asia, India and South America. By 2025, e-bus sales outside of China hit 14,000, up from 5,000 in 2020. Buses and two- and three-wheelers are the biggest near-term opportunity for electrification in emerging economies.
"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."
Electric Vehicle Outlook 2021, BloombergNEF
- Adoption of EVs in the commercial van and truck market is further behind, but is picking up speed. The combination of more models available, corporate fleet commitments, favorable economics and rising concern about urban air quality are set to tip the light commercial-van segment over to electrification in the next few years.
- 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. That is due to a combination of factors, including rapidly declining battery costs, modest driving ranges, and the relatively large efficiency penalty of diesel trucks in urban traffic, which tend to consist of congested and recurring start-stop operation.
- Heavy-duty electric trucks are already economically attractive in urban duty cycles by the mid-2020s. Megawatt-scale charging stations and the emergence of much higher energy density batteries by the late 2020s result in battery electric trucks becoming a viable option for heavy-duty long-haul operations, especially for volume-limited applications.
- Shared mobility is set to rebound to 2019 levels within the next two years globally, and by the end of 2021 in most major markets. By 2025, shared mobility’s share of annual passenger vehicle kilometers traveled globally exceeds 6% for the first time.
Long-term outlook: Economic transition scenario
From 2025 onward, our outlook splits into two scenarios. Our Economic Transition Scenario (ETS) is primarily driven by techno-economic trends and market forces, and assumes no new policies or regulations are enacted that impact the market. This approach is in line with previous editions of this report.
The second scenario, new for this year, investigates what a potential route to net-zero emissions looks like for the road transport sector by 2050. This Net Zero Scenario (NZS) looks primarily at economics as the deciding factor for which drivetrain technologies are implemented to hit the 2050 target.
- Under the Economic Transition Scenario, passenger EV sales continue rising quickly as battery prices fall. Unsubsidized price parity between EVs and internal combustion vehicles is achieved in most segments and countries by the late 2020s, and some reach this point much sooner.
- After increasing rapidly over the next 15 years, EV sales growth in the Economic Transition Scenario slows down slightly in the late 2030s in the main EV markets, like Europe, China or the U.S., as they begin to saturate and exit the steepest part of the s-curve. Households that have access to home charging go electric much faster than those that have to rely purely on the public network. Although public charging infrastructure is growing at pace globally, it is still a potential barrier to electrifying the last 20% of the market without further policy support.
- The picture changes in the U.S. from the mid-2020s, when the U.S. accelerates quickly due to a high number of households with two or more vehicles and access to home charging options. The EV share of sales in some larger markets in Europe like Germany reach around 90% by 2040. Small markets like the Nordics and the Netherlands get there much sooner.
- EVs take longer to spread in India, Southeast Asia and our Rest of World countries, where policy support is limited and stripped down, and low-cost internal combustion vehicles are hard to beat on price. Sales grow rapidly in the 2030s as the economics improve in these price-sensitive markets, but
different start times for the steep part of the s-curve in different countries draws out the global adoption curve.
- The fleet of internal combustion passenger vehicles keeps growing until 2027 in the Economic Transition Scenario, before declining steadily. Despite the relatively rapid growth of EV sales, this takes time to flow through to the fleet and there are still over 900 million ICE vehicles on the road in 2040 – more than half the fleet.
- Fuel cell vehicles start to be sold at volume in a few markets in the 2030s, but with just 8.6 million on the road in 2040 (up from only 30,000 today), this is well below 1% of the global passenger vehicle fleet. Plug-in hybrids take a slightly larger share, but are quickly surpassed by BEVs on price, performance and overall consumer appeal.
- Sales of electric light-duty vans grow to close to a third of the global market for light commercial vehicles (LCV) by 2030 and reach almost 60% by 2040. While a sizeable share of those vehicles are plug-in hybrids or range extenders in the next few years, all-electric ones quickly become the majority and are close to two-thirds of the electric market by 2030. In some markets, such as in Europe and in South Korea, electric LCV sales reach 50% by 2030. In heavier segments, sales of electric trucks reach 30% by 2040, but some countries go much higher.
- Buses and two- and three-wheeled vehicles achieve the highest EV adoption rates by 2040 in the Economic Transition Scenario, followed by passenger cars, then light commercial vehicles. By 2040, there are over 600 million passenger EVs on the road and over 750 million electric two- and three-wheelers.
Comparison with the Net Zero Scenario and policy implications
The window for achieving net-zero emissions in the road transport sector by 2050 is closing quickly. We have extended our Economic Transition Scenario analysis to 2050 to better compare trajectories with our new Net Zero Scenario. Some vehicle segments are almost on track for net zero under the ETS; others are not.
- An immediate increase in policy action is needed to bend the curve toward net zero. To get on track for a net-zero global fleet by 2050, zero-emission vehicles need to represent almost 60% of global new passenger vehicle sales by 2030. In our Economic Transition Scenario, ZEVs only achieve a 34%
share by that year, though some markets go much higher. The fleet of electric vehicles hits 169 million in 2030 in the Economic Transition Scenario but needs to jump to 218 million by the same date in the Net Zero Scenario.
- 2030 is only two model-refresh cycles away for automakers, so policy certainty will be needed very soon to enable the investments for such a high rate of penetration. This is particularly true for countries that do not already have tightening vehicle CO2 emissions or fuel economy standards. Early adoption is important for building infrastructure and broader consumer interest in our adoption models.
- Urgent action is needed from policymakers in all countries on the heavy-truck segment, which is the furthest from achieving net zero. By 2040, zero-emission medium and heavy commercial vehicles are 95% of sales in our Net Zero Scenario, but just 30% in the ETS. This represents an ‘adoption gap’ of 65 percentage points in 2040.
- In addition to introducing tighter fuel economy or CO2 standards for trucks, governments may need to consider mandates for the electrification of fleets, including those of governments and transport operators. Governments should also consider incentives to push freight into smaller trucks which can electrify faster than larger ones. At the municipal level, tighter regulations for vehicles entering urban areas will help make the economics of zero-emissions vehicles more attractive, especially for commercial fleet operators.
- In contrast, the ‘adoption gap’ is much smaller for two/three-wheelers (23 percentage points in 2035) and buses (13 percentage points in 2035). For cars, the gap is a sizeable 42 percentage points in 2035, which must be addressed through accelerated charging infrastructure deployment, and further policy support in emerging economies.
- Across all segments, sales of new internal combustion vehicles need to be phased out by just after 2035 to stay on track for the Net Zero Scenario. Even with that, some early retirements and conversions of older vehicles will be needed in the 2040s.
- Direct electrification via batteries is the most economically attractive and efficient approach to decarbonizing road transport and should be pursued wherever possible. Hydrogen fuel cell vehicles can help fill the small gaps left by electrification in some heavy vehicles, in regions or duty cycles where batteries struggle. In the Net Zero Scenario, hydrogen fuel cell vehicles are 10% of medium and heavy commercial trucks on the road in 2050, some 16% of municipal buses, and less than 1% of the passenger vehicle fleet. The balance is fully electric vehicles.
- Electric vehicles represent a $7 trillion market opportunity between today and 2030, and $46 trillion between today and 2050. While there are notable leading EV manufacturers today, the sheer scale of growth expected in the coming decades means that there is inherent uncertainty over which companies and countries may come to dominate this new value chain. Countries should be giving serious consideration to how they can create economic value-add and domestic jobs from this growth.
- Today's leading markets (China, Europe, North America and South Korea) have invested significant sums from both private and public funds into enabling the EV transition, but tomorrow's growth markets - such as India and other emerging economies - will require much lower investment. The scale being driven by today's leading markets will push down battery and infrastructure costs such that the 'cost of going electric' for the next wave of countries should be negative. Emerging economies should ready themselves to take advantage of this trend within the next five years.
- Given the minor additional push needed to bend the curve on buses and 2/3-wheelers to net zero, policymakers should have high confidence that electrification targets in these segments can be met. Policy action for these segments should be taken without delay.
- Investments in public transit and active mobility are an important part of the solution mix for net zero, as they can reduce demand for vehicles and vehicle miles, while also delivering a public-health benefit. Even a modest 10% reduction in total kilometers traveled by car globally in 2050 can make the task of achieving net zero much easier.
- In addition to pushing for more zero-emission vehicles, governments should prioritize investments in cycling and walking, and enabling higher-density urban areas. In the wake of the Covid-19 pandemic, when the finances of public transit systems are under pressure, governments should continue to invest for the long-term development and expansion of these systems. All of the above will be needed.
Impacts on oil and electricity demand
Oil demand from road transport peaks globally in 2027 in the Economic Transition Scenario, due to the growth of alternative drivetrains, fuel economy improvements of combustion vehicles, and the proliferation of shared mobility services, which go electric faster than privately owned vehicles.
- Consumption in the U.S. and Europe has already peaked; China follows in 2026, while India continues to consume increasing amounts of road fuel until 2038 in the Economic Transition Scenario. Commercial trucks remain the only segment globally yet to see a peak in demand.
- In the important passenger vehicle segment, oil demand never gets within 1 million b/d of its 2019 peak. EVs and fuel cell vehicles displace 21 million b/d of oil demand by 2050 in the Economic Transition Scenario.
- In the Net Zero Scenario, oil demand from road transport remains broadly similar until 2030, as it takes time for changes in vehicle sales to flow through to the fleet. From then, the rate of decline in oil demand accelerates, more than doubling the rate in the ETS.
- In 2030, oil demand in road transport is some 0.7 million b/d lower in the Net Zero Scenario compared to our Economic Transition Scenario. By 2040, this gap widens to over 12.5 million b/d, and by 2050, to almost 25 million.
- Governments need to develop detailed transition strategies for the industries affected by the shift to zero-emissions vehicles. This includes developing plans to recoup lost tax revenue from the sale of liquid fuels. The politically acceptable solutions for this will vary by region.
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Electricity demand impacts. In the Net Zero Scenario, electricity demand remains broadly consistent with our Economic Transition Scenario until 2030 but is 61% higher by 2040, reaching 4,483TWh. By 2050, demand is 65% greater in the Net Zero Scenario than the ETS and reaches 8,524TWh.
- The electricity used to charge electric vehicles on the road adds 9% to global demand by 2040 in the ETS and 14% in the NZS. By 2050, the spread between the scenarios grows, but fully electrifying almost all of road transport still adds less than 25% to global electricity demand. This increase in demand will require a quicker roll-out of grid upgrades and charging infrastructure.
- The largest relative increase in electricity demand comes from medium- and heavy-duty trucks (M/HCV), which are 1.5 times higher in the Net Zero Scenario. In the Net Zero Scenario, M/HCVs need as much as two-thirds of the electricity used to charge all passenger vehicles, while the same figure is less than 40% in the ETS. Compared to lighter vehicles, these heavier trucks have radically different requirements with respect to charging infrastructure – typically rapid chargers highly concentrated in depots and truck stops.
Impacts on batteries, metals, charging
infrastructure and emissions
EV battery demand is also rising quickly, with 2020 shipments 45% higher than in 2019. By 2030, demand grows almost 15-fold to 2,576GWh in the Economic Transition Scenario. Manufacturers have announced plans totaling 2,539GWh of annual capacity due by 2025. China still dominates, but capacity is growing in other regions.
- Average battery pack prices go below $100/kWh on a volume-weighted average basis by 2024, driven by the introduction of new cell chemistries and manufacturing equipment and techniques. Simplified pack designs for battery-electric vehicle platforms also help. By 2030, pack prices hit $58/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. NMCA batteries will enter the market in 2021, two years ahead of our previous expectation. This chemistry provides higher energy densities and a longer cycle life than the equivalent NMC or NCA material. By the end of the decade new chemistries using more manganese will become prevalent to reduce pressure on nickel. Lithium and cobalt mining and refining capacity is sufficient for the 2020s, but new nickel and manganese salt production capacity will need to come online to avoid a supply crunch.
- We expect the supply of lithium, cobalt, manganese and nickel to be sufficient to meet lithium-ion battery demand out until 2030 under our Economic Transition Scenario. New refining facilities and investment will be required, but we are confident the market will respond to this need. Under our Net Zero Scenario the rapid increase in demand for lithium-ion batteries will require huge volumes of raw materials.
- To evaluate the impacts of this we have created two chemistry-mix scenarios. Our base chemistry mix relies heavily on the current generation of nickel-based cathodes, while our progressive chemistry mix uses next-generation cathodes that use fewer raw materials.
- Battery recycling is a critical enabler for our Net Zero Scenario. Without it, by 2050 cumulative lithium demand exceeds currently known reserves. With universal battery recycling, however, not only does primary lithium demand remain below known reserves, but there is also the prospect of a fully circular battery industry, with supply of recycled lithium exceeding total annual demand by mid-century.
- Overall, EV adoption is not derailed by metals supply constraints even under our Net Zero Scenario, despite the very large volume of material that will be required. For metals like manganese, supply from currently known
reserves is sufficient to meet demand up to 2050. In order to keep demand in balance for lithium, nickel and cobalt, a range of approaches will be needed that will require governments, automakers, cell manufacturers, miners and recyclers to work together. This includes the need for dense charging networks, new cell chemistries, widespread recycling and investment in new mining and refining capacity. New extraction technologies and sustained high prices could also change known reserves.
- The trend over the last decade has been for average battery-pack sizes to increase. This may not continue, and could reverse. We have modeled the impact on material demand if battery pack sizes were 25% lower by 2040, compared to our main scenario. As an example, battery packs for SUVs would average 54kWh, instead of 71kWh. In this analysis cumulative demand for lithium-ion batteries would be 18% lower. For nickel this means that even under our Net Zero Scenario, using our base chemistry mix, reserves and recycling would meet cumulative demand.
- Further reductions in average battery pack sizes are possible, and desirable. There is a strong argument for governments investing heavily in public EV charging infrastructure networks because denser networks can help enable much smaller battery packs, leading to further economic and environmental benefits. Switching to vehicle regulations based on life cycle emissions could also help push the market to smaller battery packs.
In our Economic Transition Scenario, CO2 emissions from road transport bounce back relatively quickly from the Covid-19 pandemic and return to above 2019 levels by 2023. Despite the rapid rise of EVs, emissions from road transportation do not peak until 2030, when they reach 7.1GtCO2. This is an increase of about 7% from 2019 and is driven mainly by rising emissions from heavy vehicles. After peaking in 2030, road transport CO2 emissions in 2050 are 28% below 2019 levels in our Economic Transition Scenario.
Heavy trucks account for 59% of all remaining direct road transport CO2 emissions in 2050 in the ETS, highlighting the urgent need for action in this segment.
- The Net Zero Scenario entails a much more rapid transformation than the ETS, and the rate of emissions reductions diverges sharply from 2030 onward as more internal combustion vehicles are taken off the road. These figures refer to tailpipe emissions only. Fully capturing the emissions benefits of electric and hydrogen fuel cell vehicles will also require rapid decarbonization of the power sector and hydrogen production.
In our Economic Transition Scenario, by 2040 the charging network needs to grow to over 309 million chargers across all locations. The total is dominated by home chargers, which reach 270 million in this time period and account for 87% of the total network. In addition to these, there are 24 million public chargers, 12 million workplace chargers and 4 million bus and truck chargers required.
- Over $589 billion of cumulative investment is needed in the network to install all these chargers in the Economic Transition Scenario. For comparison, global investment in renewable energy capacity was $304 billion in 2020 alone.
- Required investment reaches a peak of $39 billion annually in 2037 for all chargers and a peak of $15.7 billion annually in 2035 when focusing in on public chargers. While public fast and bus and truck chargers make up just 2% of all chargers, they account for almost half of the total investment by 2040 in the Economic Transition Scenario. Home charging remains the largest category though, making up 40% of the total.
- The needs of the network will change dramatically between now and 2040 as electricity demand from shared vehicles, vans and trucks grows. This will increase the need for more high-powered charging hubs in urban areas and along highways, specifically to serve these vehicles.
- The needs of private car drivers will also vary as the mass-market EV driver is likely to have less access to home charging. Counterintuitively, the number of EVs per public charge connector rises to between 30 and 40 in most markets from between 5 and 20 EVs per public charge connector today, as use of charging infrastructure and average power delivery rises.
- Autonomous vehicles quickly rise to 10% of all EV electricity demand in 2040 and 20% of demand in 2050. This has the potential to change the requirements of the charging network just as mass-scale roll-out is completed. Wireless and robotic charging could become more important in this scenario.
- Vehicle-to-grid has the potential to become a major tool for grid operators in managing peak energy demand. By 2040 in Germany, if all electric vehicles in the fleet in our Economic Transition Scenario were vehicle-to-grid-capable and available to the grid, they could provide triple the amount of power than our projected peak energy demand. If only 25% of the fleet were V2G capable and 50% of those vehicles were available to provide services, the power available could still equal 40% of total peak demand.
- To reach the Net Zero Scenario, the required number of chargers increases to 504 million connectors by 2040 and 722 million connectors by 2050. This requires a cumulative $939 billion in investment by 2040 and $1.6 trillion by 2050. Some 47% of the additional investment required between the Economic Transition Scenario and the Net Zero Scenario is for charging infrastructure for trucks and buses.
- Support for charging infrastructure needs to be expanded dramatically to stay on track for the Net Zero Scenario, including for remote and otherwise under-served locations. Governments should also review cost-recovery mechanisms for grid upgrades and grid connections to enable more charging points, and consider if these can be included in the rate base of relevant grid operators in a given area.
