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.