Long-Term Outlook

Economic Transition Scenario

From 2026 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. The second scenario 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.

After increasing rapidly over the next 10-15 years, EV sales growth in the Economic Transition Scenario slows down slightly in the 2030s in the main EV markets like Europe, China and North America, as they begin to

saturate and exit the steepest part of the s-curve.

This scenario does not assume that the EU’s 2035 combustion vehicle phase out target is hit, but the region gets quite close with almost 80% of sales going fully electric by that date.

Despite the relatively rapid growth of EV sales, this takes time to flow through to the fleet and there are still 800 million ICE vehicles on the road in 2040 – more than half the fleet.

EVs take longer to spread in India, Southeast Asia and our Rest of World countries, including markets like Mexico, Brazil and Russia where policy support is limited or non-existent.

Over half of global ICE sales are in emerging economies by 2035, increasing to 60% by 2040 despite these countries representing a much smaller share of total vehicle sales. Looking at the fleet, this means half of combustion cars on the road in 2040 are located in these countries.

"A two-tiered global auto market is emerging, with the economic and air quality benefits of electrification set to accrue very unevenly between wealthy and emerging economies. Urgent action is needed to help close this gap."

Electric Vehicle Outlook 2022, BloombergNEF

The ETS trajectory suggests a two-tiered global auto market is emerging and that the benefits of electrification are set to accrue very unevenly. Air quality in urban areas is already markedly different between wealthy and emerging economies and this gap will widen further if the EV adoption gap is not addressed. Grid reliability will be a challenge in some countries.

Electric commercial vehicles reach cost parity with diesel ones within the 2020s in most market segments. Battery vans and lighter trucks are already gaining market share and by 2030 account for just under a third of the market in the Economic Transition Scenario. Global EV sales shares in these segments reach 60% by 2040, while exceeding 75% in several countries.

Electrification of heavier vehicles has started at low levels and, by 2040, one third of medium- and heavy-duty truck sales globally are electric. For these vehicles, adoption varies more between countries. Electric truck sales in Europe, the US and China are between 45-55% by that time, but are just over 20% elsewhere. In these segments, natural gas vehicles grab market share in some countries.

Electric bus sales continue to rise steadily, with 44% of new sales and 18% of the global fleet already electric. 98% of the global e-bus fleet is still in China, but activity is picking up in other countries. The global e-bus fleet reaches 1.75 million by 2040, representing 62% of all buses on the road. Hydrogen fuel cell buses also play a role in some markets with strong government support for the technology.

Progress on municipal e-buses in the US is slower than in Europe and China, but there is a unique opportunity emerging to electrify the country’s 500,000 school buses with $2.5 billion in new government support for this area.

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 700 million passenger EVs on the road and over 750 million electric two- and three-wheelers.