No, we're not returning to horses and buggies.
Electric cars have come a long way since 2010, not only in regards to the greatly extended driving range but also in terms of pricing. Less than a decade ago EVs were associated with wealthy buyers, but thanks to numerous factors, this is no longer the case. CNN cites an analysis conducted by Bloomberg New Energy Finance (BNEF) that made some startling revelations that will get fans of internal combustion worried.
According to the report's predictions, electric cars could make up 57 percent of all new passenger car sales globally by 2040. That's actually an increase of 2 percentage points from last year's projections. In the United States, China, and Europe, EVs are predicted to consist of a similar percentage of sales. Interestingly, the decline of internal combustion could already be underway.
"We see a real possibility that global sales of conventional passenger cars have already passed their peak," said Colin McKerracher, head of advanced transport for BNEF.
Due to a decline in battery prices, EVs are already coming close to matching gasoline- and diesel-powered vehicles in terms of purchase price. In fact, they already cost less to operate, even at a time when national gas prices are generally low. At this rate, BNEF predicts worldwide EV sales will increase from just two million in 2018 to 56 million by 2040. Sales of conventionally powered vehicles, however, are predicted to drop from last year's 85 million to 42 million globally. Again, thank more declines in battery prices for this. For example, battery costs per kilowatt-hour have dropped by 85 percent since 2010.
This is attributed to numerous manufacturing improvements and increased economies of scale. There are far more battery factories today than there were a little over nine years ago, and there will only be more to come. But what's really interesting about this report is its claim that by the mid-2020s EVs will become less expensive than similar internal combustion vehicles for both purchase price and long-term ownership costs.
Think about that – this is only around five to six years from now. No wonder Porsche, for example, has already announced that its next-generation Macan, due by 2022, will go all-electric. Consumer knowledge regarding EVs will continue to grow as well. Details, such as knowing that electricity is cheaper than gasoline and diesel and that EVs require less maintenance due to having fewer moving parts, will become common knowledge. The report also adds that emission levels, thanks to increased EV sales, will begin to sharply decline in years leading up to 2040, but only back to 2018 levels. Still, it's something.
Another reason this EV shift is expected to happen fast is the rise of ride-sharing services. Fleet owners are fully aware of maintenance and fuel costs and the switch to full-on battery-powered vehicles makes sense for their bottom line. For the time being, China will continue being the global EV sales leader, but this will change by 2040. Europe, however, will still lead the US in EV sales during the 2020s.