Electric vehicles will rise to dominate car sales in the next two decades, though their adoption will fall short of global climate goals without new government incentives and tighter emissions standards, according to BloombergNEF.
Even without new government support, passenger electric vehicles will rise to almost 70% of all sales by 2040, driven largely by rapidly falling costs for lithium-ion batteries, BloombergNEF projects in its latest Electric Vehicle Outlook. That level is more bullish than the research firm projected last year, when it estimated passenger electric car sales would reach roughly 58% by 2040.
ECONOMICS, NOT CLIMATE, IS THE MAIN DRIVER BEHIND AUTOMAKERS’ EMBRACE OF ELECTRIC VEHICLES
In fact, electric car sales had a “breakout year” in 2020, even as the larger auto market declined during the pandemic, said Nick Albanese, BloombergNEF’s head of intelligent mobility.
Gas-powered vehicles appear to be on their way out. BloombergNEF says gas-powered vehicle sales likely peaked in 2017.
That is a result of electric vehicle sales quickly increasing and the growth of shared and autonomous vehicles, which together are expected to reduce the overall number of vehicles sold globally starting in 2036.
Nonetheless, BloombergNEF finds electric vehicle sales must grow even faster to be in line with global climate targets to reach net-zero emissions by 2050. Under a net-zero scenario, 60% of new vehicle sales globally would have to be zero emissions by 2030, and new gas-powered car sales must be phased out largely by 2035, the report says.
Albanese said governments should immediately tighten their fuel economy or tailpipe emissions standards, especially for trucks, and ramp up subsidies for passenger electric cars, which he expects to remain more expensive than gas-powered models for the next five to seven years.
Thus far, the U.S. electric vehicle market has lagged behind that of Europe and China.
President Joe Biden has proposed spending roughly $174 billion on electric vehicles, including point-of-sale consumer rebates and charging investments, as part of his infrastructure plan. Those policies would boost electric vehicle adoption, but Republican lawmakers have balked, instead proposing $4 billion for electric cars in their counteroffer.
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Nonetheless, the “most important mechanism” Biden has to boost electric car sales in the United States is tightening fuel economy standards beyond what the Obama administration would have required, Albanese said.
Biden has directed the Transportation Department and the Environmental Protection Agency to propose new rules by July.
