Analyzing the 2021 Global EV Outlooks: Trending Up

As noted in my original post on this topic, I promised I would keep members updated on an ongoing basis on EV penetration projections — to the extent the data has been publicized and is available. The spreadsheet below includes an update for the year 2021 and you can easily compare it to the data from 2017-2020. For this analysis, I collected 12 major public analyses on EVs from the last year, shown in the graphic below. All of these studies are linked in this spreadsheet so that you can easily navigate to them.  I break down:

• Key points in the analyses
• EV fleet penetration projections and year
• EVs as a percentage of the light-duty (LDV) fleet and by year
• Percent of EV vehicle sales as a percentage of the LDV fleet and by year
• Any statements or projections on internal combustion engine vehicle (ICEV) parity, if available

You can download this graphic or ask me for the PowerPoint slide. You can also access it in the spreadsheet and then modify and use as you like in your own work.

While in 2019 and 2020 EV forecasting slowed down with fewer firms releasing public projections on EVs, last year analyses picked up.

Key Forecasts: IEA and BNEF Scenarios

IEA has both a Stated Policies Scenario (SPS, formerly New Policies Scenario) which is based on current policies that have been implemented by governments and a Sustainable Development Scenario (SDS), which assumes governments will set policies to meet net zero targets. In the SPS, the global EV stock across all transport modes (excluding two/three-wheelers) expands from over 11 million in 2020 to almost 145 million vehicles by 2030, an annual average growth rate of nearly 30%. In this scenario, EVs account for about 7% of the road vehicle fleet by 2030.

EV sales reach almost 15 million in 2025 and over 25 million vehicles in 2030, representing respectively 10% and 15% of all road vehicle sales (similar to its 2020 projection). In the SPS, the electric LDV stock rises from about 10 million in 2020 to around 50 million vehicles in 2025 and almost 140 million vehicles in 2030. Globally, the stock share of electric LDVs increases from less than 1% today to 8% in 2030. Sales of electric LDVs rise from 3 million in 2020 to 13 million in 2025 (sales share of 10%) and 25 million in 2030 (17% sales share).

In the SDS, the global EV stock reaches almost 70 million vehicles in 2025 and 230 million vehicles in 2030 (excluding two/three-wheelers). EV stock share in 2030 reaches 12%. In the SDS, almost 220 million electric LDVs are projected to be circulating worldwide by 2030 (of which only 20 million are light-commercial vehicles), corresponding to an almost 15% stock share. Sales of electric LDVs are projected to reach 45 million in 2030 (35% sales share, similar to its 2020 number), an 80% increase relative to the SPS.

For the first time, BNEF presents two scenarios, similar to IEA, shown in the figure below.

Its 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. Its Net Zero Scenario (NZS) looks primarily at economics as the deciding factor for which drivetrain technologies are implemented to hit the 2050 target. 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.

Global sales of zero-emission cars rise from 4% of the market in 2020 to 70% by 2040 in the ETS, 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 ETS but needs to jump to 218 million by the same date in the NZS. Across all segments, sales of new internal combustion vehicles need to be phased out by just after 2035 to stay on track for the NZS.

Overall Trends

There remains a divergence of views on the degree of EV penetration on a global basis with no clear trend. Several firms with a deep background and experience in energy tend to take a more conservative view on EVs and are in the minority (e.g. OPEC and me, representing the TES diamond). BNEF, DNV, McKinsey and Wood Mackenzie have the most progressive forecasts featured.

I still take a conservative view with a 10% projection by 2030, and I see most of that focused on EV uptake in China and Europe. Why? Among other reasons, I strongly stand by my view that uptake will be slow in the U.S. through 2030 as infrastructure develops and consumers become more comfortable with the technology. I am not anti-EV. I have just never bought the “EV is like an iPhone consumers will flock to” argument. Consumers are conservative, especially when it comes to their cars, and they are notoriously slow to adopt and adapt to new technology.

A big issue for consumers is the ability to choose a car that they are already used to and like driving, the SUV, at a price point they can afford (below $40,000). I believe the model offerings in the U.S. and EU over the next few years will address this issue and will be helped by incentives.

In the EU, uptake is increasing quickly, driven by policies such as CO2 standards for vehicles and various incentive programs offered by the Member States. But more critical in the EU than perhaps the U.S. is the issue of infrastructure. I believe infrastructure will develop more slowly and will be more complicated in the EU than in the U.S. The reason: more than 60% of households in the U.S. are located in single-family homes that can conceivably add home charging. In the EU, that figure is about 33%.

I believe public charging in the U.S., even with massive federal funding, will develop more slowly than expected due to issues such as permitting and other regulatory approvals needed for utilities to add make ready infrastructure to support charging. With respect to charging, BCG notes in its forecast that, “Our consumer research shows that inadequate charging infrastructure remains a key deterrent for customers who might otherwise pick EVs over ICE vehicles. We estimate that 100 million additional charge points will be required globally in the next decade to keep pace with projected EV growth.”

More on Charging

Insights from other firms on the topic of charging include the following:

• DNV: “Currently, too few charging stations within range is a major barrier to EV uptake in most regions, and significant uptake of EVs cannot be achieved without both the average fleet range leaping forward and charging-station density increasing.”

• BCG: “Our consumer research shows that inadequate charging infrastructure remains a key deterrent for customers who might otherwise pick EVs over ICE vehicles. We estimate that 100 million additional charge points will be required globally in the next decade to keep pace with projected EV growth. Most governments and OEMs are acutely aware of this, and are providing much-needed support.”

• BNEF: “By 2040 the charging network needs to grow to over 309 million chargers across all locations, under the same scenario. Home chargers alone would have to reach 270 million, public chargers 24 million, workplace chargers 12 million and bus and truck chargers 4 million.”

• McKinsey: This analysis is most realistic in showing just exactly what would be required to support a scale up of EVs in the EU and notes that there are multiple hurdles (figure below) in play right now, particularly on the regulatory front. “Simplified regulations are needed to facilitate charger siting, since it can currently take up to three years to obtain approval for grid extensions for a fast-charging station. Ensuring the EU-wide coverage of public charging is essential to avoid having chargers located only in profitable locations.”

Parity

Several firms, including BNEF, Deloitte, DNV and S&P Global have projected that EVs will reach cost parity with ICEVs by 2025. BCG projects that battery pack costs will drop to $75 per kWh by 2030.

Regional Variations

Most forecasts here acknowledge that the two big growth regions for EVs are and will be the EU and China. Insights include:

• BNEF: “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…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.”

• BCG: “The global BEV share will rise to 45% in 2035, and will reach 54% in the US, 58% in China, and 62% in the EU. (graphic below) By this point, the eventual dominant players in e-mobility will have been largely determined. Every link along the automotive value chain will have been reshaped. We expect that market leadership will be divided among a more even mix of new EV-only players and incumbent OEMs, and be determined by how well the companies manage their portfolios across regions and scale up their production, distribution, and services.”

• McKinsey: “We believe Europe—as a regulatory-driven market with positive consumer demand trends—will electrify the fastest and is expected to remain the global leader in electrification in terms of EV market share.

“Reality Checks”

Several firms had interesting “reality check” comments in their forecasts:

• BNEF: “In some regions, electrical power grids will have to be upgraded to meet the increased demand from EVs. In the US, for example, we estimate that by 2030 an additional $1,100 in investment in grid upgrades will be needed for each BEV sold. Under our projections of BEV sales in the US through the rest of the decade, this would translate into around $25 billion in power grid investment. In other countries, investment requirements could be much higher.”

• OPEC: “It is noticeable that the structural change in fleet composition is proceeding rather gradually due to a large base of conventional vehicles in the global fleet. Hence, the transition to alternative powertrains will take decades to accomplish, even if new vehicle registrations in this area advance at a higher rate.”

• McKinsey: “On a global level, we expect EV (BEV, PHEV, and FCEV) adoption to reach 45 percent [by 2025] under currently expected regulatory targets. However, even this transformative EV growth outlook is far below what’s required to achieve net zero emissions. EVs would need to account for 75 percent of passenger car sales globally by 2030, which significantly outpaces the current course and speed of the industry.”

• BCG: “If half of new cars sold around the world in 2035 are zero-emission vehicles, 70% of the vehicles on roads will still be burning gasoline or diesel. Even economies in the vanguard of the climate-change fight are therefore likely to fall short of decarbonization targets.”

• DNV: “As there are further barriers to completely replacing current commercial ICEVs with battery electric ones, we foresee that fuel-cell electric vehicles (FCEVs) will play a significant role after 2030. These will account for up to 16% of the commercial EV fleet in OECD regions and China by 2050, and to a smaller amount in the other regions.”