As electric vehicles become ever-more affordable to buy and run, the EV revolution may hit our roads sooner than expected, according to a new forecast by the advanced transport team at Bloomberg New Energy Finance (BNEF).
A new BNEF report forecast a steady rise in Electric vehicle sales, from the 70,000 sold in 2016, up to 3 million by 2021.
By 2040, 54% of global new light-duty vehicle sales are expected to be electric vehicles, up from the 35% predicted in a previous forecast. At that time, EVs are tipped to account for 33% of all light-duty vehicles on the road around the world.
Annual global light-duty vehicle sales forecast
Via Bloomberg New Energy Finance
But while global EV sales are set to increase, Australia is falling behind the times. According to a report from ClimateWorks Australia, just 1,369 EVs were sold in Australia in 2016, which represents just 0.10% of the two million electric vehicles on the road around the world.
Two of the key concerns preventing Aussies from buying an EV were how far an electric car could travel on a single charge and the upfront purchase cost. But according to the BNEF report, the latter issue could be history as early as 2029.
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A big factor in the updated forecast was the dropping price of lithium-ion batteries - a key component in EVs. Since 2010, battery prices have fallen 73%, and according to the report, are expected to drop another 70% by 2030 as manufacturing methods improve. These falling prices will lead to better affordability of electric vehicles.
“We see a momentous inflection point for the global auto industry in the second half of the 2020s. Consumers will find that upfront selling prices for EVs are comparable or lower than those for average ICE [Internal Combustion Engine] vehicles in almost all big markets by 2029,” Colin McKerracher, lead advanced transport analyst at BNEF said.
RACQ’s 2017 Car Running Costs report shows that the listing price of top-selling light vehicles generally ranges from $16,820 to $23,450. If the cost of buying an EV drops to the average price of $18,460, for example, then with a low rate car loan of 5.14% Aussie drivers could own an electric vehicle within 5 years, making monthly repayments of just $350.
During this period it’s expected EVs will also become less expensive to own on a life-time cost basis than traditional ICE vehicles.
It's not all smooth sailing for electric vehicles, though. Touching on Aussie drivers’ other concern - the distance an EV can travel on a single charge - Salim Morsy, senior BNEF analyst and lead author of the report, said more investment in infrastructure is needed before EVs can really push ahead.
“The inability to charge at home in many local and regional markets is part of the reason why we forecast EVs making up just over a third of the global car fleet in 2040, and not a much higher figure,” he said.
But there’s plenty of reason to believe this investment may happen, as key industry players and even governments throw their support behind the push toward electric vehicles.
For example, the French government recently announced that the country would ban the sale of petrol and diesel cars after 2040 and iconic car manufacturer Volvo has also announced that from 2019, it will no longer produce cars solely with internal combustion engines. Instead, all Volvo cars will either be fully electric new models, or hybrid versions of existing models.
Volvo president and chief executive Håkan Samuelsson said, “Volvo Cars has stated that it plans to have sold a total of 1 million electrified cars by 2025. When we said it we meant it. This is how we are going to do it.”