Surge in EV adoption challenges fossil fuel forecasts
Electric vehicle sales have continued their remarkable growth trajectory, exceeding both public expectations and forecasts from professional analysts in the field. This impressive surge has also outstripped the projections put forth by oil companies, marking a significant milestone in the global transition towards clean energy transportation. These revelations emerge from BloombergNEF's latest Zero-Emission Vehicles Factbook, which sheds light on the rapid evolution of the EV market.
BloombergNEF, known for its optimistic outlook on EVs, has consistently been among the most bullish forecasters. Nevertheless, other forecasters, including a portion of CleanTechnica's readership, held even more optimistic views and perceived BloombergNEF's projections as conservative. Notably, organizations such as OPEC, BP, and Exxon, traditionally rooted in the fossil fuel sector, have consistently underestimated the pace of EV adoption. Once again, in what has become an annual occurrence, BloombergNEF has been compelled to revise its forecasts upwards, with some of the more ambitious and forward-thinking forecasters proving to be remarkably accurate in their predictions.
The driving force behind this unprecedented surge in EV adoption can be attributed to two key factors: increasing policy support and growing consumer interest. Long-term outlooks for zero-emission vehicle (ZEV) adoption have become increasingly bullish, with new forecasts for battery electric vehicle (BEV) fleet size in 2030 experiencing a remarkable 26 per cent increase since the previous year.
According to BloombergNEF's 2023 Long-Term Electric Vehicle Outlook, the ZEV share of passenger vehicle sales is projected to reach a staggering 75 per cent globally by 2040 in their base-case Economic Transition Scenario. This figure, though unchanged from the previous year's report, signifies substantial progress from the 2020 Outlook, reflecting the introduction of additional policy support for ZEVs over the past few years. The International Energy Agency's (IEA) 2023 Global EV Outlook also paints a more optimistic picture, estimating a 36 per cent BEV share of passenger vehicle sales by 2030. This is more than double the 17 per cent estimated in its 2022 report, bringing the IEA's scenario closer to BloombergNEF's 2023 Outlook.
However, it's important to note that not all countries are progressing at the same pace in terms of EV adoption. China has emerged as the undisputed leader in this regard, with several European nations following closely behind. In contrast, the United States, Canada, Australia, various European countries, and several Asian nations lag significantly behind in their adoption of EVs.
"In over half of the global car market, EV adoption is still below 10 per cent of sales. This includes countries like the US and Japan," observes BloombergNEF. "Over 30 per cent of the global car market is in countries where EV adoption is still below 5 per cent. EV adoption in India, Southeast Asia, Japan, and the Rest of World category—which includes countries like Brazil or Russia—is climbing, but it was still below 5 per cent in 1H 2023. In India, the market crossed the 1 per cent EV adoption mark only in 2022, reaching 2 per cent in 1H 2023. Relatively low-priced vehicles, lack of EV model availability, underdeveloped charging infrastructure, unreliable grids, and lack of policy support are some of the issues holding these countries back."
Despite regional disparities in adoption rates, the global EV fleet is experiencing exponential growth. The passenger electric and fuel-cell vehicle fleet has quadrupled in size since 2020, with a cumulative total of 41 million EVs expected to have been sold by the end of 2023, up from just 10 million at the close of 2020. This remarkable growth means that EVs now constitute approximately 3 per cent of the global passenger vehicle fleet, with China and Europe together housing 80 per cent of this expanding EV fleet.
For enthusiasts of battery electric vehicles (BEVs) specifically, excluding plug-in hybrid electric vehicles (PHEVs), BloombergNEF also provides insightful data. The fleet of true zero-emission passenger vehicles, excluding PHEVs, has more than quadrupled in size since 2020, with cumulative all-time sales of zero-emission passenger vehicles reaching approximately 29 million in 2023, up from just 6.8 million at the end of 2020. Remarkably, despite Europe's higher share of PHEVs, it remains the second-largest ZEV market globally, trailing only China.
The electrification of the global automotive sector is clearly accelerating at an unprecedented pace, driven by a combination of supportive policies, heightened consumer interest, and a growing awareness of the environmental benefits of electric vehicles. As the automotive industry continues its transition toward a sustainable future, the world eagerly awaits further developments in this dynamic and transformative sector.
Peter Milios is a recent graduate from the University of Technology - majoring in Finance and Accounting. Peter is currently working under equity research analyst Di Brookman for Corporate Connect Research.