October 13, 2018


Planes, Trains and Automobiles - the Electric Remake (Michael Liebreich, 9/13/18, Bloomberg NEF)

Two years ago, BNEF Chief Editor Angus McCrone and I wrote a piece entitled Electric Vehicles - It's Not Just About the Car. At the time, BNEF was forecasting 406 million electric cars by 2040, and our article described the profound implications such growth would have on different sectors of the economy, from oil companies to the electricity system, from city streets to ministries of finance.  We also predicted that other parts of the transport industry would go electric, noting that "there are already 200 million electric bikes in China alone, and their use is spreading worldwide. Improved battery, motor and power control technology will challenge the dominance of small fossil-fuel engines in every light sector: motor boats, lawnmowers, snowmobiles, mopeds and motor cycles."

At the start of 2016, fewer than one million EVs had been sold in the history of the world, now there are four million, and the next million will hit the streets in just six months. The news today is full of cities and countries banning internal combustion vehicles, and of car companies launching electric models every other week. There may still be some who are convinced that battery electric vehicles will never catch on, or that the world's drivers will wait for hydrogen cars, but their numbers are dwindling.

Most mainstream energy and transport forecasters are coming around to our 2016 bullishness. At the start of 2016, the International Energy Agency were predicting just 23 million electric cars on the world's roads by 2030; by this year it had upped its figures to 127 million in 2030, and 280 million by 2040. BP has upped its forecast for 2035 from 72 million to 210 million. Even OPEC has moved - from 46 million EVs, to 253 million in 2040. See the article by our Head of Advance Transport Analysis, Colin McKerracher.

Just as the rest of the world's energy cognoscenti try to catch up, it has become clear that our 2016 predictions were in fact too conservative. In its latest annual forecast, published in May, BNEF said there would be 560 million electric cars by 2040: over one third of the fleet and over half of all new car sales (client link here).

Buses, which were under the radar in 2016, have started going electric faster than light-duty vehicles. There are nearly 400,000 electric buses on the road already, 99 percent of them in China; BNEF expects electric buses to have a lower total cost of ownership in almost all charging configurations by 2019. By 2030, it expects 84 percent of all municipal bus sales globally to be electric, and by 2040, some 80 percent of the global municipal bus fleet will be electric. Clients can see the work by Aleksandra O'Donovan, head of our electric vehicle team, here and here.

Over the past two years we have also seen the beginnings of the electrification of commercial vehicles, starting, as expected, with light vans. A few years ago DHL Deutsche Post couldn't find a manufacturer willing to sell it any short-range electric post vans, so it bought a company called StreetScooter and started to make its own; this year it opened a second StreetScooter factory to meet third party demand. UPS is doubling the number of electric vehicles in its London fleet to 170. Renault and Nissan got a bit of a head start in the market for electric delivery and trade vans, based on their electric car platform, but Volkswagen, Daimler, Ford and all other vehicle makers are rushing to catch up.

We are also starting to see that the trend will not be confined to light vehicles, as many thought. I have been saying for a few years that the real barrier for electric vehicles is not weight, but distance: if an electric car can compete with internal combustion on a total cost-of-ownership (TCoE) basis for a given route pattern, an electric bus or truck will too. And since bus and truck purchasers are driven almost entirely by TCoE, not sticker price or branding, once break-even is achieved, the switch to electric will be as fast as the supply chain and charging infrastructure will allow.

Posted by at October 13, 2018 4:43 AM