Plunging battery prices are bringing the age of gasoline-powered cars to an end faster than anyone expected, according to a new report from Bloomberg NEF (BNEF). That means peak oil demand will also arrive sooner than expected — which in turn means ambitious climate goals will be more affordable than previously thought.
“Sales of internal combustion passenger vehicles have already peaked, and may never recover,” BNEF’s Electric Vehicle Outlook 2019 finds.
Electric vehicle (EV) sales are now seriously eating into internal combustion engine (ICE) vehicle sales — and that trend is projected to accelerate in the coming years.
As a result, BNEF projects that oil demand will peak in 2028 for passenger vehicles, and in 2035 for commercial vehicles. “We expect demand in both sectors combined to peak in 2030,” a BNEF spokesperson told ThinkProgress in an email.
Thus, the rapid rise in EV sales will drive a slowdown, a peak, and then a drop in oil consumption. And that means oil prices and the value of investments in oil companies will fall.
Other findings in BNEF’s chart-filled report are equally astonishing. For instance, the EV adoption rate is so rapid that EVs will reach 50% of new car sales in both China and Europe around 2030 — at which point EVs will make up some 40% of new U.S. passenger vehicle sales.
What is driving the rapid adoption of EVs?
First and foremost, it’s the sharp and ongoing drop in battery prices. From 2010 through 2018, the average lithium-ion battery pack dropped a remarkable 85%, from $1,160 to $176.
BNEF projects that the sharp price drop will continue, as average battery pack prices “reach $87/kWh in 2025 and $62/kWh in 2030” — a further drop of 65% from 2018 prices.
These price drops mean that the economics of owning an EV will quickly surpass that of owning a gasoline-powered car.
In three years, EVs will actually be cheaper up front than combustion vehicles, which will make EVs the increasingly attractive option. After all, they are already superior to gasoline cars in many key respects: EVs have faster acceleration, lower maintenance costs, zero tailpipe emissions, and a much lower per-mile fueling cost than petrol cars , even when running on carbon-free fuel.
Also, as batteries get cheaper, EV ranges are getting longer — 300, 400, or even 500 miles.
The time needed to charge a battery is also dropping fast. Some chargers take only 20 minutes to charge an EV, and new chargers can cut that time in half. Ultimately, next-generation batteries may be chargeable in three to five minutes.
This rapid adoption of batteries and EVs — combined with the accelerating price drops and adoption rates for renewable energy — mean that the world can decarbonize the transportation sector faster and cheaper than we thought just a few years ago.