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EV sales set to reach 45m globally by 2040 as high price barrier falls away

EV stock is expected to grow to 35 times its current size.

EV stock is expected to grow to 35 times its current size.

Globally the number of electric vehicles (EVs) on the roads is expected to jump to 323 million by 2040 according to new research by Wood Mackenzie.

Sales are expected to reach 45 million units per year over the next 20 years, leading to this surge in numbers. In the UK, a surge in EV sales is already underway, with battery electric vehicles sales increasing 261.8% in June compared to the same month in 2019.

However, these figures have been revised down due to the impact of COVID-19 worldwide, which will delay total vehicle sales by as much as two years.

In markets like Europe and China, the strong focus on a green recovery will likely help drive forwards EV adoption, however the US response has not been favourable for electrification of transport.

“Despite EV stock growing to 35 times its current size, the transport emissions curve will flatten and not fall. The global CO2 emissions contribution of transport will increase by 1.3 megatons between now and 2040,” said Ram Chandrasekaran, Wood Mackenzie’s principal analyst.

Adoption of EVs is being driven by strict regulatory targets around the world, in the UK this includes the impending ban on the sale of internal combustion engine (ICE) vehicles. This is currently set for 2035, but there have been many calls to bring forwards this date.

There are few barriers left for commercial EV adoption, continued Wood Mackenzie, meaning we are likely to see a step change in the coming years. It has projected commercial EV sales to top 5.5 million a year by 2040, with global stock hitting 40 million.

Certainly the number of corporations committing to electrify their fleets has been growing, with majors like BT Openreach and British Gas in the UK transitioning to electrified vans.

“Unlike retail customers, fleet owners are well versed in the capital and operational expenses of their vehicles,” added Chandrasekaran. “They also have well-defined operating routes, as well as overnight parking locations.”

The main challenges to EV adoption remain the high cost of vehicles and a lack of EV charging infrastructure, but progress is underway for both.

Chandrasekaran continued: “The projected price of battery packs keeps dropping. We expect the US$100/KWh threshold to be breached by 2024, one year earlier than our previous projections.

“Cumulative residential and public charging points are projected to grow to 32.5 million and 5.4 million outlets by 2030 and will have an investment value of US$2.7 billion and US$3.3 billion, respectively.”

In the UK, progress is being made to expand the charging network in an effort to ease adoption. In August 2020, the Department of Transport hailed a milestone as the number of EV chargers across the UK surpassed 18,000.

Wood Mackenzie’s analysis follows a report produced in July by Deloitte, that suggested the EV transition in the UK is reaching a tipping point, with more than half of consumers considering making the switch.

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