A groundbreaking analysis by the Rocky Mountain Institute (RMI) in collaboration with the Bezos Earth Fund indicates that global electric vehicle (EV) sales are on a trajectory to exceed even the most ambitious net-zero targets, potentially capturing over two-thirds of the market share by 2030. This seismic shift follows a pattern of exponential growth and carries significant implications for the automotive and energy sectors.
RMI’s research reveals that internal combustion engine (ICE) car sales hit their peak in 2017, and by the mid-2020s, the number of retired ICE vehicles is projected to surpass new sales. This impending decline signifies a pivotal moment in the automotive industry.
The analysis points to an ‘S-curve’ pattern already established in leading EV markets, such as Northern Europe and China. This trend implies that global EV sales will surge at least sixfold by 2030, potentially commanding a market share ranging from 62% to 86% of new vehicle sales. In contrast, conventional projections have consistently fallen short, targeting only around 40% market share for EVs by 2030.
As internal combustion cars currently constitute about a quarter of global oil demand, and broader road transport accounts for nearly half, the rapid growth of EVs poses a significant threat to oil consumption. The research indicates that oil demand for cars reached its zenith in 2019 and is anticipated to decrease by a minimum of 1 million barrels per day annually after 2030, thereby erasing any expected growth in oil demand for cars.
An intriguing revelation from the analysis is that economics now surpasses policy incentives as the primary driver of EV sales. Decreasing battery costs are a central catalyst, with RMI expecting battery expenses to halve over this decade, declining from $151 per kilowatt-hour (kWh) to a range of $60 to $90 per kWh by 2030. This cost reduction is projected to make EVs, for the first time, as affordable or even more so than gasoline cars in markets worldwide.
The dominance of EVs in car sales is poised to catalyze electrification across other modes of road transport, extending to two- and three-wheelers, as well as heavy-duty trucks.
China leads the charge, with a trajectory to achieve 90% EV sales by 2030, a substantial leap from the one-third of sales it represents today. Numerous other markets are on similar ‘S-curves,’ aiming to attain up to 80% market share in a parallel timeframe. The synergy of robust policy support and China’s prowess in EV and battery production is substantially driving down costs and enhancing EV adoption worldwide.
Notably, countries like China, the Netherlands, and Norway have already demonstrated that rapid EV sales growth aligns with climate goals. Additional research, released by Systems Change Lab, reveals that a diverse array of countries is following the pattern of exponential growth once EV sales reach 1% of total car sales. Even later-adopting nations, including India and Israel, are catching up due to cost reductions and technological advancements. India, for instance, tripled its all-electric vehicle sales in just one year, highlighting its emergence along the S-curve trend.
Furthermore, a tipping point in purchasing decisions is anticipated as EVs become more affordable than fossil-fueled vehicles. Research from Exeter University’s Economics of Energy Innovation and System Transition (EEIST) project indicates that this parity may occur as early as 2024 in Europe, 2025 in China, 2026 in the United States, and 2027 in India, particularly for medium-sized cars, with smaller vehicles reaching parity even sooner. In China, the lifetime costs of small EVs are already lower than their gasoline counterparts. When factoring in both operating and acquisition costs, EVs are already more economical to own in the European Union and China, with the United States likely to join this trend in the next one or two years.
Crucially, coordinated international action could expedite the attainment of this purchase-price parity tipping point by up to three years. If the United States, European Union, and China align their regulatory paths to achieve zero emissions in all new car sales by 2035, this could not only advance the transitions in the largest markets but also accelerate global cost reductions, facilitating a faster transition for all. These three major markets have a substantial global impact, collectively representing 60% of the worldwide car market.
The Accelerating to Zero Coalition, featuring over 220 signatories committed to 100% zero emission vehicle (ZEV) sales by 2040 globally and 2035 in leading markets, is propelling widespread progress. Moreover, more than 100 corporate members of EV100 are contributing to hasten the transition and steer investment decisions at scale.
With anticipation building for COP28 Transport Day on December 6, 2023, an increasing number of countries, companies, and regions are expected to announce shared pathways and target dates for phasing out petrol-powered cars. This shift is particularly significant as road transport alone accounts for approximately 10% of global emissions, signifying the pivotal role the transport sector plays in realizing the goals of the Paris Agreement. The transition to electric vehicles represents a pivotal moment in the fight against climate change, offering cleaner air, reduced greenhouse gas emissions, and more cost-effective transportation.