The World Is Headed To 70% BEV Sales By 2030

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That the world is headed to 70% BEV sales by 2030 is likely. It is based on the expectations of some carmakers and some simple math. I got to thinking about it after reading the article by Steve Hanley “IEA Predicts Electric Vehicle Sales Will Rise 35% This Year.” It is about the highlights in the annual International Energy Agency (IEA) report Global EV Outlook. In the latest version, the IEA predicts a 60% EV marketshare by 2030 in the main markets of China, EU, and USA. I think this unlikely.

Let us first think about the technological and price developments that we can expect, beginning with price developments. In China, BYD is bringing new models to market in the $20,000–$30,000 price range that are very competitively priced compared to the ICE products of legacy brands. In the USA, the Tesla Model 3 and Model Y base models are in range of the ICE models of the East-Asian legacy competition, even before tax incentives. In the second half of this decade, many more fully electric models will start to compete on price with the ICE models.

Legacy auto does not like this development. Legacy automakers need the higher margins of electric vehicles to finance the phaseout of their ICE models. Regulations like the Euro-7 standard will make ICE vehicles more expensive, and shrinking demand will put pressure on prices. Closing factories and retraining workers is expensive. Stranded assets are unavoidable. But 100% electric competitors like Tesla and BYD do not have those problems, and will use price as a weapon to gain market share.

In this decade, battery density will at least double, looking at what is expected to go into production in the next few years. Tripling density is even likely for some battery types. The price per kWh will halve every 5 years. This price erosion is helped by the use of LFP and sodium-ion batteries.

Taking this together, we will see the same mass and volume battery pack with double the capacity for half the price in 2030.

In reality, this development will be used to increase range a bit and decrease price a lot. In the second half of this decade, there will be fewer and fewer arguments why somebody should buy a fossil fuel vehicle instead of a full electric (BEV). With the mandatory end of fossil fuel vehicle sales (2035) coming closer, and expectations of plummeting resale values — combined with the closing of (inner) cities for all vehicles with a tailpipe — BEV sales are likely to be over 90% in the EU+ and China by 2030.

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To make this more clear, China is ahead of the EU+ in BEV market share. The Chinese central government has 2040 as a goal for 100% BEV. The EU mandates 100% BEV by 2035. What is currently the obstacle for most people — price and/or range and/or charging infrastructure — will not be a problem five years from now. The European and Chinese people are accustomed enough with BEVs to not see them as new, unknown technology anymore. For most, the biggest question about fully electric vehicles is when to make the step to zero-emission driving.

The EU+ and China are about 50% of the world’s light duty vehicles (LDV). The USA, Canada, Japan, South Korea, Taiwan, Australia, and New Zealand (some of those markets clearly bigger than others) constitute the bulk of the rest of the world (~28% LDV). They will also have a larger market share of BEVs than FFVs. I know that many readers expect or hope that most of these countries are close to 90% BEV market share by 2030, or one or two years later. Ford and Stellantis both have 50% share of their sales as their 2030 goal. GM would like to be the leader, and Tesla will likely be the biggest auto seller in the USA by 2030. But it is also possible to get a Trump acolyte as president. With a prediction of “over 50%,” we keep it safe.

The rest of the countries of the world are at different levels of economic development. India (~6%) has the political ambition to be 100% BEV by 2030, but developing and implementing the needed policies might be a challenge. India is a leader in two- and three-wheel electrification, and with awful pollution in its big cities, there is widespread support for a fast transition to zero emission vehicles. Tiny Costa Rica is among the leading countries in the transition to clean transportation. Indonesia would love to have a Tesla gigafactory on one of its isles. Expect those super rich oil countries (~1.3%) in the Middle East to be at or close to 90%, because it is cool technology and they can afford it.

Would it be too optimistic to put the rest of the world at 50% BEV market share? Simple arithmetic shows that over 90% BEV market share in 50% of the world auto market is 45% BEV market share worldwide already (at least). And then if we assume 50% BEV market share of the other 50% of the market, that’s 25%. Together, I see a 70% global market share for BEVs in 2030. I can also see it a lot higher, but that could be based on wishful thinking.