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Rethink Energy Makes Bold Predictions About Global Vehicle Fleet Transition To Electric

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Rethink Energy has made the prediction that some countries’ entire automotive fleets will be electric within the next decade. Policy changes in various countries have led to changes in market dynamics. However, the uptake trend is obvious for electric vehicles. Rethink Energy is predicting that some countries will have 100% electric vehicle fleets as early as 2032. China and some Western European countries will achieve this milestone by 2032, and the USA by 2038 (California is expected to be even earlier).

There is currently a surge in the construction of battery factories in the US as carmakers seek to get maximum benefit from the Inflation Reduction Act (IRA). Tesla is even building a lithium refinery in Texas. Rethink Energy singles out Tesla as a “clear winner with a majority of its vehicle lineup being eligible in at least some capacity. Tesla remained the largest electric vehicle seller in the US, selling over 500,000 vehicles into the US market in 2022. The company’s industry-leading profit margin and its willingness to weaponize it puts Tesla in a strong position to lead going forwards, particularly as competition from incumbent OEMs is only going to fully materialize mid-late decade.”

In 2022, 5.8% of total new vehicle sales in the US were plugin electric vehicles. It is expected that this is likely to increase to 7.8% in 2023, or 1.1 million EVs. California and other CARB states will lead the way. The EPA’s increasingly strict emissions regulations will make it more difficult to produce and sell fossil fuel cars.

Bold Predictions

USA EV fleet growth. Graph courtesy of Rethink Energy. Note that the chart above is cumulative.

China sold 5.9 million electric passenger cars in 2022, up from 3.2 million in 2021. Chinese mass-manufacturers like BYD are increasingly shutting out Western competitors. The Chinese market appears to front-load demand towards the end of the year, leading to much lower sales in the first few months of the following year. It is an incredibly cost sensitive market, as demonstrated by the success against all odds of the Wuling Hongguang Mini in a joint venture with GM.

According to Rethink Energy, the Chinese automotive fleet is expected to hit 100% electric vehicles in 2032. Bold prediction.

Bold Predictions

EV fleet growth in China. Graph courtesy Rethink Energy.

European markets have been grappling with the Russian invasion of Ukraine and its effect on energy prices. Markets are slowly recovering. “Factories producing vehicles and batteries within Europe will primarily service the major European markets, so we can expect a jump in domestic production and sales within the region around 2026/2027 when these factories come into operation. Until then Europe will continue to be serviced predominantly by batteries coming from China and wider East Asia.”

Germany’s automotive fleet is expected to be 100% BEV by 2032, and the UK’s by 2034. Another bold prediction.

“Italy remains a bit of an anomaly within the electric vehicle market, with sales up until 2021 progressing smoothly and then EV sales largely collapsed and have yet to return in full. Italy also remains counter to its European rivals in that it still favours PHEVs over BEVs, despite widespread knowledge that their emissions reductions in use are overstated.” Fiat has a big part to play here.

Europe’s uptake of EVs seems to have been side tracked by a war, the resulting recession, and a strange conversation about e-fuels. Future demand will also be affected by declining population numbers in some European countries. Attempts to discourage private car ownership, especially in congested cities, will also reduce the numbers of vehicles sold. Longer lasting BEVs will mean a lower scrappage rate and may lead to an expansion of the used car market and battery replacement services.

If automotive manufacturers continue to produce significant numbers of internal combustion engine (ICE) vehicles, they may end up with warehouses full of unwanted vehicles by mid to late decade. They would be well advised to keep an eye on their inventory.

“The Indian automotive market remains heavily focused towards 2 and 3-wheelers due to the country’s lack of infrastructure outside of heavily urban areas and its staggering urban population density overloading existing infrastructure already. 2022 saw just over 46,000 4-wheeled EVs sold in the country.” I have written further on this here.

Thankfully, India’s 2-wheeled market has been electrifying significantly, and this will enable the country to play a part in global decarbonisation.

“India’s story is going to be similar to a lot of countries within the region, particularly the Asian Tigers of Indonesia, Vietnam, and the Philippines. All of these countries are predominantly 2-wheel focused markets which will need to see significant infrastructure investment if they want to turn into 4-wheel oriented markets.” This will depend on the ability of these economies to fund road expansion.

There is a consolidation of EV markets away from PHEV demand and towards both BEV markets and HEVs. Sometimes this is a result of government policy and sometimes consumer perception. A consumer may feel confident to make the move to BEV as their charging needs have been addressed.

Developing countries with high population density in urban areas are best to seek electrification by electrifying their two- and three-wheeled fleets. It is worth noting that countries like Vietnam and Thailand are also pursuing electric vehicle manufacture for export.

“North America is still going to see increasing vehicle demand as its socioeconomic factors put it on a still expanding population curve relative to Western Europe, but it needs to continue to address the production bottlenecks it has seen since Covid-19. This is a difficult thing to commit to considering the shift to electric vehicles, as while it may be possible for domestic manufacturers to return to full production volumes of ICE vehicles, with the shift to electrification so close it doesn’t make sense to forego capital expenditure on this new market.”

It looks like we will see less smog, less disease, and quieter roads within the lifetime of most CleanTechnica readers.

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Written By

David Waterworth is a retired teacher who divides his time between looking after his grandchildren and trying to make sure they have a planet to live on. He is long on Tesla [NASDAQ:TSLA].


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