Do you remember VHS cassettes? Yes, barely. How about the phonograph? Neither do we. Exactly. There comes a time when new technology becomes so accessible and easy to use that the alternatives that we were ones used to are no longer in need. So when will electric cars stop being a trend and rather become mainstream?
According to Bloomberg New Energy Finance (BNEF), it looks like the 2020s will herald the beginning of the era of the electric car.
Following the pattern of technologies from the past and how they have shaped the behavior of generations ahead, electric vehicles will, too, bring significant shifts in the world of the future.
To give you an example of the upcoming changes, think of the oil supply that will be no longer needed. Bloomberg calculated that electric vehicles could displace oil demand of 2 million barrels a day as early as 2023. The only question here is, will this indeed happen so soon?
Electric Cars Cheaper Than Conventional by 2022
Why not? It seems like electric car sales are increasing every year. In 2015, EV sales grew by 60 percent worldwide. And surprisingly, this is the same annual growth rate that let Ford’s Model T surpass the usage of the buggy and the horse in the early 20th century.
The first game changer, as it is often referred to, had a trajectory of development almost identical to the one of Tesla Motors today. Coincidence? We don’t think so.
Tesla Motors, as one of the few EV automakers today, announced that it is aiming to bring EVs to the mass market, and the company’s first official step towards this goal is the Model 3, which falls in the $30,000 price range. More than 350,000 people have preordered the model so far.
Similarly, Nissan and Chevrolet are following Tesla’s footsteps with their EVs, thus allowing for much wider spread of the EV as a type of vehicle. By 2040, electric vehicles will account for 35 percent of all new vehicles sold.
According to the BNEF report, new EV sales could be as high as 50% in 2040 if they become widespread in fleets and ride-sharing schemes, or as low as 25% if oil prices remain very low for many years. As Salim Morsy, senior analyst and author of the report, stated that “the central forecast is based on the crude oil price recovering to $50, and then trending back up to $70-a-barrel or higher by 2040.”
If the oil price were to fall to $20 per barrel and remained on that level, this would only delay mass adoption of EVs to the early 2030s.
Yes, ok, we all want to see our addiction to oil cured, and it even looks like we already have the technology we need to do so. But nevertheless, EVs today comprise only 1 percent of all sold cars in the world. Electric cars are still very rare in the developed countries, and most other nations can’t even afford them.
Skeptics would say that with these levels of distribution and infrastructure, there is no way EVs would rise to 35 percent of all car sales. There is a need for significant investment in bringing awareness and understanding of sustainable technology in most countries, along with developing and expanding the power stations across the globe. Even after all this is completed, the result will be that the plug-in cars would still cost a fortune. So is sustainable transport technically feasible in the near future at all?
Well, nobody thought DVDs were possible, but they replaced VHS in less than a decade. This time, however, the facts are speaking for themselves, and you must be blind not to see them.
One of the main reasons that would allow for the quick invasion of EVs in the mass market is the decrease in cost of battery production. Only in the past year, the price of batteries fell by 35 percent, and it is following the same path. In less than six years, analysts estimate, reduced battery price will make electric vehicles as affordable as their gasoline counterparts.
According to Colin McKerracher, lead analyst at BNEF, “lithium-ion battery costs have already dropped by 65% since 2010, reaching $350 per kWh in 2015. We expect EV battery costs to be well below $120 per kWh by 2030, and to fall further after that as new chemistries come in”. Moreover, this will bring EVs price down to less than $22,000 in today’s value according to the projections of Bloomberg finance analysts.
The infrastructure needed for the kickstart of EVs to the mass market might seem to be another obstacle on the way. However, several global studies have already shown in their forecasts that charging stations will not be a problem. On the contrary, the number of power stations will increase more than ten times by 2020. According to IHS Incs, the market for EV chargers will grow from more than 1 million units in 2014 to more than 12.7 million units in 2020.
Another reason for the quick development of the EV market that is no less important than the technicalities is the effect electric vehicles have on the environment. EVs are vital to cutting down carbon emissions and dealing with air pollution in cities. They can eliminate nitrogen oxides (NOx) and sulfur oxides (SOx), which are the cause of many premature deaths of plants, animals and people every year. According to a study, by 2050, the electric vehicles could help reduce annual greenhouse gas emissions by 1,030 million metric tons relative to 2015 levels, a 45% reduction.
As we can see, there is little left that can delay the introduction of EVs to the mass market. Even if conventional cars improve their efficiency by 3.5% a year, EVs will still come at a cheaper price by 2022, and that is including the original sale price plus running costs. EV sales will rise faster in countries that invest early in charging infrastructure or environmental policies.
We bet that if five years ago somebody told you that you would no longer need your car in a couple of years, you would have never believed them. But how about now? It might still be a little hard for the majority of you to accept the possibility of charging your car like you are charging you laptop. But hey, we should be open to what the future brings, right? And it seems like there is no escape from electric cars, so we’d better get used to the idea of plugging in our rides.