There will be just 5 million EVs on the road by the end of 2018, minuscule penetration into a global car stock of 1.2 billion cars. But with faster acceleration, longer life, fewer moving parts and less maintenance, and no tail pipe emissions EVs are going to be big - really big.
So what has to happen to get to 300 million EVs - our forecast for 2040 - one in seven of the global stock and when over 50% of new car sales will be electric?
We have deepened and broadened our analysis of EVs' disruptive potential and the implications. I had a chat about our latest thinking with transport research team leads, Prajit Ghosh and Gavin Montgomery.
Less and less so. Sure, the battery is one-third of the cost of an EV today, but costs have already fallen by 80% this decade and should continue to fall. Battery pack prices will drop below US$200/kWh this year then decline by around 10% per annum.
Battery performance could double inside ten years. Various lithium-ion battery (LiB) technologies are being adopted, but lithium NMC batteries are gaining the most traction. The incumbent NMC 111 chemistry is equal measures of nickel, manganese and cobalt, and has an expected energy density of around 150 Wh/kg - a sort of proxy for driving range.
The industry's focus on increasing energy density and reducing dependency on scarce and expensive cobalt is seeing a move to NMC 5:3:2 and NMC 6:2:2 batteries. Some battery makers think they can mass-produce NMC 8:1:1 with an energy density of above 200 Wh/kg by the early 2020s, though there are big challenges with the chemical stability and controlling heat.
Slowly, but appetite will accelerate. The more obvious sign of the energy transition is the rapid, global build-out of zero-emissions renewables power generation to displace fossil fuels. This is a necessary precursor to the consumption side, where the sustainability movement, in which EVs will play a vital part, is at an earlier stage of development but now gaining momentum across a broad front.
It's manifesting in all sorts of ways - decarbonization goals, companies procuring renewable energy and EV fleets; investor pressure for transparency on emissions; and capital markets reducing exposure to fossil fuels while seeking new instruments for green social investments.
There's a lot going on, and COP21 commitments were the catalyst - EVs are central to most signatory countries' emissions reduction targets. The volume of global transport emissions subject to carbon mitigation goals has increased by six-fold since 2011, with California, Japan, France, Mexico, South Korea and Ontario among the governments which have adopted carbon policies. The Netherlands and Norway (2025), India and Germany (2030), China (2035), France and UK (2040) plan to end sales or registrations of ICE vehicles.
AEVs will be very attractive to the urban consumer who doesn't want to own a car and uses ride-sharing services for their travel needs. In time, AEVs could be very disruptive to the market because of the high-capacity utilization and durability of EVs.
But the automated technology is yet to be proven and the very real safety challenges tested and overcome. So AEVs are not likely to be a force in the market before 2030.
In part two, we'll look at how EVs will disrupt the oil market.