Electric Vehicles

EV Fleet Growth Projections

By Simon Johns - May 22, 2024

The fervor for battery electric vehicles is cooling. OEMs are rethinking strategies that were perhaps a touch optimistic, but growth remains robust. Still, there is much variance among forecasts over the long-term EV fleet growth projections. They will be a key factor in the impact that EV sales have on passenger car motor oil volumes. But with fewer parts in an EV compared with an internal combustion engine, metalworking fluids will take a hammering too.

In 2023, registrations of BEVs hit 250,000 per week globally. That’s more than double the annual total in 2013. This upward trend continued through one of the worst pandemics in a generation. Most surprising was the collapse of the internal combustion engine vehicle market.

The consensus among analysts and EV proponents is that this trend will continue. But how steep it will climb is open to speculation. Some of that variation probably stems from the core interests of different organizations, some of which are outlined below.

The global population of battery-powered and plug-in hybrid cars has been growing rapidly and is expected to continue doing so. That does not mean, however, that forecasts assume a continuation of the status quo. After the pandemic, sales slowed but growth predicted for coming decades is positive. Moreover, it will be driven by quite different factors. Based on trends in 2023, global annual sales will reach 16 million units by the end of 2024.

During those years when the rate of growth is sharply increasing, the reasons for the growth would also be evolving. Until now, government incentives have been one of the main factors for increasing numbers of consumers to buy EVs. EVs offer their own built-in financial incentive. Owners can stop (in the case of BEVs) or largely reduce (PHEVs) money spent on fuel. To date, however, that savings would more than be offset by the bigger price tags that EVs carry.

For model year 2024, battery-powered sedans in the US cost between U.S.$45,000 and $55,000 depending on range. That compares to around $32,000 for a typical ICE car in the same size category. The electric premium widens to between $9,000 and $17,000 for crossover BEVs and $11,000 to $20,000 for sport utility vehicles. Those are very large upfront cost differences – too large to overcome for most car buyers.

Recognizing this, governments have offered a variety of carrots aimed at reducing the cost of buying and owning EVs. These range from exemptions on sales or personal property taxes to free parking and ferry rides, but the biggest are direct payments to subsidize purchases. To date, 90% of EV purchases have occurred in some dozen countries, and in all of them national and/or local governments offer large subsidies, in some cases exceeding $10,000 per vehicle in some countries.

In most cases, at least, subsidies were never intended to be permanent. Indeed, governments have good reason to eliminate them because the bill for such payments rises rapidly as EV sales shoot up. Some are already winding down. In June of 2019, China eliminated subsidies that it pays to manufacturers of EVs with range of less than 250 kilometers and cut in half its subsidies for those with longer ranges. In the US, federal subsidies were conceived as applying only to the first 200,000 in sales for any one model.

Private Sector Perspectives

The most aggressive prediction for the highest number of EVs on the roads in a given timeframe is by Bloomberg New Energy Finance, which expects registrations to reach 16.7 million units by then end of 2024.

Its forecast in 2021 turned out to be conservative. BNEF predicted sales of 4.4 million units. The number was 6.75 million, according to e-mobility vehicle data provider EV Volumes. Then by 2026, BNEF expected 10% of global passenger vehicle sales, rising to 28% in 2030 and to 58% in 2040. In fact, by 2023 sales reached almost 18% of passenger car at around 14 million units.

EV Volumes, part of automotive data company JD Powers, predicts annual global EV sales doubling to 29 million units in 2027. Contrary to BNEF, it thinks the global share of EVs will be more like 22.6% in 2025 and 35% in 2028.

Financial services consultancy EY thinks BEVs and plug-in hybrids will account for 55% of global vehicle sales by 2030.

In its December 2020 forecast, the U.K.-based research company IHS Markit estimated EV sales would grow by 70% in 2021 to 3.94 million and then to 11.26 million vehicles by 2025, a compound rate of 52%.

Agency Views

In its Global EV Outlook 2024, the Paris-based International Energy Agency presents three pictures. First is the Stated Policies Scenario, which considers the effects of existing government policies and objectives, as well as announcements by carmakers on their EV manufacturing plans and uptake.

It predicts the global EV stock (excluding two/three-wheelers) will grow from less than 45 million in 2023 to 250 million in 2030 and reach 525 million in 2035. IEA thinks that in 2035, more than a quarter of vehicles on the road will be electric. On average, the EV stock will grow by 23% per year from 2023 to 2035.

In its 2021 outlook, IEA’s Stated Policies Scenario predicted the global EV stock (excluding two/three-wheelers) will grow from the 11 million is calculated for 2020 to 145 million by 2030. This represents growth of roughly 30% and foresees EVs accounting for 7% of the road fleet.

To achieve this, annual sales would have to reach 15 million in 2025, which at today’s rate seems doable, and more than 25 million in 2030, representing 10% and 15%, respectively, of all road vehicle sales. The agency also thinks that if governments apply more pressure to reduce fleet average emissions on automakers and incentivize consumers to buy EVs, the fleet could hit 230 million units.

In what IEA calls its Announced Pledges Scenario, the stock of EVs in 2035 will reach 585 million in 2035 and almost a third of the vehicle fleet will be electric.

The IEA’s Net-zero Scenario, the fleet of EVs will grow at an average rate of 27% per year until 2035, culminating in a fleet of 790 million, excluding two and three wheelers.

The U.S. Energy Information Agency is one of the most cautious. Its first prediction in 2011 had sales of battery EVs in the U.S. at fewer than 500,000 units a year by 2035. Its current prediction in the Annual Energy Outlook 2020 puts the figure in the region of 1.9 million by 2050, with PHEVs climbing to 900,000 sold per year by the end of the same period.

None of the organizations mentioned above offer estimates on the effects EVs will have on PCMO demand, but such wide variations would have an impact on volumes. EV uptake in Oronite’s 2018 analysis was significantly higher than any of these other projections, and it is safe to say the impact would be less under those scenarios.

Oil Company Forecasts

Since its last analysis, named the Sky Scenario, Shell has been shedding hydrocarbons refining assets and buying up EV-related companies at a speed that would make Elon Musk blush.

Over the past few years it has invested in Greenlots, a Californian charging network startup; Newmotion, a Dutch electric charging company with 30,000 charge points; and another Californian charging startup called Ample. Shell also signed an agreement with Ionity, a European charging network operator, and acquired Sonnen, a German energy storage and home EV charging business.

In January 2021, Shell announced it would buy up Ubricity, the U.K.’s largest public EV charging network. A few months later, it joined with charging equipment company Alfen to develop a battery-backed ultra-fast charging system in the Netherlands.

The supergiant oil company predicted that more than half of new car sales around the world will be electric by 2030 and all of them by 2050. This might seem surprisingly bullish for a corporation whose core business is petroleum, but Shell has a vested interest in EVs. It says it will install 2.5 million charge points by 2030.

In BP’s most recent Energy Outlook, it set out three scenarios for the energy transition. In its Accelerated and Net Zero scenarios, the number of EVs (including battery, plug-in hybrid and light-duty electric trucks) would increase to between 550 million and 700 million by 2035 from 20 million in 2021. E-mobility will account for 30-35% of the vehicle parc by 2035. This, BP thinks, will hit 2 billion such vehicles by 2050, or around 80% of the parc.

By the mid-2030s, most new car sales will be electrified. Tighter emissions regulations and lowering cost from the competitiveness of electric cars will make this happen.

BP’s New Momentum scenario thinks there will be 500 million such vehicles by 2035 and 1.4 billion by 2050. New Momentum has EVs making up 40% of new car sales in 2035, rising to 70% in 2050.

In its 2021 Energy Outlook, BP laid out a couple of scenarios for the adoption of EVs. In scenarios where policy adoptions to combat global emissions happen at a more rapid pace, EVs account for 30% of four-wheeled vehicle miles traveled on roads in 2035, increasing to 70-80% in 2050. If efforts to fight global emissions remain at the same pace as the last few years, the share of miles traveled drops to 10% in 2035 and 30% in 2050.

Similarly, BP predicted that EVs would account for 80-85% of the stock of passenger cars in more optimistic scenarios. Meanwhile, the market share will be 35% in 2050 at the current rate.

Like its Anglo-Dutch rival Shell, BP has laid out lots of money for a handful of EV-related businesses: the charging network company Chargemaster, ultra-fast charging lithium-ion battery developer StoreDot, mobile rapid EV charging technology firm FreeWire and PowerShare, one of China’s leading charging platforms.

ExxonMobil, the biggest oil company in the world, predicted in its 2019 Energy Outlook that what it calls “advanced vehicles” (hybrids, plug-ins and fuel-cell cars) will grow to occupy more than 20% of the vehicle fleet, or some 420 million units, and 30% of new sales by 2040. The U.S. giant has been slow to invest in EV charging infrastructure companies and start-ups. However, although it did signal in January 2019 that it was mulling entering those sectors.

According to Andrew Logan, oil and gas program director at nonprofit sustainable investing organization Ceres, “This move suggests that a cultural shift may be underway … [in] the most bearish of the oil majors on electric vehicles.”

OPEC, typically more downbeat than ExxonMobil, puts EVs at 430 million by 2045, or 17% of the global fleet.

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