Electrified Vehicles Could Capture Half of New-Car Sales by 2040

Hybrid and all-electric vehicles are expected to grow to 54% of the new-vehicle market—and as much as one-third of the vehicle fleet—by 2040, according to Bloomberg New Energy Finance (BNEF).

The forecast is much more aggressive than BNEF’s 2016 analysis, which predicted electrified vehicles would capture only 35% of the global market over the same period. Bloomberg attributes the steep increase to a combination of falling costs, improved driving ranges and a stronger commitment by carmakers to future EV programs.

The updated BNEF outlook predicts combined global sales of hybrids and EVs will more than quadruple from last year’s record of 700,000 units (about 1% of the market) to 3 million units and 4% of the market by 2021. The forecast anticipates a more dramatic surge will start later that decade and continue through 2040.

BNEF says Europe will lead the shift with nearly two-thirds of sales—and even more for early pioneers such as France, Norway and the U.K.—projected to be electrified vehicles by 2040. Penetration rates in the U.S. and China are estimated to be 58% and 51%, respectively, by that time. The report says implementation in India and other emerging markets likely will lag that of developed countries, with “significant” EV sales unlikely until the late 2020s.

Pure electric vehicles are expected to account for the bulk of the growth in electrified vehicles after 2025 as hybrid systems lose ground due to the cost and complexity of dual power sources, according to the BNEF report. The authors say Japan is the lone market in which plug-in hybrids will continue to play an important role after 2030.