BHP Predicts Half of All Global Vehicle Sales Could Be Electric by 2030

Mining and resources giant BHP has raised its projection for the uptake of electric vehicles, saying that electric vehicles could achieve more than 50 per cent share of global new vehicle sales by 2030, and 100 per cent of all vehicle sales by 2050.

Even with a more muted outlook, BHP considers that nearly half of all new car sales will be electric by 2050.

By 2070, the entire globe’s light vehicle fleet could be completely electric, based on 100% EV sales by 2040 and with a fleet turnover over three product lifecycles (the global average product lifecycle is about 10 years for vehicles).

BHP’s forecast of a 50 per cent share for EVs in new vehicle sales was released last week, along with its own strategic announcement that highlighted an early end for thermal coal, and a rapid uptake of electric vehicles.

This came just days after a bitter election campaign in Australia, where Labor’s own target for a 50 per cent share of EVs in new vehicle sales by 2030 was mocked and demonised by the Coalition government and most of mainstream media.

BHP  expects that by 2035 there will be a minimum of 132 million light battery electric (BEV) and plug-in hybrid electric (PHEV) vehicles on the road by 2035 and 561 million by 2050.

This “low case” equates to at least 7 per cent by 2035 and 27 per cent market share by 2050 for EVs, up 2 per cent and 6 per cent respectively from its previous forecast (last issued two and a half years ago), and based on a forecast of 1.68 million light duty vehicles at the very least by 2035, and 1.79 million by 2050.

In comparison, BHP says its “high case” for EV uptake could be as much as 36 per cent by 2035 of a 2.26 billion-strong global light duty fleet, and 75% by 2050 out of a total fleet of 2.5 billion.

In other words, as many as 700 million EVs on the road by 2035 and 1.6 billion by mid-century.

While BHP’s forecasts are typically conservative, its own forecast for a total global fleet is not out of line with that of other forecasters such as BloombergNEF, whose Electric Vehicle Outlook 2019 report issued mid-May predicts a global fleet of 1.68 billion by 2040 (tempered by predicted growth of ride-hailing and car-sharing).

Also, its mid-case – somewhere between 132 million and 700 million by 2035 – does not clash with that of BNEF’s prediction of 500 million passenger EVs on the road by 2040 either.

As author of the report, VP for market analysis and economics Dr Huw McKay notes, the low case holds particular importance for the mining giant’s investment strategies – and that a number of particular scenarios must hold for EVs to reach a tipping point for mass market consumption.

Based on a framework developed by BHP from the now permanently successful takeover of smartphones, these include legacy carmakers embracing the new driving technology, positive network effects, infrastructure and turnover rate of vehicles.

We already know legacy carmakers are making moves to transition to electric drivetrains: take GM, Volkswagen AG, Hyundai and Kia, Volvo, Daimler, Nissan.

While BHP does not consider EV ownership to to increase the value of EVs for other consumers (conventional network effects), McKay does admit that a “virtuous circle between rising sales and improving economics of charging investments might be interpreted as a network effect of sorts that can sponsor diffusion.”

Which brings us to two more salient points – other economics taken into consideration by BHP include that of investment in infrastructure and the falling cost of batteries.

McKay notes that the price of batteries per kWh according to BNEF has dropped from $US290/kWh two years ago to just $US180/kWh on average, and agrees that further drops will make the case for truly mass market EVs.

“We agree with the consensus position that when battery pack costs fall to $100 per kWh, EVs become cost competitive in the mass market – with a “people’s EV” very likely to emerge,” McKay notes.

But first, charging infrastructure must be adequately provisioned, says McKay: “To paraphrase the now clichéd phrase “build it and they will come”; we argue that “build them [the chargers] and they [consumers] will buy [EVs]”.

With further commitments from lawmakers to add to the numerous nations and local governments introducing regulations designed to limit or ban new sales of combustion vehicles in the next decade, necessary policy required to drive investment in infrastructure will further encourage uptake, says McKay.

“To move towards our high case, we would need to observe the many national and sub-national governments that have announced either future ICE vehicle bans or EV targets to move to accommodate this transition by building charging infrastructure in advance of demand: and the most populous emerging markets to join them on this path,” McKay says.