“We see a real possibility that global sales of conventional passenger cars have already passed their peak,” said Colin McKerracher, head of advanced transport for BNEF.
Over the next two decades, worldwide electric vehicle sales will rise from 2 million last year to 56 million by 2040, BNEF predicts. At the same time, sales of “conventionally powered” vehicles will fall from last year’s 85 million to just 42 million globally.
The shift will be driven by further declines in battery prices, which are already falling rapidly. Since 2010, battery costs per kilowatt-hour have fallen 85%, thanks to improvements in manufacturing and increased economies of scale as more battery factories are built.
Given these trends, electric cars should be less expensive than similar internal-combustion cars by the mid-2020s in terms of both purchase price and long-term ownership costs. Electric cars cost less to own and drive because electricity is much cheaper than gasoline or diesel fuel. They also require less maintenance because they have far fewer moving parts.
“There are now over a billion users of shared mobility services — such as ride-hailing — globally,” Izadi-Najafabad said. “These services will continue to grow and gradually reduce demand for private vehicle ownership.”
China will continue to lead in sales of electric cars, but China’s share of the market will fall as more are sold in other countries. China is expected to account for 48% of all electric cars sold in 2025, but only 26% in 2040. Meanwhile, Europe will pull ahead of the US in electric car market share during the 2020s, BNEF predicts.