- Exponential growth in EV sales is transforming the auto sector faster than currently predicted, with EVs set to dominate car sales by the end of the decade, putting at risk nearly half of global oil demand, according to new analysis by RMI.
- Later-adopting countries, such as India and Israel, are now accelerating EV deployment at faster rates than the global average, meaning they have a chance to catch up with the front-runners, such as China, according to separate new analysis by Systems Change Lab.
- Leading markets have already crossed a tipping point, with the EU and China seeing battery electric vehicles cheaper to own1 than petrol and diesel cars in the small and medium-sized car segments, according to separate analysis from the EEIST project.
- Battery electric vehicles are likely to cross a second tipping point, where their purchase price falls below that of an equivalent petrol or diesel car, as early as 2024 in Europe, 2025 in China, 2026 in the US, and 2027 in India, the EEIST research shows.
Washington, D.C. (September 14, 2023) - Ahead of Climate Week NYC, three separate pieces of research from RMI, Systems Change Lab and the EEIST project highlight the speed and scale of the accelerating transition to EVs.
Global EV sales are on track to meet or outpace even the most ambitious net-zero timelines and could account for more than two thirds of market share by 2030, following exponential growth trends, according to new analysis by RMI, founded as Rocky Mountain Institute, in partnership with the Bezos Earth Fund.
Combustion car sales peaked in 2017, and by the middle of the decade more will be scrapped than sold, meaning the overall fleet of combustion cars is about to peak and will be in freefall by 2030, the RMI research shows.
Following an ‘S-curve’* trajectory, already established by leading EV markets in Northern Europe and China, implies that EV sales will increase at least sixfold by 2030, to enjoy a market share of 62% to 86% of sales, the analysis shows. By contrast, current established projections see EVs reaching only around 40% market share by 2030, despite having been consistently revised higher to try and keep up with the exponential growth already underway.
As internal combustion cars account for around a quarter of global oil demand and broader road transport accounts for nearly half, the exponential growth of EVs puts all of that demand at risk. Oil demand for cars peaked in 2019 and is now bouncing along a plateau and will be falling by at least 1 million barrels per day (mbpd) every year after 2030, according to the RMI forecasts. That is equivalent to eliminating all new growth in demand for oil from 2030.
The analysis reveals economics is now overtaking policy incentives as the core accelerant of EV sales, with falling battery costs the lead driver. RMI expects battery costs to halve this decade, from $151 per kWh to between $60 and 90 per kWh, making EVs for the first time as cheap to buy as petrol cars in every market by 2030 as well as cheaper to run.
EV dominance in car sales will inevitably drive electrification across other forms of road transport, from two and three wheelers to trucks.
China is on course for 90% EV sales by 2030, up from a third today, with a growing number of markets on similar ‘S-curves’ to hit up to 80% market share by the same date as the race for EV supremacy speeds up, the research from RMI shows. China sold more EVs last year than the rest of the world combined, thanks to strong policy support, and dominates production of EVs, batteries and other components, which is further driving down battery costs and making EV adoption easier all over the world.
Countries including China, the Netherlands and Norway have already shown that it is possible to grow EV sales fast enough to meet climate goals, according to separate research released today from Systems Change Lab, an initiative convened by World Resources Institute and the Bezos Earth Fund. Now, a diverse range of countries are showing a similar pattern of exponential growth as EV sales in these countries quickly accelerate up an S-Curve once 1% of car sales are EVs.
Later-adopting countries, such as India and Israel, are now seeing EV sales growth at faster rates than the global average due to falling costs and advancing technology, meaning they have a chance to catch up with the front-runners, the Systems Change Lab research shows. India’s all-electric vehicle sales tripled in one year from 0.4% to 1.5%, a feat that took the rest of the world three years, indicating the country is at the early stages of an S-curve trend.
A rapid shift in purchasing decisions is likely to occur once EVs become cheaper than fossil-fuelled vehicles to buy, according to a third, separate piece of research by Exeter University’s Economics of Energy Innovation and System Transition (EEIST) project. This purchase price-parity ‘tipping point’ is expected as early as 2024 in Europe, 2025 in China, 2026 in the US and 2027 in India for medium-sized cars, and even sooner for smaller vehicles - in China, small EVs are already cheaper than fossil-fuelled equivalents. When both the costs of operation and purchase are accounted for, EVs are already cheaper to own than petrol or diesel cars in the EU and China, and the US will achieve the same within the next 1 or 2 years.
The EEIST project research also finds that coordinated international action, whereby the US, EU, and China align their regulatory trajectories so that all their new car sales are zero emissions by 2035, can bring forward this purchase-price parity tipping point by up to three years. This would not only benefit the transitions of the largest markets but would accelerate cost declines globally, enabling a faster transition for all. These three large markets have global impact, together accounting for 60% of the global car market.
Meanwhile, under the Accelerating to Zero Coalition, over 220 signatories to the ZEV declaration, which includes countries representing 12% of the global car and van market committed to 100% ZEV sales by 2040 globally and 2035 in leading markets, are helping to drive widespread progress through a shared pathway. Plus, over 100 corporate members of EV100 are helping to accelerate the transition and driving investment decisions at scale.
This comes as COP28 President Dr. Sultan Al Jaber calls for a step-change in decarbonisation, including tripling renewable capacity by 2030 to help deliver against the goals of the Paris Agreement. With renewable energy being a vital component of decarbonising transport, recent analysis shows exponential growth in solar and wind capacity is on track to supply over a third of all power by 2030 (up from around 12% currently), on track for reaching net-zero scenarios.
NOTES TO EDITORS
The full analyses are available here:
Systems Change Lab: These countries are adopting electric vehicles the fastest
Rocky Mountain Institute: X-change: Cars, the end of the ICE age
The EEIST Project: Crossing the tipping point - EV Case Study
Modeling exponential change
1Comparison of ownership costs include cost of purchasing and operating the vehicle, over its lifetime.
*The RMI analysis examines the various established ways of modeling the future of EV demand, and concludes with a likely range for the share of EV sales based on S-curves, which implies that EV will be between 62% and 86% of sales by 2030. This range is higher than the top of current forecasts, but the analysis argues that it is the most reasonable starting point for thinking about the future of EV sales.
S-curve models take historic data and an end point and use the past to estimate a midpoint and use the past to estimate a midpoint and growth rate in the future. In the early stages of growth, S-curves can be too aggressive and small changes in numbers can have a major impact. As you get more and more data points, the forecasting ability of S-curves increases. The fact that the S curve is the most likely shape for the future should not distract us from the fact that it requires constant work to get there.
Kingsmill Bond, Senior Principal, RMI said: “Electric vehicles are on track to dominate global car sales by 2030, signaling the endgame for the largest sector of oil demand. And where cars lead so the rest of transport will follow: exponential change is spreading to 2-wheelers across the Global South and to trucks in China. This is good news for cutting emissions and improving public health. But it also shifts money from the hands of petrostates into the pockets of consumers.”
Joel Jaeger, Senior Research Associate, Systems Change Lab said: “Not every country is the same, but when it comes to EV sales they are all following a similar pattern of exponential growth. Scandinavia and China have been the leaders up to this point, but they have paved the way for other countries to follow in their footsteps, or go even faster.”
Professor Mei Mei Aileen Lam, from the EEIST project, said: “Coordinated policy action to phase out fossil-fuelled vehicles by 2035 in the EU, US and China can bring forward EV purchase-price parity by years, in those markets and beyond. It would bring forward the tipping point in India a whole three years from 2027 to 2024. It would enable a faster, cheaper – and therefore fairer – transition for everyone."
Kelly Levin, Chief of Science, Data and Systems Change, from the Bezos Earth Fund, said: “Several large vehicle markets are proving it’s possible to quickly course-correct on fossil-fueled vehicle sales in favor of EVs. Global momentum towards zero emission road transportation is clearly building, and these advancements should capture policymakers’ attention to act expeditiously. The complete phase out of fossil-fueled vehicles is in reach.”
Professor Tim Lenton, from the Global Systems Institute at the University of Exeter, said: “Positive tipping points have the power to bring about rapid, transformative change to reduce greenhouse gas emissions. In the case of electric vehicles, the price-parity tipping point not only accelerates the switch from petrol and diesel cars – it also drives down the price of batteries, which helps in other areas such as the transition to renewable energy, as a renewables-based power grid relies on cheap energy storage.”
Simon Sharpe, Director of Economics for the Climate Champions Team and Policy Impact Lead of the EEIST project, said: "Strong policy has got the transition to electric vehicles started, and just because the transition is now gathering pace does not mean that any government should take its foot off the accelerator. Zero emission vehicle mandates, investment in charging infrastructure, purchase incentives, and battery recycling standards can all help people to enjoy the benefits of low cost, zero emission, sustainable road transport sooner."
RMI, founded as Rocky Mountain Institute, is an independent, non-partisan, nonprofit organization of experts across disciplines working to accelerate the clean energy transition and improve lives. RMI decarbonizes energy systems through rapid, market-based change in the world’s most critical geographies to align with a 1.5°C future and address the climate crisis. We work with businesses, policymakers, communities and other organizations to identify and scale energy system interventions that will cut greenhouse gas emissions at least 50% by 2030.
Systems Change Lab
Systems Change Lab aims to drive change at the pace and scale needed to tackle some of the world’s greatest challenges: limiting global warming to 1.5 degrees C, halting biodiversity loss and building a just and equitable economy. Convened by World Resources Institute and the Bezos Earth Fund, Systems Change Lab supports the UN Climate Change High-Level Champions and works with key partners and funders including Climate Action Tracker (a project of Climate Analytics and NewClimate), ClimateWorks Foundation, Global Environment Facility, Just Climate, Mission Possible Partnership, Systemiq, University of Exeter, and the University of Tokyo’s Center for Global Commons, among others. Systems Change Lab is a component of the Global Commons Alliance.
The Economics of Energy Innovation and System Transition (EEIST) is a University of Exeter led project which develops cutting edge complexity-based modeling solutions to support government decision making around low-carbon innovation and technological change, aiming to facilitate a rapid low-carbon transition.
Groundswell is a collaborative project, established by the Bezos Earth Fund, Global Optimism, and Systems Change Lab to support a diverse and distributed chorus of voices whose stories of achievements and further possibilities can inspire us all in this time of crisis.
Bezos Earth Fund
The Bezos Earth Fund is transforming the fight against climate change with the largest ever philanthropic commitment to climate and nature protection. We're investing $10 billion in this decisive decade to protect nature and drive systems-level change, creating a just transition to a low-carbon economy. By providing funding and expertise, we partner with organizations to accelerate innovation, break down barriers to success and create a more equitable and sustainable world. Join us in our mission to create a world where people prosper in harmony with nature.
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