Thursday 23 November 2017
 
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ANALYSIS

EV global penetration to hit 90pc by 2050: study

DUBAI, October 17, 2017

Pure electric vehicles (EVs) are estimated to reach global penetration of 12 per cent, 34 per cent and 90 per cent in 2025, 2030 and 2050, respectively, according to a new report from Bank of America Merrill Lynch (BofAML).

Meanwhile, new energy vehicles (NEVs) will see global sales of 89 per cent/96 per cent/100 per cent during the same time frame, added the BofAML Global Auto Electric Vehicle (EV) Primer.

Declining battery / EV powertrain costs will be key to rapidly increase pure EV adoption from c. 2024, the point at which EV total cost of ownership (TCO) converges with Internal Combustion Engine Vehicle ICEV TCO.

BofAML expects the global average EV powertrain cost to decrease from $16,200 in 2016 to $6,700 in 2030 (-6 per cent CAGR), in line with the decline in battery cost.

“We forecast the inflection between ICEV and EV TCO cost curves to occur in 2024. We expect inflection point across different regions (including fuel savings) to occur in 2022/23 (Europe) and 2024 in the US and China. Including fuel savings and subsidies, Global EV TCO is close to Global ICEV TCO in 2018, with EV TCO in China already lower than ICEV TCO in 2017,” the report said.

“We see EV adoption at a tipping point due to a confluence of increasingly supportive factors: improved EV range (2017 c. 383km in US, 247km in EU), declining EV powertrain costs (2016-2020: $16,201 to $11,889) rising ICEV powertrain costs (EU / US), still supportive subsidies (US), EV sales targets (China), falling diesel sales / residual vehicle pricing (EU) and reduced EV charging infrastructure concerns,” it added.

China c. 50 per cent of global EV sales

Chinese OEMs are likely to emerge as leaders in the pure EV market, supported by the government's favourable subsidies and recent 2019/2020 NEV targets. China's c. 50 per cent share of Global pure EV sales should be maintained up to 2030.

By contrast, German OEMs have committed to diesels in an effort to bridge the gap to EU CO2 targets. EU OEM strategies are starting to focus on pure EVs, but German OEMs lag with no new EVs pre-2019.

Renault-Nissan has been an early EV adopter but Toyota & Honda are late entrants, only recently shifting focus from Fuel Cells to EVs. Amongst US OEMs, GM's ability to integrate autonomous EVs into a ridehailing / shared fleet looks differentiated. Ford is focused on using existing platforms for EVs, while FCA lags behind in terms of EV offerings. Tesla's auto focus is solely on pure EVs (new Model 3 launch in 2017).

Impact on oil prices

Should EV sales rise towards 50 per cent by 2050, total global oil demand would peak at ~105 million barrels per day (mbpd) by 2030. In this scenario, oil demand would decline by 0.10 per cent per annum on average in 2030-50 vs. +0.10 per cent growth.

In a more extreme scenario where EV sales rise to 75 per cent by 2050, oil demand would peak by 2030 and then decline 0.20 per cent per year on average in 2030-50.

In order to meet the IEA's 2C global warming scenario, the IEA estimates the global stock of EVs will need to exceed 10 per cent of the total by 2030, and 40 per cent of the total by 2050. “This compares to our base case of 20 per cent penetration by 2050 and could see oil demand peaking a lot sooner,” BofAML said.

EVs also likely to depress outlook for Downstream

“With increasing penetration of EVs, we do not just expect crude oil prices to be impacted by an early peak in global oil demand. We also see Downstream operations impacted, with demand for refined products (particularly gasoline) and lubricants (in as far as its usage in the maintenance of internal combustion engines is concerned) under threat and directly impacted,” BofAML said.

“In addition, we also expect significantly less through-traffic at filling stations - putting at risk most earnings expected from attached retail sites. Big Oil's hope of maintaining or - as laid out by BP at its recent Downstream investor day - even expanding earnings generated from retail sites by offering charging points at filling stations will in our view only work at filling stations targeting long distance traffic (such as along motorways) - given our expectation of most charging being done at home.”

Gasoline potentially the biggest loser from a switch to EVs

Once oil demand peaks on EVs, the only major sector that would continue to expand oil demand is petrochemicals. This likely would be the last bastion of oil demand growth, in our view, with most petchems demand for ultra-light products, NGLs including ethane and propane. The big loser from the anticipated switch to EVs is gasoline, while diesel demand from heavy vehicles could continue to rise for decades to come.

The demise of the filling station?

In the meantime, fuel (and related retail) throughput per filling station is likely  to decline and hollow out the attractiveness of what has been a valuable business characterised by steady margins largely unrelated to commodity prices. – TradeArabia News Service




Tags: Electric vehicle | BofAML |

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