Electric vehicles set to make over one third of new vehicle sales in 2040

electric vehicle

Electric vehicles could make up 15 to 35 percent of total new vehicle sales globally in 2040, says IHS Markit as part of its new research project, Reinventing the Wheel.

“The key question is whether we are approaching a transformative shift akin to the first decade of the 20th century, when the internal combustion engine, cheap gasoline, bicycle technology and mass production combined to usher in the automotive age,” said Daniel Yergin, vice chairman of IHS Markit. “Converging developments along multiple tracks are leading us to focus on this important question.”

While electric vehicles constitute a small percentage of the world’s vehicle sales and are just 1 percent of the on-road fleet today, sales in 2016 are up more than 1000 percent since 2010—a trend that IHS Markit expects to continue with the potential to make electric vehicles more than one third of the new vehicle sales in 2040.

“Significant advances in battery technology, financial support from governments, regulations and values of millennials will be key factors leading to increases in electric vehicle adoption,” said Jim Burkhard, study co-director and chief of research at IHS Markit for crude oil markets and energy scenarios.

Electric vehicle share in individual markets will vary based on these factors, IHS Markit says. For instance, in China and Europe—regions where policies are favorable to electric vehicles— IHS Markit estimates that electric vehicles could comprise over half of new passenger vehicle sales in 2040.

“How and when this transformation takes shape will have significant impacts on the global economy and raises fundamental questions for the oil and gas, automotive, chemical and the electric power industries, as well as individual consumers,” said Tiffany Groode, study co-director and head of IHS Markit automotive scenarios.

Reinventing the Wheel will focus on the world’s largest automotive markets—the United States, Europe and China, as well as India—with projections out to the year 2040. The study, to be completed in 2017, will consist of two parts.

Part I will include the development of scenarios representing potential paths for the future of the car, energy and chemicals. Part II will assess the impact, investment implications and strategic choices for the automotive, oil, gas, electric power and chemical industries.