Lithium-ion battery costs have plummeted from $1,000 per kWh in 2010 to $350 last year. By 2020 BNEF projects costs to have dropped further to around $200. “We expect EV battery costs to be well below $120 per kWh by 2030, and to fall further after that as new chemistries come in”, said Colin McKerracher, lead advanced transportation analyst at Bloomberg New Energy Finance. BNEF is not alone in its predictions, the 2020 forecast of the German Fraunhofer Institute for System and Innovation Research is in the same range.
8% of global electricity demandDeclining battery costs, which make up one third of the expenses to build an EV, will push down the EV price tag. As a result, the total cost (including maintenance and fuel) of electric cars will reach parity with internal combustion engine cars sometime over the next 6 years. When this happens the sales of EVs will quickly pick up and lead to mass adoption in the 2020s. By 2040, 35% of all new light duty vehicles (LDVs) sold will be electric, BNEF predicts.
The transition to electric cars will cause a significant shift from oil consumption to electricity use in the transportation sector. BNEF predicts that by 2040 it will displace “13 million barrels per day of crude oil but using 1,900TWh of electricity. This would be equivalent to nearly 8% of global electricity demand in 2015”.