Certain segments, such as buses and two- and three-wheelers are close to being on track for net zero, but there is no room for complacency and more action is needed to get on track elsewhere – especially in medium and heavy commercial vehicle sectors, the Long-term electric vehicle outlook has found.

‘The window to stay on track for net zero road transport emissions by 2050 is still open – but only just barely. A big push is needed from governments, automakers, part suppliers and charging infrastructure providers in the years ahead,’ says Aleksandra O’Donovan, Head of Electric Vehicles, BNEF.

The study outlines two scenarios for the uptake of electric transport to 2050, and examines impacts on demand for batteries, materials, oil, electricity, infrastructure and emissions. The Economic Transition Scenario, which assumes no new policies and regulations are enacted, is primarily driven by techno-economic trends and market forces. The second scenario investigates what a potential route to net zero emissions looks like for the road transport sector by 2050. This Net Zero Scenario looks primarily at economics as the deciding factor for which drivetrain technologies are implemented to hit the 2050 target.

Passenger electric vehicle (EVs) sales are forecast to grow rapidly in the next few years, rising from 6.6mn sold in 2021 to 21mn in 2025. The fleet of EVs on the road hits 77mn by 2025 and 229mn by 2030, based on BNEF’s Economic Transition Scenario – up from 16mn at the end of 2021, and reflective of the remarkable success story of EVs in the energy transition to date.

As the uptake of EVs continues to grow, they are already displacing 1.5mn b/d of oil. Most of this is from electric two- and three-wheelers in Asia, but rising passenger EV sales push this to 2.5mn b/d by 2025. Overall, oil demand from road transport is now set to peak by 2027, according to BNEF’s findings, as electrification spreads to all other areas of road transport beyond passenger cars. Sales of internal combustion engine (ICE) vehicles already peaked in 2017 and BNEF expects the global fleet of ICE passenger vehicles to start to decline in 2024.

To get on track for a net zero global fleet by 2050, zero emission vehicles need to represent 61% of global new passenger vehicle sales by 2030, 93% by 2035, and the last ICE vehicle of any segment needs to be sold by 2038. The report also found that vehicle-to-grid technology can play a role in driving down power sector emissions and generating value for consumers.

According to BNEF, developed countries and multilateral institutions should include EV investments, incentives and charging infrastructure deployments in their international climate finance plans, making capital available to emerging economies that have credible plans to develop this sector.

The fleet of passenger EVs is set to hit 469mn in 2035 in the Economic Transition Scenario but needs to jump to 612mn by the same date in the Net Zero Scenario. Much of the gap will have to be met in emerging economies, while wealthy countries should look at ways to support the transition in those markets and avoid a global slowdown of adoption.

Looking at different segments, medium and heavy commercial vehicles are lagging far behind, and need strong additional policy measures to meet net zero. Under the Economic Transition Scenario, only 29% of these vehicles achieve zero emissions by 2050 – far from the full adoption needed for net zero. Governments may need to consider mandates for the electrification of fleets, zero emissions zones in cites, and incentives to push freight into smaller trucks which can electrify faster than larger ones.

EV manufacturers are contemplating a market for battery raw materials that is very tight for the years ahead, BNEF notes. The battery supply chain will require significant near-term investment to avoid a supply crunch. Yet, the rising cost of batteries will not derail near-term EV adoption. Some of the factors that are driving high battery raw material costs – war, inflation, trade friction – are also pushing the price of gasoline and diesel to record highs, which in turn is driving more consumer interest in EVs.