Experts predicted that the growth of electric vehicles (EVs) was going to disrupt both the car sector and the oil market four years ago. The exponential development in EVs would culminate in their conquest of the global car market by the early 2040s, similar to the quick replacement of horses by motor vehicles in the U.S. a century ago. Oil was going to become the new coal, with the prices converging to around $15 a barrel in energy-equivalent terms. The geopolitical and economic consequences would be massive.
Since then, the transportation revolution has accelerated, regularly outperforming most predictions. After expanding by over 40% in recent years, there will be over ten million electric vehicles in 2020. This is similar to the early twentieth-century adoption of automobiles. If current trends continue, EVs will account for roughly 60% of the global automotive market by 2040 and 90 percent by the year 2050. These figures are higher than those predicted by the International Energy Agency (IEA), which predicts 330 million electric vehicles in 2040, and BloombergNEF, which predicts a 30% global EV share, but they are broadly consistent with the IEA’s Net-Zero by 2050 Scenario and Carbon Tracker/Imperial College London’s Paris climate agreement scenarios.
What we’ve seen in China recently should put an end to the notion that EV uptake in developing and emerging economies will trail decades behind that in developed economies, delaying a worldwide oil demand collapse. Indeed, the IEA and many others predict that oil demand would rise in most emerging areas, more than offsetting the fall in established economies.
In fact, only in 2020 did Europe exceed China in terms of the new EV registrations, although China remained the biggest EV market, with about 4.5 million vehicles. Even though the COVID-19 epidemic lowered car demand dramatically, the electric vehicle market has steadily grown rapidly in many nations, particularly developing ones.
Emerging markets have demonstrated that they can be leaders in the electric vehicle business. As several brands battle for market dominance, the Chinese EV sector has further decreased costs. In China, over 400 firms had entered the electric vehicle market, similar to the initial periods of the automobile industry in the United States, when hundreds of companies competed until giants like Ford and Chrysler emerged. The lifespan cost of owning an electric vehicle has been continuously falling as battery costs have decreased and are now comparable to that of a car.
The cheapest electric vehicle on the market, manufactured by China’s SAIC Motor, has already been outselling Tesla’s Model 3, the most prominent electric vehicle. More importantly, the SAIC model makes electric vehicles cheap in many developing nations, similar to how the Volkswagen Beetle as well as other models popularized cars in these areas.