Ernst & Young: Electric cars are coming sooner than expected
A steady stream of news items indicates that the transition to electric vehicles will take place faster than many people think. Plug-in vehicle sales have surpassed a 10% market share in California, and Tesla is now estimated to have an impressive 1.7% share of the total US market. In Norway, the world’s EV capital, 3 out of 4 car buyers are now choosing EVs, and Tesla’s Model 3 is the top-selling vehicle (of any kind). In Switzerland, which formerly lagged behind some other European markets, 40% of the cars sold year-to-date have been EVs or hybrids (and yes, Model 3 is the most popular EV there too).
Above: Tesla's Model 3 (Source: EVANNEX; Photo by Casey Murphy)
As EV sales increase in key regions around the world, industry analysts are gradually revising their forecasts, and most are bringing forward their predicted dates for the end of the Oil Age.
Ernst & Young, one of the venerable Big Four accounting firms, now predicts that EV sales in the US, China and Europe will surpass those of fossil-powered vehicles five years sooner than previously expected.
EY’s latest forecast is that fossil fuel-powered vehicles will represent less than 1% of global sales by 2045, taking their place alongside sailboats and horses as nostalgic vestiges of historical technologies.
Europe will be the trendsetter—EY predicts that EV sales there will surpass those of legacy vehicles by 2028. China will follow by 2033 and, sadly, the US will bring up the rear, achieving a majority of EV sales by 2036.
“A mix of changing consumer attitudes, ambitious climate-focused regulations and technology evolution is about to change the landscape of vehicle buying forever,” said Randall Miller, EY Global Advanced Manufacturing & Mobility Leader. “While the automotive industry has begun to more fully embrace the move toward electrification, the impact of this seismic shift is arriving sooner than many expected.”
Above: Ernst & Young is recognizing the massive transition underway in the automobile industry (YouTube: EY Germany Switzerland Austria GSA)
The global auto industry is rapidly recovering from the pandemic-induced sales slowdown. The EY Mobility Consumer Index, published in November, showed that almost a third of non-car owners planned to buy a car in the next 6 months. Among all prospective buyers, 30% said they’d prefer an electrified vehicle.
To develop its forecasts, Ernst & Young uses an AI-based system that appears to work something like Tesla’s Autopilot. The EY Mobility Lens Forecaster is built on “a neural network model that uses AI to analyze several variables that influence demand and supply for mobility. These include variables that reflect consumer behavior, regulatory trends, technology evolution and manufacturers’ announced strategies. The model is updated regularly with new market inputs to keep up with the ever-changing reality. As its predictions are matched up against actual outcomes, the model adjusts its calculations and learns from any mistakes for future predictions, essentially becoming smarter and more accurate over time.”
There are certainly a lot of variables that could affect the accuracy of any predictions. One of the wildest cards is how soon autonomous vehicle technology will come into widespread use. If and when self-driving Robotaxis become viable, owning a fossil-fueled vehicle could quickly become like owning a horse. New policy initiatives from governments could also bring the tipping point forward.
It’s not only the auto industry that will have to adapt. “This new outlook also has implications for governments and energy industries in terms of infrastructure and electricity generation and storage, and forward-looking organizations are already using this data to help ensure a smooth transition to this new EV-dominated market,” Miller added.
Contrary to popular belief, the oil industry is not oblivious to what’s going on—oil giants are responding to the news in ways both positive (investing in EV charging companies) and negative (hyping hydrogen in hopes of derailing or delaying the transition to batteries).
A recent article in OilPrice.com cited the latest Ernst & Young forecast. Felicity Bradstock writes that “the goal of net-zero has spread around the globe, meaning many automakers are making the switch earlier than anticipated.” She notes that federal, state and local governments around the world are encouraging consumers to try driving electric, and angling to attract new EV and battery plants. The latest is the Indian state of Gujarat, which recently rolled out a policy package that includes subsidies and incentives for EV buyers and investments in charging infrastructure, in line with India’s National Electric Mobility Plan.