The Electric Car Revolution Is Accelerating
“This is economics, pure and simple economics,” BNEF’s lead advanced-transportation analyst Colin McKerracher said before forecasts were published on Thursday. “Lithium-ion battery prices are going to come down sooner and faster than most other people expect. The forecast is BNEF’s most bullish to date and is more aggressive than projections made by the International Energy Agency.
There's around 90 gigawatt hours of EV lithium-ion battery manufacturing capacity online now, and this is set to rise to 270 gigawatt hours by 2021. Lithium-ion cell costs have already fallen by 73 percent since 2010 and BNEF predicts innovation of battery manufacturers will accelerate and lead to further steep declines in average prices over the next two decades. While they won’t fall as fast as solar panels, it could still lead to suppliers getting squeezed as they compete for contracts,McKerracher said. “There’s an element of competitive dynamics and a real possibility of oversupply in the lithium ion battery market that will serve to hammer down prices,” he said.
The world may need the equivalent of 35 of the so-called Gigafactories like the one built by Tesla founder Elon Musk in Nevada over the next 13 years to meet the power demands of electric cars, according to BNEF.
In Europe, almost 67 percent of new cars sold will be electrified in 2040, and 58 percent of sales in the U.S. and 51 percent in China, BNEF said. Though there's uncertainty in the U.S., where President Donald Trump could dramatically disrupt electric vehicle growth by withdrawing support for the technology in the world’s second biggest car market. “The next 6 to 8 years become really critical,” McKerracher said. “If those volume amounts falter dramatically, then some of those cost reductions may not come to pass and that will affect the crossover point and therefore the overall adoption level.