Global light duty electric vehicle sales reached a record high of 6.3 million units in 2021, up 102% year on year, with this number expected to rise to 26.8 million units in 2030, according to the latest analysis from S&P Global Platts Analytics.
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While EV sales more than doubled year on year in 2021, internal combustion engine car sales grew by 2.8% year on year, Platts Analytics said in its Future Energy Outlook Special report.
The updated 2030 forecast is 23% higher than the previous forecast released in June 2021, with Platts Analytics Low Carbon Transport Analyst David Capati telling Platts Feb. 16 that the forecast had risen due to a variety of factors, including consumer adoption momentum increases, increased policy support and pressures.
"We have seen governments worldwide introduce legislation funding EV charging infrastructure expansion, increased domestic EV production capabilities and numerous countries set ICE sales phase-out targets or bans as early as 2025," Capati said.
"Auto manufacturers across the world have also invested over a half-trillion dollars in increasing every facet of their EV capacities in the next decade," he added.
Several locations across the world were already showing the total cost of ownership of an EV to be lower than ICE vehicles over the lifespan of the vehicle, Capati said, saying that this was dependent on several factors, such as the subsidies, road taxes, fuel costs or driving habits of the region.
"We anticipate initial EV purchase prices to continue to decline as the decade progresses. We currently forecast EV battery costs to fall below $100/kWh by 2026, making EV vehicles more broadly cost-competitive with ICE vehicles without subsidy. We believe the culmination of these factors will convince consumers that EVs are a logical purchase," Capati said.
According to the report, EV battery cell prices were just below $140/kWh in 2021, down 60% since 2015 despite rising demand for battery metals, such as cobalt and lithium boosting the prices of these raw materials.
Platts' seaborne lithium carbonate assessment rose 555.6% year on year to $59,000/mt CIF North Asia Feb. 16, while hydroxide was also up 450% at $55,000/mt CIF North Asia. Similarly, Platts' cobalt hydroxide assessment rose 106.2% year on year to $29.90/lb Feb. 16.
"It is true that battery spot prices are currently soaring to record highs. This is due to a surge in EV demand that has not been met by supply in addition to COVID-19-related restrictions hindering production centers and shipping ports," Capati told Platts.
Increased battery material supply
Battery raw material prices had been met with record financing in battery metal mining operations in resource rich areas such as South America, Australia, and China, he added.
"We anticipate lithium and cobalt prices peaking in 2022 before sufficient supply comes online, coupled with operational relief sufficient to meet demand resulting in a price fall and stabilization. Furthermore, the need for lithium and other key battery metals could be lessened as battery efficiencies increase, chemistries change, and battery cell recycling practices improve," Capati said.
Platts Analytics expects global lithium demand from EVs to reach 250,000 mt in 2030, 550,000 mt in 2040 and 780,000 mt in 2050, according to the report, adding that cumulatively, EVs would demand 12.5 million mt of lithium by 2050.
Due to high raw material costs, Platts Analytics forecasts battery prices to increase slightly year on year in 2022, but then resume their decline thereafter, making EV vehicles more broadly cost-competitive with ICE vehicles without subsidies.
Another factor adding to this will be the move to lithium iron phosphate, or LFP, cathodes over nickel magnesium cobalt, or NMC, cathodes, Platts Analytics said, which offered a lower cost battery pack and overall EV costs due to cutting out cobalt and nickel for plentiful and cheaper phosphate and iron.
Despite the accelerated growth in EV sales, Platts Analytics said the current global light duty vehicle fleet would continue to be dominated by ICE vehicles in the coming decades, as existing and future ICE vehicles in the fleet would have to age into retirement.
However, Platts Analytics forecasts the global light duty passenger vehicle EV fleet to displace 1.8 million barrels/day of petroleum-based road transport fuel by 2030, requiring 303 TWh/year of electricity for charging.