BCG Now Bullish On EVs
The consultancy says cost declines will make battery-electric vehicles an attractive purchase for consumers post-2025. Until then, continued government pressure – and incentives – will be needed to prop up demand.
TROY, MI – Add The Boston Consulting Group to the list of the converted.
An electric-vehicle skeptic since it first explored the global market potential in 2010, the consultancy says it now believes there is significant growth ahead, predicting an economic tipping point in favor of battery-powered cars will be reached around 2028.
In its new forecast, part of a report to be released later this year, BCG calls for full battery-electric vehicles to account for 6% of the global market in 2025, rising to 14% in 2030.
That penetration level would equate to 6.3 million and 15.3 million units, respectively. This year, BEVs hold a 1% market share worldwide, with about 900,000 units expected to be delivered in calendar 2017.
Sales of xEVs, including 48V mild hybrids, full hybrids and plug-in hybrids, as well as BEVs, will account for 24% of global light-vehicle volume in 2025 and 48% in 2030, up from 5% today, BCG predicts. That should be good for 25 million and 52 million vehicles, respectively.
What’s changed since 2010, when BCG expected BEV sales to top out at around 1.5 million units in 2020? Cost for one, new mobility for another.
In 2010, BCG forecast lithium-ion cell costs would fall from about $670/kWh to $250/kWh in 2020, says Xavier Mosquet, senior partner and lead author of the study. But those costs have declined much more rapidly, by about 20% annually to around $150/kWh today.
The firm now forecasts costs falling to $80-$97 in 2025 and $70-$90 in 2030.
That will make BEVs more affordable for consumers, with BCG predicting the 5-year cost of ownership (including purchase price and operating and maintenance costs) for a U.S. buyer will be less for a BEV than for an internal-combustion-engine vehicle by 2028.
The affordability equation improves as annual mileage increases, which means BEVs will make even more economical sense sooner to taxi fleets or new-mobility providers, BCG says, helping drive volume in the sector.
In fact, fleets are expected to account for half the BEV purchases in the U.S. in 2030, when sales should equal 20% of the LV market, BCG says. Worldwide, of the 14% BEV market share in 2030, only about four percentage points will be related to shared-mobility fleets.
The consultancy also says:
48V hybrids will account for 8% of the global market in 2024 and 15% in 2030.
Plug-in hybrids make the least sense economically, with the longest payback period among electrified models. Still, the sector will triple its global market penetration from 2% in 2024 to 6% in 2030.
Full-hybrid market share will nearly double over the 2024-2030 timeframe to 13% worldwide.
China will be the biggest market for EVs, as its 17% BEV market share projected for 2030 equates to nearly 6 million units annually. But BEV penetrations rates will be higher in the U.S. (20%) and Europe (22%) due to the mobility-fleet sector. Penetration will reach only 12% in Japan, where BCG says the fewer miles traveled annually make full hybrids a more rational purchase for consumers.
Government incentives and emissions regulations will need to remain in place to continue driving the BEV market through 2025 (a U.S. House bill on tax reform threatens to end the $7,500 credit on EV purchases). “If you do away with the incentives (before then), the market goes away,” Mosquet says. After 2025, costs will decline and consumers will begin to drive demand.
While battery cost will come down, range doesn’t need to go beyond the 200-plus mile (322-km) distance of the Chevrolet Bolt for the 2030 volume targets to be hit, Mosquet says, noting that’s enough daily range to meet the requirements of a metropolitan taxi and most commuters.
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