Batteries account for a third of the cost of building an electric car. But big reductions in battery prices lie ahead and during the 2020s electrical vehicles will become a more economic option than gasoline or diesel cars in most countries, the study by Bloomberg New Energy Finance predicts.
Lithium-ion battery costs have already dropped by 65% since 2010, reaching $350 per kWh last year.
“We expect electrical vehicles battery costs to be well below $120 per kWh by 2030, and to fall further after that,” said Colin McKerracher, analyst at Bloomberg New Energy Finance.
Some 1.3 million electrical vehicles have now been sold worldwide and 2015 saw strong growth. Still, electric vehicles currently make up about one per cent of global annual car sales.
The study forecasts that sales of electric vehicles will hit 41 million by 2040, representing 35 per cent of new light duty vehicle sales. This would be almost 90 times the equivalent figure for 2015, when electrical vehicles sales are estimated to have been 462,000, some 60 percent up on 2014.
The forecast is based on the oil price recovering to $50 a barrel, and then trending back up to $70 or higher by 2040.
If the oil price was to fall to $20 and remain there, this would only delay mass adoption of electrical vehicles to the early 2030s, according to Salim Morsy, senior analyst and author of the study.
Electrical vehicles come in two categories – battery electric vehicles, or BEVs, that rely entirely on their batteries to provide power; and plug-in hybrid electric vehicles, or PHEVs, that have batteries that can be recharged but have conventional engines as back-up.