May 19, 2020 - Energy & Environment

Coronavirus shatters electric vehicles' crystal ball

Illustration of a car in a crystal ball

Illustration: Sarah Grillo/Axios

New analyses about electric vehicles underscore two things: the pandemic is creating unprecedented turmoil for all kinds of energy technologies, and attempts to assess the fallout are more art than science.

Driving the news: A brand new analysis from the research firm BloombergNEF projects that global electric vehicle sales will drop 18% this year, which would end 10 years of growth but represents a smaller decline than their estimated cut to sales of traditional cars.

  • Meanwhile, the International Energy Agency said in a short report yesterday that EV sales will inch above 2019 totals in their central estimate, while in early April the consultancy Wood Mackenzie projected a 43% drop this year.

Why it matters: All three outfits employ skilled analysts! And that goes to show how much we're in uncharted waters here. And not just with EVs.

  • Experts are also grappling with how much global CO2 emissions will fall this year, and struggling to adjust near-term and long-term oil demand estimates.

Quick take: Coronavirus is quite the curveball that's making even short-term forecasting hard (which you can also see in rapidly shifting projections of U.S. oil production), as well as adding yet another huge wrinkle to long-term projections and scenarios.

Consider this line from IEA's analysis of the overall car market in just the second half of 2020 alone...

"The extent and pace of the rebound will depend on a range of factors, including the pace at which confinement measures are eased, potential second waves of the pandemic, the pace of economic recovery and the willingness and ability of consumers and businesses to purchase new cars. Government policy will also be critical."

What they're saying: Megan Mahajan of the firm Energy Innovation, which recently analyzed the range of 2020 carbon emissions declines due to COVID-19, shared some thoughts about the topic.

  • "Modeling the short-term impacts obviously presents challenges, because the scale of this sudden shift in energy demand is unprecedented compared to recent recessions," she tells me.
  • "We can’t necessarily rely on historical data because this situation is so unique and projections may be highly uncertain," Mahajan adds.

The big picture: 'When we consider the big questions surrounding long-term climate policy, the answers come down to projecting whether COVID will change our overall activity patterns," she says, pointing to questions about the future of air travel, use of private vehicles vs. mass transit, and telework, among other variables.

  • "If the answer is no, then COVID impacts will likely be short-lived and emissions will return to a business-as-usual trajectory, unless policymakers prioritize low-carbon policies and a clean energy economic recovery that invests in technologies of the future."
Data: BloombergNEF; Chart: Danielle Alberti/Axios

Let's spend a little more time with BloombergNEF's latest outlook, which has some interesting takeaways for full electric and plug-in hybrids.

What they found: They actually don't see COVID-19 as a long-term inflection point, despite the near-term upheaval in sales. They see EVs growing to 58% of new passenger car sales worldwide by 2040, when they will represent 31% of cars on the road.

  • That's quite similar to last year's long-term outlook. BNEF analyst Colin McKerracher said in a statement that the pandemic is "raising difficult questions about automakers’ priorities and their ability to fund the transition."
  • But he adds: "The long-term trajectory has not changed, but the market will be bumpy for the next three years."

The intrigue: The new analysis is the first time BNEF projects an overall peak in global passenger vehicle sales during their forecast period that runs through 2040. They see that occurring in the mid-2030s, the result of "changing global demographics, increasing urbanization and more shared mobility."

What's next: The report points to diverging paths in different markets in the coming years as the auto industry recovers from the pandemic shock.

  • When it comes to EVs, "the shape of the recovery varies around the world, with EV sales in China and Europe pulling ahead" thanks to EU emissions rules, China's domestic support and more.
  • "The U.S. falls further behind leading EV markets over the next few years, but catches up in the 2030s," the report states.

Go deeper: Electric vehicles sales head toward a big drop

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