Millennials drive demand as the world plugs in to electric vehicles

Global electric vehicle supremacy will arrive by 2033, five years earlier than previously expected, as tougher regulations and rising interest drive demand for zero-emission transportation, according to a new study.

Consultant Ernst & Young (EY) now sees EV sales outpacing fossil fuel-burners in 12 years in Europe, China and the US, the world’s largest auto markets. And by 2045, non-EV sales are seen plummeting to less than 1% of the global car market, EY forecast using an AI-powered prediction tool.

Strict government mandates to combat climate change are driving demand in Europe and China, where automakers and consumers face rising financial penalties for selling and buying traditional petrol and diesel-fuelled cars. EY sees Europe leading the charge to electric, with zero-emission models outselling all other propulsion systems by 2028. That tipping point will arrive in China in 2033 and in the US in 2036, the consultancy predicts.

The US lags the world’s other leading markets because fuel-economy regulations were eased during former president Donald Trump’s administration. Since taking office in January, President Joe Biden has rejoined the Paris Climate Accord and proposed spending $174bn (about R2,4-trillion) to accelerate the shift to EVs, including installing 500,000 charging stations across the country.

Millennials, driven by a coronavirus-influenced rejection of ride-sharing and public transportation, are embracing car ownership. And 30% of them want to drive an EV.

—  Randy Miller, Ernst & Young’s global advanced manufacturing and mobility leader

“The regulatory environment from the Biden administration we view as a big contributor because he has ambitious targets,” Randy Miller, EY’s global advanced manufacturing and mobility leader, said. “That impact in the Americas will have a supercharging effect.”

There also is a growing consumer appetite for EVs, from Tesla’s hot-selling Model 3 to new electric models coming from legacy automakers, such as General Motors’s battery-powered Hummer truck and Ford’s F-150 Lightning pickup. Investments in battery-powered models now top $230bn (about R3,3-trillion) from the world’s automakers, according to consultant AlixPartners.

“Many more models that are much more appealing are coming out,” Miller said. “You factor that with the incentives and those are the raw ingredients that are driving this more optimistic view.”

The EY study also sees the millennial generation, now in their late 20s and 30s, helping to propel EV adoption. Those consumers, driven by a coronavirus-influenced rejection of ride-sharing and public transportation, are embracing car ownership. And 30% of them want to drive an EV, Miller said.

“The view from the millennials that we’re seeing is clearly more inclination to want to buy EVs,” Miller said.

Additionally, the combination of government purchase incentives for EVs and proposed bans on internal combustion engines in cities and states are accelerating the adoption of battery-powered vehicles.

Europe is forecast to lead in EV sales volumes until 2031, when China will become the world’s top market for electric vehicles.

Vehicles powered by petrol and diesel are still predicted to make up about two thirds of all light vehicle registrations in 2025, but that will mark a 12 percentage-point decrease from five years earlier. By 2030, EY predicts that non-EV cars will account for less than half of overall light vehicle registrations.

— Bloomberg News. More stories like this are available on bloomberg.com