Tightening emissions regulation, bans on driving combustion engine vehicles and subsidies to provide incentives to consumers are pushing electric vehicle sales higher than previously expected, particularly in China and Europe.
By 2030, Morgan Stanley’s global auto team expects 40 per cent of new car sales to be electric. Achieving this level of electric vehicle adoption will require about 36m electric cars to be produced every year by the turn of the next decade, up from the 4m expected to be made this year. But with about 9 per cent of global emissions coming from passenger vehicles, is this transition fast enough?
The pace of replacement means that the world’s car fleet will only be 10 per cent electric by 2030, and there will still be 1.5bn petrol and diesel cars on the road — about 150m more than today. Even assuming some efficiency gains and the use of more sustainable fuel, this car mix is not going to have a significant impact on global oil demand for passenger cars, or CO2 emissions.