BloombergNEF just published its latest annual Light-Duty Vehicle Outlook. BNEF web clients can access the report here, and Bloomberg Terminal clients can find it here.
BNEF’s transport research tends to focus on decarbonization, including how drivetrains are changing. But another vital aspect to road transport emissions is just how many vehicles are on the road. Our view is that the vehicle fleet will continue to grow for at least another decade.
This latest report lays out a scenario for passenger road transport for the coming decades in which the global passenger vehicle fleet grows from 1.2 billion to a record of just over 1.5 billion in 2039. BNEF expects worldwide annual sales to peak in 2036, ending more than a century of growth.
Changes in the prime driving-age population is a powerful factor in the outlook. According to United Nations numbers, Europe’s working-age population will drop 11% by 2040, while Japan and South Korea’s will shrink more than 20%. China — the world’s largest auto market — will see its working-age population contract 14%. Over the same period, the share of the global population that is 69 years or older rises to 10% from 4%. These changes prevent our outlook for passenger vehicle usage from being higher.
Urbanization is another major driver in our outlook. Urbanization in India and other low-middle income markets like Brazil, Russia, Mexico, South Africa and Turkey mean that most urban dwellers, particularly those living in highly congested megacities, will find owning a passenger vehicle more costly or less convenient than owning a two-wheeler, using shared mobility services or taking public transit. This results in passenger vehicle sales in India, for example, approaching 8 million units by 2040, but never exceeding that number due to increased congestion in cities and higher sales of two-wheelers, which already account for most vehicles sold each year in the country.
The number of vehicles on the road also depends on who or what is behind the wheel. Per car, shared and self-driving vehicles travel more kilometers on average than private vehicles. In our outlook, shared and autonomous vehicles are a growing portion of the vehicle fleet, but are still heavily outnumbered by private vehicles.
This trend has a significant effect on the drivetrain mix, as shared and self-driving vehicles are far more likely to be electric. As of the end of last year, the private vehicle fleet was comprised of just over 1% EVs, far lower than compared with 6% of shared vehicles (e.g., ride-hailing, taxis and fleet-based car-sharing) and autonomous vehicles. However, private vehicles do make up 98.7% of the global passenger vehicle fleet and have 15 times the absolute number of EVs as shared and autonomous vehicles.
Policy measures will affect the rate with which shared vehicles electrify. Either with an eye on upcoming regulation or through a growing sense of what their customers want, all major ride-hailing companies now have programs in place to encourage drivers to purchase EVs. The majority have set specific targets for the full adoption of EVs on their platforms. While these companies don’t typically own the vehicles used on their platforms, they are testing the levers they can pull to encourage EV adoption.
Long-term outlooks such as this report deal with many factors which, when altered even slightly, can have a significant effect on the results. We’ll keep paying close attention to the near-term developments around vehicle sales, shared-vehicle business models and self-driving technology, as they will clearly impact the ability of the transport industry to decarbonize.
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