by Julia Pyper
December 17, 2018

Break out the champagne! No, it still isn't New Year's Eve. But there is a lot to celebrate in the world of electric vehicles. So here is the 2018 rundown, in 12 charts. 

First, cheers to a major milestone: U.S. plug-in passenger car sales have officially passed the 1 million mark. “As of October 2018, 1 million plug-in vehicles have been sold in the United States," the Department of Energy confirmed last month.

Plug-in vehicles sales started in December 2010 with the commercial launch of the Nissan Leaf and the Chevrolet Volt. Since then, more PEV models have come to market, spiking sales from under 5,000 per month in September 2012, to a record 45,000 per month in September 2018. 

California has been driving most of that growth. In November, the Golden State achieved its own milestone of 500,000 plug-ins sold since 2010. 

U.S. Electric Vehicle Sales

Source: Veloz

The U.S. market looks quite different from what it was eight years ago. Tesla has jumped to the top-selling EV brand in the nation, just hit its third-quarter vehicle production target, and beat expectations on deliveries.

GM has been trying to keep up with sale the Tesla Model 3 with the 200-mile Bolt EV, but remains well behind, and the pioneering Chevy Volt will soon be discontinued.

In the meantime, other automakers have entered the EV market en masse. There are now more than 40 plug-in vehicle models in the U.S., with many more scheduled to arrive in the coming years. Not all cars are as quick off the blocks at Tesla, however. Today, the top 10 models make up a whopping 84 percent of total U.S. plug-in sales, according to Inside EVs.

More market shifts are expected as larger, longer-range, autonomous, connected and grid-services-equipped EVs come to market.

Source: Energy Fuse

The same trend is playing out worldwide — with more EV models and more EV sales than ever before. 

Cumulative global passenger EV sales recently passed the 4 million mark, according to Bloomberg New Energy Finance. And the world is now adding roughly 1 million EVs every six months.

Sales are being driven in large part by China, which is responsible for around 37 percent of passenger EVs sold globally since 2011 and around 99 percent of e-buses, according to BNEF.

Subsidies and other supportive policies play a key role in boosting Chinese EV adoption. By 2025, the government wants annual new energy vehicle sales to make up 20 percent of China's auto market, amounting around 7 million plug-ins per year, Xinhua reports. China is also looking to lead on EV production, with 487 electric-vehicle makers in the country, according to The Wall Street Journal's last count.

Policy is an important EV market driver, in China and around the world. But it isn't the only one. Rapid declines in battery costs are a major reason why the EV market is beginning to take off. 

According to Wood Mackenzie, the battery represents one-third of the cost of an EV today, but costs have already fallen by 80 percent this decade and are expected to continue dropping. Battery pack prices will fall below $200 per kilowatt-hour this year, then decline by around 10 percent per year going forward.

As a testament to this trend, the Energy Information Administration's battery cost forecast for 2020 has already been hit, based on WoodMac’s understanding of automaker contracts.

While passenger EV sales numbers are still low when compared to the total automotive market, the acceleration of EV sales is starting to have a meaningful impact on oil demand forecasts. 

Wood Mackenzie projects there will be 280 million EVs worldwide by 2040 — 211 million personally owned battery electric vehicles, 45 million plug-in hybrid vehicles, 2 million plug-in diesel hybrids, and 22 million autonomous electric vehicles (AEVs). 

By that year, WoodMac expects electric cars and trucks will displace 5.5 million barrels of oil demand per day.

AEVs will be responsible for a meaningful chunk of the oil demand decline. In WoodMac's base-case analysis, AEVs displace 1 million barrels of oil per day by 2040.

That analysis assumes there are 22 million AEVs in the world in 2040, and that they travel the same distance as 100 million regular EVs. It also assumes that AEVs really only gain a market presence in 2035 and that these vehicles are only used in shared vehicle applications, specifically as robo taxis, and are not owned by households.

If autonomous vehicle technology benefits from accelerated cost declines and supportive policies, and makes it into a broader range of vehicles, the impact the technology would have on oil demand increases exponentially. If AEV's take off just five years earlier, WoodMac calculates they could displace up to 5 million barrels of oil per day — not far off of the entire EV sector's oil demand impact under the base-case scenario. 

Oil companies are seeing this trend, too. BP's 2018 Energy Outlook actually goes beyond the WoodMac forecast, projecting 130 million electric cars by 2030 and 320 million electric cars by 2040. The oil major also forecast peak oil demand for the first time.

Like WoodMac, BP expects there to be a substantial increase in shared mobility, and shared electric mobility in particular, in the 2030s. Because shared EVs will be used with greater intensity than personal cars, EVs overall will account for 30 percent of passenger vehicle kilometers by 2040, up from just 2 percent in 2016. According to BP chief economist Spencer Dale, the average EV will be driven about 2.5 times more than an internal combustion engine car.

As a result, EVs put a significant dent in future liquid fuel demand, under BP's assessment. It's notable, however, that the fuel demand impact of EVs is dwarfed by other gains in fuel efficiency.

Oil majors are starting to get on board with the global shift to electric, rather than fight it at every turn. Or at least they want a seat at the table. 

Oil companies have made a series of investments in EV charging firms in recent months. Most recently, ChargePoint raised $240 million from backers including Chevron, which marks the U.S. oil company's first EV related investment.

“Many of the majors in oil and gas globally have been diversifying. A lot of them have a renewables portfolio, a lot of them are trading energy. It’s nice to see a U.S. major take a big step. That industry, it’s got a lot of capability, it’s got a lot of available capital and it can make a huge difference in the electrification of transportation. Huge," Pasquale Romano, CEO and president of ChargePoint, recently told GTM.

In the U.S., EV charging station deployments are starting to pick up speed, fueled by new investments from a range of players. In addition to oil companies, money is flowing into EV infrastructure from automakers, utilities and governments.

According to the Edison Electric Institute, 24 states currently have some type of incentive (e.g., grant or tax credit) to support the deployment of EV charging stations. And many are gaining additional funding from the Environmental Mitigation Trust.

The Environmental Mitigation Trust was established in October 2017 under the Volkswagen diesel emissions settlement, and will provide states and Native American tribes with $2.925 billion to mitigate emissions of nitrogen oxides. States may use up to 15 percent of their funds to deploy EV charging infrastructure. So far, 41 states have allocated at least some of their funds from the program to EV charging infrastructure, representing more than $265 million in potential investment.

Electrify America is the other major investment vehicle created out of "Dieselgate." EA is a subsidiary of Volkswagen, and is required to spend $2 billion over 10 years (2017-2027) to deploy charging infrastructure and related activities to support the EV market.

Utilities are another significant source of funding for the charging industry, with more than $1 billion currently earmarked to spend on EV charging infrastructure.

Source: Edison Electric Institute, EV Forecast 2018

Researchers at Wood Mackenzie have created a handy chart to understand where money is flowing to and from within the EV ecosystem. 

The relevant players go well beyond charging equipment providers, to include network providers, software solutions and services and standards organizations — each of which play a key role in making the shift to electric mobility a reality. 

Source: Wood Mackenzie Power & Renewables

While technology advances and investment dollars are moving the EV market forward, policy remains an important factor. Ambitious government targets for EVs, coupled with incentives and other programs, are giving private industry strong market signals to advance. 

Norway, for instance, has called for all new cars sold there to be electric by 2025. France, the U.K. and California aim to do the same by 2040. And, as noted above, China has set a goal for 20 percent of new car sales to be electric by 2025. But these are ambitious goals, and success is not guaranteed.

The U.S. federal government is currently considering two significant changes to EV policy: a freeze on vehicle emissions standards and a rollback of the federal EV tax incentive.

In August 2018, the EPA and the NHTSA proposed modifications to tailpipe greenhouse gas emissions and Corporate Average Fuel Economy (CAFE) standards for light-duty vehicles that would freeze the rules for model years 2021-2026 at model year 2020 levels -- rather than increasing standards through 2025.

The Trump administration's proposal would also eliminate California’s waiver under the Clean Air Act, including the state's Zero-Emission Vehicle program that requires an increasing number of zero-emissions vehicle sales over time. For now, the future of CAFE remains unknown, as EPA and NHTSA continue to review tens of thousands of public comments on their proposal, and as California and other Democratic-leaning states intensify their opposition.

At the same time, the White House and several Republican lawmakers are seeking to end the $7,500 federal EV tax credit. As currently structured, the credit phases out for an individual automaker when it sells 200,000 qualifying vehicles. Tesla has already exceeded the cap, and GM is close behind. Automakers are hoping they can stave off elimination of the credit, and possibly even extend it with help from a Democratic-controlled House. 

The good news is that local policy work is ongoing. According to the North Carolina Clean Energy Technology Center's Q3 2018 edition of The 50 States of Electric Vehicles report, there were 211 EV actions across the U.S. last quarter. These types of actions will help the country hit the 2 million EV sales mark in a fraction of the time it took to cross the 1-million-vehicle mark.