World Energy Outlook: electrifying transport — beyond cars

The transport sector uses little electricity today. It accounts for less than 2% of total global electricity demand, according to the World Energy Outlook. Rail is the largest user, responsible for about 70% of transport electricity demand. Plans for further electrification in railways and new subways, especially in developing economies, may lead to a small increase.

Electric vehicles: five times more electricity

In the New Policies Scenario of IEA electric vehicles will be the main reason for the increase of global electricity demand for transport, pushing this higher by a factor of nearly five to 2040.
With a growth rate of 14% per year, electricity demand in road transport overtakes railways to become the largest source of transport electricity demand by around 2030. Developing economies account for 60% of the increase in electricity use for road transport, with China alone using as much as all the advanced economies combined.

However the demand for electricity will be less than 5% of total demand for electricity since industry, housing and data centers are more important sectors in demand for electricity.

Policy commitments

The increase in electricity demand for road transport is mostly driven by passenger cars (60% of the growth). An important contributing factor is policy commitments at country, regional and city levels to support the electrification of vehicles. These policy instruments include:

  • direct subsidies to reduce vehicle purchase cost
  • incentives such as free parking and road toll exemptions
  • stock and sales targets
  • public procurement schemes
  • targets to phase out conventional cars
  • zero-emissions city targets
  • support for charging infrastructure deployment.

Total cost of ownership

The increasingly stringent fuel-economy, GHG and air pollutant emission standards for cars in many countries also play an important role. Electric vehicles are still more expensive than conventional vehicles. However, in some regions where driving ranges are not too broad, fuel taxes are high and there is a preference for smaller cars, the total cost of ownership for electric vehicles comes close to that of conventional cars by the middle of next decade, depending on the regional characteristics.

Another important factor is the commitment being shown by the auto industry. This raises the prospect that the number of electric vehicle models will expand and that component costs (for example battery and motors) will fall.

Demand for electricity

In the New Policies Scenario by IEA, the electric car fleet amounts to more than 40 million cars by 2025, and one-out-of-five cars sold in the world is electric by 2040, compared with just over 1% today. However, this hides regional differences, in China one-out-of-three cars sold by 2040 is electric, while the share of EVs in EU car sales is about 40% by 2040.
In contrast, shares are lower in regions lacking a strong policy push and with relatively low taxes on fuel and consumer preferences for bigger cars. In the United States and the Middle East, the market for electric cars reaches around 15% and around 1% by 2040, respectively.
Electric cars contribute to more than 60% of the increase in electricity demand for road transport, which expands to account for just 3% of global electricity demand by 2040.
Electric two/three-wheelers already account for a quarter of global sales today, mostly in China, and their numbers rise to over 700 million by 2040, supported by relatively low battery capacity requirements.

Freight vehicles

Electrification is also beginning to spread beyond cars: Volvo, Daimler, Tesla, Renault, and Scania, for example, are working to develop electric trucks. However, heavy-duty trucks only see limited electrification in the New Policies Scenario, reaching less than 1 million by 2040, given current deployment hurdles such as the need for very high battery capacity or a specific infrastructure. Currently, research projects have been realized in a number of European countries (i.e. Sweden, Germany, and Italy) for electric highways as an effort to support long-haul routes for commercial freight operations. These projects are at the demonstration stage.

Source: IEA – World Energy Outlook

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