Forecasting can be difficult, let alone 30 years out. Imagine predicting today’s world in 1990.

But RBC Capital Markets is taking a shot by doing a deep dive into the electric vehicle sector to gauge sales, market share, battery capacity and other metrics to 2050.

Equity analysts Joseph Spak and Tom Nayaran see an inexorable march toward a much broader use globally of electric vehicles. Have a look at hi-lights from their persuasive case supported by some helpful bar charts.


Forecast global battery electric vehicles (BEV) sales penetration of ~11% by 2025

We estimate that globally, BEVs will represent ~3% of 2020 global demand, while plug-in hybrid-electric vehicles (PHEVs) will represent another ~1.3%.

But we see robust growth off these low figures.

By 2025, when growth is still primarily regulatory driven, we see:

  • ~11% BEV global penetration of new demand representing a ~40% compound annual growth rate (CAGR) from 2020’s levels
  • ~5% plug-in hybrid-electric vehicles (PHEV) penetration representing a ~35% CAGR.
  • By 2025, we see BEV penetration in Western Europe at ~20%, China at ~17.5%, and the US at 7%.

Comparatively, we expect ICE vehicles to grow at a 2% CAGR through 2025.

On a pure unit basis, we see “peak ICE” in 2024.

Global New Light Vehicle Unit Demand by Propulsion

We forecast global new light vehicle demand by ICE, PHEV and BEV.


Source: RBC Capital Markets estimates, IHS Automotive, Wards, Autodata, ACEA, CAAM, JAMA, OIC

Forecast global BEV sales penetration of ~83% by 2050

As we look out, the number of BEV offerings by original equipment manufacturers (OEMs) increases and encapsulates a wider range of vehicle segments and price ranges.

Meanwhile, costs should decline, while factors such as range, efficiency and fast charging improve.

Further, many governments aim to ban ICE vehicles. The combination of these vehicle factors means that BEV demand ultimately becomes a consumer-led one.

By 2050, we see ~83% BEV global new vehicle penetration, representing an ~8% CAGR over a 25-year period from 2025.

We see regions like China and Western Europe reaching 95% penetration. We forecast the US at 80% penetration.

We believe the PHEVs are ultimately a transition technology and see PHEV sales peaking around 2035.

ICE vehicles decline at an estimated 8% 2025-2050 CAGR, meaning that from now for the next 30 years, global ICE vehicle units decline about 6% per year.


Source: RBC Capital Markets estimates, IHS Automotive, Wards, Autodata, ACEA, CAAM, JAMA, OICA

BEVs will represent ~46% of global vehicles in operation (VIO) by 2050

Our modeling shows of global vehicles in operation (VIO) by 2025, ~97% will be ICE (including HEV), ~1% PHEV and ~2% BEV.

By 2050, we model the global VIO to be ~48% ICE, ~6% PHEV and ~46% BEV.


Source: RBC Capital Markets estimates, IHS Automotive, Wards, Autodata, ACEA, CAAM, JAMA, OICA

Batteries could be the big constraint

One of the larger risks to our forecast is battery supply.

We estimate there is currently ~400 gigawatt hours (GWh) of lithium ion battery cell capacity and in tracking planned capacity additions, we believe this could reach 1,800GWh by 2025 and 2,900GWh by 2030.

We note capacity is very difficult to track, and there are different types both in terms of chemistry and form (cylindrical, prismatic, pouch), so capacity may not be fungible.

Further, supply may not be just for light vehicles as commercial vehicles, storage and consumer electronics also have demand.

Assuming 95 million light vehicles, 100% BEV penetration and a 60 kilowatt hours (kWh) per vehicle average suggests 5.7 trillion watt hours (TWh) of capacity eventually needed for light vehicles alone, which means industry capex investments could be in the US dollar trillions.

Battery Capacity Needed to Support Our EV forecast



Automakers in the early innings of a heavy investment/capital expenditure cycle

Traditional OEMs are in early stages of heavy investment and capex cycle in electrification/software (including autonomous).

These investments may be the most existential decisions they may face as it’s arguably to ensure their participation in the future.

Market thus far has taken a mostly welcoming view to this step-up as it increases probability of “life extension,” i.e., raises terminal value.

But ultimately, proving a return on these investments is needed. If OEMs can be more profitable, multiple expansion is warranted. Otherwise, “same ol’, same ol’ automakers.

Some of this will have to come from BEVs as a platform to enable new (potentially recurring) revenue streams that increase the total addressable market, profitability and reduce cyclicality.

Traditional OEMs do face challenges with negative scale of ICE footprint, asset write-downs, restructuring, labor concerns and culture change.

The needed investment in electrification/software could cause consolidation.

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