The low price of petrol is not the biggest incentive for swapping a standard engine for an electric car.
But that might soon change, according to a report by Bloomberg that says electric cars will be cheaper than conventional ones by 2022.
Bloomberg New Energy Finance said that the declining cost in batteries is going to be crucial at bringing the prices down, enabling electric cars to make their mark and become mainstream.
Sales of electric cars will hit 41 million, or a third of the market by 2040, Bloomberg said. That’s almost 90 times the equivalent figure for 2015.
Salim Morsy, senior analyst and author of the study, said the predictions are based on crude oil price recovering to $50 from their current price of around $30 per barrel, then trending back up to $70 a barrel or higher by 2040.
“If the oil price were to fall to $20 and stick there, this would only delay mass adoption of [electric cars] to the early 2030s,” Morsy warned.
“In the next few years, the cost-of-ownership advantage will continue to lie with conventional cars, and we therefore don’t expect [electric cars] to exceed 5 per cent of sales in most markets – except where subsidies make up the difference. However, that cost comparison is set to change radically in the 2020s,” he added.
The growth of the electric cars could have a dramatic effect on oil, according to the report.
Electric vehicles could displace oil demand of 2 million barrels a day as early as 2023. That would create a glut of oil equivalent to levels that triggered the 2014 oil crisis, the report said.
Four towns and cities have been given a share of a £40 million fund to promote the uptake of plug-in electric cars in the UK.
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Sales of alternatively fuelled vehicles rose by 40 per cent from the previous year to 72,775 in 2015 – a market share of 2.8 per cent – according to figures from the Society of Motor Manufacturers and Traders. This included plug-in hybrid sales more than doubling, while pure electric cars were up by around 50 per cent.
“The UK is a world leader in the uptake of low-emission vehicles and our long-term economic plan is investing £600 million by 2020 to improve air quality, create jobs and achieve our goal of every new car and van in the UK being ultra-low emission by 2040,” said Patrick McLoughlin, secretary of state for transport.