BHP raises electric vehicle forecasts From Today's AFR
BHP has raised its expectations for electric vehicle sales and market penetration, but warns the electrification of the transport sector will only proceed as fast as the development of charging infrastructure. In a blog published on Tuesday by BHP's market analysis and economics vice president Huw McKay, the miner upgraded its expectations for the minimum adoption of electric vehicles in coming decades.
BHP now believes electric vehicles will comprise at least 7 per cent of the world's light vehicle fleet in 2035; up from a minimum of 5 per cent.The miner says electric vehicle sales in 2035 will be at least 16 per cent; up from 10 per cent.While BHP also published forecasts for the maximum possible adoption in the decades ahead, the company's minimum expectations are arguably more significant as they provide an insight into the modelling foundations upon which the company is willing to make investments.
''Low cases take on special importance in our framework. The likelihood of achieving positive expected returns, scaled for risk, in a low case operating environment is one of the critical metrics for any investment that seeks to advance in our internal process,'' said Dr McKay in the blog.
By 2050, BHP expects at least 47 per cent of all light vehicle sales to be electric, while that rate could be 100 per cent under BHP's most aggressive forecasts.But for BHP's bull case forecasts to be achieved, governments would need to enforce all publicly stated targets for phasing out petroleum-fuelled cars, while investing significantly in infrastructure to charge the batteries in electric vehicles.''It is questions related to charging that are the main strike against a more rapid, near-term electric vehicle diffusion case at this stage,'' said Dr McKay in the blog.''Right now, charging units are neither pervasive nor fast versus the incumbent technology. The global stock of chargers is advancing roughly one-for-one with EV sales. That is okay, but it is far from spectacular.''To paraphrase the now clichéd phrase “build it and they will come” we argue that “build them (the chargers) and they (consumers) will buy.”Dr McKay acknowledged the rapidly declining cost of modern batteries.''We agree with the consensus position that when battery pack costs fall to $100 per kilowatt hour, electric vehicles become cost competitive in the mass market,'' he said.
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