Have We Reached Peak Combustion Vehicle?

June 1, 2022


BloombergNEF published its annual long-term electric vehicle outlook today, a deep look at the future on two, three, four and more wheels. The trends are clear: Despite the challenges of a pandemic, supply-chain crunches and trouble sourcing critical minerals, electric vehicles are eating into the transportation system and taking bigger bites every year.

Before we jump into the future, it’s worth mentioning the present state of EVs. At the end of this year, there will be more than 27 million electric passenger vehicles on the road out of a global fleet of more than 1 billion. There are currently fewer than 2 million electric buses and commercial vehicles plying streets worldwide.

There are also just short of 300 million electric two- and three-wheelers — the scooters, trikes and tuk-tuks that dominate roads in Asia. Electrifying every one of these segments contributes to reducing global oil consumption. Today, it’s these smallest vehicles that are denting oil demand most, although not enough to make global oil consumption fall, at least yet.

Today’s fleet is a result of yesterday’s habits, so to speak. With another year of global auto sales behind us, we can definitively point to the peak of a more than century-long trend of increasing internal combustion engine car sales.

In 2017, global new vehicle sales reached 87 million, and all but 1.1 million had an engine. That year will end up being the all-time high for deliveries of internal combustion cars. Sales dropped below 82 million in 2019, and in 2020 they plummeted to fewer than 70 million. ICE car sales will probably tick back up, but EVs are the predominant reason total auto sales will get back to where they one were sometime around the middle of the decade.

As sales rise and fall, so shall the fleet. BNEF expects that the world’s fleet of ICE cars, excluding hybrids and plug-in hybrids, will peak at just over 1.2 billion this year, dropping only slightly in 2023. And after that, the decline is marked. By the end of the next decade, the global fleet of cars with an engine, rather than a battery or fuel cell, will be less than half the size it is today.


Bloomberg NEF asserts that the rising cost of batteries will not derail near-term EV adoption. Its researchers write in the report’s executive summary:

Some of the factors that are driving high battery raw material costs – war, inflation, trade friction – are also pushing the price of gasoline and diesel to record highs, which is driving more consumer interest in EVs. Internal combustion engine vehicles are also becoming more expensive to produce.  

The acceleration in EV adoption means that combustion vehicle sales peaked globally in 2017 and are now in permanent decline. By 2025 passenger ICE sales are 19% below their 2017 peak. Managing the decline while investing in the future is a major challenge for some legacy automakers.


However, Profundo’s analysis suggests that internal combustion engine operations will rapidly become less profitable – and eventually loss-making – because of the increasing carbon costs.

In the UK and EU, for instance, carmakers are now liable for steep fines if they sell too few electric cars. The UK is also considering a zero-emission vehicles mandate, which would mean half of all vehicles must be pure electric by 2028 ahead of a ban on hybrids, which combine a battery with a petrol engine, in 2035.

The analysis, commissioned by Transport & Environment, a Brussels-based thinktank, suggested that the legacy carmakers could increase their market values by a collective €800bn (£680bn) if they accelerated the switch to electric cars.

Julia Poliscanova, senior director for vehicles and e-mobility at T&E, said: “A faster transition to electric is not only in the interests of the climate and consumers, it is vital to the financial viability of European automakers.

“EU lawmakers have an obligation to these businesses and workers to support a timely transition. Higher car CO2 standards than are currently on the table for 2025 and 2030 are key to speeding it up.”

The analysis was based on a sum-of-the-parts calculation, a commonly used technique for investors trying to work out how to value companies. If the electric car operations were valued in line with US electric car pioneer Tesla the shareholder gains could be even higher – even if some influential investors still believe Tesla is overvalued despite falling in value by a third from its peak in November 2021.

The research did warn that Russia’s invasion of Ukraine could push back the date when electric cars are more profitable than petrol or diesel by between one and three years, depending on the manufacturer, because of higher battery material costs.


7 Responses to “Have We Reached Peak Combustion Vehicle?”

  1. J4Zonian Says:

    Gee, what a huge difference. Before the war, Republicans, Democrats, & fossil fuel corporations were lying & manipulating governments in order to slow the transition from fossil fuels to efficiency, wiser lives, and clean cheap safe renewable energy. Now, Republicans, Democrats, & fossil fuel corporations are lying & manipulating governments in order to slow the transition from fossil fuels to efficiency, wiser lives, and clean cheap safe renewable energy.

  2. Anthony O'Brien Says:

    Part of the trend is caused by the supply chain problems plaguing the auto industry. It is not that the people don’t want ice vehicles it is that they can’t get them. This is affecting electric vehicles too, the wait time for a Kia EV6 in Australia is you can’t eve put in an order.

    An electric bicycle is legally limited (Australia) to 250 watts and 20kph and yet some are well over 1kw and can do 70kph (faster than a legal moped). Similar speeds are possible on some electric scooters. The law and common practice are yet to meet.

    Second hand cars are way too expensive for what you get. Cars that should be scrapped are still on the market. So do I want a bike that works or a car that is likely to spend more time in the workshop than in the driveway.

    • gmrmt Says:

      Surely Ebikes are classified as to what they can do. Pedal assisted bikes under a certain speed are considered bikes with no need for licensing or insurance and the ability to use bike paths/lanes. A more powerful bike is considered a moped with all the restrictions that come with it.

      • Anthony O'Brien Says:

        Yup, a one kilowatt e peddle bike is far from legal but also quite common. Legally a motor bike, but none are registered as such.

  3. gmrmt Says:

    My wife and I have two cars. We want to drop one and get a hybrid for my wifes’ range anxiety. A new hybrid couldn’t be delivered for at least three years and a used costs more than a new one. So here’s our hybrid car plan: she keeps her ICE car that she uses once or twice a week at most and that we both use on long trips and I’m getting an Ebike for my 6.1 km. commute to work and for short side trips for groceries on the way home.

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