(Bloomberg) -- Electric vehicles aren't just transforming the auto industry: They're also about to reshape the global power market.
By 2040, more than half of all new cars sold will be plug-ins like those offered by Tesla Inc., according to a report from Bloomberg New Energy Finance. That means electricity demand from vehicles will surge 300-fold from last year's consumption, the data show. Carmakers are committing to a shift away from combustion engines: Volvo said Wednesday that beginning in 2019, all of the company's new models will have an electric motor, while BMW has said the electric iNext will replace the 7-Series as its flagship in 2021.
The growing popularity of plug-ins -- buoyed by declining lithium-ion battery prices -- is a boon for electricity providers, which have been battered by falling power prices amid abundant supplies of renewable energy. But electric vehicles will present another challenge for utilities and regulators already working to add intermittent generation from wind and solar farms into the electricity mix without disrupting supply.
“The auto sector and the power sector are kind of coming together in a way they haven't in the past,” said Colin McKerracher, an analyst at Bloomberg New Energy Finance in London. “They are becoming more intertwined.”
Electric vehicles will account for 5 percent of total global power demand in 2040, according to BNEF estimates. That means grid operators will have to take steps to manage the surge in electricity use, including storing more power and offering rates that will encourage charging at off-peak times.
“The grid can handle the increase in electric vehicles, but there are some difficult points that have to be addressed,” McKerracher said.
To contact the reporter on this story: Patrick Martin in New York at pmartin147@bloomberg.net.
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Christine Buurma, Carlos Caminada
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