The 35-Year Forecast For Electric Vehicles - Tesla (NASDAQ:TSLA)

The long-reigning internal combustion engine is soon to be deposed.

“We believe that we are at an inflection point where we will begin to see mass market adoption of [battery electric vehicles (BEVs)], in particular,” Bernstein analysts Toni Sacconaghi Jr. and Mark Newman wrote in a Monday note.

If they prove clairvoyant, electricity will become the standard source of vehicle energy ━ and sooner than most expect.

Turn Of The Season

Bernstein considers the industry on the cusp of a decades-long “automotive revolution,” wherein BEVs supplant ICEs and beat out hybrid electric (HEV), plug-in hybrid electric (PHEV) and hydrogen fuel-cell (FCV) alternatives to become the global standard of vehicles.

“In order for ICE and hybrid vehicles to compete, these categories will see prices steadily decline,” Loup Ventures Managing Partner Gene Munster wrote in a concurring thesis.

Considering historical precedents and the recent “breakthrough” of Tesla Inc TSLA’s Model 3, Bernstein sees EVs, primarily BEVs, accounting for 60 percent of auto sales by 2050. Loup Ventures proffers a more ambitious timeline, with EVs accounting for 86 percent of sales by 2040.

The Four Winds

Progress will be driven by favorable government policy, improving cost economics, technological progress and expanding consumer receptivity, according to Bernstein.

“We believe we will see legislation over the next 5 to 10 years enticing consumers to buy electric vehicles through subsidies; gas powered vehicles may even [disappear] from the road,” Munster wrote.

Setting The Stage

The move toward electric engines will pave the way for another automotive “paradigm shift.” Munster expects more than 94 percent of new cars sold in 2040 to be self-driving.

The transition will start in 2020 with a predicted 98,000 fully automated vehicles entering the market, a projection accelerating to 96.3 million in 2040.

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