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A few days ago, Bloomberg New Energy Finance (BNEF, owned by Bloomberg L.P.) published a forecast on global electric vehicle sales. The study suggested that, by 2040, 35% of new car sales will come from electric cars, which equals a total of 41 million electric cars sold annually. In 2015, 462,000 electric vehicles were sold worldwide, accounting for half of a percent of total car sales.

In order to reach 35%, electric car sales will need an “S” trend to happen in the future. There are basically three stages in terms of the “S” trend – an initial acceptance period with slow growth, followed by a period of rapid market growth, and then entering another slow period after saturation. Things like smartphones and color TVs and even the hybrid cars to some extent all have followed this trend.

For electric cars, the kickoff on sales will mainly rely on two factors according to the report – drop of battery cost as well as decrease in oil demand.

Regarding the battery cost, BNEF anticipates the pack cost to be $120/kWh by 2030. The timing is less aggressive (and maybe more realistic) than that set by USABC (a consortium formed by GM, Ford and Fiat Chrysler). USABC targets year 2020 for the pack cost to go below $125/kWh. Carmakers think electric cars will have a comparable cost to regular cars when the battery cost decreases to this level.

The battery pack cost has been dropping over the years. It is around $300/kWh for the upcoming Chevrolet Bolt. Korean battery maker LG Chem will build the pack together with other powertrain components in the car, which helps reduce the cost.

Regarding the oil demand, the report argued that when 2 million barrels of oil per day are replaced by driving electric cars, the sales will take off. 2 million barrels per day surplus is believed to cause the plunge of oil price in 2014. This day would come as early as 2023.

2 million barrels of oil equal to 84 million gallons. In 2013, the average fleet light duty vehicle fuel efficiency in the US is 21.6 mpg. Assuming a 5% annual improvement, the fuel efficiency will become 35.2 mpg by 2023. Say cars drive 35.2 miles per day on average (or about 13,000 miles per year), then they will consume 1 gallon of oil per day per vehicle. Therefore, 84 million gallons mean 84 million electric cars on the road in total. Considering that there are 1.3 million EVs on the road right now, 84 million is really a very exciting number.

The BNEF report also indicated that plug-in hybrid sales will reach the peak around 2030 and then starts to drop down. Plug-in hybrids, as a transitional new energy vehicle technology, should have their reasons to stay on the market for longer time: 1) since the battery size is usually smaller than that of all-electric cars, the costs of plug-in hybrids are less sensitive to battery cost; 2) plug-in hybrid cars can run all-electric for short range commuters and run hybrid for longer range, both of which have much better mpge than regular cars; 3) plug-in hybrids can be easier for consumers to accept than all-electric cars. After all, electric cars not only need to be cost competitive, but also rely on breakthroughs in other areas like fast charging and charger infrastructure construction.

In this regard, plug-in hybrids may have a chance to follow the growth pattern of hybrid cars. Carmakers are acting too. For example, BMW and Mercedes-Benz have plans to build plug-in hybrid versions of the majority of their lineups in 2020-2025 timeframe.

It is also interesting to notice the shift of views on the future for oil over time. Initially, it was concerned that oil would be depleted before alternative car technologies become mature. Then, there was a theory that the depleting oil would drive up the price and force the alternatives to become mainstream. Now, people start to think that someone may end up holding the useless barrel. Electric cars have helped shape the shift of views.