Last week, Bloomberg New Energy Finance (BNEF) released its latest long-term forecast for the electric vehicle (EV) marketplace. The analysts are forecasting that sales of light-duty vehicles (passenger cars, pickups, and SUVs/crossovers) will rise from around 1% in 2016 to 54% of all vehicle sales by 2040. By that time, one-third of the entire global fleet will be electrified.

BNEF attributes the projected soaring growth to rapidly falling battery costs and increased commitments from carmakers like Volvo, which also announced last week that by 2019 all its new cars would include some type of electrification. The analysts expect sales of EVs to remain relatively low until 2025 and then reach an inflection point between 2025 and 2030 as EVs “become economical on an unsubsidized total cost of ownership basis across mass-market vehicle classes.”

The cost of lithium-ion cells has dropped by 73% since 2010, according to BNEF analyst Colin McKerracher. To keep up with global demand, a total of 35 plants equal in size to Tesla Inc.’s (NASDAQ: TSLA) Gigafactory are going to be required over the next 13 years.

BNEF estimates that global demand for crude oil will drop by 8 million barrels a day by 2040, about one-fourth of OPEC’s current production, or more than half of U.S. daily demand for crude oil to feed the nation’s refineries.

Demand for electricity will rise of course. By 2040, electricity consumption from EVs will rise to 1,800 terawatt-hours from just 6 terawatt-hours in 2016. EV consumption will account for about 5% of total global demand for electricity in 2040.

BNEF forecast that 58% of new cars sold in the United States in 2040 will be electrified, somewhat less than the 67% forecast for European sales and somewhat more than the 51% sold in China. McKerracher noted:

The next 6 to 8 years become really critical. If those volume amounts falter dramatically, then some of those cost reductions may not come to pass and that will affect the crossover point and therefore the overall adoption level.

While Europe and China appear to be committed to growing their EV fleets, recent decisions in the United States to expand areas open to drilling for more oil combined with a lack of federal support for EV technology could substantially disrupt projected sales of electric vehicles.

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