Electric cars make up only a tiny fraction of the automobiles sold worldwide, but that will change quickly, according to an analysis by Bloomberg New Energy Finance.

By 2040, electric cars could make up 57% of all passenger car sales worldwide, the report found. That’s up two percentage points from BNEF’s 2040 projection last year. Electric vehicles will make up a similar percentage of light commercial vehicle sales in the United States, Europe and China within that time, BNEF predicts.

“We see a real possibility that global sales of conventional passenger cars have already passed their peak,” said Colin McKerracher, head of advanced transport for BNEF.

Electric cars are coming close to matching gasoline- and diesel-powered cars in purchase price and they already cost less to operate. That means that electric cars will soon overtake internal combustion-powered cars as the more economical choice for consumers, according to the new report.

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Over the next two decades, worldwide electric vehicle sales will rise from 2 million last year to 56 million by 2040, BNEF predicts. At the same time, sales of “conventionally powered” vehicles will fall from last year’s 85 million to just 42 million globally.

The shift will be driven by further declines in battery prices, which are already falling rapidly. Since 2010, battery costs per kilowatt-hour have fallen 85%, thanks to improvements in manufacturing and increased economies of scale as more battery factories are built.

Given these trends, electric cars should be less expensive than similar internal-combustion cars by the mid-2020s in terms of both purchase price and long-term ownership costs. Electric cars cost less to own and drive because electricity is much cheaper than gasoline or diesel fuel. They also require less maintenance because they have far fewer moving parts.

The sheer number of cars on the road will continue to grow, though, limiting the impact of increasing EV sales on greenhouse gas emissions. Emissions will begin to decline sharply in the years leading up to 2040, but that will only get them back to 2018 levels, the report said.

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Ride sharing services will shift to electric vehicles faster than private owners, said Ali Izadi-Najafabadi, who leads BNEF’s shared mobility research. Vehicle fleet owners are, generally, more conscious of maintenance and fueling costs than are private individuals.

“There are now over a billion users of shared mobility services — such as ride-hailing — globally,” Izadi-Najafabad said. “These services will continue to grow and gradually reduce demand for private vehicle ownership.”

China will continue to lead in sales of electric cars, but China’s share of the market will fall as more are sold in other countries. China is expected to account for 48% of all electric cars sold in 2025, but only 26% in 2040. Meanwhile, Europe will pull ahead of the US in electric car market share during the 2020s, BNEF predicts.

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