The consultancy's eye-catching new report — "New market. New entrants. New challenges" (PDF) — suggests the market for pure electric and plug-in hybrid vehicles is fast approaching a "tipping point" that should drive soaring sales over the next decade.

It is a compelling analysis. After a record 2017 when sales of EVs globally passed 1 million units for the first time, Deloitte predicts sales of more than 2 million units for 2018. Moreover, there are encouraging signs such stellar growth rates can be broadly maintained. The report predicts global sales will hit 4 million in 2020, 12 million in 2025 and 21 million in 2030.

Such soaring demand is set to be driven by two trends that are both entrenched and accelerating. Firstly, policy measures will continue to work to tilt the market in favor of zero-emission vehicles. The Deloitte report highlights how fuel efficiency standards will push manufacturers to develop more electric models as they work towards EU goals to ensure plug-in vehicles command 10 percent of the market by 2025 and 22 percent of all sales by 2030. Meanwhile, direct grants and incentives are likely to help boost demand over the next five years, at the same time as urban air quality and congestion restrictions further stimulate interest in zero-emission cars and vans.

It is notable the report comes in the same week as reports suggest Sweden will become the latest country to set a phase-out date for internal combustion engine vehicles, that could see sales of polluting cars and vans banned from 2030. Similarly, separate reports reveal the Chinese government has introduced new rules purposefully designed to curtail the development of new auto factories pumping out internal combustion engine vehicles. 

Secondly, and perhaps more important, Deloitte predicts customer demand for EVs also will be driven by the removal of the cost and technical barriers that currently hamper the market. It points to the slated release over the next three years of a fleet of new EV models with ranges in excess of 500km, as well as rapid expansion of the charging network to include new fast-charging technologies. "We estimate the time required to achieve an 80 percent charge in a 60 kWh battery (equivalent to a range of 200 miles) will be reduced to just 30 minutes — the threshold that the majority of customers consider acceptable — by 2025," the report states.

Most eye-catching of all, the report suggests the total cost of ownership for EVs is set to fall sharply over the coming decade, as ticket prices fall and running costs remain much lower than their polluting rivals. The report predicts that globally the cost of ownership for EVs will match petrol and diesel models by 2024. And in the United Kingdom, cost competitiveness could come even sooner. Under a scenario where the government's $4,600 plug-in car grant is maintained, EVs should match conventional cars on an annual cost of ownership basis as early as 2021. Even if the grant is axed, cost competitiveness still should come within five years.

And it doesn't stop there. The report's killer chart shows how annual cost of ownership for EVs will continue to fall over the course of the decade as the sector takes advantage of economies of scale. It predicts that by 2030, owning an EV will save you over $1,300 a year compared to owning a petrol or diesel model.

"In the U.K., the cost of petrol and diesel vehicle ownership will converge with electric over the next five years," said Michael Woodward, U.K. automotive partner at Deloitte. "Supported by existing government subsidies and technology advances, this tipping point could be reached as early as 2021. From this point, cost will no longer be a barrier to purchase, and owning an EV will become a realistic, viable option for new buyers."

Encouragingly, Deloitte is not out on its own with these predictions. Last year, BloombergNEF similarly predicted EVs soon would undercut conventional cars in terms of both running costs and purchase prices. "The upfront cost of EVs will become competitive on an unsubsidized basis starting in 2024," the influential analyst house stated. "By 2029, most segments reach parity as battery prices continue to fall." The world's auto giants also are using similar projections to justify their multi-billion dollar investments in EV development.

It is this point that you would expect the celebrations to start. Within five years, probably sooner in many key markets, EVs will become the financially rational choice at precisely the same time as extended ranges make them practically viable. From there market forces will do the rest and demand will soar, putting the world on course for zero-emission road transport networks and the deep decarbonization of much of our economy.

However, the Deloitte report contains a sting in the tail. The outlook for EVs may be upbeat, sales of internal combustion engine cars and vans may be expected to fall from 2014, but the report's projections still point to plug-in vehicles accounting for just 20 percent of the market in 2030. Even after EVs become the financially sensible choice, Deloitte reckons the internal combustion engine's stranglehold on the global auto market will be loosened only slightly.

It is a forecast that will be deeply worrying for both the environment and many of the world's leading auto companies. It is hard to see how global emissions goals in line with keeping temperature increases well below 2 degrees Celsius can be achieved if internal combustion engines are still dominating the roads transport segment in 12 years' time, just as it is difficult to envisage the global air pollution crisis being resolved under such a scenario.

Equally, Deloitte's report warns that even with soaring projected demand for EVs taken into account the market could experience significant overcapacity over the next decade.

"With many OEMs planning a significant increase in the level of EV production over the next decade, the number of potential manufacturers appears unsustainable," the report states. "Based on our analysis, the overall industry capacity ... is approximately 14 million units above the forecast consumer demand for EVs in 2030 … Based on these figures, it is not inconceivable that some incumbent OEMs will be out of business beyond 2030, while it is highly likely that not all EV startups will survive. Meanwhile, those organizations that survive will no doubt face major changes to their existing business models, with the prospect of today's powerful OEMs acting as white label suppliers to other brands now a real possibility."

Consolidation and disruption are familiar characteristics of any fast-growth technology market and anyone would be hard-pressed to predict precisely how the market will shake out. As Deloitte's Woodward observed, "Whilst there is a distinct trend developing in the EV market, the story is not a clear cut one." He argued that the gearing up of EV production is "driving a wide 'expectation gap' and manufacturers, both incumbent and new entrants alike, will need to adapt towards this new competitive landscape."

Deloitte advises that auto companies successfully can prosper in this challenging market by building trust in their brand, ensuring a positive customer experience with investment in everything from the initial sales process through to aftercare, tapping consumer interest in the sharing economy through new business models, and continually investing in both engineering talent and the partnerships with battery suppliers and other third-parties that can help drive innovation and keep costs down.

It is sage advice, but the fear among environmental campaigners will be that some auto firms will respond to any oversupply in the EV market by scaling back their electric mobility plans and sweating their incumbent internal combustion models for as long as possible.

However, there is an alternative outlook. It is all but inevitable that a market experiencing such fundamental technological transition will experience a shakeout and a fair few corporate casualties along the way. But it is also possible Deloitte's projections are on the conservative side. Perhaps those auto giants investing in such a massive increase in production capacity are on to something. Perhaps more policymakers will emulate Sweden, Norway, the Netherlands and Denmark and declare internal combustion engine sales have to end. Perhaps most of the motoring public quickly will be won over by cars that are cheaper and cleaner than all that has gone before.

Then again, perhaps they won't.

Billions of dollars, the future direction of the auto industry and hopes of curbing global greenhouse gas emissions rest on how accurate the latest projections for EV adoption prove to be. The global EV market is growing fast, but the hope is that there is plenty more room for acceleration.