Report: Sales of internal combustion vehicles now in "permanent decline"

(CNN) Sales of non-plug-in internal combustion-powered vehicles peaked in 2017, according to a report by industry analysts at Bloomberg New Energy Finance, and have been in "permanent decline" since then as sales of plug-in hybrid and electric vehicles increase.

Sales of plug-in vehicles are also expected to triple their current levels by 2025, according to the report.

"Most importantly, the market is shifting from being driven primarily by policy, to one where organic consumer demand is the most important factor," lead authors Colin McKerracher and Aleksandra O'Donovan wrote in the BloombergNEF report.

In 2025, the global auto industry will sell 20.6 million plug-in vehicles, according the report, compared to 6.6 million this year. Sales of purely internal combustion-powered vehicles, while projected to still make up the majority of total car sales in 2025, will have decreased.

Fully battery-powered vehicles will make up 75% of plug-in vehicle sales by 2025, according to the report. Plug-in hybrid vehicles are not expected to make a significant percentage of plug-in vehicle sale outside of Europe. Sales of plug-in hybrids will peak around 2026, the report predicts. Fuel cell vehicles, which run on electricity produced from hydrogen gas rather than being stored in batteries, are not expected to play a significant part in the passenger vehicle market.

Some automakers, like General Motors, have already announced plans to sell only emission-free vehicles by 2035, but currently make the vast majority of their revenue from gasoline powered trucks and SUVs. Other automakers, like BMW and Toyota, have been more cautious about setting firm deadlines for leaving behind internal combustion.

Market penetration of electric vehicles won't be the same everywhere. EVs are expected to reach 39% market share in China and Europe by 2025, the report said. They could make up an even higher portion of sales in some European countries, though, with EVs making up 40% to 50% of passenger vehicles sales in the United Kingdom, Germany and France.

China and Europe will account for 80% of all EV sales globally in 2025, the report predicts, with the US representing just 15% of the world's EV sales. Sales in the US will begin trending sharply upwards over the next decade, though, as major automakers and startup companies begin producing electric versions of the sorts of vehicles Americans like to buy.

China's BYD is the second-largest electric vehicle brand in the world, selling nearly 600,000 EVs and plug-in hybrids in 2021.

"Whether that's an electric Ford F-150 or a Chevy Silverado or a Rivian pickup truck, all of a sudden what you're gonna see in the next few years is better matching between what consumers in the US want in terms of the, the size and shape of the vehicles they buy and the supply that's out there," said McKerraracher in an interview with CNN Business.

The US also has a lot of catching up to do in terms of public charging infrastructure, he said. The US federal government has announced plans to invest heavily charging infrastructure, though. And because a larger percentage of Americans live in single-family homes and can, therefore, economically and conveniently charge at home, less public charging will be needed here than in countries with greater housing density, like China, he said.

One of the biggest surprises in their research, McKerracher said, was an especially rapid increase in EV market share in China, which has gone beyond what government requirements had dictated.

"We've long speculated that there's a point where policy stops being the primary driver and really organic demand, consumer demand, takes over," he said. "And it kind of looks like that's what's happening in China."

Even still, road transport is not on track to be carbon neutral by 2050, and even if all vehicles on the road gave off no emissions whatsoever, it would not be enough to solve the climate crisis, the authors warn.

"Simply changing out the drivetrain of vehicles may not be the most efficient way to deliver net zero, and a full range of solutions -- including more public transit, and active transport options -- will be needed," they wrote.