Demographics and population are big factors. But really, the developed world will lead the revolution.
Some European countries will hit 100% of new car sales by 2040, helped by government policy and society’s desire to reduce emissions. The US won’t be far behind, but the rate of penetration will be slower than in Europe. The typical US car is bigger and heavier than elsewhere, with light trucks and SUVs popular for example, posing challenges for battery technology.
China is key to EVs’ growth because of the size and growth of the middle class. The total car fleet in China will have doubled to almost 380 million by 2040, and while penetration will be lower than in the US, it will be the biggest EV market in the world.
Are ICE vehicles being rapidly phased out?
Far from it. ICE vehicles will be a force even in the new car sales market for some time. We expect the global car fleet to grow by around 600 million vehicles to 1.8 billion by 2040, with over half of the increase ICE vehicles – largely driven by demand from the developing world. But the global stock of ICE vehicles peaks around 2030, within a few years of EVs gaining commercial traction.
So when will oil demand peak?
Demand for gasoline peaks in the early 2030s and diesel plateaus shortly after – broadly in line with the peak in ICE vehicle stock. But total oil demand continues to rise for a few more years driven by demand from petrochemicals.