Transport in transition: the future of EVs

Rapidly changing EV economics and technological innovations could disrupt oil, metals, and power markets around the world.

The global energy transition has picked up steam, and the demand for electric vehicles (EVs) is poised to take off. With the global stock of EVs forecast to grow to 280 million passenger cars by 2040, this will have far-reaching implications for the oil, metals and power markets.

The most immediate effect of the growth in EVs will be the decline in oil demand. If EV stock rises as we expect it to, we’ll see almost 5.5 million b/d of gasoline and diesel demand displaced. That number could climb even higher as fuel efficiency continues to improve and as more countries and governments establish more stringent fuel efficiency mandates. Another factor — potentially displacing an additional 1 million b/d of oil — is the potential rise of autonomous vehicles, which will be electric.

Also playing a role in the proliferation of EVs are falling battery costs, which are expected to fall to US$100/kWh by 2027. This will make EVs much more cost-competitive and address one of the most significant stumbling blocks for consumers considering purchasing an EV. This trend is expected to continue to 2040, when battery costs are forecast to be five times cheaper than they are today.

While the demand for EVs will have negative effects for oil demand, the opposite is true for metals. Raw materials for EV batteries will encounter double-digit annual demand growth for the next decade. In particular, we expect to see lithium and nickel battery demand pick up as manufacturers move toward more nickel-intensive cathodes. Home charging and charging stations along major highways and thoroughfares will have implications for power markets, as well, as the grid will need to be able to support the increased load.

We dived into these predictions in greater detail in our webinar

Expert analysts Ed Rawle, Prajit Ghosh and Gavin Montgomery presented an integrated perspective on how EVs will transform commodity markets over the next two decades, covering topics including:

  • What are the drivers behind the EV revolution?
  • How fast will EVs be adopted? What are the enablers and barriers?
  • Wood Mackenzie’s EV and autonomous electric vehicles (AEV) global view
  • Implications for the major commodity segments:
      • Oil and oil product markets
      • Power markets and the grid 
      • Metals and mining

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