The impact of electric cars on oil demand
Rising prosperity will boost car ownership in emerging markets as efficiency targets and lower battery costs spur electrification - and almost all of this growth is in emerging markets
Spencer Dale, group chief economist, talks about rising levels of car ownership in emerging markets
We expect oil demand to continue to grow throughout the next 20 years, driven by increasing transport demand, particularly in fast-growing Asian economies.
Spencer Dale, group chief economist
The global car fleet will double from 0.9 billion cars in 2015 to 1.8 billion by 2035 as rising incomes and improving road infrastructure boost car ownership. Within the same timeframe, the non-OECD fleet will triple - from 0.4 billion cars to 1.2 billion.
Overall, global demand for car travel roughly doubles over the course of the Energy Outlook.
The number of electric cars also rises significantly, from 1.2 million in 2015 to around 100 million by 2035 (5.5% of the global fleet). Around a quarter of these electric vehicles (EVs) are plug-in hybrids (PHEVs), which run on a mix of electric power and oil, and three-quarters are pure battery electric vehicles (BEVs).
A key driver of the pace at which EVs penetrate the global car fleet is the extent to which fuel economy standards are tightened. But EV penetration will also depend on a number of other factors, including:
Fuel demand for use in cars continues to rise, despite efficiency improvements and EV switching.
- the pace at which battery costs continue to fall;
- the size and durability of subsidies and other government policies supporting EV ownership;
- the speed at which the efficiency of conventional vehicles improves; and - crucially - on
- consumer preferences towards EVs.
In 2015, cars accounted for 19 Mb/d of liquid fuel demand - a fifth of global demand. All else equal, a doubling in the demand for car travel over the coming 20 years would lead to a doubling in the liquid fuel demand from cars.
The number of electric cars will rise significantly, from 1.2 million in 2015 to around 100 million by 2035
In 2015, cars accounted for 19 Mb/d of liquid fuel demand - a fifth of global demand
The global car fleet: 2015-2035 (billions)
The global car fleet doubles from 0.9 billion cars in 2015 to 1.8 billion by 2035
Illustrative path for battery pack costs ($/kWh)
Three-quarters of plug-in hybrids (PHEVs) are pure battery electric vehicles (BEVs)
Potential growth reduced significantly
However, improvements in fuel efficiency reduce this potential growth significantly (-16 Mb/d) as manufacturers respond to stricter vehicle emission standards. An average passenger car is expected to achieve more than 47 miles per US gallon in 2035, compared with around 28 MPG in 2015 - a faster rate of efficiency improvement than in the past.
The growth of electric cars also mitigates the growth in oil demand, but the effect is much smaller: the 100 million increase in the number of electric cars reduces oil demand growth by 1.2 Mb/d - less than a 10th of the impact of the gains in vehicle efficiency.
Overall, the increase in demand for car travel from the growing middle class in emerging economies overpowers the effects of improving fuel efficiency and electrification, such that liquid fuel demand for cars rises by 4 Mb/d - around a quarter of the total growth over the Outlook.
Related content
Regional insights
Energy projections at country and regional levels
Newsletter sign-up
Sign up for regular news from the energy economics team
Outlook downloads
Download the full report, Excel workbook and regional insights
Add to My Watchlist
What is My Watchlist?