Report: Electric Vehicles Could Take Big Chunk Out of Oil Demand

A report recently released from oil industry consultant Wood Mackenzie predicts that a boom in electric vehicles could reduce global gasoline demand by as much as 10 percent by 2035.

While battery-electric cars and trucks today represent less than one percent of total global vehicle sales, they are expected to take off after 2025 as governments move to tackle pollution and costs fall, the Houston-based analyst said.

Should electric cars pick up a market share over 35 percent, demand for oil could drop by approximately two million barrels per day by the year 2035 the firm said. That’s the range of the production cut OPEC and its allies agreed to last week in order to end a three-year crude surplus.

“Anything that reduces the demand for transportation has an impact on the oil market,” Alan Gelder, vice president of refining, chemicals and oils markets at Wood Mackenzie, said in an interview in London, Automotive News reported. “The question is how big is it going to be and what’s the time frame.”

SEE ALSO: OPEC Not Concerned About Impact of EVs

Wood Mackenzie’s report mirrors the International Energy Agency, which last month forecast global gasoline demand has all but peaked because of more efficient cars and the spread of EVs.

On Friday Athens, Madrid, Mexico City and Paris announced plans to phase out diesel vehicles by 2025 in a battle against vehicle pollution, a move that could further increase demand for EVs that have zero tailpipe emissions.

Regulation and government subsidies alone won’t be enough to spark a boom in EVs, Gelder said. “If there’s a technology revolution, so battery technology gets cheaper and EVs don’t need a subsidy, then it comes down to consumer preference. If the consumers like something, it’ll switch far faster.”

It will take more than just Tesla to supply enough EVs if demand really zooms, Gelder said.

Major automakers including Ford, General Motors and Volkswagen will need to produce them on a larger scale. “At the moment they can’t, and changing manufacturing lines takes time.” Gelder said.

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