THE global shift to electric vehicles (EV) might appear unstoppable, but the path there is far from straightforward.
Battery electric vehicles will eventually dominate passenger car fleets across every region, according to global risk management firm DNV, and will capture more than 90% share by 2050 in markets ranging from China and Europe to Southeast Asia.
That might appear to signal a rapid decline in oil demand for road transport, and merit steep downward revisions in gasoline consumption forecasts across several major regions.
However, a closer look at the inventory data for the underlying car fleets suggests the journey away from internal combustion engines (ICE) likely has plenty of twists and turns ahead.
The fuel outlook is clouded by the fact that some countries are moving faster than others to replace internal combustion engine cars with EVs, while others are expanding EV fleets alongside sales of conventional cars.
Below are six factors that highlight the key trends for electric and combustion-engine fleets across the world’s largest vehicle markets to help energy system planners anticipate the rate of change towards EVs over the coming decades.
China’s clout
China is the undisputed heavyweight of global electrification, and the country’s electric car fleet is already greater than that of the rest of the world combined, with around 37.5 million passenger EVs in use, DNV data shows.
By 2035, DNV projects that over 165 million EVs will be on China’s roads, before the EV total tops 360 million by 2050.
China’s vast EV manufacturing base, integrated battery supply chain and extensive charging network continue to drive down ownership costs and accelerate adoption.
Beijing has also rolled out subsidies for EV purchases and mandates for automakers to accelerate the shift away from fuel-burning vehicles.
In combination, these factors are projected to drive China’s inventory of combustion-engine cars sharply lower. Currently, there are around 314 million ICE cars in use in China, but that figure may drop to around 228 million by 2040 and to 107 million by 2050.
That more than 200-million-car drop in projected combustion engine vehicle inventories in under three decades is likely a cause for concern among fuel producers and traders.
But it’s actually not the steepest projected decline in combustion engine car stocks among major markets over that period.
Europe’s momentum
The region with the largest projected decline in ICE cars by 2050 is Europe, where conventional car numbers are seen contracting from around 284 million currently to around 77 million, DNV’s projections show.
Policies designed to cut transport emissions alongside a constantly expanding fleet of charging stations are making EVs a more attractive choice among car buyers.
And even though conventional cars still outsell EVs made by European carmakers, sales numbers of EVs and hybrids suggest that customers are keen to switch to EVs as they become increasingly affordable and convenient.
Europe’s total stock of battery electric vehicles is currently around 12.5 million, but is set to jump to nearly 70 million by 2035 and to 177 million by 2050, DNV’s data shows.
North America on the fence
Reversals in policies around EVs and federally-funded charging systems have dented the sales growth of EVs in North America in recent years, and look set to result in a slower fleet transition away from ICE cars compared to other major car markets.
Even so, large shifts to the overall auto fleet complexion are expected by mid-century, according to DNV’s projections.
North America’s fleet of ICE cars is currently around 290 million, and conventional engines account for around 86% of the total car fleet.
By 2040, however, ICE cars are expected to number around 215 million and account for only 30% of the total fleet thanks to a projected boom in EV uptake from around 8 million cars currently to nearly 86 million.
Steadily declining costs of EV ownership alongside improved access to charging stations are expected to drive EV uptake across North America, even though access to relatively cheap gasoline looks set to keep ICE cars on the road for longer.
India’s late growth spurt
The Indian subcontinent is still expanding its fleet of ICE passenger cars, which is estimated at around 73 million currently and will top out at around 165 million in the late 2040s, according to DNV’s estimates.
Limited charging infrastructure and consumer concerns about costs are expected to delay the region’s upswell in EV uptake into the 2050s.
That said, electric scooters and motorcycles are already seeing rapid growth across the region, and should promote continued expansion of charging infrastructure and greater electric grid stability that will underpin the eventual EV-heavy swing in car trends.
Car buyers in Southeast Asia, Sub-Saharan Africa, Latin America and the Middle East are expected to follow similar paths, with sales of ICE cars seen expanding into the 2040s before EVs emerge as the dominant choice.
Fuel fix
For fuel markets, the critical metric may be the retirement rate of combustion-engine vehicles rather than the sales rate of EVs.
China and Europe appear set to remove well over 300 million ICE passenger cars from their roads between now and 2050, making those regions the largest sources of long-term gasoline demand destruction.
North America also looks set to steadily erode fuel demand as EVs capture an ever larger share of the vehicle fleet, although the pace will lag that of China and Europe.
However, those declines in ICE car numbers are likely to be partly offset by continued growth in conventional vehicle ownership across India and several other emerging markets over the coming decades.
As a result, the outlook for transport fuels is not entirely downhill. Global EV adoption is accelerating rapidly, but fuel demand will increasingly depend on whether developing economies follow China’s path of replacing combustion vehicles, or continue adding electric and conventional cars side by side.
For energy planners, refiners and fuel traders, that distinction may prove more important than headline EV sales figures.
The destination is clearly a more electrified global vehicle fleet, but the speed of the journey remains far less certain.
This article is written by Gavin Maguire, a columnist for Reuters.