Increased demand for electric vehicles can affect oil market: Study

The demand for millions of barrels of oil every day may soon be wiped out by electric cars. According to recent figures, the number of electric vehicles on the world’s roads is set to increase from 11 million vehicles to 145 million by the end of the decade.

According to an International Energy Agency (IEA) report, as a method to achieve global climate targets; if governments around the world, agree to encourage the production of low-carbon vehicles, there could be 230 million electric vehicles worldwide by 2030.

Sales in the first quarter of the year 2021 were more than 2.5 times or 250 per cent higher than in the same months last year, found IEA’s first global report on electric vehicles.

In 2020, a record three million new electric cars were registered around the world, bringing the total number of electric cars to 10 million, despite the economic slowdown, which has caused the global car industry to shrink by 16 per cent. In addition, the number of other electric vehicles like electric vans, heavy trucks and buses stand at approximately one million.

This increase in the number of electric cars is expected to have significant implications on oil companies,as the profitsthey make from producing crude depend on the demand for transport fuels.

By 2030, Electric vehicles could potentially remove the requirement of approximately two million barrels a day of diesel and petrol, and save the equivalent of 120m tonnes of carbon dioxide.

If governments were to increase their ambition for electric road transport by aligning them with global climate targets, doubling the carbon savings these vehicles could displace about 3.5m barrels of oil a day.

According to IEA reports, with $120 billion consumer spending on electric vehicles last year, a 50 per centincrease in spending was witnessed as compared to 2019. This boom has multi-billion-dollar implications for the global automotive industry. Last year also witnessed carmakers offering 370 electric models to the market, an increase of 40 per cent from 2019 numbers.

IEA’s executive director, Fatih Birol said, "Current sales trendsare very encouragingbut our shared climate and energy goals call for even faster market uptake," said.

The IEA report calls for "stronger ambition and action from all countries", calling the production of sufficient electric vehicles to put the world on the course to meet its climate targets, a "formidable challenge".