IEA sees EVs displacing less oil by 2030 as uptake at risk

The global oil market could be heading for a shallower demand shock from electric vehicles amid new trade uncertainties and stalling European uptake, the International Energy Agency said May 14.

Despite record sales in 2024, the Paris-based energy watchdog sees EVs displacing 1 million b/d less oil by the turn of the decade than it did in its previous year's forecast, according to its new annual Global Electric Vehicle outlook.

Rising EV adoption has been a key assumption behind IEA projections that global oil demand could peak by the end of the decade, and the pace of electrification remains a critical swing factor contested among forecasters.

The agency now says that some 5 million b/d of diesel and gasoline will be eroded by EVs by 2030. In 2024, EVs displaced over 1.3 million b/d of fossil fuel demand globally, the IEA reported.

However, new economic headwinds have put growing pressure on the automotive sector and complicated the challenge for policymakers to make EVs attractive, the agency said.

"Uncertainties over global economic growth and the evolution of trade and industrial policies could affect the outlook," the report said, responding to brewing recessionary fears and import tariffs that could curb consumer spending.

In Europe, rising hybrid vehicle uptake and sluggish EV sales had already extended timelines for an expected gasoline phaseout on the continent.

Responding to weaker-than-expected European EV uptake in January 2025, Platts, part of S&P Global Commodity Insights, delayed forecasts for the continent to see its gasoline demand peak from 2025 to 2026/27.

Based on stalling macroeconomic indicators, the IEA slashed its oil demand growth forecasts for 2025-2026 in its latest April oil market report, contributing to an expected supply glut of 1 million b/d by 2026.

Affordability puzzle

Falling battery costs have supported booming uptake in China, but wider affordability remains a key uncertainty that will set the pace for global adoption.

Two-thirds of Chinese EVs already undercut conventional vehicles on price, the IEA said, underpinning forecasts that China will drive half the oil displacement from EVs globally by 2030.

In contrast, German battery electric car prices can be up to 20% higher than conventional alternatives, leaving European demand sensitive to policy support.

The IEA blamed waning subsidy schemes for seeing European EV sales stagnate in 2024.

As the US, China, and the rest of the world hash out future tariff policies, cheap Chinese EV exports remain exposed to inflationary pressure, the IEA said.

In 2024, China made more than 70% of the world's EVs, the IEA said, reporting that around 20% of global EV sales are imported.

However, the agency espoused the cheaper operating costs of running electric-powered vehicles, sharing that in almost any oil price context (down to $40/b), EVs remain cheaper to operate than fossil alternatives in "many markets."

Sales growth

On the back of record performance in 2024, global EV sales are set to climb from over 17 million in 2024 to 20 million in 2025, the IEA said.

Projected sales volumes would see EVs make up a quarter of vehicle purchases worldwide in 2025, up from 20% currently.

In China, EVs made up roughly 50% of car sales, followed by 20% in Europe and roughly 10% in the US.

In the first three months of 2025, sales were up 35% year over year globally, the IEA said, noting significant uptake across emerging markets in Latin America and Asia.

IEA Executive Director Fatih Birol struck a bullish tone on future adoption despite growing macroeconomic concerns and trade barriers.

"Our data shows that, despite significant uncertainties, electric cars remain on a strong growth trajectory globally. Sales continue to set new records, with major implications for the international auto industry," he said in a statement.