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

The global oil market could be on course for a shallower demand shock from electric vehicle penetration amid new trade uncertainties and stalling Western uptake, the International Energy Agency said May 14.

Despite observing record sales in 2024, the Paris-based energy watchdog sees EVs displacing 1 million b/d less oil by 2030 than it did in its previous year's forecast, mostly due to slower US uptake, according to its new annual Global Electric Vehicle outlook.

Rapid electrification of the transport fleet has been a key assumption behind the IEA view that global oil demand could peak by the end of the decade, making the pace of vehicle switching a key swing factor for future oil market balances.

The agency now sees EVs displacing demand for roughly 5 million b/d of diesel and gasoline by 2030, and stressed that a dramatic growth trajectory remains underway. However, future uptake will continue to be led by China amid signs of stalling momentum in the US and Europe, the report said.

In 2024, robust growth in the global EV market offset roughly 1.3 million b/d of oil demand, 100,000 b/d more than the previous year, according to IEA figures.

However, stalling policy incentives and macroeconomic pressure risk dragging on growth, the agency said, citing pressure on the entire automotive sector.

"Electric cars are facing many headwinds -- there are changing trade measures such as tariffs, there's economic uncertainties, there's the potential implications of low oil prices which have to be looked at," the IEA's Chief Energy Technology Officer, Timur Gul, said on a press briefing.

In the US, EV sales were up 10% year on year in the first quarter of 2025, but a rush to maximize EV tax credits could fizzle out after a push to repeal them at the end of the year, Gul said. The IEA reduced its US EV outlook to reflect "reduced policy expectations," he noted.

European sales also stagnated as subsidy schemes and other tax credits waned, the IEA said, noting that the continent has failed to sustain a 2020-2021 growth spurt triggered the implementation of stricter CO2 regulations.

Weaker-than-expected European EV uptake and rising hybrid sales have supported gasoline demand sentiment, and in January 2025, S&P Global Commodity Insights analysts delayed forecasts for peak consumption from 2025 to 2026/27.

Commodity Insights analysts now expect the world to reach peak liquids demand in 2031 at 109 million b/d, before declining to 100 million b/d by 2050.

Affordability challenge

Falling battery costs have supported booming uptake in China, but wider affordability remains a key challenge for global penetration, the report said.

"Competitiveness now is really the driving force in China's electric car sales, and not just policy," Gul said, sharing that two-thirds of Chinese EVs are already priced at a discount to conventional alternatives.

In contrast, European-made EVs can be up to 20% higher than conventional alternatives, leaving demand sensitive to policy support.

A European clampdown on cheap Chinese EV imports kept prices supported through 2024, while a new higher-tariff environment for cars and commodities like steel will add inflationary pressure.

China still accounts for more than 70% of global EV production, the IEA said, but tougher European measures caused exports to the continent to roughly halve in 2024, pushing cheap models to new markets such as Asia and Latin America.

In a weaker oil market environment, lower fuel prices could dampen savings associated with running electric-powered vehicles. Yet even if global crude benchmark prices plummeted to $40/b, EVs would still offer "significant fuel cost savings" across all major markets, the IEA said, calling for lasting policy support.

Sales growth

On the back of record performance in 2024, global electric car sales are set to climb from over 17 million in 2024 to 20 million in 2025, representing one quarter of automotive sales, the IEA said.

In China, EVs already make 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. Starting from a low base, electric car sales across emerging and developing economies also grew 60% year on year in 2024, driven by markets such as Vietnam, Thailand and Brazil.

IEA Executive Director Fatih Birol struck a bullish tone on future adoption despite new challenges for the market. "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.