Tokyo — The International Energy Agency has raised its estimates for the impact of electric vehicles on global oil demand, bringing forward a previous forecast by a decade, as EV sales continue to surge.
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EVs will displace 2.5 million b/d of oil demand by 2030 on the back of increasing sales in all major automotive markets and growing support from government policy initiatives, Pierpaolo Cazzola, the lead author of IEA's latest Global EV Outlook, said Wednesday.
The estimate forms part of projections in the report, which predicts 125 million EVs will be on the road globally by 2030, compared with 3 million in 2017, Cazzola said at an event launching the report in Tokyo.
"We refer to 2.5 million b/d (of oil demand impact) in the case of 2030," Cazzola said in reference to the IEA's Global EV Outlook 2018 report.
In the IEA's World Energy Outlook, released in November 2017, the central long-term outlook scenario forecasts that 280 million EVs will be on the road in 2040, reducing oil demand by 2.5 million b/d or some 2.3% of total oil demand.
The IEA's latest projection on EVs' displacement of oil demand is an update to its view in the WEO report, after factoring in policy developments over the course of 2017, Cazzola told S&P Global Platts on the sidelines of the event. The IEA has consistently revised upward its forecasts of EV sales and the latest WEO report itself doubled a previous estimate for the number of EVs on the roads by 2040 from 150 million.
In 2017, EVs displaced 400,000 b/d of gasoline and diesel demand, the majority of which was attributable to two- and-three wheelers (73%), followed by buses (15%) and light-duty vehicles (12%), the IEA said in the EV report.
BOOMING EV SALES
The IEA said it sees scope for further supportive policies and battery cost reductions to continue to back "significant growth" in the EV market.
"The growth of EVs has largely been driven by government policy, including public procurement programs, financial incentives reducing the cost of purchase of EVs, tightened fuel-economy standards and regulations on the emission of local pollutants," the IEA said.
By 2030, the IEA now estimates there will be 125 million EVs on the road, based on existing and announced policies. That could rise to 228 million EVs if policies become more ambitious to meet global climate goals and other sustainability targets.
"Achieving these levels requires a rapid scale up and geographical expansion of policy commitments, starting as soon as possible," the IEA said.
It said the global stock of electric passenger cars reached 3.1 million in 2017, an increase of 57% from the previous year and a similar growth rate to that of 2015 and 2016.
Sales of EVs in 2020 are expected to be about 4 million, up from 1.4 million in 2017, and are expected to rise to 21.5 million by 2030, the IEA said.
As a result of booming EV sales, the report estimates governments will forgo $47 billion in revenues from tax on road fuel in 2030, a figure that could hit $92 billion under a more optimistic EV growth scenario.
Last week, Bloomberg New Energy Finance, one of the most bullish analysts on EV sales, trimmed its estimates for the likely disruption to oil demand from EVs, citing faster progress on fuel efficiency in conventional vehicles.
The world's switch from internal combustion engines to EVs will displace 7.3 million b/d of transport fuel by 2040, according to BNEF's latest annual outlook, a 9% fall from the 8 million b/d impact forecast a year earlier.
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