Report: EV Stock to Hit 5 Percent of Global Car Fleet by 2025

Published September 28th, 2020 - 01:30 GMT
Report: EV Stock to Hit 5 Percent of Global Car Fleet by 2025
For example, In Norway, EV stock share of the car fleet has increased by about 12% over the last five years, but gasoline and diesel sales in the country have declined by about 9% over the same period. In China, the largest EV market by volume, where more than 1mn EVs were sold last year, accounting for about 5% of total car sales, gasoline demand continues to grow due primarily to the growth in overall personal mobility demand. (Shutterstock)
Highlights
While the EV car stock was less than 1% (0.8%) of the global car fleet last year according to the IEA report, Barclays highlights that that so far the effect of burgeoning EV sales on oil demand has been somewhat subdued, proportionately.

Electric vehicle (EV) stock should reach almost 5% of global car fleet by 2025 based on the IEA’s projections, said Barclays in a new report, adding that in such a scenario, EVs are expected to offset about 1.2 million barrels per day (mb/d) of oil demand.


While the EV car stock was less than 1% (0.8%) of the global car fleet last year according to the IEA report, Barclays highlights that that so far the effect of burgeoning EV sales on oil demand has been somewhat subdued, proportionately.

For example, In Norway, EV stock share of the car fleet has increased by about 12% over the last five years, but gasoline and diesel sales in the country have declined by about 9% over the same period. In China, the largest EV market by volume, where more than 1mn EVs were sold last year, accounting for about 5% of total car sales, gasoline demand continues to grow due primarily to the growth in overall personal mobility demand.

Even in California, USA, where the share of EV sales more than doubled between 2016 and 2019, gasoline demand has been largely flat. This is likely due to below-average usage of EVs compared with their conventional counterparts, which could be attributed to continued concerns about range, charging infrastructure, and time constraints. Therefore, the actual effect of growing EV penetration on 2025 oil demand could be lower than expected, Barclays said.

California Governor Newsom recently signed an executive order that directs the California Air Resources Board (CARB) to develop regulations that will mandate all in-state sales of new passenger vehicles to be zero-emission vehicles (ZEVs) by 2035.

New medium- and heavy-duty vehicles are required to be ZEV by 2045. In order to facilitate the transition, the order contemplates significant investment in charging infrastructure, via partnership with the private sector.

California is the largest gasoline-consuming state in the US, accounting for roughly 10% of total consumption. It has also been leading the rest of the country in electric vehicle (EV) penetration, driven primarily by the state's ZEV credit program. According to InsideEVs, California accounts for 45-50% of total EV sales in the US, with EV share of all car sales at about 8% last year.

Eleven other states (Colorado, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Vermont, and Washington) have also adopted California's ZEV program and could also announce similar measures to boost EV penetration. For example, Oregon governor Kate Brown praised Newsom's order and said he would also make efforts to boost EV penetration. These states account for another 18% of total gasoline consumption in the US.

The California governor's order on phasing out conventional cars is the most aggressive in the US, but several European countries have set even firmer goals for themselves. Norway, for example, plans to achieve a 100% transition to EVs for new vehicle sales by 2025. Denmark has set a similar goal for 2030. Among the major European economies, France plans to phase out new conventional vehicle sales by 2040 and the UK has a similar target but is likely to be brought forward.1

These targets aim to guide a policy framework to accelerate the adoption of EVs, which is negative for oil demand over the medium term. However, the governor's order in the US is significantly at odds with the federal government's guidelines on emission standards for new vehicles. Earlier this year, the Trump administration reduced the mandated pace of average fuel economy improvements (for model year 2021-26) from 5% annually, set by the Obama administration, to 1.5% annually.

EV sales are picking up from a very small base, and despite the substantial reduction in battery pack costs over the past several years, sales still largely rely on government support. This was reflected in the significant slowdown in sales last year in China as well the US, driven primarily by the reduction in government subsidies/tax credits.

So the effect of accelerated transition on oil demand over the next few years is likely to be negligible, the Barclays report said.


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