Accelerated EV Adoption Could Cut Global Oil Demand by 5 Million Barrels Per Day
Wood Mackenzie's latest report suggests that electric vehicle (EV) adoption could accelerate significantly if governments strengthen supply-chain investments, high fuel prices drive consumer switching, and EV technologies advance faster than expected.
The report examines a scenario in which policy support, consumer behavior, and technological innovation converge to accelerate the global transition to electric mobility. Under this 'electric shock' scenario, EVs could account for 25% of the global vehicle fleet by 2040, up from approximately 4% currently. This would reduce global oil demand to 99 million barrels per day (mb/d) by 2040, around 5 mb/d below the base case and close to current levels.
China is expected to remain at the forefront of global EV adoption, with EVs accounting for 42% of Chinese car sales in Q2 2026. Additional policy measures could reduce the total cost of EV ownership by around 30%, increasing annual Chinese EV sales from 8.9 million in 2025 to 29.9 million by 2040.
However, Wood Mackenzie warns that the US risks falling behind other major EV markets without stronger battery technologies and competitive domestic supply chains. The report suggests that targeted policy support could attract foreign investment in EV supply chains and new manufacturing facilities, bringing EV total cost of ownership parity with gasoline-powered vehicles forward to 2031.
The accelerated transition could also lead to the early closure of approximately 40 oil refineries globally and require additional investment in mining and processing capacity. Copper is identified as the most significant bottleneck, requiring annual additions of around 960,000 tonnes per year through 2040.