Oil Price Shocks Spark Electric Vehicle Boom

Oil supply disruptions and rising fuel prices are accelerating electric vehicle adoption, according to Wood Mackenzie. The firm says that governments and consumers exposed to higher fuel costs and supply risks will invest in EV manufacturing and supply chains, driving down oil demand.

WoodMac notes that technology is advancing rapidly, with China making progress on five-minute charging and new battery types like sodium-ion and lithium iron phosphate. Western governments may need to support domestic EV tech or license Chinese innovations to keep pace and reduce exposure to price shocks.

The firm predicts global oil consumption will fall to 99 million barrels per day by 2040, down from over 100 million bpd today. The shift will not be evenly distributed, with the US expected to see its EV market share rise from 3% to 20% and Europe's share climb from 3% in 2025 to 35%.

David Brown, an author of the report, warns that accelerating EV innovation outside the US could force Washington to take transport electrification seriously if manufacturers want to remain competitive at home and abroad. The industry needs another $45 billion of metals investment over the next decade, with copper emerging as a constraint.