Oil Prices Fuel Electric Vehicle Boom as Major Automakers Lag Behind
High oil prices are driving up the prospect of accelerated electric vehicle (EV) sales worldwide. According to Wood Mackenzie, the latest escalation in the conflict in the Middle East has put upward pressure on crude prices, with Brent crude rising above $108 a barrel for the first time since May.
The surge in EV sales has been observed in several markets around the world, including France, Germany, and the UK. In China, BEVs have gained significant market share, accounting for about 40% of sales this year.
US vehicle manufacturers have abandoned plans for a rapid transition to EVs, but Chinese manufacturers continue to benefit from government support, including tax breaks, grants, low-cost financing, and trade-in subsidies. The US Treasury secretary has stated that a Chinese EV made by BYD is 'the best $70,000 car that $35,000 can buy.'
Wood Mackenzie analysts have mapped out a possible scenario in which the global EV fleet in 2040 is about 50% larger than in their base case forecast. To achieve this, three key conditions would need to be satisfied: governments must invest in EV and battery supply chains, progress must be made in EV technologies such as fast charging, and consumers must decide that high and volatile fuel prices are here to stay.