IEA: Electric vehicle sales are expected to rise strongly, weakening oil demand

(1) The International Energy Agency (IEA) forecast on Tuesday that electric vehicle sales will rise strongly in 2024 and increasingly weaken oil demand. The IEA added that the key to the future rise of electric vehicles will also depend on the affordability of car buyers and the charging infrastructure. (2) IEA said that electric vehicle sales are expected to reach 17 million this year and 14 million in 2023, and more than 20% of the cars sold worldwide will be electric vehicles, of which 10 million will be sold in large Asian countries. (3) According to the IEA's Global Electric Vehicle Outlook report, the pace of adoption of electric vehicles will mean that oil demand for road transport will peak around 2025. If countries can follow through on established energy and climate policies, oil demand will fall by about 6 million b/d by 2030 and 11 million b/d by 2035, equivalent to more than one-tenth of total current oil demand, the IEA said. (4) Referring to EV demand, the IEA said: "Low profit margins, Fluctuation in battery metal prices, high inflation and the phasing out of purchase incentives in some countries have raised concerns about the growth rate of the industry, but global sales figures remain strong." ” (5) Sales in the first quarter of this year rise by 25% over the same period of the previous year. The IEA said that although the increase was unchanged from the year-on-year increase in the first quarter of 2023, the number of vehicles compared to the base period increased. (6) However, the IEA predicts that the share of electric vehicles in total sales will vary by region, accounting for about one-ninth in the United States, one-quarter in Europe, and nearly half in large Asian countries. (7) According to the IEA, the factors affecting sales in the European market are "the general weakness of the sales outlook for passenger cars and the gradual elimination of subsidies in some countries". The IEA added that affordability remains key to the rise of the EV industry compared to conventional vehicles, and prices vary widely across regions. (8) In Europe and the United States, internal combustion engine vehicles are still cheaper than electric vehicles, while in large Asian countries, nearly two-thirds of electric vehicles sold last year were cheaper than conventional cars. (9) "EV prices will generally fall as battery prices fall, competition intensifies, and automakers achieve economies of scale," the IEA noted, noting that in some cases (inflation-adjusted) prices stagnated or even pumped slightly between 2018 and 2022. Another key challenge is to meet the rising demand for charging infrastructure, which needs to rise five-fold by 2035, the IEA added