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The surge in electric vehicle (EV) sales in recent years — driven largely by China — is now meaningfully curbing oil demand, according to the International Energy Agency (IEA).
The background: EVs, including plug-in hybrids, now account for roughly one in five new car sales globally.
While northern European countries have the highest EV penetration rates, China plays an outsized role in overall market dynamics given the sheer size of its local car market. And EV sales there are booming.
According to Dutch financial services group ING, EVs accounted for 30% of new car sales in China in 2023, and will likely hold a 35% share this year. Meanwhile, the country is also starting to dominate the export market.
The latest: The IEA says the world would be consuming an extra 1 million barrels of oil a day if it weren’t for the rapid increase in the deployment of clean energy technologies. That’s equivalent to about 1% of current daily oil demand.
“Most of this comes from the growing sales of electric cars,” the IEA says in a new report, adding that EVs account for 550,000 barrels a day in “avoided” oil use.
“Without the impact of electric cars, global oil demand would have risen above the pre-pandemic level, instead of hovering still slightly below in energy equivalent terms,” the agency says.
The use of biofuels made from crops has also contributed to restricting oil demand growth.
More broadly, the IEA says, deployments of solar, wind, nuclear, EVs and heat pumps over the past five years has curbed fossil fuel use by 5%, or nearly the equivalent of Japan and Korea’s combined annual energy demand from all sources.
