RIYADH: Electric vehicles are set to displace more than 5 million barrels of oil per day globally by 2030, highlighting their growing role in reshaping fuel demand and bolstering energy security, a new report stated.
China alone is expected to account for half of this displacement, according to the International Energy Agency’s latest global publication, as it continues to dominate global EV sales, manufacturing, and battery production.
This shift is being driven by the rapid uptake of EVs across both developed and emerging economies, and in 2024, global electric car sales exceeded 17 million units — an increase of 3.5 million over the previous year and equivalent to the entire global market in 2020.
The momentum is set to continue in 2025, with sales expected to surpass 20 million vehicles, capturing more than one-quarter of total car sales worldwide, the IEA stated.
Saudi Arabia is no stranger to the global EV transition. As part of its Vision 2030 plan to diversify the economy and reduce reliance on oil, the Kingdom aims for 30 percent of vehicles in Riyadh to be electric by the end of the decade.
The Saudi Public Investment Fund holds a 61 percent stake in US-based Lucid Motors, and the Kingdom has also launched its own EV brand, Ceer.
In its latest report, the IEA said: “Across all vehicle modes, the deployment of EVs replaces the use of more than 5 million barrels of oil per day globally in 2030, an important energy security consideration. Half of these savings are the result of EV adoption in China.”
As EV adoption expands across vehicle types and regions, the cumulative effect on oil demand is becoming increasingly significant.
China leading the way
China remains at the center of this transformation. In 2024, the country sold more than 11 million electric cars — representing nearly half of all domestic car sales — and is projected to reach a 60 percent EV sales share in 2025.
By the end of the decade, EVs are expected to account for 80 percent of all new car sales in China.
Europe and Southeast Asia are also playing crucial roles. In Europe, stricter carbon dioxide emissions targets are forecast to increase the share of EVs to nearly 60 percent of all car sales by 2030, though this is slightly lower than previous forecasts.
In Southeast Asia, strong policy support and emerging domestic manufacturing capacity are projected to lift EV sales to 25 percent by 2030.
Electrification in the region is even more pronounced for two- and three-wheelers, with nearly one in three expected to be electric by the end of the decade.
In contrast, the US is expected to see more modest growth. Based on current policies, EVs are projected to reach just 20 percent of new car sales by 2030 — significantly below earlier expectations.
While US electric car sales rose 10 percent in 2024 to reach a 10 percent market share, and are on track to grow further in 2025, the long-term trajectory has been tempered by policy uncertainty and higher vehicle price premiums compared to internal combustion engine vehicles.
“Emerging markets in Asia and Latin America are becoming new centers of growth, with electric car sales jumping by over 60 percent in 2024 to almost 600,000 – about the size of the European market 5 years earlier,” the report said.
Brazil saw EV sales more than double to 125,000 vehicles, capturing more than 6 percent of new car sales, the report stated.
In Southeast Asia, EVs accounted for 9 percent of the market, with higher penetration rates in countries like Thailand and Vietnam.
“Sales in Africa also more than doubled, too, mostly thanks to growing sales in Egypt and Morocco, though electric cars still represent less than 1 percent of total car sales across the continent,” the report said.
Saudi Arabia’s drive to EV growth
Saudi Arabia’s EV ambitions have seen PIF investing over $10 billion in Lucid, which built its first international plant in King Abdullah Economic City, marking a critical step in domestic EV manufacturing.
Ceer, being developed with Taiwan’s Foxconn, will form a crucial part of the Kingdom’s goal of producing 500,000 EVs annually by 2030.
To support this growth, Saudi Arabia plans to deploy 5,000 fast chargers by 2030 and is expanding its renewable energy portfolio to power EV infrastructure sustainably.
While absent from the latest global EV outlook, Saudi Arabia’s investments signal a strategic shift in preparation for a lower-carbon future and the long-term impact of EVs on oil demand.
Oil out, batteries in
As EV adoption accelerates globally, the displacement of oil use is expected to intensify.
Two key segments — light-duty passenger vehicles and heavy-duty trucks — are converging on tipping points for oil substitution.
In China, where battery electric trucks have already reached total cost of ownership parity with diesel in certain applications, electric truck sales doubled in 2024 to 75,000 units, accounting for over 80 percent of the global market.
By 2030, EV trucks in Europe and the US are also projected to achieve TCO parity for long-haul applications, further contributing to the reduction in oil consumption.
Battery costs — an important driver of EV affordability — continued to decline sharply in 2024, particularly in China where prices fell by 30 percent, compared to a 10 percent to 15 percent drop in the US and Europe.
Low prices of critical minerals and increasing manufacturing efficiencies have also contributed to making EVs more economically attractive.
In emerging markets, Chinese EVs are enabling faster market penetration through lower price points.
In Thailand, the average electric car is now priced on par with ICE models, and in Brazil, the price gap narrowed from over 100 percent in 2023 to 25 percent in 2024.
Similarly, in Mexico, the premium dropped from more than 100 percent to around 50 percent as Chinese vehicles accounted for two-thirds of EV sales.
Trade and industrial policy developments could affect the pace and scale of this oil displacement.
Several countries are introducing or considering tariffs on Chinese EVs, prompting manufacturers to diversify export markets or increase overseas production.
While lower oil prices could narrow the cost savings between EVs and internal combustion engine vehicles, the former are expected to remain competitive under a wide range of scenarios.
Even at benchmark oil prices of $40 per barrel, home-charging in all major markets would offer significant savings compared to conventional fueling.
In China, where public fast-charging costs are about twice that of home-charging, EVs still provide a cost advantage over petrol-powered vehicles.
