A faster transition to electric vehicles (EV) could reduce global oil demand by 5 million barrels per day (b/d) by 2040, according to a Wood Mackenzie report issued August 13.
The energy research firm projects global oil demand at 99 million b/d in 2040 if electric vehicle adoption accelerates, compared with 104 million b/d in its base case.
“EV sales are growing at radically different speeds around the world. In the US, passenger EV sales in the first five months of 2026 were down 33% from the same period of 2025, after tax incentives were withdrawn. In Europe, EV sales were up 30% over the same period. In China, a steep downturn in gasoline car sales lifted the market share of EVs from 33% in Q2 2025 to 42% in Q2 2026, despite a small fall in volume,” the report said.
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The faster EV adoption would also require more investment in charging networks and electricity systems. Wood Mackenzie estimates China would need another 4 million public charging ports by 2040, requiring about US$200 billion in additional investment above its base case.
Europe would need another 2.7 million charging ports, representing about US$108 billion in additional investment. The U.S. would require about 500,000 additional ports.
According to WoodMac, “if electricity suppliers and regulators can shift EV charging to periods of ample power supply, grids can be kept stable and charging costs competitive even as power demand from EVs rises”.
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The firm said that if achieved, the impact would be felt most sharply in refining. It estimates that a 5 million b/d reduction in transport fuel demand could lead to the early closure of about 40 refineries, based on an average refinery capacity of 200,000 b/d.
“Refining is a capital-intensive sector in which profitability relies upon high asset utilization. Falling demand lowers utilization, driving capacity rationalization as sites become loss-making…Refineries in Organization for Economic Co-operation and Development (OECD) countries are most at risk due to their high energy costs and carbon prices,” WoodMac explained.
