Fuel demand worldwide unlikely to drop despite anticipated alternative fuel vehicles market surge

The fact that traditional fuel vehicles will be phased out and replaced by alternative-fuel vehicles (AFVs) is no longer in question. However, how quickly this transition is going to take place is another story. In fact, while countries in Europe and Asia are still experiencing a drop in fuel demand, other areas such as North America are expected to see an increase by 2030. These countries are still struggling to build adequate electric vehicle (EV) charging infrastructure and many consumers don’t yet see the advantage of having an EV, which slows down market growth, according to GlobalData’s latest market analysis.

Svetlana Doh, Upstream Oil & Gas Analyst at GlobalData, comments: ‘The fact that transition to non-fuel cars is supported by many governments, major car manufacturers and oil and gas companies helps to keep overall fuel demand relatively constant to the end of the decade. However, while in Europe and Asia fuel demand is expected to drop by 5% each by 2030, some other regions are still expected to see a rise in fuel demand. Indeed, in North America, for example, fuel demand is going to see around 3% increase by 2030.’

Doh continues: ‘Oil and gas operators are trying various strategies to find their own niche in the EV business. For instance, Shell has a most ambitious plan of increasing the number of EV charging points to almost half a million by 2025, while Total is planning to provide a whole value chain from power generation to manufacturing batteries for EVs. Meanwhile, Woodside Petroleum is entering the business of supplying hydrogen to charging stations.’

The transportation sector currently accounts for almost a quarter of CO₂ emissions. The process of supporting replacement of traditional gasoline-powered cars with EVs on a government level is a logical step. 

Doh concludes: ‘In order to meet their own deadlines on carbon emissions, many countries have been in the process of developing policies favouring EV business over gasoline/diesel-powered cars by introducing incentives and tax reductions. For example, in the US, car manufacturers can apply for loans (up to 30%) to revamp their factories for production of AFVs. Currently, Western and Central Europe, Japan, Korea and China are leading the transitioning to EVs.’

According to GlobalData, Global EV and plug-in hybrid vehicle (PHEV) markets are estimated to account for 20% of new car sales by 2030, which is more than 20mn new vehicles, according to GlobalData. EV and PHEV sales are expected to climb to 27.5mn by 2035 – 24% of all new vehicles to be sold worldwide. China, the US and Western European countries are estimated to have the highest share of alternative fuel vehicles in 2030, with 25.2%, 16.1% and 31.7% of new sales, respectively.

Figure 1: Oil and gas companies’ strategies in electric and hydrogen fuel vehicles
Source: GlobalData