BP: Electric Vehicles to Cut Oil Consumption

The emergence of self-driving electric cars and travel sharing are set to dent oil consumption by 2040, oil and gas giant BP said, forecasting a peak in demand for the first time.

In its benchmark annual Energy Outlook, BP forecast a 100-fold growth in electric vehicles by 2040, with its chief economist Spencer Dale painting a world in which we travel much more but instead of using private cars, we increasingly share trips in autonomous vehicles, Reuters reported.

While travel demand more than doubles over the period as economies of countries such as China and India grow, higher oil demand will be more than offset by increased engine efficiency standards as well as the larger number of EVs and shared traveling. Unlike many other forecasts, including previous BP Energy Outlooks, which looked solely at the growing share of EVs in the car fleet, BP this year focused on the share of vehicles kilometers powered by electricity.

Under BP’s Evolving Transition scenario, which assumes that policies and technology continue to evolve at a speed similar to that seen in the recent past, some 30% of car kilometers are powered by electricity by 2040 from almost zero in 2016. At the same time, the number of EVs is set to increase from 3 million today to over 320 million by 2040, representing roughly 15% out of a total car fleet of 2 billion.

The gap between the increasing number of EVs on the road and the kilometers powered by electricity is due to the expected growth in so-called shared mobility by EVs, Dale said.

“Cars will be used much more intensely over time,” Dale told reporters in a briefing on Monday ahead of the release of the report on Tuesday.

As a result, fuel demand from the car fleet is forecast to dip to 18.6 million barrels per day in 2040 from 18.7 million bpd in 2016, when it represented around one-fifth of total oil demand, according to BP.

BP expects autonomous vehicles to become available in the early 2020s. Their initial high cost means the vast majority of the cars will be bought by fleets offering shared mobility services.

The average electric car is expected to be driven about two and a half times more than an internal combustion car, according to Dale.