Efficient car engines, EVs will dent global oil demand: BNEF

Oil demand will face a bigger threat from fuel-efficient engines than from electric vehicles (EVs) over the next two decades, Bloomberg New Energy Finance (BNEF) said in a recent report.

Engine and other vehicle improvements that increase the distance vehicles can travel per unit of fuel will erode global oil consumption by 7.5 million barrels a day by 2040, more than the 6.4-million-barrel decline due to electric vehicles, it added.

However, demand from passenger cars will peak in 2022 before falling to 15.9 million barrels a day from 24 million now.

“Improvements in the fuel economy of the internal combustion engine and the increasing uptake of passenger electric vehicles are set to have a profound effect on the future of oil in the transport sector,” BNEF analysts said in the report.

According to the BNEF, regulatory standards, improvements in engine design and greater integration of hybrid technologies will lead to an increase in the average efficiency of new internal-combustion engine cars sold in all regions over time.

"While the erosion in demand because of the transformation in how people travel on road will begin slowly, it will accelerate after 2030 as EVs rapidly become more popular."

More than half of all new car sales and a third of the planet’s automobile fleet — equal to 559 million vehicles — will be electric by 2040, the report said.