Goldman Sachs Says EV Surge Could Cut Global Oil Demand by Late 2027

On June 22, 2026, Reuters reported that Goldman Sachs said accelerating electric vehicle adoption following an oil supply shock related to the Strait of Hormuz could reduce global oil demand by as much as 0.32 million barrels per day by late 2027.

In a recent note, the bank said global EV market penetration rose by 3.4 percentage points to 26.1% last month, marking the second-highest level ever recorded.

Goldman Sachs outlined two potential scenarios for how increased EV adoption could affect future oil demand.

Under its “Temporary Acceleration” scenario, which assumes regional EV adoption rates remain at their May 2026 levels, the bank estimates global oil demand could decline by approximately 0.13 million barrels per day by December 2027.

Under its more aggressive “Persistent Acceleration” scenario, which assumes EV adoption continues to grow at a pace consistent with trends observed between February and May 2026, the reduction in oil demand could reach roughly 0.32 million barrels per day during the same period.

Goldman Sachs highlighted the important role of electric two- and three-wheelers, particularly in India, Vietnam, and China. These vehicles account for the majority of EV sales in those countries and can displace between one-third and one-half as much fuel consumption as a passenger electric vehicle.

The bank also noted that EV adoption is increasing across most major markets. Twelve of the world’s 15 largest EV markets recorded higher penetration rates, with China leading the gains after its EV adoption rate increased by 11.4 percentage points.

BloombergNEF: Global EV Sales Expected to Reach Another Record in 2026 Despite Slowing Growth in Some Major Markets

BloombergNEF’s Electric Vehicle Outlook 2026 projects another record-breaking year for electric vehicle adoption, with more than 23 million passenger EVs expected to be sold globally in 2026, an 11% increase from 2025 levels.

The report forecasts that 27% of all new cars sold worldwide this year will be electric, a significant increase from just 9% five years ago. By 2035, BloombergNEF expects more than half of all new passenger vehicles sold globally, or 52%, to be electric.

Several factors are driving continued EV growth, including declining lithium-ion battery prices, the introduction of more affordable models, and accelerating adoption in emerging markets. BloombergNEF also noted that higher gasoline prices associated with the Iran war have increased consumer interest in EVs, although the firm said it is still too early to establish a direct link between the conflict and higher EV sales.

China remains the world’s largest EV market and accounted for 63% of global EV sales in 2025. Within China itself, electric vehicles now represent nearly 64% of all new passenger vehicle sales. BloombergNEF expects China to remain dominant throughout the decade, accounting for 52% of global EV sales by 2030.

Emerging markets are becoming increasingly important drivers of growth. EV adoption rates in several countries now exceed those of the United States. In 2025, nearly half of all vehicles sold in Singapore were electric, while EVs represented 39% of sales in Vietnam and 27% in Thailand. Turkey also experienced rapid growth, with EV sales more than doubling and electric vehicles accounting for 22% of total vehicle sales.

The report attributes much of this growth to efforts aimed at reducing dependence on imported oil, openness to Chinese automakers, and supportive industrial policies. Chinese brands represented 88% of EV sales in Thailand during 2025.

However, BloombergNEF noted that strong EV adoption can occur without relying heavily on Chinese manufacturers. In Vietnam, passenger EV sales nearly doubled to 179,000 units in 2025, with domestic automaker VinFast accounting for 98% of those sales. In Turkey, domestic automaker Togg became the country’s second-largest EV brand behind BYD.

The continued rise of EVs is expected to significantly alter global oil consumption patterns. BloombergNEF projects that road fuel demand will peak in 2029. Under its Economic Transition Scenario, fleet electrification and fuel efficiency improvements could eliminate 25.8 million barrels per day of road fuel demand by 2040. This reduction would be four times larger than the combined oil displacement expected from the aviation, marine, and petrochemical sectors.

Despite the positive global outlook, BloombergNEF lowered both its short- and long-term EV adoption forecasts for the second consecutive year. The adjustment is largely due to slower growth in China and a sharp slowdown in the United States.

In China, stricter eligibility requirements for incentives and an increasingly mature and competitive market are contributing to slower growth. In the United States, EV sales are projected to decline 19% in 2026 following the rollback of federal support measures, including changes to national fuel economy targets and reductions to Inflation Reduction Act incentives. BloombergNEF now expects only 24% of the U.S. vehicle fleet to be electric by 2040.

Affordability remains one of the biggest barriers to adoption in many regions. In Germany, Italy, and the United Kingdom, battery electric vehicles still cost about 17% more than comparable internal combustion engine vehicles. However, this gap has narrowed considerably from the 34% premium recorded in 2024.

Battery costs remain the largest contributor to EV pricing. While countries around the world are investing in local battery manufacturing, China continues to maintain a substantial cost advantage due to its mature supply chain, lower input costs, favorable financing conditions, and intense competition among manufacturers. North America and Europe are expected to face higher battery prices for the foreseeable future because of differences in production scale and supply chain integration.

BloombergNEF’s Head of Electric Vehicles, Aleksandra O’Donovan, said that EV adoption continues to advance globally, but the pace of the transition is becoming increasingly uneven due to policy changes in the United States and a maturing Chinese market. She added that long-term electrification trends remain strong thanks to improving vehicle economics, declining battery costs, and rapid growth in emerging markets.

The report also highlighted that fleet turnover remains a major challenge. BloombergNEF does not expect electric passenger vehicles on the road to outnumber internal combustion vehicles until 2047. By 2040, more than one billion gasoline and diesel passenger cars will still be operating worldwide. Combustion engines are also expected to remain dominant in other segments, accounting for over 80% of trucks, 52% of vans, 48% of two-wheelers, and 42% of buses globally.

Andrew Grant, BloombergNEF’s Head of Intelligent Mobility, said that slow vehicle replacement cycles will continue to challenge policymakers pursuing net-zero transportation goals. However, he noted that the transition still presents enormous investment opportunities, including roughly $2.2 trillion in annual vehicle spending by 2035 and another $524 billion in charging infrastructure investments between now and 2035.

Additional findings from the report include:

EV electricity demand is expected to grow from 367 terawatt-hours in 2025 to more than 2,700 terawatt-hours by 2040. Accommodating that demand will require more than $800 billion in grid investments globally.

Demand for stationary battery storage between 2025 and 2035 has increased by 27% compared to BloombergNEF’s previous outlook, attracting greater interest from automakers including General Motors, Ford, and Volkswagen.

Electric buses continue to lead transportation electrification, with more than half of municipal bus sales already electric in over 20 countries. That figure is expected to rise to 60% by 2030.

Electric vans are projected to account for 34% of global van sales by 2030, while medium- and heavy-duty electric trucks are expected to reach approximately 17% of global sales.

Robotaxis also continue to advance, although commercialization remains in its early stages. BloombergNEF noted that Waymo vehicles operating in the United States reached an annualized driving rate of nearly 110,000 kilometers per vehicle by December 2025, far exceeding the utilization rates of traditional shared vehicles.