Many carmakers, and not just Tesla, have been developing electric vehicles, betting on the expected continuous rise of battery-powered cars in the future. Now it’s not only carmakers that predict that EVs will make up a substantial part of new vehicle sales in a decade or two—oil majors are admitting it too.

France’s Total SA expects EVs to account for up to 30 percent of new car sales by 2030, which could lead to oil-based fuel demand peak in the 2030s, Total’s Chief Energy Economist Joel Couse said at Bloomberg New Energy Finance conference earlier this week.

Couse reckons that after 2030, fuel demand “will flatten out” and “maybe even decline”, in what Colin McKerracher, head of advanced transport analysis at Bloomberg New Energy Finance, described as the “most aggressive” projection by an oil major about the rise of EVs.

Other oil majors have their projections about peak oil demand as well, ranging anywhere from as early as the next decade, to nowhere in sight. At the same time, analysts believe that EV sales will only rise, but the pace will greatly depend on incentives and government policies. Meanwhile, many carmakers are preparing for the EV surge and entering the battery-powered car market.

Germany’s Volkswagen AG, which is still paying penalties and settling civil claims following the diesel emission scandal, plans to launch four affordable Volkswagen-branded EVs and an Audi EV crossover in the coming years. Premium carmaker Volvo said in mid-April that it would build its first fully electric car in China, which will be available for sale in 2019, and exported globally from there. Related: Is The Market Running Out Of Patience With OPEC?

According to Frost & Sullivan, the global EV market is expected to grow by 25.6 percent to 950,000 sales this year. The 2017 launches of new EV models will be around 25, with Chevrolet Bolt and Tesla Model 3 being the most anticipated, Frost & Sullivan says. Incentives and subsidies, substantial investment by original equipment manufacturers, new entrants, and lower battery prices are driving the double-digit growth.

Still, challenges that manufacturers need to address include the lack of standard charging technology, the short-distance range, and lack of a fixed business model, according to Frost & Sullivan. The analysts’ underlying conclusion is that “continued incentives and subsidies will be crucial market drivers for growth.”

France’s Total sees that growth as potentially leading to peak oil-based fuel demand in the 2030s. Other majors also have ideas about the impact of EVs on global oil demand.

Shell’s chief executive Ben van Beurden said in March that oil demand could peak as early as in the next decade.

“We have to acknowledge that oil demand will peak, and it could already be in the next decade. It could happen. There are people who believe it will grow forever but I don’t subscribe to that,” van Beurden told the CERAWeek energy forum, as quoted by The Telegraph.

BP, in its Energy Outlook 2017, said that an extra 100 million battery EVs could lower oil demand by around 1.4 million bpd. Still, the UK oil major sees oil demand peak in the mid-2040s, with many drivers to factor in, including global GDP growth, efficiency trends, and climate policy. According to BP, the penetration of the EVs will depend on how fast battery costs would continue to drop; the size and durability of government incentives; how conventional cars’ efficiency would improve; and how consumer preference towards EVs would shift. Related: New Oil Discoveries Slump To 2.4 Billion Barrels In 2016

Not unsurprisingly, Amin H. Nasser, president and CEO of Aramco—the oil powerhouse of OPEC’s largest producer and exporter Saudi Arabia—said at an oil summit in Paris this week:

“The conclusion is clear: oil demand will continue to grow… in absolute terms… at fairly healthy levels… for the foreseeable future. It is why I believe ‘Peak Oil Demand’ is not in sight for at least the next few decades.”

The EVs may be increasingly popular in Western Europe and the U.S., but growing population and growing income in India, China, and other emerging economies are still demanding oil-based fuels for the cars their residents drive. India’s oil consumption growth, for example, reached a record-level 11 percent last year as an increasing urban population with rising income fueled greater use of cars, trucks, and motorbikes.

Regardless of when peak oil demand will occur, electric vehicles and their rise are a reality that oil majors are no longer ignoring.

By Tsvetana Paraskova for Oilprice.com

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