WASHINGTON, Aug 13 - A new analysis from Wood Mackenzie argues that three emerging economic dynamics could significantly boost global electric vehicle production, with consequences for oil demand, electricity systems and metal markets.
The report isolates three primary drivers: oil supply shocks associated with conflicts in petroleum-producing countries Russia and Iran that would prompt governments to accelerate investment in supply chains; elevated fuel prices that push consumers toward EVs; and technological innovation in battery systems.
Battery progress and policy options
Wood Mackenzie notes rapid progress in Chinese battery technologies, citing developments such as 5-minute charging and work on both sodium-ion batteries and lithium iron phosphate batteries. The report suggests that Western governments could use public support to boost domestic innovation in response.
Policymakers may also conclude that wider licensing of Chinese EV technology is necessary to increase resilience against oil-price shocks while domestic supply chains are scaled up.
Regional outlooks for oil demand and EV market share
On oil, the report projects global demand could decline to 99 million barrels per day by 2040, down from a level above 100 million barrels per day at present.
Wood Mackenzie’s regional forecasts show divergent EV penetration. In the United States, abundant domestic oil supplies are expected to limit the pace of electrification: EV market share is projected to rise from 3% today to 20% by 2040. In Europe, where import dependence on oil is higher, EV adoption is expected to accelerate from 3% in 2025 to 35% by 2040.
"There’s this tidal wave of EV innovation outside of the US, and in this scenario, the United States has to take electrification of transport seriously and fund new EV supply chains, new EV manufacturing, really to stay competitive with EV imports from other countries and to stay competitive abroad," said David Brown, one of the report’s authors.
Metals supply and grid management
The analysis finds that mineral supplies could support roughly 50% growth in the global EV fleet by 2040, but the limiting factor will be how rapidly new metal supplies can be developed. The report states the world will require an additional $45 billion of investment in metals over the next decade and singles out copper as the critical bottleneck.
On the electricity side, Wood Mackenzie recommends expanding programs for "managed charging" so EV charging is shifted toward periods with ample power availability.
The report frames these forces as interconnected: supply shocks and high fuel prices spur policy responses and consumer behavior that favor EVs, while technological advances and targeted investments determine how quickly the transition reshapes markets for oil, power and critical metals.