Gasoline Demand Has Peaked, Global Forecaster Says

The forecast comes as auto makers have pivoted recently to boost their EV fleets, after years of industry skepticism about whether car buyers would ever embrace fully electric models. General Motors Co. said it would stop selling gas-powered vehicles by 2035. Volvo Cars of Sweden has said it would be all-electric by 2030.

The world will have 60 million electric vehicles on its roads by 2026, the IEA said, up from 7.2 million in 2019. The agency tracks EV trends closely as an important signal for gasoline and crude-oil demand.

The shift toward electric vehicles has been driven by government regulation, hefty incentives in developed countries and broader consumer acceptance of the technology, in part thanks to popular models like those sold by Tesla Inc. EVs still make up a small proportion of the world’s overall fleet, and auto makers say they expect to see growing demand for gas-burning internal combustion engines, particularly in the developing world, for years to come.

The forecast comes at a time when the pandemic has upended global fuel consumption, raising questions about whether it will change the world’s energy mix more generally in years to come. Energy watchers have debated for years the timing of so-called peak oil, a point at which demand for crude will start to wane. Amid the demand-crushing pandemic that started last year, some forecasters, including those at the Organization of the Petroleum Exporting Countries, have said that day may have already dawned in the developed world.

The IEA said Wednesday it sees global crude demand recovering, reaching as much as 104 million barrels a day by 2026, up about 4% from 2019 levels, thanks to the developing world. Economic powerhouses such as China, India and other Asian countries will account for 90% of the net increase in oil demand over the coming five years, the agency said.

But for the first time, the agency said it no longer forecasts a complete bounce back in demand for gasoline—the product that for years underpinned the world’s thirst for crude.

“We do not think gasoline consumption will come back to 2019 levels again,” said the IEA’s Executive Director Fatih Birol. Global jet fuel demand, meanwhile, won’t recover to pre-pandemic levels before 2024, the agency said.

Amid widespread government-imposed coronavirus restrictions on travel, the IEA said daily gasoline demand dropped by a record 2.9 million barrels in 2020, down more than 10% from the 26.6 million barrels a day burned in 2019.

The uptake of EVs isn’t the only thing driving demand down. The IEA and the U.S. Department of Energy, in a report last month, cited the improving fuel efficiency of gas-burning cars. The U.S. agency said it expects American gasoline consumption in the transportation sector to peak in 2022.

The IEA said global gasoline demand will start to return as economies open back up. But the shift to EVs in richer countries is now accelerating at such a pace that demand shortfalls there will outpace expected growth from developing countries like Indonesia, India and China.

Worldwide plug-in electric vehicles accounted for about 4.2% of new car sales last year, with sales rising 43% to 3.24 million vehicles, according to ev-volumes.com, a research group that tracks EV sales. In Europe, where EV sales are booming, plug-in electric vehicles accounted for 10.5% of new cars sold in the fourth quarter of 2020.

“E-mobility has won the race,” Volkswagen Chief Executive Herbert Diess told reporters this week while unveiling big new investments in car-battery factories and electric-charging stations.

Mr. Diess said battery electric vehicles would account for 50% of Volkswagen new car sales world-wide by 2030. He said, though, that in some markets conventional internal combustion engine vehicles would continue to dominate.

“We will keep selling ICEs in some regions longer than in others,” he said. “E-mobility will come at different levels of speed globally depending on local policies and the supply of CO2-free energy.”

Write to David Hodari at [email protected] and William Boston at [email protected]