Energy volatility could fast-track global EV adoption to 50% above base case, Wood Mackenzie finds

China leads with 29.9M in annual sales by 2040, US must make bolder bets on EV technology to keep pace

LONDON/HOUSTON/SINGAPORE, Aug. 13, 2026 (GLOBE NEWSWIRE) — INSIGHT FOR IMMEDIATE RELEASE

LONDON/HOUSTON/SINGAPORE, 13 August 2026 – As the Middle East conflict continues to drive volatility in global oil markets, Wood Mackenzie’s base case already projects EVs jumping from 4% of the global fleet today to 25% by 2040.

But the firm’s latest Horizons report identifies three factors that could jolt EV sales even higher: governments boost EV supply chain investment to strengthen resilience to oil market shocks, high fuel prices prompt more consumers to switch to EVs and EV technologies advance faster than expected.

“If these forces converge all at once, the effect on EV adoption could be dramatic,” said David Brown, Director, Energy Transition Research at Wood Mackenzie. “Our electric shock scenario models what happens when policy, consumer behaviour and technology all move in the same direction, quantifying the implications for commodities and power markets.”

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According to the Horizons report, “ Electric Shock: How electric vehicles could hit the accelerator ”, this “electric shock” scenario could see global oil demand fall to 99 million barrels per day (mb/d) by 2040, 5 mb/d below the base case and roughly its current level, potentially leading to the early closure of around 40 oil refineries worldwide.

China is the global leader in EVs, reaching 42% of Chinese car sales in Q2 2026, up from 33% just a year earlier. The electric shock scenario would accelerate that momentum further. Additional Chinese policy measures including new restrictions on gasoline consumption, full purchase tax exemptions and larger purchase credits could cut the total cost of ownership for EVs by about 30%, pushing annual sales from 8.9 million in 2025 to 29.9 million by 2040. Chinese EV manufacturing capacity could grow by 50% by 2035, with cost advantages enabling aggressive expansion across the Global South.

The contrast with the United States is stark. Without advanced battery technologies and competitive supply chains, the US auto sector risks ceding its home market to international competitors and falling behind internationally. US passenger EV sales in the first five months of 2026 were down 33% from the same period of 2025 following the withdrawal of tax incentives, and EVs currently make up just 3% of the vehicle fleet.

Under the electric shock scenario and facing a growing wave of EVs globally, US policy responds decisively with targeted policy support that could attract foreign direct investment into EV supply chains and new greenfield plants deploying modular technologies. These measures could bring EV total cost of ownership parity with gasoline vehicles forward to 2031, two years ahead of the base case, leaving the US EV fleet 51% larger than the base case by 2040.

Europe enters this scenario with strong decarbonisation ambitions but significant headwinds, some 60,000 auto sector layoffs were announced in 2026 alone.