The oil industry should take note of the “very strong and fast-developing” new global energy economy driven by electrification of transport, the International Energy Agency (IEA) said on Wednesday.

Speaking at the launch of the IEA’s annual Global EV Outlook report, executive director Fatih Birol warned the road transport electrification wave will displace 5.2 million barrels of oil per day in 2030. Currently, the sector accounts for 40% of the total oil demand globally.

The agency, which has long been a No.1 adviser for the global energy industry, says there are strong signals about the future pace of oil demand. Birol recommends oil producers to consider the current data-point ahead of committing to further long-lead investment decisions, Kallanish notes.

“The internal combustion engine has gone unrivalled for over a century, but electric vehicles are changing the status quo,” he adds. “Cars are just the first wave: electric buses and trucks will follow soon.”

The IEA estimates global electric cars sales will increase by 35%, after a record year in 2022, to reach 14 million units. This “explosive growth” will lead to a market share of 18% by year-end, following a boom from 4% in 2020 to 14% in 2022.

Yet, there may be an additional help to accelerate EV uptake, with part of the oil industry pushing for higher oil prices, Birol adds. He says the switch to EVs is no longer exclusively related to climate change. EVs are now a solution to governments’ industrial strategies and economic growth, as well as energy security, lowering reliance away on the oil industry and its geopolitics.

Although the overwhelming majority of electric cars sales to date are mostly concentrated in the Chinese, European and US markets, there have also been “promising signs” in other regions. Sales in India and Indonesia more than tripled last year, and they more than doubled in Thailand. Fresh government policies and private investment are set to drive further growth in these emerging markets, the IEA forecasts.

The global EV future comes with a number of uncertainties, but the IEA describes it as an “upbeat outlook.”