European EV car sales build lead over diesel as region's oil demand shrinks

Battery-electric cars consolidated their market position as the second-most-popular choice for buyers in 2023 as the share of diesel and gasoline-powered vehicle sales continued to shrink below 50% of the market, according to the European Automobile Manufacturers Association, or ACEA.

European sales of fully-electric cars, or BEVs, averaged 16% of total car sales in the region last year, above diesel car's share of 12% and below gasoline-powered cars which made up 36% of total sales, ACEA said. Diesel car sales saw their market lose the most ground in 2023, from 15% to 12%, while gasoline cars slipped just 1 percentage point to 36% of total sales, according to the data.

In December, however, BEV sales fell for the first time since April 2020, reflecting a slowdown from a post-pandemic surge in EV cars in 2022.

"The decrease can be attributed to a comparatively robust performance in December 2022 and a significant downturn in Germany (-47.6%), the largest market for this power source," ACEA said.

Sales of plug-in hybrids also fell in 2023 leaving the combined sales of all electrically-chargeable cars little changed at 23% of the market last year. Electric hybrid (HEV) car sales saw strong growth, however, rising to make up 26% of sales.

While sales of full-battery electric passenger vehicles in Europe overtook diesel-powered cars for the first time in the first half of 2023, diesel is expected to remain the fuel of choice for harder-to-electrify heavy transport for years to come due to the energy density limitations of batteries. In 2022, nearly 66,000 electric buses and 60,000 medium- and heavy-duty trucks were sold worldwide, representing about 4.5% of all bus sales and 1.2% of truck sales worldwide, according to the International Energy Agency. Most of the sales were in China.

S&P Global Commodity Insights estimates that diesel and gasoil demand in Western Europe's transport sector peaked at around 4.4 million b/d in 2018 and is forecast to fall to 2.79 million b/d by 2040 reflecting the region's shift to electric mobility.

Oil displacement

Road transport is responsible for more than 40% of global oil demand. Diesel demand in Western Europe's transport sector is expected to average 4.25 million b/d this year, and gasoline demand is expected to average 1.67 million b/d, according to analysts at S&P Global, before shrinking to 3.94 million b/d and 1.23 million b/d respectively by 2030.

Last year, the IEA estimated that oil displacement by electric cars, trucks buses, and other EVs globally will reach 1.8 million b/d in 2025, under a basecase scenario, before surpassing 5 million b/d in 2030 when 10 times more electric vehicles will be on the roads than today.

Passenger cars will make up 70% of the total, however, with commercial vehicles accounting for 1.5 million b/d of the projected oil displacement. As a result, global demand for oil-based road transport fuels will peak by 2025, the IEA said.

By 2030, S&P Global expects the global EV fleet to displace some 3.3 million b/d of gasoline and diesel fuel, up from around 385,000 b/d in 2022.