OPEC Predicts ICE Vehicles Will Dominate Until 2050

The Organization of the Petroleum Exporting Countries (OPEC) has released its annual report, "World Oil Market Outlook 2024," projecting that over 70% of vehicles worldwide will still rely on combustion engines by 2050, despite the anticipated growth of electric vehicles (EVs).

“Electric vehicles are destined to gain a larger market share, but obstacles persist, such as electrical grids, battery manufacturing capacity, and access to critical minerals,” said Haitham Al Ghais, Secretary General, OPEC.

The report indicates that the global number of vehicles will increase from 1.7 billion in 2023 to 2.9 billion by 2050, with a significant portion of this growth occurring in developing economies. In these regions, combustion vehicles will continue to dominate, posing challenges for the electrification agenda.

OPEC's projections are set against a backdrop of rising global oil demand, particularly in the road transport sector, which is expected to see an increase of 4.6 million barrels per day by 2050.

“Billions of people are trying to catch up on access to energy, and many have never owned a car, boarded a plane, or traveled outside their country,” said Al Ghais.

In addition to infrastructural and cost challenges, the report highlights geopolitical tensions and trade barriers as further hurdles for electric vehicle sales. Tariffs imposed by the United States and the European Union on Chinese EVs have impacted their market penetration. As a result, OPEC asserts that while the transition to electric vehicles is gaining momentum, it is unlikely to fully replace combustion vehicles in the near future.

OPEC describes the idea of phasing out fossil fuels by 2050 as a “fantasy.” The organization forecasts a 17% increase in global oil demand from 102.2 million barrels per day (mbd) in 2023 to 120.1 mbd by 2050. OPEC’s new estimates for 2045 predict a demand of 118.9 mbd, up from a previous forecast of 116 mbd. This outlook contrasts sharply with that of the International Energy Agency (IEA), which anticipates a peak in fossil fuel demand within this decade due to the rise of electric vehicles and renewable energy.

During the recent UN climate conference (COP28) in Dubai, there was an agreement to phase out fossil fuels and to triple renewable energy capacity by 2030 in an effort to achieve carbon neutrality by 2050.