A rapid uptick in electric vehicle (EV) usage—especially in the U.S., the EU and China—could displace up to 12 MMbbl/d of oil demand by 2035, the International Energy Agency (IEA) said in a new June 21 report reflecting its most optimistic climate goals scenario.

Policy developments, such as new emissions standards adopted in the past year by the U.S., Canada and the EU, continue to support expectations for rapid electrification.

“If all the national energy and climate targets made by governments are met in full and on time, as in the Announced Pledges Scenario (APS), two-thirds of all vehicles sold in 2035 could be electric,” the IEA said.

Industrial incentives—such as those in the U.S.’ Inflation Reduction Act (IRA), the EU’s Net Zero Industry Act, China’s 14th Five-Year Plan and India’s Production Linked Incentive (PLI) scheme—also incite adding value and creating jobs across EV supply chains in those economies, the IEA said.

The IEA’s latest report, the Stated Policies Scenario (STEPS), is less ambitious. The scenario it describes is based off of existing policies and measures, as well as firm policy ambitions and objectives that have been legislated by governments around the world.

Under STEPS, an estimated 6 MMbbl/d of oil demand could be displaced in 2030, while 10 MMbbl/d could be displaced by 2035.

The Paris-based agency said policy support will boost industry investment and build confidence that rapid electrification of EVs of all types—cars, vans, trucks, buses and two- or three-wheelers—will continue over the short and medium term.

“As soon as 2030, almost one in three cars on the roads in China is electric in [the STEPS analysis], and almost one in five in both the U.S. and EU,” the IEA said. “Every other car sold globally in 2035 is set to be electric based on today’s energy, climate and industrial policy settings,” significantly impacting the global car fleet, the agency said.

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The IEA expects electric car sales to continue to rise this year. Sales could reach around 17 million in 2024, accounting for more than one in five cars sold worldwide. This compares to global sales of electric cars that neared 14 million in 2023, reaching 18% of all cars sold.

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