The oil demand of the world, however, will not be as robust as the sales of passenger and commercial vehicles
By 2040, the number of cars zipping on earth will almost double to 2 billion, more than one car every five persons on earth. In 2016, there were 1.1 billion cars on the planet. In the same span of time, the number of commercial vehicles will more than double to 463 million from 224 million, according to an OPEC (Organization of the Petroleum Exporting Countries) projection.
However, the jump in the number of cars will not translate into an increase in the oil consumption. The total oil consumption of the world is expected to reach the peak of 26.7 million barrels per day in 2030 and will go down slightly to settle at 26.4 million barrels per day (mbpd) in 2040. Currently, the consumption stands at 24.4 mbpd.
Two-fold growth in number of vehicles
Currently, the world is adding 75 cars per minute or 1.18 cars per second. Resultantly, in 2040, the passenger vehicle saturation will be one for every five people, from currently one for every seven people.
On the back of higher population and economic growth rates, rising income levels and increasing urbanisation, the developing countries will see comparatively much higher growth in the number of passenger cars. Of the total 954 million cars which will be added in the next 24 years, 827 million or 87 percent of the total will be in developing countries.
India and China will lead the way in the growth of number of cars with an addition of 157 million and 306 million passenger vehicles, respectively. India will see an almost eight-fold growth in its fleet, from 23 million in 2016 to 179 million in 2040. Comparatively, China’s fleet will grow from 137 million in 2016 to 443 million in 2040, a three-fold growth.
The growth in the commercial vehicle segment will be driven by trade and economic growth, unlike passenger vehicles. But similar to passenger vehicles, the majority of growth will be in the developing countries, nearly 80 percent of total addition of 239 million.
India is expected to lead the commercial vehicle growth with a rate of 6.3 percent, highest in the world. The total fleet in India will be of 59 million in 2040, more than four times of the current number. China, on the other hand, will be another major driver to push the demand for commercial vehicles. The number of commercial vehicles in 2040 in China will be 66 million, up from 24 million in 2016.
The demand for oil is not expected to keep up vis-a-vis the demand for passenger cars or commercial vehicles. The total consumption of oil for passenger vehicle will hover between 24.4 mbpd and 26.7 mbpd.
Translating into litres, the demand will fall from 3.5 litres per car in 2016 to 2.09 litres per car in 2040 (One barel= 159 litres). Despite that, oil will be a major source of fuel for transportation.
The fall in demand can be attributed to an increase in the number of vehicles running on non-conventional fuel and development in technology leading to fuel-efficient cars.
By 2040, the share of sales of electric vehicle will be as high as 35 percent in the OECD America (OECD member countries in the Americas). A similar growth will be seen in OECD Europe and OECD Asia Oceania. China with 29 percent share will be a leader among developing countries.
Legends: NGV- Natural Gas Vehicle, HEV- Hybrid Electric Vehicles, FCV- Fuel Cell Vehicles; DC- Developing Countries, OECD- The Organisation for Economic Co-operation and Development. Source: OPEC World Oil Outlook 2017
India, which is the country with the most aggressive electrification programme of any region, may reach 18 percent of market share for electric vehicles in 2040, says the World Oil Outlook 2017.
Vehicles running on non-conventional fuel will also creep into the commercial vehicles segment, however, not as much as passenger vehicles. Electric commercial vehicles are mainly short distance and urban vehicles which, apart from improved fuel efficiency, may also take advantage of zero emissions and nearly silent operation– an important asset in densely populated areas. Heavy and long route vehicles are likely to stick to petroleum. India, particularly, is expected to have a slow adoption rate with 5-6 percent share by 2040.
Source: OPEC World Oil Outlook 2017
However enthusiastic the growth number may seem to the auto industry, a billion more cars will also come with own sorts of problems. Most of the addition of the cars are expected in the urban centres of the world which are already cramped, particularly in countries like India and China which are two of the most populated countries in the world.Apart from that, the growth will also mean an adverse impact on climate. Many countries, including, India is pushing for green methods of transportation which is a good news. But will these efforts be enough, it needs to be seen.