Analysis

Ambitious EV growth targets raise UK grid concerns but what of the impact on oil demand?

The UK’s ambitious target to increase electric vehicle (EV) sales to 80% of all new car purchases by 2030 could result in them accounting for up to 5% of total power demand, according to energy analysts at Montel, though there are concerns whether capacity buildout will be adequate.

EV charging at a public charge point

As the UK government works towards a carbon-free grid by the end of the decade, the expected rise in EV adoption presents both opportunities and challenges for the nation’s energy infrastructure. If the sales target is achieved, the National Electricity System Operator forecasts a significant surge in electricity demand, with cars alone accounting for a 143% rise in annual electricity consumption by 2029. The total increase in demand from EVs could add 17.12 TWh to the grid, up from just 7.05 TWh in 2025.

In 2024, the UK experienced a notable increase in EV sales compared to 2023. A total of 381,970 were sold, representing a 21.4% yoy growth and taking market share to 19.6% of all new car registrations, up from 16.5% in 2023.

Despite this progress, the BEV market share fell short of the UK’s Zero Emission Vehicle (ZEV) mandate target of 22% for 2024. To stimulate demand and approach these targets, manufacturers offered substantial discounts, totaling over £4.5 billion during the year—a strategy deemed unsustainable for the long term and impacting future prospects for EV manufacturers in the UK

The increased uptake was echoed on a global scale with global EV sales reaching a record 17.1 million units, marking a 25% increase from 2023, and China led the market with a phenomenal 40% growth yoy.

How is this shift impacting global oil demand?

According to the International Energy Agency (IEA), China’s oil consumption increased by only 180,000 bpd in 2024, less than one-fifth of the growth seen in 2023, and the IEA is forecasting only a slight rebound to 220,000 bpd in 2025. The country’s largest energy producer, China National Petroleum Corp., has predicted that 2025 will see an end to growth in oil demand, suggesting the accelerating shift to electric vehicles is a key factor.

In contrast to this, an optimistic Amin Nasser, Chief Executive Officer of the world’s largest oil company, Saudi Aramco, has spoken confidently of “good demand coming out of China” suggesting that, while EV uptake will erode gasoline demand, the need for chemicals produced from oil will continue expanding.

And, with the EV revolution gaining momentum, Aramco, is looking to play a crucial role in the future of clean transportation. The company has recently announced a strategic move towards sustainable energy technologies with its entry into the lithium market (a vital component in the production of EV batteries), while simultaneously reassuring markets around China oil demand.

Alongside this, Aramco is testing technologies that will increase demand for oil in other areas. It has teamed up with Chevron Lummus Global, a venture to turn up to 80 percent of a barrel of crude directly into chemicals , bypassing the refining stage. EV manufacture requires many such chemicals, so success would see Aramco supplying even more materials to EVs.

“Even with the transition and going to electric vehicles, you need oil as a feedstock to produce the materials that would be required for any transition,” Nasser said. “The growth is still there.”

And Aramco is certainly putting its money where its mouth is, having has invested in several refineries in China that can pivot to increasing production of chemical products while reducing transport fuel output. Taking a 10%-20% stake while securing supply contracts for around 60% of the facility’s oil needs, locks in long-term demand according to Nasser.

Whether Aramco’s strategic moves are driven by a desire to be a key player in delivering a transition to clean energy, or a desire to extend oil demand beyond transport, the energy industry will be watching to see how this oil giant navigates the path to a more sustainable future.

Grid impacts

While EV growth is clearly reducing fossil fuel demand, in the UK there are concerns over the pressure it exerts on an already struggling grid.

Fintan Devenney, senior energy analyst at Montel, calculated the power increase by analysing data from the National Electricity System Operator. The 80% EV goal, along with having the required capacity to cope, is possible “if everyone steps up their game”, he says. Even then, however, “it’s going to require everything that could possibly go wrong to go right”.

While this rise in demand is seen as manageable due to an anticipated growth in renewable energy sources, experts are warning of the “Herculean task” of expanding the UK’s green energy capacity to meet this rising need. The government aims to build a “clean” power grid, with offshore wind projected to nearly triple by 2030. However, industry analysts are sceptical, noting that the shift from fossil fuels to renewable sources of power will require an immense effort from the government, grid operators and energy producers.

Despite these concerns, some industry figures are more optimistic. Ben Nelmes, CEO of green non-profit New Automotive, believes the target is achievable if the government continues its efforts to incentivise EV adoption and scales up charging infrastructure. However, the rapid expansion of public charging points remains a critical challenge, as the UK currently lags behind countries like Norway in terms of charger availability.

With a significant push from government investment in EV infrastructure, such as the £2 billion for domestic manufacturing and £300 million to boost EV uptake, the UK is hoping to avoid a major setback on its road to electrification. However, the success of these efforts hinges on coordination, planning and rapid action in the years leading up to 2030.

As the country moves toward a greener future, analysts stress that the UK’s energy system will need to evolve to accommodate the changing demands of a nation transitioning to electric mobility.

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