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The fact that a record 90% share of all new car sales in Norway are electric has failed to make any impact on the country’s oil demand, indicating that hopes of rising EV uptake making an immediate dent in global oil demand are unrealistic.
Last year, 82.4% of all new passenger cars sold in Norway were fully electric, up from 79.3% in 2022, according to the Norwegian Public Roads Administration and the Norwegian Road Federation (OFV).
This share has jumped to over 90% this year, but the impact on Norway’s oil demand “has been negligible,” bank UBS said in a note this week carried by Investing.com.
Norway has risen to become an EV powerhouse, also thanks to “generous financial incentives,” which have been partly funded by the Government Pension Fund Global, the world’s largest sovereign wealth fund that has amassed its wealth from sales of oil and gas, UBS noted.
Norwegians, like other consumers, are concerned about vehicle range, and many opt for hybrids or gasoline-fueled vehicles to travel longer distances, according to the bank.
“Another possibility is that electric vehicles are used for short distances, but Norwegians still rely on fossil fuels to cover longer distances,” UBS said in the note.
Moreover, even if road transportation fuel demand has declined, demand for LPG and ethane, used for heating and cooking and in petrochemicals, has been very strong, the bank added.
Road fuel demand in Norway has remained relatively stable even with soaring EV adoption, raising questions about whether EVs really have a material impact on diesel and gasoline sales, Rystad Energy said last year.
The lack of a noticeable dent in oil demand in a country where EVs are 90% of all new car sales is a cautionary tale for those predicting an immediate drop in oil demand due to rising EV sales, according to UBS.
The bank still sees years of rising global oil demand.
“We continue to believe it will increase over the coming years, then plateau and begin a gradual decline at some stage during the next decade.”
