Investors’ optimism is admirable. Equities kept advancing yesterday, as the spectacular rally since April 7 continued, and they are within spitting distance of the record highs registered shortly after President Trump’s inauguration. The newly found buoyancy, which emerged less than a week after ‘Liberation Day’, is most plausibly based on the 90-day pause of the gigantic reciprocal tariffs on Chinese and US goods. Yesterday’s telephone call between the Russian and the US leaders further fuelled optimism as the US President announced that direct peace talks between adversaries will begin immediately. The downgrade of the US ratings by credit rating agency Moody’s, because of the perennially increasing budget deficit, which will not be offset by tariffs, was casually ignored by the equity markets, albeit bond yields are ominously strong, and the dollar has come under renewed pressure in the last few days. Import taxes will be introduced, pushing consumer prices higher and creating economic headwinds. As for the Ukrainian-Russian peace talks, Mr Trump believes that the Russian president wants to stop the war. Recent history suggests that, as much as we would like to prove it wrong, President Trump is the Apprentice in this disturbing reality TV show and not Vladimir Putin, whose willingness to co-operate must not be taken at face value. His ultimate objective of depriving his neighbour of its sovereignty has not changed, and it is inconceivable to expect a meaningful, mutually satisfactory truce any time soon.

Oil prices also held up inexplicably well, notwithstanding grim Chinese retail sales and a cut in euro zone economic growth forecast by the European Commission. Support probably came from Iran. The country’s Deputy Foreign Minister once again drew the red line and emphasised that nuclear talks will go nowhere based on the U S demand of zero uranium enrichment. The deal, which was seemingly within grasp on Friday, is anything but imminent. Yet, as outlined in yesterday’s note, the protracted absence of Iranian barrels will not precipitate a considerable price rally. Looking beyond macroeconomic and geopolitical rhetoric, and the current headline-trading environment, one can only wonder when the mood would take another handbrake turn.

The Discernible Prevalence of Electric Vehicles (EVs)

The shift from fossil fuel to renewable energy turned out slower than anticipated pre-COVID and even pre-Ukraine. Global oil demand is set to increase annually, albeit the extent of this expansion varies widely. There are probably three reasons for this ambiguity. First, the transition is a costly process and being a trailblazer means giving up competitive advantage. Secondly, there are conflicting vested interests. Thirdly, there is no reliable method to measure the speed of the transformation from one source of energy to the other, as there is no historical precedent that could provide a helping hand. Yet, the progress is conspicuous, best illustrated in the updated yearly IEA report, titled the ‘Global EV Outlook 2025’. The synopsis below uses the forecasts based on the Stated Policies Scenario.

The sub-headline sums it up: Expanding sales in diverse markets. Electric car sales surpassed the 17 million milestone last year. The annual increase was 3.5 million, and it exceeds the total volume sold worldwide in 2020, the IEA reckons. China is the indisputable juggernaut in the sales of electric cars. Over 11 million of these vehicles were sold last year, more than the total sales in 2022. At the same time, sales in Europe stuttered due to the withdrawal of subsidies and other policies, but the share of electric cars remained steady around 20%. The significance of electric cars is growing in Asia and Latin America; sales increased by 60% last year as nearly 600,000 cars went from dealers to consumers. China is the centre of EV manufacturing as it is responsible for over 70% of global production.

When having a thorough look at the IEA’s online tool, the Global EV Data Explorer, it becomes obvious that the underlying trend will continue undisturbed and could even accelerate. Combined sales of BEVs (battery electric vehicles) and PHEVs (plug-in hybrid electric vehicles) in the car sector will rise from the above-mentioned 17 million in 2024 to 40 million by 2030 – 28 million BEVs and 12 million PHEVs. It is a total increase of 235%, with BEVs claiming the slightly bigger part of this growth. China will remain the dominant player in absolute terms. Its sales of EVs will rise from 11.3 million to 21.2 million. After stagnating in the last three years, Europe will see a growth of 6.3 million during the period, from 3.18 million to 9.5 million. The US will lag as EV sales will crawl from 1.52 million to 3.37 million. India, on the other hand, is expected to register an exponential growth of 800% from 92,000 in 2024 to 720,000 by 2030.

The trend will be more elevated in other categories. Sales of vans will quadruple from 652,000 last year to 2,620,000 in 5 years’ time, with PHEVs and FCEVs (fuel cell electric vehicles) particularly gaining traction as a share of the whole. The sales of buses will jump from 72,000 last year to 357,000 by 2030, and the number of trucks sold will grow almost tenfold, including all three categories, from 97,800 in 2024 to 906,000 at the beginning of the next decade.
The two most salient factors that support or hinder the popularity of EVs are the charging infrastructure and batteries. Public chargers have risen to 5 million in 2024, twice the number of charging stations in 2022. Public charging capacity for light-duty EVs is to increase ninefold in 5 years' time, whilst the report stresses megawatt-scale chargers for electric heavy-duty vehicles started to be rolled out and should see a fivefold increase between 2024 and 2030. Global battery demand, both EV batteries and storage, reached 1 TWh last year, with EVs being the commanding driver for batteries. EV battery demand is set to expand threefold from 2024 to 2030.

The irreversible increase in EV use inevitably aids electricity demand and displaces oil. Electricity consumption from EVs as a proportion of final electricity consumption increases from 0.7% to 2.5% globally, tripling from 1.2% to 3.6% in China, jumping from 1% to 4.3% in Europe and from 0.6% to 2.2% in the US. The increased use of EVs and electricity consumption will lead to the displacement of 5 mbpd of diesel and gasoline by 2030, up from 1.3 mbpd in 2024, with China accounting for 50% of this displacement. Those playing the long game will become progressively less enthused about traditional transportation fuels, the annual report implies.

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