Geopolitical tensions and volatile oil prices could boost electric vehicle adoption far beyond current expectations, putting pressure on oil demand, refineries, and critical mineral supply chains, Wood Mackenzie strategists said in a note on Monday.
Wood Mackenzie's "electric shock" scenario sees global EV sales accelerating by about 50% above its base case by 2040 as governments strengthen supply chains, consumers respond to higher fuel costs and battery technology advances faster than projected.
The consultancy's base case already projects EVs rising from about 4% of the global vehicle fleet today to 25% by 2040.
Global oil demand could fall to 99 million barrels per day by 2040 under the accelerated scenario, about 5 million barrels below the base case and about in line with current consumption.
Wood Mackenzie analysts said that the shift could trigger the early closure of about 40 oil refineries worldwide.
"If these forces converge all at once, the effect on EV adoption could be dramatic," said David Brown, director of energy transition research at Wood Mackenzie.
China is positioned to capture the biggest gains. EVs accounted for 42% of Chinese car sales in Q2 2026, up from 33% a year earlier.
Under the electric-shock scenario, additional policy measures, including tighter restrictions on gasoline consumption, full purchase-tax exemptions and larger consumer credits, could reduce EV ownership costs by about 30%.
Wood Mackenzie said that annual Chinese EV sales could consequently rise from 8.9 million in 2025 to 29.9 million by 2040.
China's EV manufacturing capacity could expand by 50% by 2035, allowing manufacturers to use cost advantages to penetrate markets across the Global South.
Meanwhile, the US faces a more difficult trajectory. Passenger EV sales fell 33% in the first five months of 2026 from the same period a year earlier following the withdrawal of tax incentives, while EVs account for only about 3% of the country's vehicle fleet.
Wood Mackenzie said the US would need a more aggressive industrial strategy to prevent domestic automakers from losing ground to foreign competitors.
Targeted policy support, foreign investment and new manufacturing plants using modular technologies could bring EV cost parity with gasoline vehicles forward to 2031, two years earlier than in the base case.
The consultancy said that would leave the US EV fleet 51% larger than the base case by 2040.
Europe could see a similar acceleration. With about 60,000 auto-sector layoffs announced in 2026, the region faces the challenge of balancing industrial competitiveness with its decarbonization goals.
Wood Mackenzie's scenario envisages a "grand bargain" under which Europe trades tariff relief for Chinese investment in local EV manufacturing.
Electricity infrastructure would also come under pressure as millions more vehicles plug into grids. Wood Mackenzie says managed charging, shifting EV charging toward periods when electricity supply is plentiful and prices are lower, will be critical to keeping grids stable.
The world's 7 million public charging ports are currently operating at about 15% utilization, but Wood Mackenzie expects that spare capacity to be rapidly absorbed as EV adoption accelerates.