Global electric vehicle (EV) adoption could accelerate significantly if governments strengthen supply-chain investments, high fuel prices drive consumer switching and EV technologies advance faster than expected, according to a new Horizons report by Wood Mackenzie.
The report, titled “Electric Shock: How Electric Vehicles Could Hit the Accelerator,” examines a scenario in which policy support, consumer behaviour and technological innovation converge to accelerate the global transition to electric mobility.
Wood Mackenzie’s base case projects EVs to account for 25% of the global vehicle fleet by 2040, up from approximately 4% currently. Under its “electric shock” scenario, however, faster adoption could reduce global oil demand to 99 million barrels per day (mb/d) by 2040, around 5 mb/d below the base case and close to current levels.
The accelerated transition could also lead to the early closure of approximately 40 oil refineries globally.
“If these forces converge all at once, the effect on EV adoption could be dramatic,” said David Brown, Director, Energy Transition Research at Wood Mackenzie.
China Leads Accelerated EV Growth
China is expected to remain at the forefront of global EV adoption. 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 higher purchase incentives, could reduce the total cost of EV ownership by around 30%.
These measures could increase annual Chinese EV sales from 8.9 million in 2025 to 29.9 million by 2040. Chinese EV manufacturing capacity could also increase by 50% by 2035, with lower production costs supporting expansion into emerging markets.
US EV Market Faces Supply Chain and Policy Risks
Wood Mackenzie said the US risks falling behind other major EV markets without stronger battery technologies and competitive domestic supply chains.
US passenger EV sales declined 33% in the first five months of 2026 compared with the same period in 2025 following the withdrawal of tax incentives. EVs currently account for around 3% of the US vehicle fleet.
Under the electric shock scenario, targeted policy support could attract foreign investment in EV supply chains and new manufacturing facilities. These measures could bring EV total cost of ownership parity with gasoline-powered vehicles forward to 2031, two years earlier than the base case.
As a result, the US EV fleet could be 51% larger than the base case by 2040.
Europe Could Accelerate EV Transition Through Investment
Europe could also see significantly higher EV adoption under the scenario. Wood Mackenzie said the region faces challenges including job losses in the automotive sector, with approximately 60,000 auto industry layoffs announced in 2026.
The report envisages a “grand bargain” under which Europe could exchange tariff relief for Chinese investment in local EV manufacturing, helping protect jobs while accelerating electrification.
Such a scenario could result in Europe’s EV fleet being 53% larger than the base case by 2040.
EV Growth to Increase Demand for Critical Minerals
Accelerated EV adoption would require additional investment in mining and processing capacity. Wood Mackenzie estimates that approximately US$45 billion in additional greenfield metals supply investment over the next decade would be sufficient to support the projected growth.
Copper is identified as the most significant bottleneck. Annual additions to copper mine capacity would need to increase from the long-term average of approximately 850,000 tonnes per year to around 960,000 tonnes per year through 2040.
Approximately US$25 billion of the additional metals investment would need to be directed towards copper supply.
The report said a significant share of future mining investment could be directed towards higher-risk jurisdictions such as Argentina, the Democratic Republic of Congo and Pakistan. Failure by established mining regions including Chile, Peru and the US to streamline permitting and maintain competitive fiscal conditions could increase the role of Chinese state-backed companies in future mineral supply chains.
Charging Infrastructure Needs to Scale
The expansion of EV adoption would also increase electricity demand and require additional charging infrastructure. Wood Mackenzie said managed charging, which shifts EV charging to periods of available grid capacity and lower electricity costs, will be critical to maintaining grid stability.
In Western Europe, around 50% of EV charging is currently managed. Under the electric shock scenario, this share could rise to 85% across Europe by 2040.
The US would need to significantly increase adoption of managed charging, which currently accounts for only around 5% of charging sessions.
The report estimates that the world’s approximately 7 million public charging ports currently operate at around 15% utilisation. Faster EV adoption could quickly absorb this available capacity.
China could require an additional 4 million public charging ports by 2040, representing approximately US$200 billion in incremental investment. Europe could require 2.7 million additional ports above the base case, requiring approximately US$108 billion.
“Geopolitics, consumer behaviour and technological innovation could converge to lift EV sales faster than in our base case,” Brown said.
He added that securing critical mineral supplies and technological capabilities could provide OECD countries with long-term strategic advantages, while battery supply chains could become increasingly important as demand for energy storage rises alongside the global expansion of artificial intelligence.
