EV Demand Growth Slows: Refiners Revise Gasoline Outlook Upward for 2026

Cooling growth in electric vehicle (EV) adoption has prompted major refiners across North America and Europe to revise their gasoline demand outlooks upward for 2026. After several years of double-digit EV sales growth, the global market is now expanding closer to 20 percent annually, well below the 35-40 percent rates seen earlier this decade. Higher interest rates, the rollback of certain incentives, charging infrastructure gaps, and consumer concerns over residual values have all contributed to the moderation.

In Canada, EV market share of new vehicle sales reached approximately 13 percent in 2025 but has plateaued, well short of the federal government's interim target of 20 percent zero-emission vehicle sales by 2026 under the Electric Vehicle Availability Standard. Provincial dynamics vary widely, with British Columbia and Quebec leading adoption at over 25 percent, while Alberta, Saskatchewan, and the Atlantic provinces remain below 6 percent. The discontinuation of the federal iZEV rebate in early 2025 further dampened momentum nationally.

Refiners including Suncor, Imperial Oil, Parkland, and Irving Oil have signalled to investors that Canadian gasoline demand should remain resilient at roughly 850,000 to 900,000 barrels per day through the end of the decade, modestly above earlier projections. South of the border, Marathon Petroleum, Valero, and Phillips 66 have similarly raised 2026 demand expectations, with US gasoline consumption projected to remain near 8.9 million barrels per day, only marginally below pre-pandemic peaks.

The implications extend beyond volumes. Refining margins, measured by the 3-2-1 crack spread, have stabilized at healthy levels of US$22-28 per barrel on the US Gulf Coast and similar levels in Atlantic Canada, supporting strong free cash flow and continued shareholder returns. Capital expenditure plans have been adjusted accordingly, with several operators extending the life of existing assets through reliability investments rather than pursuing aggressive conversions to renewable diesel or sustainable aviation fuel.

However, the longer-term trajectory remains downward. The International Energy Agency continues to project global gasoline demand peaking before 2030, and Canadian federal Clean Fuel Regulations will progressively tighten carbon intensity requirements through 2030. Refiners are responding by investing in co-processing of bio-feedstocks, low-carbon hydrogen integration, and selective renewable diesel capacity additions, such as Tidewater Renewables in Prince George, BC, and the Imperial Oil renewable diesel facility at Strathcona near Edmonton, expected onstream in 2026.

For policymakers in Ottawa and Washington, the slowdown in EV uptake complicates the climate calculus. Achieving 2030 emissions targets will likely require renewed incentives, faster build-out of public charging, grid investment, and clearer signals on the future of internal combustion vehicle sales. For investors, the revised outlook supports a longer monetization window for refining assets and a more measured pace of capital reallocation toward energy transition projects. The next 12 to 18 months will be telling for both EV adoption curves and refining strategy across the continent.