EV Adoption Slows: UK Refiners Revise 2026 Petrol Outlook Upward Amid Mandate Pressure

The pace of electric vehicle adoption is decelerating across most major markets, and the consequences are now reverberating through global refining strategy. The International Energy Agency has revised upward its 2026 forecast for gasoline demand by approximately 600,000 barrels per day, while in the United Kingdom the Society of Motor Manufacturers and Traders reported that battery electric vehicles accounted for 19.7 per cent of new car registrations in October, well below the 28 per cent threshold required under the Zero Emission Vehicle Mandate.

For UK refiners the implications are double-edged. On one hand, persistent petrol and diesel demand offers a longer runway for assets that had been written down on the assumption of imminent transport electrification. Phillips 66 Humber, Essar Stanlow, Valero Pembroke and Prax Lindsey collectively process around 1.1 million barrels per day and contribute roughly 2.8 billion pounds to gross value added each year. On the other hand, capital allocation decisions become more complex when policy trajectories diverge from commercial reality.

BP, having recently softened its 2030 oil production reduction target, has openly cited slower EV uptake as one justification. Chief executive Murray Auchincloss told analysts that the company's downstream business would maintain refining throughput at around 1.5 million barrels per day globally for the rest of the decade, with European assets including the Castellon and Gelsenkirchen plants seen as essential. Shell has taken a similar tack, retaining its Pernis and Rheinland facilities while accelerating low-carbon investment selectively.

Consumer economics explain much of the slowdown. The average price of a new battery electric car in the United Kingdom sits at around 47,500 pounds, roughly 9,000 pounds above the comparable petrol model. Used EV residuals have also weakened, with three-year-old Tesla Model 3 values down 31 per cent year on year according to Cap HPI. The withdrawal of the Plug-in Car Grant in 2022 and uneven progress on public charging continue to dampen private demand, although fleet sales remain robust thanks to favourable benefit-in-kind taxation.

The political pressure is intense. The previous government's decision to push the internal combustion engine phase-out to 2035 has not been formally reversed, and industry bodies are lobbying for further flexibility on the annual mandate trajectory. The Department for Transport has signalled it will consult on a revised compliance pathway in early 2026, potentially allowing more banking and borrowing of credits between years.

For oil markets, the revised demand outlook supports higher refining margins through the cycle. Northwest European gasoline cracks have averaged 18 US dollars per barrel during the third quarter, comfortably above the five-year mean. Diesel cracks are stronger still, buoyed by aviation kerosene demand that continues to outperform pre-pandemic levels.

The picture is not one of EV failure but of a more realistic pace. For UK refiners and the policymakers who oversee them, 2026 will be a year of recalibration: less dramatic than feared, more demanding than hoped, and unavoidably political.