The oil industry could lose its century-old grip on the transportation market by 2040 as consumers turn to electric cars, ride-hailing apps and other technologies that could transform the way people get around, researchers predict.

Within 25 years, 1 out of every 3 vehicles sold in major markets like the United States will run on electricity; increasingly stringent fuel economy standards will force global oil demand to plateau; and new mobility options, including car-sharing and ride-hailing, will mean people can travel a greater number of miles even as vehicle sales fall, the research firm IHS Markit said in a new report on Tuesday.

"This will be the biggest change in the auto ecosystem since the beginning of the 20th century," said Daniel Yergin, the research firm's vice chairman and a Pulitzer Prize-winning energy historian.

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If the research firm's assessment is correct, the oil industry that fuels Houston's economy could face its most pressing existential challenge yet over the course of 2 1/2 decades. It's a much gloomier outlook for local oil companies than the Energy Department's forecast that electric cars will make up only 10 percent of light-duty vehicle sales in the U.S. by 2040.

Last year, light-duty vehicles made up more than a third of the global demand for petroleum products like gasoline and diesel. Ninety-eight percent of cars sold in 2016 had an internal combustion engine; by 2040, that figure could fall to 62 percent, according to IHS Markit's research, which dedicated teams of researchers to study market trends in the automobile, energy and chemical industries for a year.

Hard to imagine

IHS believes the convergence of driverless-car technology, mobility service apps and electric vehicles could be the biggest disrupter of the transportation market. The mobility-as-a-service industry bought 300,000 of its own vehicles this year, but that figure will climb to 10 million in 2040. Using driverless technologies, these cars would have lower operating costs, and most of them would have more efficient electric motors.

The firm estimates the number of miles that vehicles travel in the U.S., China, Europe and India will climb by 65 percent between 2017 and 2040 to a record high of 11 billion miles a year.

IHS traces this change to myriad transformational forces, including the technological breakthroughs that have propelled driverless technology and electric cars, changes in consumer preferences and a newfound urgency among global policymakers to stem carbon emissions.

"There will be a shift in the mentality of the oil industry," said Jim Burkhart, head of oil market research at IHS. "There will be an increasing role of fuel economy standards in nearly every major market around the world."

It's difficult for many to envision this decadeslong transition.

Today, electric vehicles make up just 1 percent of the auto sales in theU.S., China, Europe and India, the regions IHS studied. Increasing that figure to more than 30 percent could require billions of dollars in investments in the U.S. electric grid to support vehicles charging overnight.

"We have a long way to go before any of that can happen," said Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston. "The question is, exactly where does all this electricity come from? The problem is pretty formidable in making this work."

Yet for many, the answers are already appearing in sweeping changes to the nation's electricity grids - including the increasing prominence of wind and solar, as well as ever-improving battery technology.

Yergin and other IHS analysts were careful not to suggest the oil industry will face a slow demise because of all these changes. In fact, they said global oil demand will continue to expand from 98 million to 115 million barrels a day as the population continues to grow. The demand will plateau to a point where it won't shrink, but it won't grow, either.

Stricter fuel standards

Meanwhile, Houston's crop of oil producers and energy service firms will still have work to do replacing some 43 million barrels a day lost to natural production declines by 2040.

The biggest reason global oil demand will plateau in 2040 is not electric cars but increasingly stringent fuel standards, according to the study.

"It's not only a matter of technology," Yergin said. "Political, regulatory, social and psychological barriers to adoption will also need to be overcome."

Automakers will sell some 67 million cars in 2017, but the total number of cars in the U.S. and other major markets still dwarfs that figure at 816 million vehicles. That means it could take decades before the global fleet of cars turns electric. By 2040, auto sales will drop to 54 million a year, according to the study.

Increased sales of hybrid vehicles could slow the deterioration of oil demand. But by 2031, less than half of the cars sold will rely only on gas or diesel, IHS said.

"Oil will no longer be the sole king of transportation," Yergin said. "As ride-hailing becomes more prevalent, we may see cityscapes start to look different. Houston would look different as a city."