The International Energy Agency (IEA) believes that by 2030, 50 percent of global car sales will be electric, a milestone China has already achieved.
China’s electric vehicle (EV) and plug-in hybrid electric vehicle (PHEV) sales have surpassed those of internal combustion engine (ICE) vehicles in recent months. In July 2024, new energy vehicles (NEVs), a category encompassing EVs and PHEVs, accounted for approximately 50.84 percent of total passenger car sales, according to the China Passenger Car Association. This trend continued, with NEVs comprising over half of passenger vehicle sales for three consecutive months in 2024.
The rapid adoption of NEVs is significantly impacting China’s oil demand. The U.S. Energy Information Administration (EIA) reported that China’s gasoline consumption averaged 3.2 million barrels per day in August 2024, marking a 14 percent decrease compared to August 2023. This decline is attributed to increased NEV sales, sluggish economic growth, and a declining population. Goldman Sachs analysts estimate that the shift from gasoline-powered cars to NEVs has reduced China’s oil demand by approximately 500,000 barrels per day.
China’s future is accelerating, said Ciaran Healy, an oil analyst at the International Energy Agency in Paris. “Currently, we are witnessing medium-term expectations materializing sooner than anticipated, which will significantly influence the trajectory of both Chinese and global demand growth for the remainder of the decade, added Ciaran.”
Looking ahead, the International Energy Agency (IEA) projects that by 2030, 50 percent of global car sales will be electric, a milestone China has already achieved. This rapid electrification is expected to displace about 6 million barrels of crude oil demand daily. Consequently, China’s transition to NEVs is poised to profoundly impact the global oil market, potentially leading to a structural decline in oil demand as the adoption of electric mobility continues to accelerate.
The rising adoption of electric trucks and those powered by liquefied natural gas significantly impacts diesel demand. According to UBS Securities Co., Chinese diesel consumption peaked in 2019 and is projected to decline by 3 percent to 5 percent annually through 2030. Over a decade ago, Beijing transitioned to electric vehicles (EVs) by implementing subsidies that allowed automakers to enhance production capabilities and reduce costs. The results became evident in 2021, when shipments of new energy vehicles nearly tripled compared to the previous year, positioning them to exceed 10 million units for the first time in 2024.
New energy vehicles are rapidly transforming the automotive landscape, representing around 10 percent of all cars on the road. This figure is set to soar past 20 percent by 2027 and could approach an impressive 100 percent by the 2040s, as highlighted by Anders Hove from the Oxford Institute for Energy Studies. Furthermore, as consumer preferences shift, the country’s oil demand from light vehicles is projected to plummet from about 3.5 million barrels daily to just 1 million by 2040, signalling a significant move towards sustainability and energy efficiency.
China is leading the charge toward electrification at a pace unmatched by other economies. For instance, electric vehicles in the US account for only about 10 percent of total car sales. Following the Republican election sweep, BloombergNEF significantly reduced its growth projections for the sector. Furthermore, gasoline consumption in the US has only decreased by 12 percent since reaching its peak in 2004, based on IEA data. Meanwhile, in Europe, where gasoline and diesel vehicles remain prevalent, transport sector consumption shows a minimal decline of just 6 percent from its peak in 2007.
