Electric Trucks and the Future of Chinese Oil Demand
“There are three explanations for the decline in diesel consumption: the slowdown in real estate construction, the expansion of liquid natural gas (LNG) trucking, and the electrification of transportation. China’s structural decline in construction is well understood, as is the anticipated hit to diesel demand. But even as real estate construction activity stabilizes at lower levels and infrastructure construction picks up to some extent, diesel demand has still continued its decline. This leaves us to consider the other variables: increased LNG trucking and electrification of transport in China.”
“China is now pivoting away from transportation fuels to power-based energy across all modes of transport. Chinese companies are also exporting the electrification of transportation to the rest of the world, which has meaningful implications for oil markets. BYD is targeting 800,000 overseas passenger car sales this year, in a global auto market of 75 to 80 million vehicles. Domestically, China’s new energy vehicle (NEV) sales are expected to top 12 million units, which has impacted China’s gasoline demand. Gasoline demand in May 2025 has fallen to roughly the same level as May of 2022, when Shanghai was almost entirely locked down under zero-COVID.”
“Following in the footsteps of its passenger vehicle market, China’s heavy transport is increasingly being electrified. In 2020, 69% of light duty truck sales were diesel. By April 2025, diesel’s share of annual sales had fallen below 50%. Over the same period, annual light duty electric truck sales rose from 1% to 15%. In 2024 alone, China sold 256,000 light duty battery electric trucks, a 25% increase year on year. Light duty electric truck sales were the first to take off, but sales growth is now growing across all truck categories. Other formats, such as hybrids, plug-in hybrids and gasoline, have also reduced demand for light duty diesel trucks.”
Source: The Rhodium Group