China’s EV boom is starting to pinch oil producers
Subscribe to enjoy similar stories. China’s oil demand is nearing a turning point as electric vehicles take a growing share of its vehicle market, the world’s largest. The country has long been the thirstiest consumer of crude.
China accounted for 16% of global demand in 2023, or 16.4 million barrels a day, up from around 9% in 2008. More significantly, China was the largest buyer of marginal barrels. During that span, it contributed to more than half the growth in global oil demand.
Since a record consumption year in 2023, after the country emerged from strict zero-Covid policies, demand has slowed. Oil consumption is projected to rise a mere 0.8% year on year in 2024 and by an additional 1.3% in 2025, according to the International Energy Agency. While China’s overall oil demand still appears stable, its composition is shifting gears rapidly.
Gasoline and diesel demand seems to have peaked: China’s total demand for these transportation fuels in 2024 will be 3.6% lower than in 2021, according to IEA estimates. China’s housing bust is partly to blame, as a slowdown in construction led to weaker demand for diesel used in machinery. But a bigger story comes from China’s rapid shift in personal transportation, and especially the rise of electric vehicles.
More than half of the passenger cars sold in the country in recent months were new-energy vehicles, which includes plug-in hybrids, according to the China Passenger Car Association. Largely because of that trend, China’s gasoline demand in 2025 is expected to be 6.4% lower than the peak in 2021, according to IEA projections. More new heavy-duty trucks in the country are also using liquefied natural gas instead of diesel.
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