China's 70% EV Target Deals Another Blow To Oil Demand

Authored by Tsvetana Paraskova via OilPrice.com,

China aims to have electric and hybrid vehicles account for as much as 70% of all passenger car sales by 2030, in a massive transport shift set to further dent oil demand for road fuels.

As of the end of last year, the share of the so-called new energy vehicles was 54% of all passenger vehicle sales.

In the new five-year plan for the automotive industry compiled by nearly a dozen Chinese government agencies, China also targets to have 40% of new commercial vehicle sales be electric by 2030.

The 70% target by 2030 could even be achieved earlier than planned, analysts say, as this year's oil and fuel price shock is accelerating the shift to electric vehicles.

EVs and hybrids accounted for 65% of China's total passenger car sales in August, according to data by the local Passenger Car Association (PCA) cited by Bloomberg.

The ambitious EV targets are expected to continue eroding road fuel demand in China, which has been falling for the second year in a row. This year, the decline has been steeper amid the energy price shock following the start of the war in Iran.

Chinese state refiners expect continued declines and prepare for the future of plateauing and falling road fuel demand.

For example, China's Sinopec, the world's top refiner by capacity, expects Chinese oil demand to drop by 8.9% in 2026 from a year earlier amid demand destruction from higher oil prices and the acceleration of electric vehicle adoption. Gasoline demand is set for an 8.7% decline, while diesel consumption is expected to crash by 11.4%, Sinopec Economics & Development Research Institute says.

The high oil prices destroyed some demand and sped up the adoption of EVs, which has been growing anyway in recent years, suppressing total oil demand even without blocked crude supplies in the Middle East.