China, the world's largest oil importer, is witnessing a rapid electrification across its transport sector. Electric trucks are making substantial inroads, particularly in the commercial vehicle segment. Data from BloombergNEF indicates that electric trucks accounted for 22% of light-duty commercial vehicle sales in April, up from 13% in the same month last year. For heavier rigs, the surge is even more pronounced, with sales tripling to reach 15% of the total. This momentum comes as gasoline consumption, already declining due to the widespread adoption of electric cars, continues its downward trajectory.
Diesel, which traditionally accounts for over a quarter of China's oil demand, faces a two-pronged threat. Beyond the growing presence of electric vehicles, liquefied natural gas (LNG) has also been chipping away at its market share as a trucking fuel in recent years. More than 70% of China's diesel consumption is tied to road freight, mining vehicles, and construction site equipment, making the shift to electric and alternative fuels a critical factor in global energy markets.
The Chinese government is at the forefront of this transition, implementing robust incentives to accelerate the move away from fossil fuels. Central government initiatives include tax breaks on electric vehicle sales, encompassing trucks. Concurrently, local governments are actively promoting economic growth through trade-in programs that further incentivize EV purchases. This coordinated effort underscores a strong national commitment to electrification.
The impact on diesel demand is already evident. Apparent demand for diesel in China, which factors in production and imports, saw an 8.4% year-on-year decline in April, falling to 3.78 million barrels a day. Analysts at GL Consulting project an even more significant drop, forecasting a 26% decrease in diesel consumption by the end of the decade from last year's levels.
While electric trucks are currently predominantly utilized for short distances or within confined sites like ports and mines, this is set to evolve. Advancements in battery technology, leading to longer lasting power, coupled with the expansion of charging infrastructure, are expected to broaden their application. Robin Zeng, chairman of energy storage giant Contemporary Amperex Technology Co. Ltd., boldly predicts that electric trucks could account for 50% of new sales within the next three years, a forecast made at the launch of the company's new heavy-duty truck battery.
