Julio Arboleda
Sept 2025 | KS--2025-CO24
China’s Electric Truck
Boom
A Double-Edged Sword for Oil Demand and Power Supply
Commentary
2
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
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4
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Key Points
• China’s rapid adoption of new energy trucks is transforming its energy landscape by
reducing reliance on diesel – which accounts for more than a quarter of national oil
demand – while simultaneously creating new pressures on electricity generation and
grid infrastructure. This study analyzes these shifts within the broader context of the
energy transition, evaluating their implications for domestic oil consumption, power
system stability, and global energy market dynamics.
• China’s oil demand is facing structural pressure as refinery output stagnates and
forecasts are revised downward, with diesel emerging as the most vulnerable fuel. This
trend is accelerating due to the electrification of trucks: heavy-duty new energy truck
sales rose 175% year over year, reaching a 26% market share in the first half of 2025.
Growth in light-duty and LNG-powered vehicles is further eroding diesel’s dominance.
• The rise of new energy trucks is simultaneously curbing diesel consumption and
placing unprecedented strain on the power sector due to the high electricity demand
of heavy-duty vehicles. This dual challenge is reshaping China’s energy outlook,
prompting policymakers to pursue grid reinforcement and nuclear expansion to
support the transition and safeguard long-term energy stability.
5
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
01
Introduction
6
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Diesel fuel, long regarded as a cornerstone of China’s freight
and logistics sector, accounts for more than one quarter of the
country’s total oil demand. The growing substitution of diesel-
powered trucks with battery electric, plug-in hybrid, and fuel
cell alternatives is generating structural shifts in domestic oil
consumption and reshaping global energy demand projections.
At the same time, the electrification of heavy-duty trucks
presents significant challenges for the power sector, as high-
capacity batteries impose substantial pressure on electricity
generation and grid infrastructure. These concerns, however,
are already being addressed by policymakers, who are pursuing
ambitious plans to expand and modernize the national power
system to accommodate the anticipated growth in electrified
transport.
China’s ongoing energy transition has been characterized by the rapid expansion of
new energy vehicles (NEVs), supported by a combination of state-led industrial policy,
technological innovation, and market incentives. While the electrification of light-duty
passenger vehicles has received considerable scholarly and policy attention, the recent
and accelerated penetration of electric trucks marks a critical inflection point in the
country’s transport-energy nexus. This development warrants closer examination, given
the significant role of the trucking sector in China’s oil consumption profile and the wider
implications for energy system stability.
This study analyzes the evolving relationship between truck
electrification, oil demand, and electricity supply in China.
It situates recent market developments within the broader
trajectory of the country’s energy transition, examining how
the accelerated adoption of new energy trucks is altering
expectations for diesel and gasoline consumption while
simultaneously reshaping electricity demand. By integrating
perspectives from oil market forecasts, technology adoption
studies, and energy systems analysis, the paper aims to
contribute to a more comprehensive understanding of the
implications of transport electrification for China’s energy
outlook – and, by extension, for global energy markets.
Introduction
7
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
02
China’s Refinery
Slowdown: Gasoline
and Diesel Under
Pressure
8
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Chinese state-owned refineries reported lower output in March (-1.13%), April (-1.28%),
and May (-2.32%) 2025 compared to the same months in the previous year. In June 2025,
however, refining throughput rebounded, rising 6.73% year-over-year (YoY). This uptick
brought total refining output for the first half of the year to a modest 0.43% YoY increase.
While positive, this growth remains significantly below the 10-year average, reflecting a
deceleration that appears to have begun in the previous year (Li and Jackson 2025a).
China’s Refinery Slowdown: Gasoline
and Diesel Under Pressure
Figure 1.Chinese monthly refinery output of gasoline and diesel.
Source: NBS (2025).
11.50
12.00
12.50
13.00
13.50
14.00
14.50
15.00
March
April
May
June
July
August
September
October
November
December
Million tons Gasoline output
2023 2024 2025
2023 2024 2025
14.50
15.25
16.00
16.75
17.50
18.25
19.00
March
April
May
June
July
August
September
October
November
December
Million tons
Hundreds
Diesel output
Sept. 2025
9
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Figure 2.Demand for gasoline and diesel in China since 2020.
Source: JODI (2025).
While part of this limited increase in refinery output can be at-
tributed to scheduled maintenance, it has also sparked growing
discussion about the impact of electric vehicles (EVs) on gaso-
line and diesel demand. This conversation has gained traction as
gasoline and diesel output from Chinese refineries continues to
decline (see Figure 1). In the first half of 2025, gasoline pro-
duction fell 8.74% compared to the same period in 2024, while
diesel output declined by 7.48% (NBS 2025).
At the same time, growth in gasoline and diesel demand in Chi-
na is slowing. According to the Joint Organisations Data Initia-
tive (JODI), gasoline demand peaked at 3.78 million barrels per
day (MMb/d) in January 2024, while diesel demand reached 4.23
MMb/d in October 2023 (see Figure 2) (JODI 2025). Although
these figures do not provide definitive evidence of a peak, they
suggest that such levels are becoming increasingly difficult to
sustain – a trend that reflects the growing impact of new energy
vehicles on China’s fuel consumption patterns. NEVs include
battery electric vehicles (BEVs), plug-in hybrid electric vehicles
(PHEVs), and fuel cell electric vehicles (FCEVs) – that is, any
vehicle that is fully or primarily powered by electricity (ICCT
2021). This classification also applies to new energy trucks.
2,000
2,500
3,000
3,500
4,000
4,500
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Jul-23
Oct-23
Jan-24
Apr-24
Jul-24
Oct-24
Jan-25
Apr-25
MMb/d
GasolineDiesel
10
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
03
China’s Truck Market:
Rise of New Energy
Vehicles (NEVs)
11
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
While numerous studies have examined the rapid uptake of light-duty NEVs (Wang 2024;
Zhao et al. 2024; Lorente Salaberria and Xia 2023), the accelerated electrification of trucks
has taken many observers by surprise.
Supported by government incentives – including central
government tax breaks and local trade-in programs that reward
NEV adoption – truck operators in China are increasingly shifting
toward new energy alternatives, casting fresh uncertainty
over the future of diesel demand (Bloomberg News 2025).
Although diesel still accounts for more than one quarter of
China’s oil consumption, it is facing mounting pressure from the
accelerating transition in the trucking sector.
Momentum is especially strong in the heavy-duty segment,
fueled by governmental stimulus, where sales surged 175%
year-on-year to reach 76,100 units of new energy trucks
sold in the first half of 2025. These vehicles accounted for
approximately one quarter of all new truck sales during that
China’s Truck Market: Rise of New Energy
Vehicles (NEVs)
period, according to data from Sublime China Information (SCI),
a Chinese consulting firm (Li and Jackson 2025a).
According to the First Commercial Vehicle Network – an
initiative by commercial automakers in China to provide reliable
industry statistics – the YoY growth momentum of the new
energy heavy truck market has continued for 29 consecutive
months as of June 2025, underscoring the rapid growth
trajectory of new energy trucks within the heavy-duty vehicle
sector (First Commercial Vehicle Network 2025b). The data also
reveal a striking shift: in just one year, the market share of new
energy trucks within the total heavy-duty truck segment rose
from 14.82% in June 2024 to just over 26% in June 2025 (see
Figure 3).
Figure 3.Progress of the share of new energy trucks in Chinese heavy-duty truck sales.
Source: First Commercial Vehicle Network (2025b).
14.82% 14.24%
15.68%
18.14% 18.45%
17.61%
21.89%
21.02% 16.96%
20.93% 23.04%
23.92%
26.03%
0%
5%
10%
15%
20%
25%
30%
35%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25
Number of trucks
Traditional fuel New energy Percentage
12
Commentary
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
A similar trend is evident in the light-duty new energy truck
segment, though on a smaller scale. In the first half of 2025,
approximately 73,000 new energy light-duty trucks were sold
in China – nearly matching the total sales for all of 2024 (First
Commercial Vehicle Network 2025a).
Diesel demand from trucks is also facing growing competition
from liquefied natural gas (LNG)-powered vehicles, which have
The surge in new energy truck sales began in the last quarter of
2024. In September 2024, the Chinese government introduced
robust stimulus packages that significantly boosted adoption,
pushing total zero-emission medium- and heavy-duty vehicle
sales to more than 230,000 units for the year – a new historical
peak (see Figure 5).
steadily gained traction in recent years as an alternative fuel
in the trucking sector (Molnar 2024) (see Figure 4). This shift,
combined with weaker demand resulting from a slowdown
in real estate construction activity, has raised mounting
concerns among analysts about the future trajectory of diesel
consumption in China.
Figure 4.Chinese sales of LNG trucks from 2019 to 2024.
Source: Molnar (2024).
As shown in Figure 4, the primary impact of these policies was
observed in trucks and tractor-trailers. Sales of new energy
buses, by contrast, have remained relatively stable, as that
segment is already largely electrified (Mao and Rodríguez 2025).
0
4
8
12
16
20
24
28
32
-
150,000
300,000
450,000
600,000
750,000
900,000
2019 2020 2021 2022 2023 2024
bcm
Number of LNG-fueled trucks
Existing trucks New trucks Estimated natural gas demand (bcm)
Sept. 2025
13
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
To understand why the penetration of new energy trucks has
only recently accelerated – beginning specifically in the final
quarter of 2024 – it is important to consider the longstanding
barriers that have historically limited their adoption in the
heavy-duty segment.
Another major challenge lies in the high electricity demand
associated with charging heavy-duty trucks. These vehicles
require high-power charging systems that draw significant
loads from the grid, posing potential risks to grid stability –
particularly during peak hours.
To put this into perspective, a single heavy-duty truck battery
can be up to 20 times larger than a standard electric vehicle
battery. Charging one such battery may consume as much
electricity as 140 households use in a day. This scale of demand
Figure 5.Sales of new energy medium- and heavy-duty vehicles in China, 2014 to 2024.
Source: Mao and Rodríguez (2025).
Chief among these barriers has been the extended charging
times required for heavy-duty electric trucks. Long charging
durations directly reduce road time and operational efficiency.
This constraint is now being addressed through battery
swapping systems, which offer a faster alternative to
conventional charging and help maximize vehicle uptime.
underscores the critical need for infrastructure capable of
supporting widespread electrification in the trucking sector.
According to CATL, a leading Chinese company in new energy
vehicle technology, electric trucks are projected to account for
50% of new heavy-duty truck sales by 2028 – a dramatic rise
from just 10% in 2024. This rapid growth highlights the urgency
of coordinated efforts to strengthen and adapt the power grid
to accommodate the evolving energy demands of the transport
sector (Howe 2025).
-
50,000
100,000
150,000
200,000
250,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q1-Q3 Q4
Sales
Not specified Trucks and tractor-trailers Buses and coaches
2024
14
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
04
Reevaluating China’s
Oil Demand in Light
of New Truck Sales
Patterns
15
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Taken together, these developments have prompted analysts to reassess their outlooks
for Chinese oil demand. For example, in the second quarter of 2025, Sublime China
Information (SCI) reduced its diesel demand forecast for China by 1%-2%, citing the
sharp rise in electric truck sales (Li and Jackson 2025b). SCI is not alone in revising its
expectations. Both OPEC and the International Energy Agency (IEA) have consistently
downgraded their projections for Chinese oil demand for 2025 and 2026 in their respective
monthly reports.
In OPEC’s January
Monthly Oil Market Report
, Chinese oil
demand for 2025 was estimated at 17.05 million barrels per
day (MMb/d). By the July edition, this figure had been revised
down to 16.86 MMb/d (OPEC 2025). Similarly, the IEA’s January
estimate for Chinese oil demand in 2025 was 16.84 MMb/d,
which was lowered to 16.72 MMb/d in the agency’s July update
Reevaluating China’s Oil Demand in Light
of New Truck Sales Patterns
(IEA 2025) (see the left side of Figure 6). A comparable trend is
observed for 2026: OPEC’s January estimate projected Chinese
oil demand at 17.32 MMb/d, which was reduced to 17.08 MMb/d
by July. The IEA’s initial 2026 forecast, introduced in April,
placed demand at 16.96 MMb/d, later revised slightly downward
to 16.88 MMb/d in July (see the right side of Figure 6).
Figure 6.Comparison of Chinese oil demand and diesel demand outlooks in OPEC and IEA monthly outlooks.
Source: OPEC (2025) and IEA (2025).
16.7
16.8
16.9
17
17.1
17.2
17.3
OPEC 2025 IEA 2025 OPEC 2026 IEA 2026
MMb/d Chinese oil demand outlook during 2025
January February March April May June July
3.42
3.47
3.52
3.57
3.62
IEA 2025 IEA 2026
MMb/d Chinese diesel demand outlook during 2025
February March April May June July
16
Commentary
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Source: OPEC (2025) and IEA (2025).
The shift becomes even more evident when focusing specifically
on diesel demand. In its February 2025
Oil Market Report (OMR)
,
the IEA projected Chinese diesel demand at 3.615 MMb/d for the
year. By July, this estimate had been revised downward to 3.512
MMb/d – a 2.85% decrease. A similar adjustment was made to
the agency’s 2026 forecast, with diesel demand revised down
by 1.12% between the April and July editions of the same report
(IEA 2025).
16.7
16.8
16.9
17
17.1
17.2
17.3
OPEC 2025 IEA 2025 OPEC 2026 IEA 2026
MMb/d Chinese oil demand outlook during 2025
January February March April May June July
3.42
3.47
3.52
3.57
3.62
IEA 2025 IEA 2026
MMb/d Chinese diesel demand outlook during 2025
February March April May June July
17
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
05
Assessing Diesel
Displacement by
New Energy Trucks
18
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
A central concern among oil market analysts is the extent to which truck electrification
in China is displacing diesel demand. To evaluate this, Rhodium Group – an independent
research provider specializing in the Chinese economy and policy dynamics – conducted a
simplified analysis to estimate diesel displacement resulting from the adoption of electric
trucks (Quinn 2025).
Assessing Diesel Displacement by New
Energy Trucks
Rhodium Group’s approach is based on two primary
assumptions:
1. The average daily distance traveled by each category of
truck.
2. The fuel efficiency (or load factor) of each truck type.
Using these parameters, the group estimates diesel-equivalent
demand with the following equation:
• Diesel-Equivalent Demand = Cumulative Truck Sales ×
Distance Traveled × Fuel Efficiency
Drawing on data from the China Association of Automobile
Manufacturers (CAAM), government regulations, and other
sources, Rhodium Group recommends the following baseline
assumptions:
• Fuel efficiency:
Light-duty trucks: 0.10-0.15 liters/km
Medium-duty trucks: 0.15-0.25 liters/km
Heavy-duty trucks: 0.25-0.40 liters/km
• Daily distance traveled:
Light-duty trucks: 50 km
Medium-duty trucks: 100 km
Heavy-duty trucks: 350 km
Recognizing that daily distance traveled can vary significantly
depending on geographic location and usage patterns, Rhodium
Group introduced a ±20% range around the baseline values.
This approach enables the estimation of a range for diesel
displacement, rather than a single-point figure, thereby better
capturing real-world variability (see Figure 7). This trend has
accelerated notably over the past year.
Sept. 2025
19
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Figure 7.How much diesel is potentially being displaced by electric truck adoption in China.
Source: Quinn (2025).
The total diesel consumption displaced by new energy trucks
in China is estimated at 207,000 to 291,000 barrels per day
(kb/d) – a figure that has doubled since the second half of 2023.
While this remains modest compared to the level of gasoline
displacement achieved by light-duty NEVs, the rapid pace of
heavy-duty vehicle adoption suggests that this segment will
soon play an equally significant role in shaping China’s fuel
demand profile.
0
50
100
150
200
250
300
Mar-19
Sep-19
Mar-20
Sep-20
Mar-21
Sep-21
Mar-22
Sep-22
Mar-23
Sep-23
Mar-24
Sep-24
Mar-25
Kb/d
Total (kb/d) Light (kb/d) Heavy (kb/d) Medium (kb/d)
20
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
06
Impact of New Energy
Vehicles on the Chinese
Power System
21
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
May-22 Nov-22 May-23 Nov-23 May-24 Nov-24 May-25
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Million barrels per day
Focusing solely on the impact of new energy trucks on the power system would provide
an incomplete picture, as these vehicles account for only a portion of the total electricity
demand generated by China’s expanding fleet of new energy vehicles (NEVs). It is
therefore equally important to estimate the power system implications of light-duty NEV
adoption – particularly in contrast to conventional gasoline vehicles.
To support this broader assessment, the Rhodium Group
proposes the following formula to estimate the gasoline-
equivalent displacement from electric vehicle charging (Quinn
2025):
• ((Daily charging estimate × power efficiency) ÷ fuel
efficiency) ÷ liters per barrel = total barrels
In practical terms, this translates to:
• ((Kilowatt-hours × kilometers per kilowatt-hour) ÷
kilometers per liter) ÷ liters per barrel = total barrels
The total NEV fleet in China includes heavy-duty vehicles, which
significantly influence the fleet’s overall energy performance.
When these are taken into account, the average efficiency of the
Impact of New Energy Vehicles on the
Chinese Power System
electric fleet is estimated at approximately 4 miles per kilowatt-
hour (kWh). By comparison, gasoline-powered vehicles average
about 33 miles per gallon (mpg). This efficiency differential
forms the basis for estimating the volume of gasoline displaced
by NEVs in recent years, with an assumed margin of error of
±15%.
Applying this methodology to the average daily EV charging
demand in May 2025 – estimated at 383 million kWh – yields
a central estimate of approximately 1.11 MMb/d of gasoline
displaced (Quinn 2025). Figure 8 illustrates the results of
this assessment, reflecting the accelerating trend in gasoline
displacement driven by NEV adoption and highlighting a marked
surge since 2022.
Figure 8.Estimated gasoline daily displaced in China by NEVs, May 2022 to May 2025.
Source: Quinn (2025).
22
Commentary
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
For comparison, in 2024, total EV charging demand in China
reached 110 billion kWh, averaging approximately 301 million
kWh per day. To contextualize this electricity requirement,
consider that a 1-gigawatt (GW) nuclear power plant generates
roughly 8 billion kWh annually. Based on this benchmark, China
would need the output of approximately 13 to 14 GW of nuclear
capacity – or 13 to 14 nuclear plants rated at 1 GW each – solely
to meet the electricity demand of its NEV fleet.
Such a requirement would pose a significant challenge for many
countries, given the additional electricity demand created by
the rise of NEVs. In China’s case, however, the country is actively
expanding both its renewable and nuclear power capacity, which
may help alleviate this pressure. Specifically for NEVs, China
aims to meet the necessary power demand primarily through
renewable sources, with only a very limited contribution from
nuclear energy, which currently accounts for around 2% of the
country’s total installed capacity (Takahashi 2025).
The deployment of new energy in China has exceeded
expectations. In 2024, the country added 80 GW of wind
capacity and 277 GW of solar capacity, according to the National
Energy Administration. This represents a 45% increase in solar
power, bringing total solar capacity to 890 GW, and an 18%
increase in wind power, raising total wind capacity to 520 GW.
Combined, China’s installed renewable capacity now exceeds 1.2
terawatts (TW) – a milestone originally targeted for 2030 under
the 2020 plan (REI 2025). In parallel, China plans to expand its
nuclear generation capacity from 60.88 GW in 2024 to 110 GW
by 2030 (NBP 2025). In this context, the estimated 14 GW of
additional capacity required by NEVs appears relatively modest
and well within reach.
Sept. 2025
23
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
07
Final Comments
24
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
Given the scale and pace of new power generation in China, the rapid adoption of NEVs
is unlikely to place additional pressure on the country’s power system. However, the
accelerated transition from fossil-fueled to new energy trucks is reshaping the outlook for
oil demand. While the initial impact was concentrated on gasoline consumption – driven
by the electrification of light-duty vehicles – recent developments in the heavy-duty
segment are now extending this effect to diesel demand. This shift is further reinforced
by the rising penetration of LNG-fueled trucks and the sustained slowdown in real estate
construction activity over recent years.
As noted in this study, the total displacement of diesel by new
energy trucks is estimated at 207,000 to 291,000 kb/d. When
combined with more than 1 MMb/d of gasoline displacement,
the overall reduction in Chinese oil consumption becomes
substantial. To put this into perspective, China’s average crude
oil imports in 2024 reached 11.1 MMb/d (excluding fuel trade),
with Saudi Arabia – its second-largest supplier – providing an
average of 1.55 MMb/d (Soltani 2025). Against this backdrop,
a reduction of approximately 1.1 MMb/d in domestic demand
represents a meaningful shift, with direct implications for
China’s key energy partners.
Government policy has played a pivotal role in accelerating
this transition, particularly in the heavy-duty vehicle sector,
where regulatory incentives and mandates are reshaping
Final Comments
industry behavior. Technological advancements – including
battery swapping solutions – are further supporting the shift
by improving operational efficiency and reducing downtime for
commercial fleets.
In light of these findings, it is essential for China’s energy
partners to begin developing strategies for a future shaped by
potentially lower Chinese oil dependency. At the same time,
China’s growing investment in and support for advanced vehicle
technologies is positioning the country as a global leader in the
new energy vehicle sector – an area in which Saudi Arabia has
also expressed strategic interest. This context presents a timely
opportunity to explore deeper industrial partnerships and joint
ventures that extend beyond traditional oil-based cooperation.
25
China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
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China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
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China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
About the Project
The KAPSARC Oil Market Outlook (KOMO) project provides KAPSARC’s estimates of global
oil supply and demand over both the short term (12-24 months) and the long term. Its
objective is to deliver a comprehensive analysis grounded in realistic assumptions and
informed by current market fundamentals. This includes the assessment of product
demand across different regions worldwide. On the demand side, KOMO incorporates a
wide range of influencing factors. For example, the impact of new energy vehicles (NEVs)
on Chinese oil consumption is just one of many elements taken into account in its demand
forecasts.
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China’s Electric Truck Boom
A Double-Edged Sword for Oil Demand and Power Supply
kapsarc.org /kapsarcinfo@kapsarc.org
