Electric trucks are the latest threat to oil demand in China
MORE and more Chinese trucks are being powered by batteries, another sign that oil-based fuels are getting shoved to the sidelines in an increasingly electrified economy.
Government incentives are boosting sales of electric trucks in a sector that has traditionally run on diesel, a fuel that makes up over a quarter of Chinese oil demand. Petrol, which accounts for more than a fifth, is already in long-term decline because of the rapid adoption of battery-powered cars.
Electric trucks accounted for 22 per cent of light-duty commercial vehicle sales in April, from 13 per cent in the same month last year, according to BloombergNEF. For bigger rigs, the increase is even more pronounced, with sales trebling to 15 per cent of the total. Diesel demand is being menaced on two fronts, as liquefied natural gas had already been making inroads as a trucking fuel in recent years.
As the world's biggest oil importer, major shifts in China's transport sector create waves on global energy markets. The threat to diesel is stark. More than 70 per cent of the fuel's consumption in China is tied up in road freight or the vehicles that work mines and construction sites, according to Amy Sun, an analyst at GL Consulting.
The central government is leading the charge on incentives to switch from fossil fuels, with tax breaks on electric vehicle (EV) sales that include trucks. Local governments, meanwhile, are busy trying to lift economic growth via trade-in programmes that also reward EV sales.
Apparent demand for diesel in China, which includes production and imports, fell 8.4 per cent year on year in April to 3.8 million barrels a day. Consumption will drop 26 per cent by the end of the decade from last year's levels, according to a briefing by Sun at GL Consulting last week.
Right now, electric trucks are mostly used over short distances or at single sites such as ports and mines, she said. But that should change as batteries become longer-lasting and more charging stations are built.
Electric trucks could jump to 50 per cent of new sales in the next three years, said Robin Zeng, chairman of energy storage giant Contemporary Amperex Technology Co Limited Zeng made his forecast last month at the company's launch of a new battery for heavy-duty trucks. BLOOMBERG
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