China Nears Peak Oil Demand Amid Extraordinary EV Growth

China Near Peak Oil Demand

China, the world’s second-largest oil consumer and top importer, is on the brink of a historic energy transition as it nears peak oil demand amid an extraordinary surge in electric vehicle (EV) growth. By July 31, 2025, EV sales have soared past 11 million in 2024 alone, with over half of new car purchases being electric, signaling a dramatic shift from gasoline-powered vehicles. This transformation, fueled by aggressive government subsidies, infrastructure development, and a push for energy security, is reshaping global oil markets. However, the question remains: will this peak in oil demand herald economic prosperity or expose new vulnerabilities? Let’s explore the drivers, impacts, and controversies behind China’s evolving energy landscape.

China’s EV revolution is nothing short of remarkable. In 2024, EV sales hit 11 million, a 40% increase from the previous year, according to industry data. This growth has propelled EVs to over 50% of new car sales, a milestone that outpaces global averages and reflects a strategic pivot from internal combustion engines. Companies like BYD and NIO have led the charge, with BYD surpassing Tesla in global EV deliveries. The country’s EV fleet now exceeds 40 million vehicles, displacing over 2 million barrels of oil demand daily, a figure projected to rise to 13 million barrels by 2035, per the International Energy Agency (IEA).

This shift is underpinned by robust policy support. Since the early 2000s, China has offered generous subsidies, tax incentives, and investments in charging infrastructure, with over 10 million charging points installed by mid-2025. Rural areas are now targeted for EV adoption, with banks and local governments providing financial support. The result? A transportation sector that once accounted for nearly half of China’s oil consumption is rapidly electrifying, with gasoline demand dropping by 1% in 2024 and expected to decline further.

Analysts predict China’s oil demand could peak as early as 2025 or 2027, years ahead of earlier forecasts of 2030 or beyond. The IEA suggests a peak around 105.5 million barrels per day (bpd) by 2029, followed by a slight decline, driven by EV penetration and efficiency gains in gas vehicles. Rystad Energy and PetroChina project gasoline demand peaking in 2024 or 2025, with diesel following by 2027, as EV and hybrid sales outpace traditional fuel use.

Several factors are at play:

• EV Adoption: With EVs capturing 70% of new car sales by 2030, per IEA estimates, road fuel demand is waning. October 2024 saw hybrid and EV sales exceed 50% of total passenger vehicle sales.

• Economic Slowdown: A sluggish property sector and declining construction activity have reduced diesel demand, down 5% year-on-year in Q2 2024.

• Demographic Shifts: A shrinking prime-age population and slower urbanization are curbing transport fuel needs, despite rising incomes.

However, total oil demand may not collapse immediately. Petrochemicals, used for plastics and chemicals, are expected to drive growth, potentially pushing overall demand to 18.1 million bpd by 2030 before a gradual decline, according to the IEA.

China’s nearing peak oil demand is sending ripples through global markets. As the world’s top crude importer, with 11.1 million bpd in 2024, a decline in imports down 3.4% in the first ten months of 2024 signals challenges for oil exporters like Russia and Saudi Arabia. The IEA notes that no single market, including India, can fully offset this slowdown, potentially leading to a structural surplus by 2025. Brent crude prices, hovering near $70 per barrel in mid-2025, reflect this uncertainty.

For oil producers, the shift is a double-edged sword. Reduced transport fuel demand could weaken refining margins, prompting consolidation in China’s overcapacity-ridden refinery sector. Yet, increased petrochemical demand offers a lifeline, with China expanding capacity to become the world’s largest polymer producer. Geopolitically, China’s reduced oil import reliance historically a security concern may alter its foreign policy, from South China Sea expansion to its alliance with Russia.

This transition is not without debate. Proponents argue it strengthens China’s economic and environmental standing. EVs reduce reliance on imported oil, cutting a 70% external dependence that once threatened energy security. The EV industry has created millions of jobs, bolstered clean tech dominance, and positioned China as a climate leader, especially as the U.S. under the Trump administration pivots to fossil fuels in 2025.

Critics, however, highlight risks. Over-reliance on EV manufacturing could falter if global demand shifts or battery prices rise, with China importing 80% of its lithium and cobalt. The economic slowdown, with GDP growth at 3.6% in Q1 2024, raises questions about sustaining this transition. Moreover, the environmental narrative is contested while EVs cut tailpipe emissions, coal-powered electricity (still 60% of China’s grid) offsets some gains, potentially increasing CO2 emissions unless non-fossil energy dominates.

Public sentiment, reflected in posts on X, shows a mix of optimism about EV innovation and concern over economic stability. Some view the peak as a triumph of policy, while others warn of a “cartoonishly large” oil surplus that could destabilize markets.

China faces hurdles in sustaining this shift. Charging infrastructure, while expansive, lags in rural areas, and battery recycling remains underdeveloped. The petrochemical sector’s growth could delay the oil demand peak, complicating the 2030 carbon peak goal. Internationally, trade tensions exacerbated by U.S. tariffs on Chinese EVs may limit export markets, forcing China to absorb surplus production.

Despite challenges, opportunities abound. China’s high-speed rail network and vehicle-to-grid programs could further displace oil. Investments in renewable energy, like solar and wind, could align EV growth with carbon neutrality by 2060. Botswana’s success with diamond wealth management offers a model strong governance and transparency could ensure oil and EV benefits reach the people.