Electric vehicles have defeated gasoline vehicles, and batteries have defeated oil. It's all a win for China.

When the all-solid-state battery production line was completed and when the penetration rate of new energy vehicles in China (including commercial vehicles and exports) exceeded 50% for the first time in October, the achievements of the new energy transformation are remarkable. Saying "China has won" is not comparable to the so - called "winning theories" in the West and India.

In addition to the leapfrog development of the automotive industry itself, we have reduced our dependence on oil through new energy. How can we quantify the strategic benefits in this field?

According to the latest occasional thematic report of the Bank of Italy, "China's Shrinking Oil Footprint: How the Spread of Electric Vehicles Is Shaping China's Oil Consumption", from 2005 to 2024, China's oil consumption more than doubled, accounting for more than half of the global oil demand growth during the same period. However, in 2024, China's annual oil demand declined for the first time in twenty years.

After consulting materials from the International Energy Agency and the "World Energy Statistical Review 2025", the four authors, Lorenzo Bencivelli, Alessandro D'Orazio, Simone Emilozzi, and Andrea Gazani, established a dynamic model, proving that the rapid popularization of new energy vehicles is the main driving force behind this trend.

In 2024 alone, the popularization of electric vehicles replaced about 430,000 barrels per day of gasoline consumption, roughly equivalent to one - eighth of the daily oil consumption. If the transformation accelerates, this figure could quadruple by 2040.

Therefore, the strategic significance of vehicle electrification and new energy transformation is self - evident.

China's Oil Situation: "Growth and Decline"

According to statistical data, between 2005 and 2024, China's oil consumption more than doubled, making it the world's largest crude oil importer and accounting for more than half of the global oil demand growth. As shown in Figure 1, "World Crude Oil Consumption by Country".

As of 2025, data from the General Administration of Customs shows that from January to October, China imported 471 million tons of crude oil, equivalent to 3.462 billion barrels, with an average daily import volume reaching a new high of 1.154 million barrels.

However, the increase in imports is due to strategic demands for energy security and supply stability. If we conduct a detailed and in - depth investigation, we will find that while the import volume has skyrocketed, there has been a structural change in oil consumption.

After twenty years of expansion, China's oil consumption in the transportation sector began to stabilize after 2019 and recorded its first annual decline in 2024.

This turning point is partly driven by the rapid popularization of electric vehicles. This structural transformation is in line with China's broader strategy of enhancing technological autonomy and reducing external vulnerability in the context of the global energy and industrial supply chain reconstruction (de Soyres and Moore 2024).

It should be noted that the definition of "electric vehicles" here is roughly similar to China's "new energy vehicles". As shown in the distinction in Figure 2, it includes pure electric vehicles, plug - in hybrid vehicles, hydrogen - powered vehicles, etc., while hybrid electric vehicles and pure fuel vehicles are classified as internal combustion engine (ICE) powered vehicles.

As expected by Cherif et al. (2017), the large - scale popularization of electric vehicles can reduce oil consumption by tens of millions of barrels per day within twenty years, reshape the flow of oil trade, and affect global oil prices.

According to information provided by the "World Energy Statistical Review 2025", micro - evidence confirms that the energy - saving effect of electric vehicles in the real world depends on charging convenience and driving patterns (Bushnell et al. 2022, Rapson and Muehlegger 2023, Gessner et al. 2025).

China is at the center of this transformation: through coordinated industrial policies, large - scale subsidies, and the close integration of automobile manufacturers and battery producers, China has established the world's largest electric vehicle market and manufacturing base (Ezell 2024, Bickenbach et al. 2024, DiPippo et al. 2022).

This industrial strategy is a pillar of China's geo - economic positioning and has far - reaching implications for the competitiveness of enterprises and the dynamics of the global value chain (D'Orazio et al. 2024, Kee and Xie 2024, Gourinchas et al. 2024, Arezki and Van der Ploeg 2025).

According to Figure 3, "Stock and Growth of Electric Passenger Vehicles by Country", in 2024, electric vehicles accounted for 25% of China's new car sales and 11% of the total domestic vehicle stock. Its popularity is second only to Norway, and the number of electric vehicles in China accounts for about 60% of the global total.

In the left - hand chart, "Other" includes diesel, natural gas, liquefied petroleum gas, and other alternative fuels. In the right - hand chart, the green bars show the share of electric vehicles in the total vehicle stock of each country in 2024, the orange bars represent the growth of electric vehicle numbers from 2014 to 2024, and the blue bars in the right - hand chart show the share of each country's electric vehicles in the global total in 2024.

Note that there are some ambiguous expressions in the definition of electric vehicles overseas here.

According to data from the China Association of Automobile Manufacturers, in 2024, China's automobile sales reached 31.436 million vehicles, a year - on - year increase of 4.5%. Among them, the sales of new energy vehicles reached 12.866 million vehicles, a year - on - year increase of 35.5%, with a penetration rate of 40.9%. The sales of pure electric vehicles reached 7.719 million vehicles, a year - on - year increase of 17.9%, accounting for 60.0% of new energy vehicle sales and 24.6% of the overall vehicle market sales.

Therefore, the statement "electric vehicles accounted for 25% of China's new car sales" here is more likely to refer to pure electric vehicles.

Can Save 4% - 12% of Oil?

To evaluate the impact of the popularization of electric vehicles on China's gasoline consumption, researchers from the Bank of Italy developed a dynamic model in a recent paper (Bencivelli et al. 2025) to track the stock of in - use vehicles (distinguishing between internal combustion engine vehicles and electric vehicles) and their fuel consumption.

The purpose of the model:

(i) By comparing China's actual gasoline consumption with the counterfactual consumption obtained from the model in a "no electric vehicle popularization" scenario, it measures the reduction in gasoline consumption driven by electric vehicles between 2015 and 2024.

(ii) It predicts China's gasoline demand until 2040 under different electric vehicle popularization paths.

(iii) By comparing three scenarios with a "constant penetration rate" benchmark scenario (which fixes the share of electric vehicles in new passenger car sales at the observed 2024 level of about 48%), it evaluates the long - term fuel savings.

The researchers used annual data on electric vehicle sales and the in - use stock of internal combustion engine vehicles and electric vehicles and calibrated their respective scrapping rates following the method of Nguyen - Tien et al. (2025).

Between 2015 and 2024, the popularization of electric vehicles in China accelerated significantly, leading to a reduction in gasoline consumption. Figure 5, "Actual Gasoline Consumption vs. Counterfactual Scenario without Electric Vehicle Popularization", compares China's actual gasoline consumption level (blue solid line, left - hand axis) with the counterfactual scenario without electric vehicle popularization (blue dashed line, left - hand axis) and shows the difference between the two (blue bars, right - hand axis), in million barrels per day.

Note: The blue solid line represents actual data, and the blue dashed line represents the counterfactual scenario without electric vehicle popularization. The blue vertical bars represent the difference between actual and counterfactual gasoline consumption, in million barrels per day.

By 2020, compared with the benchmark scenario, the popularization of electric vehicles had reduced gasoline consumption by 0.1 million barrels per day (3% of the annual gasoline consumption in 2020). Since then, this effect has increased steadily, reaching 0.43 million barrels per day in 2024.

Compared with the high oil import volume of 1.154 million barrels per day in the first half of 2025, this level is equivalent to 4% of the import volume; compared with the oil consumption in 2024, it is equivalent to 12%.

This reduction translates into an estimated 67.5 million tons of avoided carbon dioxide emissions in 2024, accounting for about 0.6% of China's total carbon dioxide emissions in 2023, which is comparable to the 1% decline in carbon dioxide emissions observed during the implementation of the "zero - COVID" policy.

Will Double by 2040

How is the estimated reduction in gasoline consumption and the long - term forecast from 2025 to 2040?

Researchers from the Bank of Italy quantified the long - term effect of China's electric vehicle popularization relative to a "constant penetration rate" benchmark scenario, which fixes the share of electric vehicles in new passenger car sales at the observed 2024 level of about 48%. They predicted the evolution of China's passenger car stock until 2040 under different electric vehicle popularization paths and linked these trajectories to gasoline demand and related carbon dioxide emissions.

Figure 6 shows the electric vehicle popularization scenarios and their impact on China's annual gasoline demand from 2025 to 2040. Source: CEIC, International Energy Agency, Our World in Data, OIES. The historical data is depicted by a black solid line.

The researchers simulated different electric vehicle popularization paths measured by the share of electric vehicles in new car sales to evaluate how they affect China's future gasoline demand. Slow, medium, and fast transitions mean a gradual increase in the share of electric vehicles in new car sales. The "no electric vehicle popularization" scenario is only used as an extreme counterfactual reference.

Panel (a) of Figure 6 shows the composition of the vehicle stock by 2040 under these scenarios. In the "rapid popularization" scenario, electric vehicles account for about 60% of the total stock; in the "medium - speed" (and "slow") popularization scenarios, they account for about 50%; in the "constant penetration rate" scenario, they account for about 30%.

The turning point where the number of electric vehicles exceeds that of internal combustion engine vehicles occurs in 2037 in the rapid popularization scenario and in 2039 in the slow scenario. In the "constant penetration rate" benchmark scenario, internal combustion engine vehicles still dominate even by 2040.

Panel (b) reports the corresponding gasoline demand trajectories. In the "rapid popularization" scenario, demand peaks as early as 2025, reflecting the rapid replacement of internal combustion engine vehicles. In the "medium - speed popularization" scenario, the peak occurs in 2027, while in the slow - transition scenario, gasoline demand continues to grow until 2028 and then begins to decline.

The difference in oil consumption between the "rapid popularization" scenario (green line in Panel (b) of Figure 6) and the "constant penetration rate" benchmark scenario (gray line) quantifies the annual gasoline savings. This savings increases steadily over time, reaching about 1.0 million barrels per day by 2035 and 1.7 million barrels per day by 2040.

For example, the annual savings in 2040 will make an important contribution to global decarbonization goals, equivalent to a reduction of about 267 million tons of carbon dioxide emissions, accounting for about 2.3% of China's total carbon dioxide emissions in 2023.

The researchers' analysis shows that the rapid popularization of electric vehicles in China is the main driving factor behind the recent trend in the country's oil consumption. In 2024 alone, the popularization of electric vehicles replaced about 430,000 barrels per day of gasoline consumption.

Forecasts show that if the transformation accelerates, this figure could quadruple by 2040. The implications of these findings are far - reaching, extending beyond China's borders. For the global oil market, they indicate that one of the main sources of oil demand growth in the past twenty years is weakening. For the global energy transformation, they highlight how the strong popularization of electric vehicles is reshaping China's oil consumption pattern and achieving significant emissions reduction.

This article is from the WeChat official account "C Dimension", author: Shi Jie. Republished by 36Kr with permission.