Peak Oil Demand — Will It Be Hastened By Electric Semis?

While Tesla fans and logistics companies anxiously await deliveries of the first electric Semis, China leads the world in low-emissions trucking. Bloomberg reports that light commercial electric vehicle sales have gone from 1% of market share to 10% in the last two years, and may be a big factor in early onset peak oil demand.

Medium- and heavy-duty truck sales in China are also on the rise. Sales of electric semi trailers haven risen from close to zero two years ago to 3.4% of the market in mid-2022. As Bloomberg’s Colin McKerracher puts it: “the trend for the year is still strongly up and to the right.”

Credit: Farizon Auto

“China is the largest commercial vehicle market in the world, so what happens there moves the needle globally. At 10% electric share, China is well ahead of almost all other countries in this segment. Only South Korea has a higher adoption rate, with more than 20% of its light commercial vehicle sales already electric so far in 2022.” 18,000 light commercial vehicles were sold in China in August.

Most of the heavy trucks in China are not yet operating on long-haul routes but are deployed within cities. This use may expand rapidly as China adjusts the mix of policy, technology, and economic levers available to accelerate the adoption of heavy vehicles with zero emissions and greater capabilities. Bloomberg expects this to be sooner rather than later.

What of hydrogen trucks? Although some fuel cell trucks are being deployed, at this point in time, battery electric heavy trucks are more economically competitive for urban duty. As hydrogen costs decline and infrastructure expands, we may see a clearer picture, especially in the area of long-haul trucking. Read about a UK trial of hydrogen trucking here.

A BNEF review of planned model launches “showed a huge divergence between the number of electric and fuel cell trucks coming to market. There are a lot corporate net-zero targets that are starting to filter down to the supply chain in the next few years that will pressure big logistics fleet operators to start getting zero-emission options on the road. Electric models have a serious head start.”

China plans to deploy 34,000 vans and trucks with swappable batteries in the near future. “Data compiled by BNEF shows a 318% increase in the number of commercial battery swap stations set up in China last year. … A single city, Tangshan, has deployed over 4,400 heavy-duty battery-swapping trucks as of September. That’s more than the entire global heavy duty fuel cell truck fleet.”

Read about Australia’s pioneering work in battery swapping for electric semi trainers here.

With oil demand for passenger cars peaking due to the uptake of electric vehicles in China’s market, oil companies have looked to commercial vehicles to keep demand growing. Bloomberg thinks they will be sorely disappointed. No wonder OPEC is curtailing production. “In BNEF’s 2022 Road Fuel Outlook, commercial vehicle growth keeps oil demand growing, but not for long. This year’s outlook has overall road transport reaching peak oil demand in 2027, but if sales of electric trucks continue to rise sharply in China, that could be pulled forward.”

A future is certainly an exciting place to live.