Rise of NEVs will have immaterial impact on Chinese oil demand in medium term
The threat from the rise of so-called “new energy vehicles” or NEVs, which accounted for only 1.4% of China’s total car sales in the first half of 2017, is likely to be immaterial to Chinese oil demand in the medium term, according to analysis from Credit Suisse’s research arm.
Over the weekend, a top government official announced that China plans to ban petrol and diesel cars at a yet to be determined date.
Oil demand substitution from the rise in NEVs should be offset by robust growth in sport utility vehicles or SUVs, which consume more gasoline or diesel fuel than a conventional passenger car.
Similarly, fuel demand in China is less than 30% of total oil demand, compared to 50% in the U.S. and/or Europe, as Chinese oil demand is structurally more geared towards the industrial sector.
“The substitution effect will be far more material in developed countries vs. China,” the report said.