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Electric truck sales soar in China, a new blow for diesel.

The rapid growth of electric-powered heavy trucks in China is largely due to subsidies and the rapid rollouts of chargers. This has further reduced diesel use and lowered oil demand for the world's largest crude importer.

In recent years, the growth of LNG-powered trucks and electric cars has fueled a boom in sales of electric trucks in China. These factors, along with a slowing economy, have led to a decline in oil consumption.

According to Sublime China Information, the consulting firm, sales in the largest market for energy trucks in the world rose 175% on an annual basis to 76.100 units in the first six months of the year. This represents about a quarter or new truck sales. Over 90% of the increase was attributed to electric models. These are still mainly used for short hauls in ports, mines and steel mills.

Analysts have been surprised by the rapid pace of change. They have revised their diesel demand forecasts and shifted forward their predictions on a peak Chinese oil demand.

SCI analyst Xu Lei has cut his firm's China Diesel Demand expectations by 1% to 2% due to the boom in electric trucks sales.

Ye Lin, vice-president at Rystad, said that the surge in electric heavy vehicles was a shock and is now a factor accelerating China’s oil consumption, which will peak this year. He had originally expected it to peak in 2026.

Rystad estimates that the transport sector will burn about two thirds of China's diesel by 2030. This means that overall diesel consumption in China will be reduced by about one quarter from 2024 levels.

According to SCI, diesel consumption is expected to drop by 11.3 millions tons or 6.3% this year, which is the same as last year.

"BEIJING TO YOUNNAN"

Li Shuai drove a diesel truck for more than six-years before switching to an electric vehicle six months ago. He drives a cement truck in Hebei Province near Beijing.

Li, 38, stated that "charging infrastructure has significantly improved in the last half year making things more convenient." It is possible to drive a truck full of goods from Beijing to Yunnan, a distance of more than 2,000 kilometers.

Charge times of up to 90 minutes, and the limited availability of chargers in certain areas, are still issues.

Teld, a provider of EV charging infrastructure that has installed more than 2,400 truck-charging stations in China, opened a 800 km corridor linking Shanxi to Shandong provinces on March 1, a major route through China's coal producing region.

In a dusty parking lot, there are car and truck charging stations side-by-side. Yongji Liu, the owner of the charging station, had initially only intended to service EVs. However, "the electric trucks market is growing at such a rapid pace that we have also installed chargers" for trucks.

Cheaper than Alternatives

Analysts and truckmakers say that the boom in electric trucks is due partly to the cheap electricity and the government subsidies of up to 95,000 Yuan ($13,264), which were introduced last July, for new vehicles.

Diesel trucks may be cheaper initially, but higher fuel prices make them more costly after one million kilometers.

According to GL Consulting, once fuel costs are included, diesel trucks will cost approximately 2.25 million yuan (314,000 dollars) at the one million kilometer mark. This is roughly 10% higher than LNG trucks, and 15% higher than electric trucks.

According to SCI analyst Wang Neng, rising fuel prices have also reduced the advantage LNG trucks enjoy in terms of price. Limited refueling stations have also hindered growth.

SCI predicts that LNG truck sales will be around 92,000 units during the first half of the year, down 15% compared to a year ago, but the rapid adoption of electric vehicles is more than compensating for the drop in diesel consumption.

Sany, China's second best-selling electric truck manufacturer, says that the growth potential of electric trucks is greater than passenger EVs due to lower operating costs.

Zhaoting Yue is SANY's Vice President of International Marketing. She said, "We expect electric trucks to represent 70% to 80% new sales in as little as 2 to 3 years due to lower operating costs and a more comprehensive charging infrastructure." ($1 = 7.1625 Chinese Yuan)

(source: Reuters)