The streets of Beijing have changed dramatically within just a few years. The noisy, smelly thrum of traffic has been replaced by an unusual quiet for a megacity. Roads course with a stream of mostly electric vehicles, all with their distinct, green license plates.
This is not just a Beijing phenomenon. For those arriving in many of China’s major cities from countries dominated by gas-guzzlers, the quiet will be their first impression, said Li Shuo, director of the China climate hub at the Asia Society Policy Institute.
It’s like stepping into the future, he told CNN.
By any measure, China’s EV growth has been extraordinary. More than half of new cars sold are electric, putting the world’s largest automarket on a path to all but erase gas-powered cars over the coming decades. Last year, China’s EV sales soared to 11 million, a nearly 40% increase on 2023, according to data from UK research firm Rho Motion. It’s an “irreversible transformation,” Shuo said.
China’s EV revolution helps cement its dominance in clean technology and its claim on global climate leadership, just as the Trump administration doubles down on planet-heating fossil fuels and demonizes clean energy.
It is also shaking oil markets. Analysts predict oil demand may be peaking in China — flipping from increasing demand to declining — but the impacts go far wider. As the world’s biggest oil importer, what happens here has ripple effects across the global oil market.
The “implications are staggering,” said Lauri Myllyvirta, co-founder of the Centre for Research on Energy and Clean Air.
China’s big bet
The roots of China’s EV surge go back nearly two decades.
Legacy automakers in the US, Japan and Europe had “such a big head start” on gas-powered vehicles that it was unlikely China would ever catch up, Shuo said. EVs offered the chance to dominate a new market.
There was also another key benefit: energy security.
Unlike the fossil fuel-rich United States, China was built on imported oil. This reliance on other countries is a potential “geopolitical liability,” said Ilaria Mazzocco, an expert in Chinese climate policy at the Center for Strategic and International Studies. The advantage of EVs is that they can be powered by China’s plentiful supplies of homegrown electricity.
The government started introducing EV-friendly policies in earnest around 2009, Mazzocco told CNN, offering manufacturers cheap credit and funding for research.
It was “a pretty big bet,” she said, and the road wasn’t smooth. A few years in, “it was considered kind of a failure.”
Traffic on Financial Street in Beijing in November 2024. – Na Bian/Bloomberg/Getty Images
But ultimately the bet paid off, thanks to a combination of consistent support from China’s city and central governments, advances in battery technology and a slew of highly competitive companies, she said, including Tesla’s main rival, China-based BYD.
The country now boasts a robust charging infrastructure and homegrown EV expertise, technologies and materials. It’s producing large amounts of cheap EVs that people actually want to buy, Myllyvirta said.
It’s a very different picture in the US, where the economic case for EVs without subsidies is weaker, he added, because gas is “extraordinarily cheap” and Americans prefer “absolutely massive vehicles.”
With President Donald Trump now in office, the country is poised to sprint even further from policies promoting electric vehicles and to increase tariffs on Chinese EVs and battery materials.
The result is likely to be a US market that diverges further from the rest of the world, Myllyvirta said, “and that just makes it harder and harder for US automakers to compete overseas.”
Reshaping global markets
China’s progress in electrifying transportation — including a vast, high-speed rail network — is slamming the brakes on its previously soaring oil consumption.
Gasoline demand fell by about 1% in 2024 and is on course to fall faster this year, even as people’s incomes grow and car ownership rises, said Ciarán Healy, an oil market analyst at the International Energy Agency. “For a country of China’s economic profile, it’s extraordinary,” he told CNN.
Total oil demand may also be close to peaking. China’s crude oil imports fell nearly 2% in 2024, marking the first annual drop in two decades, except for during the Covid pandemic. The US is one of China’s oil suppliers; China was the second-biggest importer of US crude oil in 2023, according to the US Energy Information Administration.
An electric car is parked at a charging station in Beijing on August 15, 2024. – Johannes Neudecker/picture-alliance/dpa/AP
The picture is slightly complicated by the fact that as EVs are reducing oil demand, another sector is pulling it up.
China’s flourishing petrochemicals industry, producing plastics and other industrial products, feeds on oil. But “it’s not anywhere close to outpacing the reduction from the transportation sector,” said Kate Larsen, who leads international energy and climate research at Rhodium Group, an independent economic research firm.
The IEA predicts China’s oil demand will be declining by the 2030s. “It’s taking away one of the most consequential slices of global demand growth for oil,” Healy said.
China was by far the biggest driver of global oil demand between between 2013 and 2023. The average annual increase in its oil demand over that decade was about 600,000 barrels a day; in 2024, it was less than 200,000 barrels a day, according to IEA estimates.
The IEA predicts global oil demand is going to level off at the end of this decade and start declining in the 2030s, with EVs playing a big role in this downward trend.
While countries such as India are increasing oil consumption, “it doesn’t look like there’s anybody that’s going to be able to fill China’s shoes,” said Erica Downs, a senior research scholar at the Center on Global Energy Policy at Columbia University SIPA.
China is also reshaping the global landscape through its EV exports — a rapidly growing proportion of which are heading to countries in the Global South, including Thailand and Brazil. An influx of low-cost Chinese EVs “has the potential to enable a much faster shift to electricity in other countries as well,” Myllyvirta said.
A seismic shift
China’s EV revolution puts it on track to be a clean-energy powerhouse. But, while China is adding wind and solar at lightning pace, the electricity that charges EVs remains dominated by coal.
Even with this fossil fuel-heavy electric grid, an EV still produces less planet-heating pollution over its lifetime than a gas-powered car, Myllyvirta said. But given the carbon-intensity of the manufacturing process, “you’re only going to start seeing EV sales bite into emissions in a few years from now,” he said.
As China powers ahead on renewables, the climate impact of EVs will decline further. Rhodium projects a 60% fall in the carbon pollution intensity of China’s grid between now and 2040. “Those are big, big numbers,” Rhodium’s Larsen said.
EVs could make up 100% of new cars sold in China by 2040, she said. “That really sets the stage for a rapid decline in emissions from transportation.”
There remain many unknowns about what exactly will happen to oil demand over the next few years, both inside China and globally. But experts say China’s rapid EV boom represents a seismic shift that could halt the country’s role as an engine of global oil demand and could help redefine the its role on the international stage.
“China has found itself in a situation where its economic, geopolitical and climate interests align,” Mazzocco said.
China’s clean energy transformation contrasts sharply with the US, where Donald Trump is promising to pull the plug on support for EVs and clean power.
There’s already a “drastic difference between the cars on the street in China and here in the US,” said Shuo. There is a danger, he added, that the US may come to be seen as a “fossil” of auto-making history.
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