China Floods Global Markets With EVs, Slowing Oil Demand Growth

China is accelerating its leadership in electric vehicles (EVs), dominating global sales of passenger EVs and rapidly expanding into heavy-duty electric trucks, with over 22% of heavy truck sales in China being new energy vehicles in the first half of 2025. This surge in EV adoption is significantly reducing China's demand for gasoline and diesel, contributing to a plateau in the country's oil demand growth despite robust economic expansion. Amid fierce competition and a two-year price war in the domestic EV market, China’s government has pledged to curb irrational pricing strategies and support innovation and quality improvements to ensure industry sustainability. Chinese automakers are increasingly focusing on exports to global markets, excluding the United States due to strict tariffs and policies aimed at countering Chinese subsidies, making China the world's largest automobile exporter. However, capacity utilization signals structural challenges within the industry, with only a minority of automakers operating at profitable levels, leading to a concentration of export capabilities among stronger companies. The government is also promoting domestic consumption through eased spending restrictions and trade-in programs to sustain growth in the EV sector.