This is a look at the effect of China's transition to BEVs on the energy demand for crude by ICEVs and for electricity from BEVs. Hence I have posted it here.
I have used some new data on China's domestic BEV sales in 2023 and better data from China's National Statistics Bureau on the composition of China's vehicle fleet to update projections of the transition to BEVs. I have left HEVs and PHEVs in the total for ICEVs as their impact on demand for crude is zero or marginal at best.
The scope is limited to light vehicles. and results based on China, where ownership is expected to grow, are not appropriate when looking at the saturated markets of Europe and the USA.
There are two scenarios, one where growth in BEV sales and wind+solar electricity is relatively modest, and a high-grwoth scenarion where Government policies push an acceleration in BEV adoption and wind+solar growth.
In the medium-growth scenario,
- annual ICEV sales only fall gradually, with annual sales only 20% less by 2033, even though annual BEV sales increase by 140%.
- the light vehicles vehicle fleet grows from about 300 million at end 2023 to about 500 million in 2033,
- the number of ICEVs (+HEVs+PHEVs) on the road increase by 37% from 2023 to 2033,
- the number of BEVs on the road increase by 900% but still only compose 27% of the total light duty vehicle fleet.
- despite their increase, energy consumption by ICEVs (see 2nd graph) may start to reduce by the end of this decade, due to severe energy vehicle fuel efficiency measures being introduced by the Chinese Government and some evidence of higher scrappage rates of old ICEVs in recent years.
- energy consumption by the growth of BEVs may initially form a higher percentage of solar+wind energy produced, but then decline later in the decasde as solar+wind grows at a compound rate.
In the high-growth scenario,
- annual ICEV sales start to fall quickly from 2025, with annual sales 80% less by 2033, while annual BEV sales increase by 290%.
- the light vehicles vehicle fleet grows from about 300 million at end 2023 to about 500 million in 2033,
- the number of ICEVs (+HEVs+PHEVs) on the road increase by 17% from 2023 to 2033, peaking in 2030 and only then starting to fall quite quickly.
- the number of BEVs on the road increase by 1200% but still only compose 37% of the total light duty vehicle fleet.
- despite their initial increase, energy consumption by ICEVs (see 4th graph) may start to reduce by the end of this decade, due to severe energy vehicle fuel efficiency measures being introduced by the Chinese Government and some evidence of higher scrappage rates of old ICEVs in recent years. From 2030 as the number of ICEVs decrease energy demand from ICEVs starts to reduce quickly
- energy consumption by the growth of BEVs may initially form a higher percentage of solar+wind energy produced, but then declines quickly later in the decasde as solar+wind grows at a high compound rate.
The major point is that the key to reducing energy demand for oil-based products is to reduce the number of ICEVs on the road, and even with high groth rates of BEVs, it takes a number of years to happen in a growing automative market such as China.
Caveats:
These projections are meant simply to illustrate the inertia built into the auto market.
An underlying (heroic?) assumption is that China will be able to main significant economic growth in the next 10 years.
The reality will be different, maybe very very different.