Ann Arbor (Informed Comment) – Incredible new developments in electric vehicles are taking place in China with global implications. China’s BYD sold $100 billion worth of its electric vehicles (EVs) in 2024, outstripping Tesla, the sales of which were $97 billion. Since CEO Elon Musk has ruined the Tesla brand by attacking Americans’ social security, it is likely that BYD will go on dominating this sector. (Truth in advertising: I have a small amount of BYD stock. I sold all my Tesla shares recently.)
BYD just made a breakthrough in battery charging, developing a process that would allow drivers to fully charge their vehicles in only 5 minutes. This technology will be a game changer globally, though US protectionism may keep it out of America (to the detriment of consumers).
Worse news for US and European manufacturers: BYD’s new mid-sized model, the Qin L, priced at about $16,500 US, is rolling off the production line. It is being called a “Tesla-killer.” BYD’s automobiles are being kept out of the US and European markets, but at that price they have a shot of taking off in Asia and Latin America. The company hopes to up international sales to 800,000 units a year. Right now 85% of BYD cars are sold in China itself.
These developments are bad news for US and European automakers, but are also tolling a death knell for the petroleum industry’s future in ground transportation.
The annual International Energy Agency report confirms its earlier projection that electric vehicles are a petroleum killer.
The IEA report finds that in 2024, the annual increase in worldwide oil consumption growth decelerated significantly. This reduction in the expansion of oil demand had been predicted in previous IEA reports. For the first time in these reports, the proportion of total energy use that consisted of petroleum was less than 30%.
Around 1975, at the height of the 20th century oil crisis and the automobile age, petroleum was 46% of total energy consumption.
In 2023, the world’s people increased their oil use by 1.9% over the previous year. In 2024, the increase was only 0.8%. And that small increase was not in gasoline use for vehicles, it was for petrochemicals and airplane fuel.
Demand for oil in global road transportation actually declined. The biggest decline came in China, where petroleum use actually fell 1.8%! Why did the world’s people use less diesel and gasoline for transportation? Well, in part it was the that post-COVID bump in economic activity slowed. But in part it was the rise of the electric vehicle and the implementation in places like China of more high-speed rail.
Look at the light blue sections in this IEA graph– that’s road transport:
In the industrialized economies, petroleum use fell slightly by 0.1%, after falling 0.7% in 2023. But if we take 2019, pre-COVID, as our starting point, petroluem use is down 5.4% in these countries. In Europe, oil consumption last year was fully 7% below 2019, while in Japan it was down 11% since that year.
EVs are only one reason for the fall in petroleum demand for road transportation. As a result of the COVID pandemic, a lot of people still work from home, especially in the US, resulting in fewer automobile trips.
Still, EV’s have gotten to the point globally that they are depressing petroleum demand, and they are expected to go on doing so in the coming decades. If you are relatively young and have a lot of BP and ExxonMobil stocks in your retirement portfolio, you may want to take this development into account and maybe dump them while you can.
Fully one fifth of all cars bought in 2024 around the world were electric. Sales were up 25% over 2023, with some 17 million units sold.
China was the industry leader — nearly 2/3s of EVs bought in 2024 were Chinese.
The Chinese dominance of the electric vehicle market is bad news for Detroit, and it seems unlikely that Trump’s announced intention of imposing a 25% tariff on automobile imports will substantially change the playing field. Chinese research and development in this field runs circles around the US, and since Trump is destroying America’s scientific and technological research sector by gutting the universities, the likelihood is that China will leap ahead even more decisively. The whole world will electrify transport as the dire effects of the climate breakdown accelerate and put the fear of God into them. If China sells all those new EVs to the world, US industrial dominance will be over with.
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