As EV Uptake in China and US Grows, Demand Growth for Gasoline Will Slow

Analysts say global demand growth for petrol could drop by 50% this year as the transition to battery electric vehicles (BEVs) speeds up in major markets such as the United States and China. Additionally, refiners will likely see a dip in their second-half earnings as petrol consumption returns to normal levels after experiencing an abnormal surge in demand in 2023.

BEVs have been around for more than a decade as potential alternatives to fossil-fuel vehicles, but their high upfront costs put them out of reach for most of the consumer market. Although most automakers are now working to develop affordable electric cars for the mass market, Chinese carmakers are winning as massive subsidies from Beijing have allowed them to sell their EVs cheaply.

As a result, consumers in China are buying electric cars in droves and helping the country lower emissions from transportation. Electric vehicle adoption in other markets is also expected to impact demand growth for fossil fuels as EVs steadily replace internal combustion engine (ICE) vehicles. Consultancy Wood Mackenzie predicts that demand for transport fuel will reach a four-year low and increase by 340,000 barrels per day (bpd) down from 700,000 bpd in 2023.

The U.S. has already passed the point of peak fuel demand, and China is poised to surpass that point soon. Wood Mackenzie analyst Sushant Gupta said that electric-vehicle penetration in China and the U.S. is on the rise and noted that higher electric vehicle adoption in the Asian nation would cut transport fuel demand growth to just 10,000 barrels per day in 2024.

Chinese consumers are adopting electric vehicles in higher numbers due to two key reasons: they have access to a much larger pool of diverse and affordable electric cars and the country boasts a widespread and relatively reliable network of public-charging infrastructure. According to the International Energy Agency, China is also expected to contribute more than 50% of all electric vehicle sales in 2024.

Since China influences gasoline demand on a global scale, increased electric-vehicle adoption in the country will have a notable effect on worldwide gasoline-demand growth. Even so, electric cars are still a long way from fully replacing ICE cars, and the nation is mostly reliant on fossil-fuel cars for transportation.

China National Petroleum Corp. (CNPC)’s research arm, Sinopecm estimates that its gasoline consumption is set to rise by around 1.3% (2 million tons) to 3.8 million barrels per day (165.1 million metric tons). Furthermore, Sinopec expects a 1.7% (3 million tons) increase in global gasoline demand to bring the total gasoline demand in 2024 to 182 million tons.

There are concerted efforts by companies such as Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) to avail many of the critical metals that will facilitate the production of alternative-energy transportation means, such as EVs. The confluence of these undertakings could soon cut demand for gasoline even further in years to come.

NOTE TO INVESTORS: The latest news and updates relating to Reflex Advanced Materials Corp. (CSE: RFLX) (OTCQB: RFLXF) are available in the company’s newsroom at https://ibn.fm/RFLXF

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