China’s EV boom cushions, but cannot erase, oil shocks from Iran war

China's rapid shift to electric vehicles (EVs) is helping shield the world's biggest crude importer from oil price shocks linked to conflict involving Iran, even if it cannot fully insulate the economy from wider energy market turmoil.

At a fleet depot run by Sany, one of China’s largest truckmakers, in Tangshan, a city in Hebei province neighbouring Beijing, drivers said the appeal of switching from diesel to battery power had grown as war risks heightened concerns over reliance on imported oil.

"Once war breaks out, oil gets expensive, and prices rise right away," said electric truck driver Yuan Lianzhi, 52, speaking to Reuters on Wednesday (April 1). "But with electric vehicles, electricity prices more or less stay the same."

China still relies heavily on imported crude, leaving it exposed to geopolitical disruptions, but the country's years-long push into EVs is starting to reduce that vulnerability in road transport, one of the biggest sources of oil demand.

"The overall direction of development will still be toward new energy vehicles," said Wang Zhenguo, 46, another electric truck driver. He said China's dependence on imported oil became especially visible when conflicts abroad erupted, making electric vehicles "the most economical option" for freight and household transport.

The shift is also visible on city streets. Beijing taxi driver Chen Hui said electric cars now dominate many roads, making any fuel supply disruption feel less severe than it might have in the past. While EVs can cost more upfront, she said cheap charging made them more economical over time.

Analysts say that trend is becoming strategically important. Chim Lee, a senior China energy analyst at Economist Intelligence Unit, said China was "one of the most resilient major economies in the world" when it came to current oil

shocks, helped by EV uptake and broader efforts to diversify its energy system.

"The auto sector accounts for about 40% of China's oil consumption," Lee said. With EVs now making up more than half of passenger vehicle sales, he said oil demand growth from road transport was fading and could eventually help drive China's overall oil consumption into decline.

Production: Josh D. Arslan, Tingshu Wang/Reuters