Tanker Market: The EV Impact in Oil Demand
The tanker market is undoubtedly going to be impacted by the rising popularity of EVs. However, the pace of adoption is turning out to be slower than initially thought. In its latest weekly report, shipbroker Gibson said that “global oil demand growth slowed markedly in 2024, rising by just 0.8% year-on-year – less than half the growth rate recorded in 2023, according to the IEA Global Energy Review. A significant factor behind this slowdown was the accelerating uptake of electric vehicles (EVs). In particular, road transport oil demand in China fell 1.8% year-on-year amid rapid expansion of EVs and natural gas-powered trucks.
Unquestionably, China’s EV market has undergone a remarkable transformation in recent years. In 2024, the country accounted for about two-thirds of global EV sales, with battery electric vehicles (BEVs) making up 27% of passenger cars sold — far ahead of 13% in Europe and 8% in the United States. Government policies have fuelled this growth by supporting both automakers and consumers alike, along with a major expansion of public charging infrastructure. Overall, China’s EV sales surged by 38% year-on-year, reaching 11.2 million units. Interestingly, while BEV sales continue to dominate, their growth is slowing, while plug-in hybrid electric vehicles (PHEVs) are becoming increasingly popular. PHEVs accounted for 43% of China’s total EV market in 2024, up 10% from the previous year. This is notable because, although PHEVs reduce fuel consumption, they still rely on gasoline when the battery is depleted, meaning some level of gasoline demand will persist in China despite strong EV growth”.
Source: Gibson Shipbrokers
According to Gibson, “in the United States, EV sales expanded in 2024, benefiting from federal incentives under the Infrastructure Investment and Jobs Act (2021) and the Inflation Reduction Act (2022), which together awarded $23 billion in loans and grants. Yet, US EV adoption remains modest compared to China. BEV sales reached 1.3 million units in 2024, while hybrid vehicle sales, including plug-ins reached 1.9 million units. The US EV market is now facing political headwinds, however. In January 2025, Trump signed an executive order titled “Unleashing American Energy,” which revoked Biden-era targets aiming for EVs to make up 50% of new car sales by 2030 and instructed federal agencies to halt the distribution of funds for EV development. The Trump administration is also attempting to freeze a $5 billion government EV infrastructure program”.
Meanwhile, “in Europe, the EV market saw a decline in 2024. BEV sales fell by 1.3%, with a slump in Germany being a key factor, where the phase-out of subsidies, weak consumer confidence, and high purchase costs weighed on demand. PHEV sales declined even more sharply, falling 3.6% year-on-year as consumer preferences shifted toward fully electric models. Europe’s EV sector also faces a degree of regulatory uncertainty. While the EU has set a zero-emissions target for new passenger car sales by 2035, Germany pushed for an exemption allowing vehicles powered by synthetic e-fuels, raising concerns that political pressure from member states could lead to further amendments or delays”.
“Looking ahead, China is expected to continue dominating the global EV market, driven by supportive government policies and technological advances. This trend will likely reduce China’s domestic oil transport demand further and with it seaborne crude imports. The situation in the US, however, remains more uncertain, where political developments pose potential challenges to EV growth. Although legal battles and existing funding commitments may prevent a reversal of EV incentives, the uncertainty is likely to slow the pace of adoption. The latest Trump’s announcement to impose a 25% tariff on car imports could also have negative implications for EV sales. Meanwhile, EV adoption in Europe is expected to remain challenged in the short term by economic headwinds, reduced subsidies, high costs, and infrastructure constraints. Overall, the global EV market is poised to reshape the energy landscape, but it is clear that the pace and extent of this transformation will vary across regions, with the US and Europe potentially facing a slower decline in road fuel demand than previously thought”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
