Electric cars won't crash oil demand: 70% isn't electrifiable

Electric vehicles won't crush oil demand: 70% of usage is not electrifiable

Are electric vehicles really destroying oil demand? That's the claim made in a video by an industry commentator, but the short answer is no: the portion of crude oil that passenger EVs can replace is minor. According to the breakdown cited by a participant in the debate, 70% of oil consumption is not electrifiable. Heavy road transport, maritime shipping, aviation, mining, agriculture, fertilizers, and plastics will continue to require liquid fuels. Private passenger cars are just the tip of the iceberg, not the whole iceberg.

What the original discussion video claims

The starting point is a video arguing that gasoline demand will fall, causing prices to rise. The argument chains the entire supply line: less refining, fewer gas stations, more kilometers per tanker truck, and therefore higher cost per liter. This last part is the most contested. A truck delivering 20,000 liters of fuel that has to travel 500 kilometers instead of 300 uses about 200 extra liters, spread across the 20,000 liters sold. The price per liter rises by cents, not euros. This calculation dismantles much of the narrative.

The video also relies on China's solar deployment, with plants being built every week, and the idea that electric motors are superior to thermal ones. There is less debate here: electric motors lose less energy as heat, recover energy during braking, and are more efficient than combustion engines. However, that alone doesn't suffice to topple global crude oil demand.

China isn't buying less oil because it has more EVs

The Chinese case is the most cited and fits the worst. China accounts for around 20% of global oil purchases while simultaneously producing significant coal. What it is doing is replacing coal with renewables in its electricity mix, not abandoning crude oil. In fact, according to the material analyzed, China has very little domestic oil; it buys almost all of it from Russia and Iran. Moreover, there is news pointing in the opposite direction of the video's thesis: China is spending huge sums building factories to convert coal into oil, a technology Germans used as a contingency measure during World War II.

That detail is revealing. Converting coal into liquid fuel requires electricity and yields a product with lower calorific value, meaning it is less efficient in the engine. That a country does this on a mass scale doesn't indicate it is abandoning oil, but rather that it doesn't want its largest coal mining company to collapse suddenly. The transition is real, but slower and dirtier than the narrative suggests.

Electric motors are better, but that's not enough

There is broad consensus that electric motors are superior to thermal ones: fewer losses, more torque, regenerative braking. Anyone who has driven one knows this. The problem isn't vehicle technology, it's scale. Replacing 2 billion internal combustion cars with electric ones requires a quantity of copper that, according to arguments, does not exist in the world. And even if it did, electricity would have to come from somewhere: it is also generated by burning oil.

Here lies the contradiction nobody resolves. Electric vehicles are viable for those who have charging infrastructure and don't make long trips, but they are not a universal solution. Imposing them as if they were generates backlash and distorts the market. Meanwhile, global oil demand isn't falling: only two regions, Europe and the United States, had not recovered their 2019 consumption levels by 2023, and the latter by a very small margin.

The industrial cost nobody wants to look at

The discussion shifts to European industry. The electric car hasn't sunk the European internal combustion engine on its own, but it has coincided with its loss of technological initiative. German manufacturers see their cars piling up in lots while Chinese buyers stop wanting them. Tariffs don't fix a fate that, largely, is already sealed.

Some argue that all this is an operation to flatten the curve of energy consumption, not infections. Elbichito was a shock that reduced oil consumption; the 2008 financial crisis did too, though less so. The game would consist of exchanging money for oil to prolong resources while alternatives take off. It is a hypothesis, not a proven fact, but it explains why green rhetoric and balance sheet realities don't quite add up.

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The electric car is a better machine. Oil, for now, is still winning by a landslide. If anyone finds a way to electrify an airplane or a cargo ship, let us know.