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The war in Iran will accelerate China's switch to electric trucks over diesel

Analysts and automakers predict that the rise in diesel prices caused by the Iran War will accelerate the electrification process of China's heavy trucks fleet this year and help to reduce fuel consumption in the world's biggest oil importer. Over the past two years, electric?heavy trucks have grown from a niche to nearly a quarter of all new heavy truck purchases by 2025. This is thanks to government subsidies and cheap refuelling. The growth of last year was particularly pronounced in the fourth quarter, as buyers believed that the trade-in subsidies would soon end.

According to CVWorld.cn, new-energy heavy trucks, which are mainly electric, started this year with a similar boom. Sales grew 45% on an annual basis to 44,000 units, accounting for over a quarter of segment sales.

CVWorld.cn also said that it expects sales of heavy electric vehicles to increase 30% in April, due to a stronger seasonal demand as well as higher oil prices.

Min Ji, a senior analyst at S&P Global Mobility said that the war in China has pushed up fuel prices, and this will lead to accelerated replacement of traditional trucks. The company plans to revise its forecasts for electric truck sales by the end of this month. Electric heavy trucks have a range of about 300 km (186 mi), and are mainly used for short trips between industrial sites, and transport hubs. However, long-distance corridors continue to expand and manufacturers such as Sany now market trucks with a range of up 600 km. The rapid introduction of liquefied natural gas and electric trucks has also reversed the decades-long growth of the use of gasoline and diesel in China.

Several energy consultants now expect diesel consumption to decline faster than originally forecast.

GL Consulting predicts that diesel consumption will fall by 4.3% in this year, compared to a forecast of 4.1% before the war. Rystad Energy forecasts a 5% drop in diesel demand this year. This is faster than the 4% decline they predicted before the war. It's equivalent to an additional decrease of around 40,000 barrels a day.

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The economics of buying an EV truck are more compelling because the price of diesel in China has risen 27% since the Iran War began on February 28, the highest it's been in four years.

In China, electric heavy trucks can cost up to 500,000 yuan (about $73,500), and diesel versions more than 300,000. But buyers are able to save nearly half of that price with a trade-in program that was extended from April to the end of the year.

The EV trucks are a lot cheaper to run. GL Consulting estimates that lifetime costs for an electric truck – including purchase price, fuel and operation costs over a million kilometers – are half of a diesel-equivalent at current?fuel rates. These lower costs also drive an export boom into Europe, which is the second largest electric truck market in the world, but it still lags behind China. According to the International Energy Agency, China will sell 160,000 electric trucks in 2024. In Europe, however, they'll only be less than 25,000. In March, it was reported that up to 12 Chinese manufacturers, including the top-selling Sany brand, planned to sell their products in Europe at a price of up to one third less than what is currently being charged.

Chen Dong, the Deputy General Manager of Sany, told reporters in April that Sany was already anticipating that the market for electric tractor trucks would increase by 50%, to 250,000 units.

Chen stated that the odds of reaching this goal are on the rise, due to rising oil prices.

(source: Reuters)