China's road-fuel demand is set to fall by about 440,000 barrels per day in 2026 as high oil prices accelerate the shift to electric vehicles and alternative-fuel trucks, deepening a structural decline in oil consumption, Kpler strategists said in a note on Tuesday.
The decline in gasoline and diesel demand will account for about half of China's total liquids demand contraction in 2026, Kpler analysts said, with technology-driven changes in road transport projected to displace about 1.3 million b/d of road-fuel consumption.
The analysts said that gasoline demand is forecast to fall by about 210,000 b/d in 2026, while diesel demand is projected to decline by about 230,000 b/d.
"China's road-fuel demand downturn is becoming increasingly structural," said Elif Binici, lead analyst for oil modeling and price forecasting at Kpler, adding that elevated prices had compounded the impact of electrification rather than creating the weakness.
Kpler estimated that electric vehicles would displace about 640,000 b/d of gasoline demand on average this year. The consultancy said that EVs are projected to account for about 20% of China's passenger-car fleet by year-end, up from 15% at the end of 2025.
China's gasoline market weakened sharply after retail prices rose about 21% between the start of the year and April. Prices averaged roughly 22% above year-earlier levels in Q2, contributing to an 8% decline in gasoline demand during the period.
The shift toward electric vehicles has continued despite weaker overall car sales. Passenger new-energy vehicle retail sales fell about 12% over the year during January-July, while sales of conventional gasoline-powered cars dropped 42%, Kpler said.
Kpler expects gasoline demand to decline by another 70,000 bpd in 2027 even if prices normalize, as the growing EV fleet and higher vehicle utilization keep oil displacement elevated.
EVs are expected to account for about 22% of the passenger-car fleet by the end of next year.
Meanwhile, China's diesel market is undergoing a structural shift, with road freight activity increasing even as diesel consumption declines.
Road freight turnover rose about 3% over the year on average in the first seven months of 2026, Kpler said, citing official data. However, diesel demand is forecast to fall by about 230,000 b/d this year.
The divergence reflects the growing use of liquefied natural gas and electric heavy-duty vehicles, as well as weaker construction and industrial activity.
"China is moving more freight while consuming less diesel," Binici said, pointing to a decline in the diesel intensity of road transport.
Higher diesel prices initially boosted demand for LNG trucks. LNG vehicles accounted for about 37% of domestic heavy-duty vehicle registrations in March, while new-energy vehicles accounted for 23%, leaving conventional diesel vehicles with about 40%.
However, LNG's advantage narrowed as gas prices followed oil higher. LNG truck registrations fell to about 6,200 in July from over 30,000 in March and April, cutting their market share to 11%.
Kpler said that electric trucks increasingly filled the gap. New-energy heavy-duty vehicle registrations more than doubled over the year in May and June, lifting their share to 41% and 45%, respectively, before reaching 47% in July.
Electric trucks are gaining traction in high-utilization applications such as ports, mines, steel plants and industrial routes, where fixed journeys and centralized charging can maximize their operating-cost advantage.
The LNG and electric heavy-duty vehicle fleets are expected to displace nearly 680,000 b/d of diesel consumption this year. Kpler said that electric trucks are projected to account for about 230,000 b/d of that displacement.