BEIJING – China has an increasingly important buffer against oil price shocks: electric taxis.
Taxi use and ride-sharing are booming across Chinese cities. 3.05 billion people traveled in May, government data shows, since the Iran war began at the end of February, the number of tourists has increased by 6% compared to March-May last year.
This sharp increase reflects the peculiarity of China’s transportation structure, where fares are falling even as gasoline prices rise. Analysts say an influx of new drivers looking for work in the wake of the economic downturn and cheap electric cars is pushing down fares, thereby attracting passengers looking to save on high gas prices.
Li, a part-time driver for a ride-hailing service in Beijing, said fares have fallen by 10% to 15% since he started hailing rides six months ago. “The competition is fierce,” the 36-year-old told Reuters at an electric car charging station.
You can see the other side of this on social media. Since gas prices started rising in March, there have been hundreds of posts explaining how traveling in taxis and rideshares is cheaper than driving.
“Especially when gas prices are high, I prefer to take a taxi to places that are too far away to go by bike. That way I don’t have to look for parking or pay for gas,” said Yan, 45, the owner of a gas-powered car, asking only to give his last name.
Along with the electrification of taxis, the ride-sharing boom is evidence that China’s transportation system has become less dependent on oil, allowing the country to escape oil shocks such as the closure of the Strait of Hormuz.
According to the Ministry of Transport, about half of China’s 1.3 million taxi fleet are electric vehicles, and in major cities the figure is close to 100%.
Didi, the leading ride-sharing app, said it registered an additional 2 million hybrid or electric vehicles last year, bringing its total non-fossil fuel vehicle fleet to 8 million, with 75% of all miles driven being EVs.
As a result, China’s gasoline consumption in May was down 10% year-on-year, and diesel consumption was down 14% compared to the same month last year, despite a 2% increase in road freight transport and record high road traffic during the May Day long weekend.
Greenpeace predicts that by 2035, 90% of taxi and rideshare miles traveled will be electric.
“The rise in fuel prices has reduced the opportunities for people to drive their own gasoline-powered cars,” said Daizhong Liu, director of East Asia at the China Institute for Transport and Development Policy.
“However, overall travel demand is still increasing, with more trips moving to public transport such as taxis and subways.”
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This flexibility partly explains how China was able to cut oil imports, which fell 41% in June compared to a year ago, without drawing down reserves on a large scale. In doing so, China freed up oil cargoes in war-constrained global markets and helped keep oil prices in check.
“This conflict may have accelerated behavioral changes that were already underway, leaving China structurally less dependent on oil than markets had historically assumed,” JPMorgan analyst Natasha Kaneva said in a July 2 note.
That potential will be put to the test as China’s transportation fuel prices return to pre-war levels.
JPMorgan expects gasoline demand to continue to decline in 2027, but at a slower pace than this year, forecasting a decline of 50,000 barrels per day year over year, compared with a decline of 150,000 barrels per day this year.
Zhang, 45, an electric and hybrid car owner who only gave his last name, said he usually drives his hybrid car in battery mode when fuel prices are high.
“I went to fill up my hybrid when I saw the prices had come down recently,” she said.
(Reporting by Lewis Jackson and Sam Lee; Editing by Sonali Paul)
