The conventional wisdom in many corners of the oil market right now is that while electric vehicles will erode demand for liquid fuels in the passenger-car segment, transport in heavy trucks should provide steady growth for decades to come. The line of reasoning here is that as the world continues to get wealthier, more things get moved around by big, road-going rigs and there are limited alternatives to diesel in these heavier vehicle segments.

Exxon’s most recent Energy Outlook, published in late December, certainly reflects this view. The company sees dramatic growth in energy consumption from heavy trucking out to 2050, and only a tiny sliver of this being met by oil alternatives.

There are reasons to question this wisdom: For one, clean-energy policies targeting trucking are increasing. California’s Advanced Clean Truck rule, which five other states also have adopted, sets rising quotas for zero-emission truck sales over the next 15 years. In turn, meeting the EU’s upcoming fuel efficiency standards is likely to require electric trucks to be part of the sales mix.

The industry is responding. Volvo AB, Daimler Trucks and Volkswagen subsidiary Traton expect between 35% and 60% of their global sales to be electric and fuel cell by 2030. The three groups sold 735,000 medium- and heavy-duty trucks in 2020, in a global market of 4.6 million units.

Critics might point out that these are just announcements, and that the future of global oil demand won’t be determined by what happens in California, or by the targets of a few truck makers. Some of that is valid, but what’s happening in China is harder to ignore.

China’s heavy truck market is the largest in the world and the chart below shows sales of heavy trucks classified as ‘new energy vehicles’ by month in 2021. New-energy vehicles include battery electrics, plug-in hybrids, and fuel cell vehicles.

That’s a dramatic growth story throughout 2021, and my colleagues in our Beijing office are confident that the trend will continue through 2022 and beyond. There are a few caveats: first, the starting point in the first quarter was low due to a policy change at the beginning of the year. Second, despite the growth, new-energy trucks were still a small share of the heavy truck market, representing about 1% of sales in China in 2021.

The growth is one interesting angle, but the mix of drivetrain technologies that are being deployed in this segment might be even more important. Of the just over 10,000 new-energy heavy truck sales last year, 62% were normal battery electric vehicles, 31% were EVs with swappable batteries, and 7% were fuel cell vehicles.

Truck usage patterns vary widely and it’s not clear yet exactly which technology will win in each sub-segment and duty cycle. Most of the new energy trucks deployed to date in China are logistics and sanitation vehicles.

The point is China is experimenting, and once it finds the right solutions for the right segments, it will adjust policy support and push hard to accelerate deployment. When that happens, the speed of the transition could be dramatic. BNEF’s analysis indicates that electric trucks are already approaching cost competitiveness in urban applications and should get there for long-haul applications around 2030.

We’ve seen this pattern before in China’s bus market. Once it was clear that electric buses were a viable option, sales went from 4,300 in 2013 to over 100,000 in 2018. There are now nearly 700,000 electric buses on the road there — around 30% of the fleet — and those e-buses are displacing about 230,000 barrels per day of oil demand.

If the same happens for heavy trucks, it should cause a major rethink in the conventional wisdom about how robust oil demand will be in this segment in the decades ahead.