Key Takeaways
China’s latest 5-year plan sets a target of 70% “New Energy Vehicles” (NEVs), electric vehicles and hybrids, for passenger-car sales and 40% for commercial-vehicle sales by 2030.
The plan also directs that vehicles equipped with autonomous driving functions begin large-scale use, expecting their safety performance to substantially surpass that of human drivers.
China intends to closely monitor the results, including oversight of vehicles and batteries as well as manufacturer performance, with the goal of becoming a world automotive powerhouse.
The sales goals are not far-fetched, as NEV sales in August were 62% of total vehicle sales, as high oil prices due to the Iran conflict helped drive EV adoption.
China, the world’s largest oil importer, is weathering the effective closure of the Strait of Hormuz fairly well as it has reduced its oil imports and banned petroleum exports for a major portion of the conflict in the spring and early summer of 2026.
China released the “Intelligent Connected New Energy Vehicle Industry 15th Five-Year Plan,” a 2026-2030 roadmap, announcing new targets: new energy vehicles (NEVs) should account for 70% of domestic new passenger-car sales and 40% of new commercial-vehicle sales by 2030. China also plans to deploy vehicles equipped with autonomous driving functions at scale, saying that the safety performance of such vehicles should substantially surpass that of human drivers. They say mechanisms will support this by assessing the technology’s maturity and safety. The plan calls for tighter oversight of vehicle and battery capacity, mergers and restructuring, and curbs on improper local investment incentives. It is a top-down approach led by the central government, with strict goals and standards for companies and the buying public.
Besides setting NEV sales shares, the plan calls for average passenger-vehicle fuel consumption to fall to 3.3 liters per 100 kilometers by 2030, while battery electric passenger cars should consume around 11.5 kilowatt-hours per 100 kilometers. Labor productivity per employee across the industry is targeted to rise 15% from 2025 levels. Highly automated driving will be implemented on expressways, urban expressways, and selected urban roads. To advance commercialization, China will conduct demonstrations involving autonomous passenger cars, buses, long-haul logistics and urban delivery, while taking an orderly approach to vehicle approvals and road access. The plan also aims to foster several automakers ranked among the world’s top 10 by sales, along with auto parts companies ranked among the global top 100. China wants its auto industry to join the ranks of the world’s automotive powerhouses.
To implement the plan, China will maintain NEV tax incentives, support vehicle trade-ins, promote NEV adoption in rural areas, and back the replacement of city buses and their batteries. It will also deepen reforms to NEV insurance. It aims to centralize transportation control under the State.
At the end of last year, new energy vehicles accounted for 54% of all passenger vehicle sales in China. Electric vehicles and hybrids accounted for 65% of China’s total passenger car sales in August, according to data by the local Passenger Car Association (PCA). EV targets are expected to continue eroding road fuel demand in China, which has been falling for the second year in a row. This year’s decline is steeper due to higher oil prices stemming from the Iran conflict.
In Southeast Asia, consumers are willing to wait in long lines to buy popular Chinese NEV models. In Europe, five Chinese automakers sold a combined 138,000 vehicles across 31 countries in May, up 64% year on year. For the first time, Chinese automakers surpassed Japanese carmakers in monthly new vehicle registrations in Europe. In South America, Brazil is the largest destination for China’s NEV exports. In July, BYD’s plant in Brazil produced its 100,000th vehicle.
Data from the China Association of Automobile Manufacturers show that China’s exports rose from 977,300 in 2013 to 7.098 million vehicles in 2025, more than sixfold in 12 years. From 2021 to 2025, China’s vehicle exports increased by about one million units annually. In the first seven months of this year, China’s vehicle exports reached 6.14 million units, up 66.8% year on year. Strong NEV growth has played a major role in propelling China to become the world’s largest automobile exporter.
China’s Sinopec, the world’s top refiner by capacity, expects Chinese oil demand to drop by 8.9%— 600,000 barrels per day — in 2026 from a year earlier, due to demand destruction from higher oil prices and the acceleration of EV adoption. Gasoline demand is expected to decline by 8.7%, while diesel consumption is expected to drop by 11.4%. The only petroleum product used in transportation expected to increase is jet fuel, whose demand is expected to rise by 1.3% this year compared to 2025.
China, the world’s largest oil importer, built a huge oil reserve of around 1.4 billion barrels and banned exports of petroleum products during the spring and early summer of the Iran conflict, which helped the country absorb price increases from the effective closure of the Strait of Hormuz by the Iranians. The high oil prices also sped up the adoption of electric vehicles.
With these changes, Sinopec, or China Petroleum & Chemical Corporation as it is officially known, is looking to transform its business. Sinopec will be allocating more capital to new energy and chemicals by the end of the decade to grow revenues and profits amid the lowest domestic fuel sales in China in nearly a decade. The company’s chairman is looking to develop shale oil fields, sustainable aviation fuels, and cut refining costs to make Sinopec more resilient to the declining fuel demand in China. In its first-half earnings release, Sinopec noted falling domestic fuel sales, which have been weighing on the company’s earnings for two years.
Conclusion
China targets NEV shares of 70% for passenger-car sales and 40% for commercial-vehicle sales by 2030 in its 5-year plan. Vehicles equipped with autonomous driving functions are expected to enter large-scale use, with safety performance substantially surpassing that of human drivers. These sales goals are not far-fetched, as NEV sales in August were 62% of total vehicle sales, and high oil prices due to the Iran conflict helped drive EV adoption. China, the world’s largest oil importer, is weathering the closure of the Strait of Hormuz fairly well, as it has reduced its oil imports and banned petroleum exports for much of the conflict in the spring and early summer of 2026.
