China Is Replacing Oil With Electricity

The use of electric trucks in China has increased 90% year over year.

And that is interesting well beyond the EV market itself.

A new analysis estimates that electric vehicles displaced around 36 million tonnes of oil in China during the first half of the year.

We usually look at this transition through the oil market. More EVs mean lower demand for gasoline and diesel.

But for silver, I find the other side of the equation more interesting.

China isn’t simply reducing its oil consumption. It is replacing part of its energy system with electricity.

Electric trucks need charging stations. Those stations need power electronics, switchgear and connections to the grid. Higher electricity demand also means greater pressure on transmission and distribution infrastructure.

And silver has a role in many of these electrical systems.

Manufacturers can gradually reduce the amount of silver they use as they cut costs and improve efficiency.

But the scale of the transition matters.

For decades, China built an economy around enormous consumption of fossil fuels. Now part of that system is gradually being replaced by one that requires more electrical equipment, more grid capacity and more power electronics.

When people talk about silver and the energy transition, solar usually gets most of the attention.

I wouldn’t overlook transportation.

If electric trucks, buses and passenger vehicles continue replacing oil consumption at a similar pace, the most interesting question for silver won’t be how much metal goes into a single vehicle.

It will be how much electrical infrastructure needs to be built around millions of them.