China turns to electric taxis to soften Hormuz oil shock

Published Wed, Jul 15, 2026 · 02:48 PM

[BEIJING] China has an increasingly important buffer against oil price shocks: electric taxis.

Across Chinese cities, taxi usage and ridesharing are booming. In May, people took 3.05 billion trips, with government data showing trips have grown 6 per cent since the Iran war began on Feb 28, versus March to May in 2025.

The jump reflects a quirk of China’s transport structure: fares are falling despite petrol prices rising. Analysts say a flood of new drivers searching for work in a sluggish economy combined with cheap electric cars is depressing fares, in turn attracting passengers who want to save on higher petrol costs.

A part-time Beijing ride-hailing driver surnamed Li said fares have fallen 10 per cent to 15 per cent since he started six months ago. “Competition is intense,” the 36-year-old told Reuters at an electric vehicle charging station.

The flip side can be seen on social media. Since petrol prices began rising in March, hundreds of posts describe how travel by cab or rideshare is cheaper than driving.

“Especially when gas prices are high, I’d rather take a taxi to places that are too far to bike to. That way, I don’t have to look for parking or pay for (petrol),” said Yang, a 45-year-old owner of a petrol car, who only gave her surname.

With the electrification of taxis, the rideshare boom adds to evidence that transportation in China is becoming less dependent on oil, insulating it against oil shocks such as the closure of the Strait of Hormuz.

About half of China’s 1.3 million-strong taxi fleet is electric, according to the Ministry of Transport, and in major cities it is closer to 100 per cent.

Didi, the main ridesharing app, said it registered another two million hybrid or electric cars in 2025, taking its total non-fossil fuel fleet to eight million cars, with electric vehicles accounting for 75 per cent of all mileage.

As a result, China burned 10 per cent less petrol and 14 per cent less diesel in May than a year earlier, even though road freight rose 2 per cent, and road travel during the May Day long weekend hit an all-time high.

Greenpeace forecasts that 90 per cent of taxi and ridesharing mileage will be electric by 2035.

“As fuel prices have gone up, people are driving their own petrol cars less,” said Liu Daizong, East Asia director at the Institute for Transportation & Development Policy in China.

“But overall travel demand is still increasing, so more trips are shifting to public transport, such as taxis and the subway.”

Here to stay?

That flexibility partly explains how China has managed to slash oil imports, which fell 41 per cent in June versus a year ago, without extensively tapping its reserves.

By doing so, China has freed up oil cargoes in a war-constrained global market and helped keep a lid on oil prices.

“The conflict may have accelerated behavioural changes that were already underway, leaving China structurally less dependent on oil than the market has historically assumed,” JP Morgan analyst Natasha Kaneva said in a note on Jul 2.

That possibility will be tested as prices for transport fuels in China fall back to pre-war levels.

JP Morgan expects petrol demand to continue dropping in 2027, but at a slower pace than 2026, forecasting a year-on-year decline of 50,000 barrels per day (bpd) compared with 2026’s decline of 150,000 bpd.

Zhang, 45, an electric car and hybrid owner who only gave her surname, said she usually drives her hybrid in battery mode when fuel prices are high.

“When I saw prices had fallen recently, I went to fill up the tank for my hybrid,” she said. REUTERS