Goldman Sachs claims China-led EV surge could cut oil demand by 2027

Equities China EV Market, Electric Vehicles, Energy Transition, Global Oil Markets, Goldman Sachs, Oil Demand, Strait of Hormuz

U.S. banking giant, Goldman Sachs, is projecting that rapid electric vehicle adoption, majorly due to higher fuel costs tied to disruptions near the Strait of Hormuz and the US-Iran war, could reduce global oil demand by up to 320,000 barrels per day by the end of 2027.

In a research note published on Sunday June 21, the top investment bank mentioned two different scenarios that end up at the same conclusion. In the “Persistent Acceleration” scenario, where EV market share is expected to grow at the pace seen from February to May 2026, the demand reduction is projected at 0.32 million barrels per day by December 2027. In the more conservative “Temporary Acceleration” scenario, where regional EV adoption rates hold flat at May 2026 levels, production still hits a 130,000 barrel-per-day drop over the same period.

China at the forefront of the EV shift

China accounts for more than 60% of the recent rise in global EV market share, according to Yahoo Finance, with a consistently increasing penetration rate since February. Globally, EV sales reached 26.1% of all new passenger car purchases in May, up 3.4 percentage points over three months, the second-highest level on record.

The trend extends well beyond passenger cars, with Goldman Sachs’ analysts noting that two- and three-wheeled electric vehicles make up the majority of EV sales in India, Vietnam, and China, and each of these displaces about one-third to half the fuel that a passenger car EV would.

This multiplier effect amplifies the demand impact in markets and geographical areas where motorized two-wheelers are the dominant form of transport.

Twelve of the world’s 15 largest EV markets recorded rising adoption rates during the February-to-May period, according to Global Banking & Finance Review.

Goldman Sachs claims oil prices show weaker demand

The EV analysis runs concurrently with signs that fuel consumption is dropping faster than the crude oil markets anticipated.

Goldman Sachs analyst Alexandra Paulus said elevated fuel prices linked to Hormuz supply disruptions likely pushed consumers more toward electric vehicles, a dynamic particularly of weight in China where gasoline demand has weakened as the volume of EVs charging recorded a climb, Yahoo Finance reported.

Separate Goldman Sachs research published earlier this month found that actual retail-use oil demand may have dropped more sharply in response to the higher prices than previously expected.

Retail gasoline sales in China fell by more than 20% from last year’s figures in April, consistent with the lower output from refineries and increased use of rail. Western Europe also saw an average 8% decline in annual retail car-fuel volumes in the same month.

Goldman Sachs has now tied these crude oil demand pressures to a potential slide in Brent crude into the mid-$50s per barrel by late 2027. The bank currently predicts Brent could average $90 a barrel in Q4 2026, but sees a roughly $10-per-barrel drop if demand weakness in China and Europe persists.

The International Energy Agency projects EVs will account for half of all new car sales globally by 2035, even without additional government support, according to Yahoo Finance. Last year, one in four new vehicles sold worldwide was electric.

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Xiaomi founder jabs Apple while celebrating record-breaking EV orders

AI News, Equities Apple Project Titan, China EV Market, Electric Vehicles, Lei Jun, SU7 SUV, Xiaomi

Lei Jun, founder and chairman of Xiaomi Corp., couldn’t resist a jab at Apple as he unveiled the tech giant’s second electric vehicle, a sleek, long-anticipated SUV, during a launch event in Beijing late last month.

“Since Apple stopped developing its car, we’ve given special care to Apple users,” Lei said, noting that iPhone users could seamlessly sync their devices with Xiaomi vehicles.

The comment, a thinly veiled dig at Apple’s failed decade-long, $10 billion Project Titan, was followed by an impressive flex: more than 289,000 orders for the SUV were placed within an hour, surpassing demand for the SU7 sedan introduced in March 2024.

Xiaomi founder jabs Apple while celebrating record-breaking EV orders

Where Apple faltered, Xiaomi has soared, solidifying Lei’s legacy, boosting Xiaomi’s market value, and shaking up the tech and auto sectors. Apple’s abandoned pursuit of a fully autonomous vehicle underscored the missteps of moonshot ambitions. At the same time, Xiaomi’s grounded, pragmatic approach — blending Tesla- and Porsche-inspired designs with its signature affordability — has proved more effective.

China’s mature EV ecosystem gave Xiaomi an edge Apple never had: abundant subsidies, a robust charging infrastructure, and a ready supply chain.

Yale Zhang, managing director of consultancy Automotive Foresight, said Lei and Xiaomi’s charisma, brand recognition, and ecosystem cannot be underestimated. He continued to say that young consumers who are already loyal to Xiaomi naturally consider it when buying EVs.

Still, car manufacturing poses far greater challenges than smartphones or gadgets, from regulatory compliance to geopolitics. Xiaomi is charting new territory as one of the first tech giants to go full-scale into car production.

Unlike Apple’s high-concept, constantly shifting EV goals, Lei took a focused and frugal approach, calling carmaking his “last entrepreneurial project.” Xiaomi’s journey included tapping into China’s automaking talent pool, visiting companies like Geely and Great Wall, and poaching top talent from BAIC, BMW, and SAIC-GM-Wuling. Among the hires was Hu Zhengnan, formerly of Geely, credited as key to the SU7’s development.

Behind the scenes, Xiaomi pursued aggressive recruitment and built deep ties across the EV supply chain. It invested over $1.6 billion in over 100 component manufacturers between 2021 and 2024, from lidar to voltage converters, ensuring control and insulation from the supply chain disruptions that once plagued its smartphone business.

Xiaomi even constructed its own EV plant, bypassing the contract manufacturing route of peers like Nio and Xpeng. The decision reflects lessons from early Xiaomi, where strained supplier relationships — including a near-break with Samsung — forced Lei to negotiate over red wine to mend ties personally.

Can Xiaomi compete with Tesla and BYD?

Yet Xiaomi’s ascent hasn’t been without criticism. The SU7 has been dubbed the “Porsche Mi” for its familiar design, and SAIC’s vice president reportedly slammed Xiaomi’s approach as “shameless.” A fatal March accident involving the SU7 while its assisted-driving system was active led to government scrutiny and a rare period of silence from Lei.

Even so, the SU7 remains a top seller. Xiaomi’s loyal fanbase — known as “Mi Fans” — continues to drive sales. “A significant number of older buyers are purchasing the SU7 for their children,” said Rosalie Chen of Third Bridge, highlighting the model’s trust factor.

For 2025, Xiaomi has raised its delivery target to 350,000 vehicles, fueled by the SUV’s popularity and the newly introduced YU7. Starting at $30,100 for the SU7 and $35,000 for the SUV, Xiaomi’s vehicles are price-competitive with Tesla’s offerings. Its EV unit is projected to become profitable in the second half of 2025.

Yet the scale of Xiaomi’s operation is small when compared with giants such as BYD (with 4.3m EV and hybrid sales in 2023), Tesla (1.78m), or Toyota (10.8m in all markets globally). Having no offering in the mainstay sub-$20,000 market, which firms like BYD currently control, would see Xiaomi become a boutique brand for the rich, much like Tesla

Still, Lei is in an expansionist mood globally. He has recently said that Xiaomi could start overseas car sales as soon as 2027, from an R&D center in Munich with potential launches in Germany, Spain, and France, even as tariffs on Chinese EVs go up in the US, the EU, and Turkey.

Lei has acknowledged that Xiaomi is a late entrant to the auto business. But, he said, there is always potential for latecomers in a technology- and innovation-driven market.

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