In China, taking a taxi is already cheaper than using your own vehicle for one reason: electric cars

China is experiencing a peculiar situation: on its streets, it is now cheaper to get around by taxi than by private car. According to the latest data from the Ministry of Transport collected by the Reuters agency, lTaxi trips grew by 6% since the outbreak of the Hormuz crisisa phenomenon that coincides with the increase in fuel prices and the enormous electrification of urban fleets. This percentage translates into more than 3,050 million taxi trips in the month of May alone, demonstrating that the international geopolitical situation has a great impact on people’s daily lives.

The context. The war in Iran and the situation in the Strait of Hormuz have caused Chinese crude oil purchases to reach historic lows. Last June, oil imports had a collapse of 41.3% year-on-yearwhich placed them at their lowest level in a decade since October 2016, with only 29.27 million tons (about 7.12 million barrels per day). Added to this is also the low production that the national refineries are having due to a fairly low internal demand. All of this has created the perfect cocktail to generate a shortage situation that has skyrocketed prices, among other things, of gasoline.

The secret is in the electrical. This is where the taxi comes into play. Although fuel prices rise every day, the rates for this type of transport in China are becoming cheaper. This is because, as Reuters indicates, almost half of the country’s taxi fleet is electric (a condition that in cities covers almost 100% of the car supply) and, therefore, is not as dependent on volatile oil prices, making it an effective shield from China. in front of shock of Hormuz.

But not only that. In recent times, the increasingly easier access to an electric vehicle and the slowdown of the Asian country’s economy has pushed many Chinese citizens to take the leap to be independent professionals and look for work in the mobility sector as drivers with their own car. According to Reuters, companies like DiDi, the main Chinese MaaS application, have grown thanks to this phenomenon. In this case, the company has incorporated more than 2 millions of hybrid or electric vehicles in the last year, which represents a total of more than 8 million fossil fuel-free models in its fleet. Thus, there is more supply and more competition and the rates, consequently, are much cheaper.

The user wins. This new trend has already flooded the Asian country’s social networks and, in addition to the lower rates and savings on gasoline, many Chinese citizens point out the comfort of the trip and the ease of not having to look for parking as other benefits of opting for a taxi, as expressed by Yang, owner of a gasoline car, to Reuters. However, not everything is risk-free, since these economics professions in demand -such as those of a professional driver, riders and couriers – are in high demand and could end up saturating the market.

A change forever? Since the crisis, it is no secret that the world is getting used to living with a 9% less oil which previously passed through Hormuz. Like many other countries, China is now seeking to be less vulnerable to international volatility and rely less on fossil fuels.. It does so in a very clear commitment to leading decarbonization by dominating the global production of solar panels, batteries and, of course, electric vehicles. The big question is whether this change responds solely to the rise in oil prices or whether it will end up consolidating a change in habits in the mentality of Chinese citizens even when the energy market stabilizes again.

Cover image | Teresa Wang

In Xataka | China has so many electric cars running on its streets that it is going to use them to generate energy for homes