Oil's Monopoly Kaput, China To Be Top Supplier Of Energy Security

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Young energy analysts have no clue what we old timers are droning on about. China's advances in battery technology – energy density, cost and charging times – have broken oil's monopoly on transportation.

All pain points of electric vehicle ownership have been removed. Battery prices have plummeted 90% in the past 15 years. BYD's newest models have 1,000 km ranges with 5-10 min charging times. NIO has battery swapping stations all over China. And to top it off, EVs with over 500 horsepower – exotic sports car league a decade ago – are now common in mid-market sedans and SUVs.

Similarly, solar panel costs have fallen 85% in the past 15 years as China's solar companies increased photovoltaic efficiency and, more importantly, automated and massively scaled production.

Largely because of solar, China's CO2 emissions peaked a couple years ago, well ahead of its 2030 target. China is on track to becoming carbon neutral in 2040, 20 years ahead of its 2060 target (see here ).

About 45% of the world's oil (48 mmbbl/d) is refined into gasoline for passenger vehicles. Another ~30% (32 mmbbl/d) becomes diesel for trucking. All of these barrels will come under intense market assault by China's advances in batteries, electric vehicles and solar power (with assists from wind, nuclear, hydro and power transmission). Global initiatives to diversify transportation away from oil intensify the urgency.

EVs have already captured over 50% of China's new car sales. China's EV production has increased over 10x in the past 5 years and ~50x in the past 10 years. Adoption has been lower in other markets as their governments lacked urgency. Nonetheless, China's EV exports have increased 15x in the past 5 years to 343,000 units in 2025. Growth will surely accelerate as the US, Israel and Iran demonstrate how easily the oil market can be wrecked.

An electric vehicles is 3-4x more energy efficient than an internal combustion engine (ICE) car, a Rube Goldberg contraption that suffers from waste heat, friction and idling losses.

China's manufacturing costs have cut the price of EVs to half that of“equivalent” ICE cars sold in the US and Europe.

With oil prices threatening to double from $75 per barrel prewar, the math does itself.

Oil importing countries will now invest heavily to further break oil's monopoly on transportation.

With China's EV/battery technology, manufacturing costs and endless model variety, EV adoption no longer comes with penalties, but in fact imbed all kinds of benefits – from lower purchase prices to lower cost of operations to far better acceleration to whizzbang software wizardry. China has also been aggressively pushing EVs into trucking – both short and long haul.

No longer tied to oil, transportation can promiscuously source energy. Anything that burns. Anything that flows. You can split atoms. But if you really do the math, the cheapest, fastest and most scalable energy source today is solar.

Al of this will accelerate China's reversal of the Lucas Paradox – a decades-long economic aberration in which capital flowed from poor country to rich – as developed economies ran trade deficits and developing economies tightened belts to lend to rich customers.

This violation of classical economic physics – where capital is supposed to flow from rich to poor – is being corrected as China has now not only become rich, but the richest economy there ever was. Correctly measured, China's manufacturing output is larger than that of the US, EU, India, Japan, UK and Russia combined (see here and here).

The Lucas Paradox was a hangover of history. In the past few centuries, the world's choicest assets – the North American landmass (throwing in Australia and New Zealand) – through whatever methods, landed in the laps of the Anglo Empire (first the British, then the Americans).

At the same time, China, historically the world's most productive civilization (see here ), suffered an embarrassing century long face plant.