China is rapidly becoming a global leader in the adoption of LNG heavy-duty trucks, driven by supportive policies, expanding infrastructure, and rising cost advantages over diesel. While electric trucks continue to grow in relevance, the shift toward natural gas vehicles has notably reduced diesel's dominance in the heavy-duty segment, with long-term implications for the country’s fuel demand outlook.

Market Profile

China

Road Transportation 

China&rsquo;s heavy-duty truck market is experiencing a significant transition as the country shifts away from traditional diesel-powered trucks to cleaner alternatives like liquefied natural gas (LNG) and electric trucks. Between 2021 and 2024, LNG heavy-duty truck sales skyrocketed, more than tripling to capture a 21% share of the market. This surge in LNG truck adoption is primarily driven by a growing cost advantage over diesel, supported by government incentives as well as a rapidly-expanding refueling infrastructure. Falling diesel truck sales have also been influenced by the rising popularity of electric heavy-duty trucks, with a wider range of models offering battery swapping capabilities to address range limitations.&nbsp;The growth of the Chinese LNG and electric heavy-duty truck market is expected to have significant implications for the country's overall diesel demand...

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LNG Truck Expansion Accelerates in China, Dampening Diesel Demand

In recent years, China has emerged as the global leader in the adoption of liquefied natural gas (LNG) trucks. The growing demand for LNG-powered heavy-duty vehicles (HDVs) above 11.8 tonnes is driven by a combination of environmental policies, economic incentives, and industry innovation. Between 2021 and 2024, LNG truck sales market share in China more than tripled to reach over 178,000 new registrations in 2024 alone. This sharp increase in LNG truck sales was accompanied by a significant decline in diesel truck sales, with their market share dropping by over 19.2% during the same period.

<h2>Key Policies Driving LNG Truck Adoption</h2>
Several Chinese government policies have played a key role in driving the transition to LNG trucks. The China VI Emission Standards, which came into effect in July 2021 for new vehicles, are among the most stringent emission regulations worldwide. These standards apply to both light-duty and heavy-duty vehicles, including trucks, and impose stricter limits on pollutants such as nitrogen oxides (NOx) and particulate matter (PM), making LNG trucks an ideal choice for fleet operators seeking to meet these requirements.
Although China offers various financial incentives and subsidies at the provincial and city levels to promote the adoption of lower-emission trucks, these purchase subsidies--which can reach up to 95,000 yuan (USD 13,100) for new energy heavy-duty trucks that meet the National VI emission standard--apply only to electrified powertrains and cleaner diesel trucks, excluding LNG trucks. However, LNG trucks do benefit from tax incentives, such as exemptions from vehicle taxes as well as toll discounts. In addition, to encourage the replacement of older, more polluting trucks, the government offers a truck scrapping program, providing fleet owners with up to 45,000 yuan (USD 6,200) incentives when they replace old diesel trucks with newer, low-emission LNG-powered trucks.
The Chinese government has also heavily invested in expanding LNG refueling infrastructure along key freight corridors, ensuring greater accessibility for long-haul LNG truck operators. From 2019 to 2024, the number of LNG refueling stations in China grew by more than 56%, reaching around 5,000 stations by the end of 2024. This growth was primarily driven by more than 80 domestic liquefaction plants, supplied by local gas fields, and concentrated along major freight routes and logistics hubs in provinces like Shanxi, Hebei, and Ningxia. Despite the major growth in LNG import infrastructure in China, the expansion of LNG trucks has not been directly linked to this. In fact, the share of imported LNG utilized by domestic liquefaction plants is minimal, as imported LNG is generally regasified at import terminals and then distributed through pipelines for end use, rather than being redirected to liquefaction facilities.
To encourage the use of natural gas in the transport sector, China exempts both liquefied and compressed natural gas (CNG) from consumption taxes. In part, this makes LNG and CNG subject to a significantly lower tax rate compared to diesel and gasoline, which are heavily taxed in China. While CNG adoption in the Chinese heavy-duty truck sector has also seen a surge, CNG usage is preferred for vehicles operating on localized, shorter routes where frequent refueling is practical, such as public buses, taxis, and light-duty commercial vehicles&mdash;altogether making LNG a much more suitable alternative for long-haul heavy-duty transport.


<h2>Recent Trends of LNG Truck Adoption</h2>
The Chinese LNG truck market has seen rapid growth in recent years, driven by favorable economic conditions and rising fuel cost advantages.
In 2021, LNG HDV sales in China reached approximately 59,300 units, marking a 60% decrease compared to the previous year. The sharp decline in the LNG heavy-duty truck market was driven by two main factors. First, low road freight rates resulted in weak demand in resource-based logistics. Second, LNG prices experienced a significant increase starting in mid-2021, rising to approximately 5.55 yuan (USD 0.76) per litre of diesel equivalent by mid-year, and continuing to climb sharply to 11.66 yuan (USD 1.61) per litre of diesel equivalent by early November. Meanwhile, persistently low road freight rates further dampened demand in key sectors like coal and steel logistics, where LNG trucks are heavily used. Since tractor models, essential for long haul transport, account for over 90% of LNG heavy-duty trucks, this downturn in freight activity had a considerable impact on sales. As LNG truck demand fell, diesel truck sales by leading OEMs surged by an average growth of about 250% in 2021, based on data from the China HDV Sales by Leading OEMs table in the following section
However, by 2023, LNG truck sales had surged to over 150,000 units, representing over 16% of total heavy-duty truck sales, equivalent to over a three-fold increase in sales from 2022. This rapid adoption was heavily influenced by the consistent drop in LNG prices to about 7.09 yuan (USD 0.98) per litre of diesel equivalent by the end of 2024, which created a slight cost advantage over diesel, priced at 7.42 yuan (USD 1.02) per litre.
[shoojuview id="bojqalbvtkuvxmljaqel"]
Note: NGV includes both CNG and LNG vehicles.
Source: Stratas Advisors

Although electric truck sales have surged in recent years, growing at a CAGR of 43.6% from 2019 to 2024, LNG trucks have experienced even more significant growth, increasing over fourfold since 2022. In 2024, LNG trucks accounted for 19.8% of sales, far surpassing electric trucks, which held just 4.1% of the market. The sustained and stable oil-gas price gap has been a key driver in the industry's transition from diesel to natural gas, as the cost advantage makes gas-powered vehicles more economically viable. Additionally, the expansion of gas refueling infrastructure has further reinforced user confidence, encouraging wider adoption of natural gas vehicles. In China, the number of LNG refueling infrastructure increased by about 56%, increasing from 3,200 in 2019 to about 5,000 in 2024, significantly improving refueling accessibility and convenience for operators.
In contrast, electric trucks face several key limitations that make them less competitive than LNG trucks in the heavy-duty segment. Their shorter range, typically 300&ndash;500 km compared to over 1,000 km for LNG trucks, along with long charging times and higher upfront costs due to expensive batteries, reduces their appeal for long-haul use. Additionally, the heavy battery weight lowers payload capacity, further affecting efficiency. While EVs offer long-term sustainability, LNG trucks currently outperform them in terms of range, refueling speed, cost-efficiency, and overall practicality for heavy-duty logistics. Infrastructure also remains a challenge preventing a stronger adoption of electric trucks. Due to constraints in charging infrastructure for long-haul operations, battery swap-capable heavy trucks have experienced rapid growth in demand. These vehicles benefit from reduced battery size requirements, allowing for increased cargo capacity and quick turnaround times during battery swaps.​ The rising demand for swap-capable heavy-duty trucks has significantly contributed to the overall growth of the electric truck market, with swap-capable models accounting for approximately 30&ndash;35% of electric truck sales in 2024.


<h2>Growing Demand for LNG Trucks Among Leading OEMs</h2>
China's major truck manufacturers have actively responded to the rising demand for LNG trucks by expanding their LNG vehicle portfolios. Key players such as FAW Jiefang, Dongfeng Motor, Shaanxi Auto, and Sinotruk have ramped up production to cater to this surging demand.
[shoojuview id="nxiknqeekogytlkyduzo"]
Source: Stratas Advisors

As demand surged in 2023, LNG truck sales from leading OEMs increasing by over 700% on average compared to the previous year. Dongfeng experienced nearly a tenfold growth, while Jiefang led the market with nearly 100,000 LNG trucks sold, representing 64.5% of the total LNG trucks sold in the country. Similarly, as overall HDV sales increased in 2023, diesel truck sales also saw growth, but at a much slower rate compared to LNG trucks. Leading OEMs experienced an average growth of 36.5% in diesel truck sales, reflecting a significantly more modest rise compared to the sharp increase in LNG truck demand.
In the past, discussions about the gas truck market primarily focused on the heavy-duty tractor segment, which traditionally held a dominant market share. While this segment continued its rapid growth in 2024, the gas truck market has also expanded to include a wider range of models, marking a key shift in industry dynamics. By mid-2023, brands capitalized on the growing demand for gas trucks. Beyond tractors, manufacturers are actively introducing gas-powered rigid trucks, broadening the market scope. Models such as Jiefang JH6 and Sinotruk Shandeka exemplify this shift, demonstrating the increasing strength and potential of the gas truck market.
Several high-performance LNG models have been unveiled in recent years, including the 700-horsepower Sinotruk Shandeka and X6000, equipped with a 16-liter Jiefang 6SX1 gas engine and an output of 530-660 horsepower. These high-performance models address the growing demand for more efficient natural gas vehicles in the logistics sector. As transportation efficiency becomes an increasingly important competitive factor, high-horsepower gas engines provide significant advantages, such as stronger power output for efficient long-haul transport, lower-speed cruising to reduce fuel consumption and noise, and enhanced engine braking to improve both safety and efficiency.
Compared to LNG trucks, CNG has a lower energy density and is more commonly used in light trucks, although it is cheaper and benefits from a larger refueling infrastructure, with approximately 20,000 stations, nearly four times the number of LNG refueling stations. However, OEMs are now launching dual-fuel engine trucks, capable of running on both LNG and CNG, such as Jiefang's J6V, which delivers 530 HP. This power is sufficient to handle demanding tasks like heavy-load starting, acceleration, and climbing. Similarly, SINOTRUK's Shandeka G7H, with a maximum output of 560 HP, matches the power of a diesel engine with the same displacement, enabling operators to leverage both types of natural gas efficiently. This combination not only provides greater fuel availability and operational flexibility, but also ensures that when the commonly used CNG supply is depleted, LNG can serve as a backup fuel, reducing the risk of vehicles being stranded and extending their operational range.
With the rising demand for battery-swapping in China, major OEMs are steadily expanding their swap-ready electric truck lineups as well. Jiefang currently offers two swap-ready heavy-duty truck models, while Sinotruk, Dongfeng, and Shaanxi each have one model available. In 2024, China&rsquo;s electric heavy-duty truck market saw substantial growth, with total sales reaching approximately 36,600 units&mdash;a 55.7% increase from the previous year. Sinotruk led the market with 3,400 units sold, capturing a 9.3% share, followed by FAW Jiefang with 3,021 units sold and an 8.3% market share in 2024.&nbsp;


<h2>Long-Term Outlook</h2>
China's strategic focus on LNG trucks has driven growth in LNG truck sales, which are projected to make up 22.4% of total heavy-duty truck sales by 2030, rising from 19.8% in 2024&mdash;reflecting a compound annual growth rate (CAGR) of 6.9%. From 2030 to 2050, growth is expected to slow, with sales increasing at a more modest CAGR of 1.2%, reaching nearly 335,000 units and accounting for approximately 22.8% of the market.&nbsp;In turn, the diesel heavy truck fleet is expected to experience a significant decline, losing more than 30% of its market share&mdash;from 91.4% in 2024 to 60.8% by 2050. Although diesel truck sales will continue to grow at a slowing pace between 2024 and 2030, their market share is projected to drop from 75.8% in 2024 to 72.2% in 2030, and further decline to 54.6% by 2050.
However, the long-term dominance of natural gas-powered heavy-duty vehicles is expected to wane as electric trucks become more competitive. In fact, electric trucks are already gaining traction in urban and short-distance applications, and are expected to become more prevalent as battery technology improves and charging infrastructure expands. A key determining factor for the Chinese electric truck segment is also the expansion of battery swapping, which could effectively address range limitations and maximize operational time for electric trucks as fast charging infrastructure expands. By 2030, Stratas Advisors projects that electric heavy-duty trucks will account for 4.9% of new registrations, up slightly from 4.1% in 2024. This share is expected to rise significantly to 21.7% by 2050, driven by exponential growth in the latter half of the forecast period, with a CAGR of 8.9%, as electric trucks are projected to nearly match LNG trucks in sales market share by 2050.
In general, the shift to natural gas and electrification in China&rsquo;s trucking segment will have significant implications for the country&rsquo;s diesel demand, which is largely driven by the road sector. From 2.2 million barrels per day in 2024, China&rsquo;s consumption of diesel in the road sector is forecasted to fall to 1.9 million barrels per day by 2050, driving a gradual decline in overall gas oil demand in the country from 2030 onwards.
[shoojuview id="srynjczrksspxvxgnawm"] &nbsp;&nbsp;
Note: NGV includes both CNG and LNG vehicles.
Source: Stratas Advisors
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China&rsquo;s heavy-duty truck market is experiencing a significant transition as the country shifts away from traditional diesel-powered trucks to cleaner alternatives like liquefied natural gas (LNG) and electric trucks. Between 2021 and 2024, LNG heavy-duty truck sales skyrocketed, more than tripling to over 178,000 units, capturing a 21% share of the market. This surge in LNG truck adoption is primarily driven by a growing cost advantage over diesel, supported by government incentives such as a truck scrapping program that encourages the replacement of old diesel trucks with newer, low-emission LNG-powered models. Additionally, the rapid expansion of LNG refueling infrastructure has made LNG trucks more accessible and practical for fleet operators.
Parallel to LNG&rsquo;s rise, electric heavy-duty trucks are also gaining traction in China. However, the growth of electric trucks has been constrained by limitations in charging infrastructure for long-distance operations. In response, battery swap-capable heavy trucks have experienced a surge in demand, accounting for around one-third of all electric truck sales in 2024. In fact, electric heavy-duty truck sales in China increased by over 55% in 2024, with battery-swapping models comprising roughly one-third of those sales.&nbsp;
The growth of the Chinese LNG and electric heavy-duty truck market is expected to have significant implications for the country's overall diesel demand. With historical diesel demand stemming primarily from the road sector, China's consumption of diesel in this segment is forecasted to fall by -14% between 2024 and 2050, driving a gradual decline in overall gas oil demand in the country from 2030 onwards.

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