​Is generative AI the primary driver of electricity demand?

Posted by | Michael Ratcliffe

​From Cars to Trucks: How EVs Are Redefining the Future of Energy Demand 

​The growth of data centers and generative AI has sparked a wave of headlines and debate about looming electricity shortages. A key question is whether generative AI is now the primary driver of electricity demand? 

​Bloomberg suggests otherwise. In their recent article, Electric Vehicles Remain Key Driver for Grid Investment Despite Data Center Boom¹, they argue that the real force behind rising power demand isn’t silicon — it’s steel and rubber. Electric vehicles, not AI, are driving the grid. 

​Understanding how on-road electric vehicles are, and are likely to remain, the key driver of demand for electricity is a worthwhile exercise as this is a complex landscape with some interesting dynamics. 

​Passenger Cars: China Sets the Pace

​The EV story begins, and is largely defined, in China. By 2025, the country will sell 16 million new energy vehicles (NEVs)² — over 70% of the global total. By 2030, that number is projected to reach 20–25 million, accounting for nearly 80% of worldwide sales³. 

​Chinese EV makers are also expanding aggressively into emerging markets such as Southeast Asia, Central Asia and the Middle East. While protectionist tariffs may slow their entry into Europe and the US, the global momentum is clear. 

​A European perspective

​Europe, by contrast, is struggling to keep pace. The EU’s target of banning new internal combustion cars by 2035 looks increasingly unachievable. BEV and PHEV sales sit at around 4 million today⁴, with forecasts suggesting only around 6.8 million sales by 2030⁵ which is just a quarter of China’s projected output. Industry heavyweights such as Stellantis are already pulling back from full-EV commitments within this timeframe, stating that the EU’s goal of only zero-emission new cars by 2035 was unachievable⁶. 

​Toyota’s tech influence 

​Europe is not the driving force behind Bloomberg’s forecast. Most Japanese manufacturers take the lead on technology from Toyota, so all Japanese manufacturers have remained stuck on hybrids, not EVs. In the Far East, only the Koreans are following China’s lead, aggressively switching to EVs thanks to help from government ZEV policies which are targeting a full EV transition by 2035. 

​The US is, at last, aggressively accelerating its transition to EVs; helped by the Inflation Reduction Act, state mandates, and Tesla’s continued dominance (around 50% of US EV sales⁷). But like Europe, where uptake of EVs is regional, adoption is uneven, with California accounting for the majority of sales while other states lag behind⁸. 

​Trucks: Is This the Next Battleground? 

​Passenger EVs dominate today’s electricity story but heavy vehicles could define the next chapter. 

​While passenger cars are setting the pace today, the bigger disruption to the grid may come from heavy trucks. These vehicles consume far more energy per unit than cars and electrifying them could rapidly shift electricity demand. 

​Europe & the US: Still Stuck on Diesel 

​In Europe and the US, electrification of heavy trucks has barely begun. In the US specifically, the big hope was with Tesla and its Semi, but this has still not launched despite years of prototyping and testing. 2027 is now its predicted European launch date⁹.   

​Today, eHGVs represent just ~1% of new sales¹⁰, with Volvo holding a leading share in both regions¹¹. Uptake is largely confined to urban fleets such as refuse collection and construction. 

​The barriers are clear: 

• ​Charging infrastructure is thin, especially for long-haul freight. 
• ​Battery costs remain high, and range anxiety is more acute for long-distance trucking than for passenger cars. 
• ​Fleet conservatism: operators are reluctant to move away from diesel, which still accounts for well over 95% of new truck sales¹². 

​China: From Diesel to Electric in Record Time 

​China is once again moving fastest. Indications are that the growth in sales in new electric trucks between 2024 and 2025 is almost 100%¹³.

​Reports imply that they can already offer 15% lower total cost of ownership (TCO) than diesel because of cheap electricity and higher fuel efficiency, despite higher upfront costs¹⁴. Unlike Europe and the US where diesel still accounts for well over 95% of new truck powertrains, China’s diesel share is already down to almost 50%¹⁵.  

​Electric heavy goods vehicles (eHGVs) could reach 22% of new truck sales in China by 2025¹⁶, up from barely 1% just a few years ago. That’s a near-revolution in a market where diesel is still dominant in the West. 

​Two factors are accelerating this shift: 

• ​Subsidies: Generous subsidies rolled out in mid-2024 are cutting the cost gap between diesel and electric. 
• ​Battery swapping: The Chinese government started piloting it in 2021. Swapping stations are being installed on key heavy truck routes by companies like CATL. Their pioneering technology can replace a depleted truck battery in 5–7 minutes — versus hours of charging.  

​The Wild Card: Autonomy 

​What could change the picture in the West is autonomous trucking. In the US, Florida already allows autonomous trucks on its roads, and states like Texas and Arkansas are running large-scale pilots. 

​Labour costs account for 40–50% of trucking OPEX. Remove the driver and the economics of electrification suddenly improve dramatically. Add in savings from lower insurance, maintenance, and fuel consumption, and the payback period for autonomous EV fleets could shrink to just 2–3 years. 

​The Bigger Picture 

​Bloomberg may well be right about EVs being the key driver of grid demand, not just for passenger cars, but also trucks.  Trucks matter because they consume disproportionately more energy than cars. A tipping point in freight electrification could accelerate electricity demand growth far beyond what passenger vehicles alone imply. 

• ​Gasoline is already in decline thanks to passenger EVs. 
• ​Diesel could be next as eHGV adoption rises in China and autonomy unlocks new economics in the US. 
• ​LNG is fading — once considered the bridge fuel for trucks but now losing ground to electricity. 

​The conclusion is clear: AI may be grabbing the headlines, but EVs — from cars to heavy trucks — are the real drivers of global electricity demand. 

References:

1. about.bnef.com
2. globaltimes.cn
3. iea.org
4. strategyand.pwc.com
5. forbes.com
6. energynews.pro
7. cleantechnica.com
8. spglobal.com
9. motortransport.co.uk
10. evinfrastructurenews.com
11. mckinsey.com
12. reuters.com
13. theicct.org
14. theicct.org
15. ieefa.org

Tags: AI & Analytics, Artificial Intelligence, Automotive, Disruption, Energy, Innovation, Renewables, Sustainability, Technology & Innovation Research