Surging oil prices driven by the US-Israel war on Iran could accelerate the global adoption of electric vehicles – a sector that helped China overtake Japan to become the world’s largest seller of automobiles last year.
“The closure of the Strait of Hormuz could be a game-changer for EVs,” said David Brown, director of energy transition research at Wood Mackenzie, in a report released on Friday.
The “eye-watering” 50 per cent surge in global oil prices so far this month would further incentivise consumers to pivot towards EVs, he said.
Brent crude was trading at more than US$100 per barrel on Monday, as the upwards pressure on oil prices continued. On Saturday, US President Donald Trump threatened to “obliterate” Iran’s power plants unless it fully reopened the Strait of Hormuz to shipping traffic within 48 hours.
“In those countries with access to low-cost Chinese EVs, the competitive advantage over gasoline-engined cars will come even sooner,” Brown said, noting that Brazil had already become the largest overseas market for Chinese EV giant BYD.
Justin Feng, an Asia economist at HSBC, also highlighted this trend in a Friday report. He said higher and more volatile oil prices could turn EVs into a clearer “cost-savings proposition” if the conflict persisted, accelerating the electrification of Asia’s road transport.
There are now 39 countries where EVs account for more than 10 per cent of total auto sales, up from four in 2019, according to a report by the British think tank Ember released on Wednesday. Emerging markets are adopting electric cars at a rapid pace, with some now surpassing advanced economies in terms of their EV sales share, the report added.
