The oil shock triggered by the Iran war is giving the global electric vehicle (EV) market a fresh push, with higher petrol and diesel prices encouraging consumers to consider electric mobility as an alternative to conventional vehicles, Modern Diplomacy reported.
The impact is expected to be particularly significant in countries exposed to disruptions in oil and gas supplies from the Gulf. In these markets, the economics of running an EV is becoming an increasingly important factor alongside government incentives and environmental considerations.
A faster shift towards EVs could also reshape demand across the energy-transition supply chain. Rising electric vehicle sales would increase demand for critical minerals including lithium, nickel and copper, potentially putting additional pressure on supply chains that have already faced constraints.
Interest in EV-related metals had weakened after demand growth fell short of early industry expectations. Investors in lithium and copper have increasingly shifted their focus towards other areas of demand, including grid-scale energy storage and data centres.
However, the wars in the Middle East and Ukraine could accelerate the transition to electric mobility, potentially bringing battery metals back into sharper focus.
EV growth remains uneven across major markets
Global EV growth currently remains moderate. Sales of new energy vehicles increased by 4% year on year between January and August, according to Benchmark Mineral Intelligence.
The global figure, however, masks major differences between individual markets.
The US EV market has moved sharply lower. President Donald Trump’s decision to eliminate the EV subsidy scheme introduced by his predecessor has contributed to a significant decline in domestic sales. EV sales fell 33% year on year in August, while sales during the first eight months of the year were down 21%.
The decline has also influenced automaker investment decisions, with US manufacturers shifting investment back towards conventional vehicles and cancelling or delaying planned electric models and battery supply projects.
China has also reported weaker EV sales, which declined 12% year on year during January-August. The decline needs to be viewed against a broader slowdown in the country’s overall vehicle market.
Passenger vehicle sales in China fell 24% year on year in August. Despite this, new energy vehicles continued to increase their market share, reaching a record penetration rate of 65% during the month.
Chinese EV manufacturers are increasingly looking to international markets for additional growth.
Europe, meanwhile, has recorded strong EV momentum. Electric vehicle sales rose 36% year on year in August, taking growth for the year to date to 29%. Higher fuel prices and government support are helping sustain demand.
The strongest growth is being recorded outside the world’s three largest EV markets. EV sales across the rest of the world have doubled so far this year, according to Benchmark Mineral Intelligence.
The contrasting trends highlight how fuel prices, government policy and consumer economics are shaping the pace of EV adoption across markets. A sustained increase in oil prices could further strengthen the economic case for electric vehicles, while simultaneously increasing attention on the availability and cost of the critical minerals required to manufacture EV batteries.
