Higher oil prices caused by the Iran war and the closing of the Strait of Hormuz could generate higher electric vehicle sales globally benefitting Chinese EV car manufacturers, according to an analysis by David Brown, Director, Energy Transition Research, Wood Mackenzie.

Wood Mackenzie is a global energy analyst and consultancy, and Brown noted that: “The closure of the Strait of Hormuz could be a game-changer for EVs.”

The Wood Mackenzie analysis is as follows: “15 million b/d (barrels per day) of liquids exports are off the market. Close to 7% of global production is offline, primarily from Saudi Arabia and Iraq. While Brent is hovering around US$110/bbl (per barrel), competition for liquids, the amount of supply at risk, and potential for an extended conflict mean US$150 to US$200/bbl is a real possibility.”

And oil prices remain elevated “despite the 400 million barrels of stock release from the International Energy Agency. The attack on the South Pars gas field in Iran and Qatar added upward pressure on Brent prices this week. Key Gulf oil and natural gas infrastructure is now in play.”

Impact On US Market

With the world facing higher oil prices, Wood Mackenzie says, “We’ve updated our total cost of ownership (TCO) model for the US passenger car sector. High purchasing power, combined with price sensitivity at the pump, makes the US an ideal test case for how oil price volatility impacts the move toward electric vehicles.”

At the moment, “TCO calculations in the US still strongly favor gasoline vehicles, especially now that federal tax incentives have been withdrawn. If high oil prices are sustained, that could change. At US$150 Brent, an EV could have a lower TCO than its gasoline-fueled equivalent as soon as next year,” concludes Andrew Brown, Global Head of Wood Mackenzie’s Integrated Demand Model.

US$150 Brent for a sustained period through 2030, “while not impossible, would be incredibly challenging for the global economy. For every 10% increase in oil prices, global GDP growth drops by around 0.13 percentage points,” according to Wood Mackenzie’s Head of Economics, Peter Martin.

Even at US$90 Brent, “the TCO comparison in the US is still likely to favor (sic) EVs by 2029-30. US consumers could also shift to pre-owned EVs to provide a hedge against liquid fuel volatility,” noted Egor Prokhodtsev, Principal Analyst, Commodities.

This market, according to Cox Automotive, is around 400,000 vehicles and is expanding at 30% to 40% per year in the US.

Brown noted that since President Donald Trump’s second inauguration in January 2025, “US$60 oil prices and lower EV incentives in the One Big Beautiful Bill Act have given gasoline-fueled vehicles the economic advantage in the US. Softer federal regulations on fuel efficiency standards and carbon dioxide emissions also reduced regulatory incentives for EV investment.”

So far in 2026, five automakers – representing 47% of US manufacturing - have announced a combined US$73 billion in write-downs for EVs. These financial charges reflect lower market values and sunk capital for EV manufacturing. Facing its first financial loss since the 1950s, Honda cancelled three EV models for North America in early March.

But other auto manufacturers are doubling down on the U.S. EV market: “The Hyundai Group has launched its US$7.6 billion Georgia EV plant, and Toyota is ramping up a US$14 billion battery hub in North Carolina. European giants, including BMW and Volkswagen, are also expanding US-based EV manufacturing.”

Even with legal challenges from the Trump administration, several states are expanding EV policy support. California’s 2026-2027 budget proposes a US$200 million zero-carbon vehicle incentive program, and New York’s US$885 million EV Make-Ready Program will offset EV charging costs. Meanwhile, Washington state is trying to secure US$71 million in frozen funds from the national electric vehicle infrastructure program.

Global EV Sales Favor Chinese Automakers

Brown said that in those countries with access to low-cost Chinese EVs, the competitive advantage over gasoline-engined cars will come even sooner.

Brazil is already BYD’s largest market outside of China. Canada has reduced tariffs on selected Chinese models from 100% to 6%. In Asia, China’s clean energy supply chain can scale EVs across the region, and in Europe, accelerating EV sales under the Fit for 55 framework could reduce oil import costs.

One hurdle could be higher power prices: Qatar’s LNG supply outage and competition for LNG cargoes between the Atlantic and Pacific basins are increasing power prices in markets that rely on LNG for natural gas-fired power. For example, power prices in major European markets have increased by at least 40% since early March.

The analysis goes on to say that “the build-out of battery storage and renewable power, gas-to-coal switching and demand side management are tools to limit gas-price volatility in Europe and Asia. In the US, however, the Middle East conflict hasn’t moved power prices because the country is a net exporter of natural gas, rather than an importer.”

New EV charging technologies could underpin a quicker shift to EVs: “In mid-March, BYD, the world’s largest EV producer, announced charging from 10% to 70% in five minutes, about the time to refuel a gasoline passenger car. In the US, The Oak Ridge National Labs recently demonstrated battery charging to 80% in 10 minutes, while Stanford University researchers are targeting six-minute charging.”

In sum, Wood Mackenzie says: “The Middle East conflict could be a tailwind for EV adoption. Elevated oil prices, energy security objectives, the growth in renewable capacity, and rapid advancements in battery charging technology support our base case outlook for around 80 million new EVs for the global passenger segment from 2026 to 2030.”

Justin Feng, an Asian economist at HSBC, also highlighted this trend.

Feng told the South China Morning Post (SCMP) that 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% of total auto sales, up from four in 2019, according to a report by the British think tank Ember and cited by SCMP

The rising global appetite for EVs, which is being further stimulated by the Middle East conflict, could offer a major boost to China’s automotive industry, which eclipsed Japan in global sales for the first time last year, SCMP said.

New Tesla Semi Trucks Could Benefit

Diesel trucks reached 11.5 miles per gallon, and a Tesla Semi ran 460 miles on a single charge, according to a North American Council for Freight Efficiency report. The report analyzed 14 Class 8 tractors across diesel, compressed natural gas, battery-electric, and hydrogen fuel-cell powertrains, Freightways reported.

Tesla's new battery-powered Tesla Semi truck’s range will help to close the gap with conventional diesel trucks, according to Matt Schrap, former President of the Harbor Trucking Association (HTA) and now Chief Commercial Officer for Forum Mobility.

Forum Mobility develops, owns, and operates heavy-duty charging depots and leases electric Class 8 trucks.

Schrap told AJOT that Forum has been working closely with motor carriers, understanding what their challenges are, and finding pathways where the trucking fleet will see benefits from running zero-emission trucks.

Forum will soon be deploying truck chargers that will provide the Megawatt Charging Standard (MCS) with up to and over 1,000 kilowatts per hour of charging, compared to older chargers with less than half of that capacity. This will reduce charging time at the same time as the Tesla Semi comes into production with its stated 500-mile per charge capability.

Schrap said thanks to Forum and Tesla, market forces were already starting to make electric trucks more competitive in the United States: “So, now it's really about economics because if you're using electricity, depending on when you're charging, you're already cheaper than diesel on a per-mile basis. So, it can be pretty cheap compared to the fuel efficiency that you can get in a diesel. There are a lot of factors that go into that.”

Continued high oil prices are likely to accelerate sales for the Tesla trucks and for Forum’s truck charging business.