The Iran war is expanding Asia’s interest in electric vehicles as governments and consumers look for relief from a volatile oil and gas market.
The U.S. and Iran agreed Tuesday to a fragile two-week ceasefire. But analysts cautioned that it could take months for energy markets to recover from the war’s supply disruption — and the situation has already battered Asia, which is heavily reliant on oil imports from the Middle East.
“It is safe to say that the importing economies, especially in Asia, will be asking one question, and that question is, ‘What can we do to make sure this never happens again?’” said Kevin Book, managing director of ClearView Energy Partners.
A move toward EVs could drive a further wedge between the United States and the world’s most populous region, with China likely to be a prime beneficiary as the predominant supplier of EVs, batteries and other components.
Asia was already making EV inroads before the war in Iran drove oil prices to multi-year highs. Vietnam doubled its share of EV car sales last year, overtaking the United Kingdom, according to Ember. Thailand’s sales share reached 20 percent, up from just 1 percent in 2019, and Indonesia overtook the U.S. in EV penetration. Southeast Asian EV sales rose to 55,000 vehicles a month in the last quarter of 2025, up from 32,000 monthly sales a year earlier.
Then the U.S. and Israel attacked Iran, tying up around a fifth of global crude oil supplies in the Strait of Hormuz. Government efforts to cushion the resulting price shocks, through conservation measures and subsidies, have put the region’s economies under strain.
“This is giving an additional backwind to something that was already happening at speed,” said Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF.
The shift to EVs will be largely consumer-driven, he said, but countries like Laos are also actively incentivizing EV adoptions. Indonesia, Sri Lanka and South Korea have urged residents to conserve fuel while Laos lowered EV registration fees and Thailand’s prime minister was seen around town driving a BYD.
Global consultancy Wood Mackenzie said the war could be a “game-changer” for EVs. It estimates that roughly 80 million new passenger EVs could enter the global market by 2030 as a result. In a separate analysis, the consulting firm said the disruption to oil and gas flows caused by the conflict could cut global oil demand by 20 percent by 2050 as countries reduce dependence on imported fuels and prioritize electrification.
The world’s uptake of EVs stands in stark contrast to the United States, where President Donald Trump, in his quest for fossil fuel primacy, has erased consumer tax breaks, watered down fuel efficiency standards and gone after charging infrastructure.
“I don’t think there’s anyone out there today who has bought an electric vehicle who’s regretting the decision at this point in time,” Australian Prime Minister Anthony Albanese said last month.
Asia’s EV takeoff
EV interest is rising, and not just in Asia. March car sales in the United Kingdom rose to a record high last month, according to an industry group.
U.S. interest, meanwhile, remains tepid, a recent poll by the Pew Research Center found. Even at $4 a gallon, gas prices aren’t yet high enough to turn car buyers away from gasoline-powered vehicles, now that the Trump administration has scrapped EV incentives, according to Wood Mackenzie. That could change if oil prices remain high or rise.
But EVs have taken off in Asia in recent years. Sales across the region, excluding China, grew 40 percent in 2024 to reach almost 400,000 vehicles, according to the International Energy Agency.
Chinese imports made up the bulk of those sales outside Vietnam, where nearly all new EV car sales have come from local manufacturer VinFast. That Chinese dominance could prompt backlash from countries with domestic auto industries, analysts said. But as countries begin to introduce import taxes to support those industries, Chinese brands have started investing in manufacturing facilities in the region, helping drive up sales.
EV sales were over a quarter of global new car sales last year, and emerging markets comprise a growing share of that amount.
Challenges remain. Transforming a country’s transportation fleet won’t happen overnight, so rising EV sales won’t have an immediate impact on oil demand. Countries also need to weigh support for domestic industries, grid reliability, power prices and expansion of charging infrastructure to support more EVs on the roads.
“I think ultimately it comes down to two things: If you buy an electric vehicle, are you going to be able to use it?” said Ilaria Mazzocco, senior fellow in Chinese business and economics at the Center for Strategic and International Studies. “The other is: Is your government very hesitant to enable the shift because there’s concerns about big companies struggling and employment?”
Countries already moving toward more rapid EV adoption will likely continue that trajectory, she said, but countries that have been more hesitant are probably not going to change their minds overnight. Some analysts also said some countries might more easily adopt electric motorbikes and electrified public transportation, rather than electric cars.
Power prices complicate the EV calculus. Gas-dependent markets, including much of Europe, are seeing power prices rise as competition for liquefied natural gas increases and after Iranian missiles damaged a major Qatari LNG supplier.
That’s less a concern in Asia, where many countries still rely largely on coal and are planning to use more of it to soften the blow of the immediate crisis. Some of the countries that have seen the strongest growth of electric vehicles, like Nepal, are those where hydropower provides cheap and plentiful electricity.
EVs are not the only way Asian economies might look to limit their exposure to imports of Middle Eastern oil. They could also seek to implement energy efficiency measures, expand strategic petroleum stocks and buy more crude from countries outside the Middle East, said ClearView’s Book.
Yet the crisis is already deep enough that some sort of major change is likely, he said.
“When you get to the point of explicit controls on trade and commerce, price controls, it’s likely there’ll be some sort of enduring policy response,” Book said. “There’s very real and tangible absences of molecules in a lot of Asian markets.”
Structural change?
Some analysts said the seriousness with which countries pursue transition policies will depend on how long the crisis lasts.
“History shows that interest in EVs and fuel efficiency rises with the price of oil and then falls with the price of oil as oil price booms are preceded by oil price busts,” said Bob McNally, who was an energy adviser to former President George W. Bush and is the founder of Rapidan Energy Group.
What’s required for a shift, he said in a text message, is low-cost, superior technology “that consumers will embrace without being subsidized or compelled.”
That’s already happening in some parts of Asia.
In most emerging EV markets, the price of the cheapest battery electric car is lower than the average price of a fuel-powered vehicle, the IEA said in its latest Global EV Outlook. In Thailand, in 2024, the average price of a Chinese EV was lower than the average price of a conventional car.
And unlike previous energy crises, when EVs were a less viable option, foreign investment from China and competition among Chinese EV brands is producing a range of options for emerging market buyers.
“What you end up having is a number of brands beyond just BYD that can put extremely affordable, pretty impressive cars on the market,” said Vagneur-Jones from BloombergNEF.
“A lot of all these Southeast Asian countries were already well above the U.S. when it comes to EV penetration,” he added. “And they’ve done that without anything like the tax credit support that the U.S. had.”
The EV transition’s impact on climate goals could be limited if countries don’t also transition their broader energy systems, some analysts said. But growing EV adoption could also be a harbinger of a more enduring policy response.
“You won’t get the political commitment for renewables if you can’t get your EVs sorted out,” said Putra Adhiguna, managing director of Indonesia-based Energy Shift Institute. “Because that’s the one that’s most exposed to the consumers, to the public.”
