However, for Chinese electric car manufacturers, this could not have come at a better time. Although China produces and exports more EVs than any other nation, the situation at home is not so great as domestic manufacturers struggle with increasing competition and ever-lower prices, and are desperately trying to enter new markets.
With Chinese EVs becoming cheaper and fuel prices skyrocketing due to the crisis, the industry is yet to expand, analysts say, especially among Asian countries. Despite the growth in renewable energy investment in Asia, the latest conflict in the Middle East has shown how dependent they are on fossil fuel imports, with around 60% of Asia's imported fuel arriving through the Strait of Hormuz, which Iran has closed.
Just as Russia's invasion of Ukraine increased European investment in clean energy sources, experts now expect a similar scenario in Asia.
For China, which imports 40 percent of its fuel from the Middle East, the transfer to green energy has paid off the most. As the largest producer of wind and solar energy, and also having the largest oil reserves in the world, it can be said that it has the best immunity to the current energy crisis.
China cut its oil consumption by 10% last year, thanks to EVs accounting for 50% of new vehicle sales and 12% of total car sales. Chinese authorities have realized that any new crisis in the Middle East, driven by dependence on fuel imports, is not only bad for the environment, but also for the country's economy.
Economic advisers predict that by 2030, only 15 of China’s current 129 EV manufacturers will survive, thanks to the same state aid that has made China a leader in affordable electric vehicles. The current surge in fuel prices is helping them, but they will need foreign markets to “absorb” the surplus through exports, preventing a build-up of unsold inventory that would erode profit margins at home.
The US cannot currently benefit from this because excise taxes are high on Chinese EVs until they agree to Trump's proposal to bring production there, in order to compensate for the interference in the percentage of sales of Elon Musk's domestic Tesla with jobs.
