One group that doesn't want the Iran war to end soon is China's electric-vehicle makers.
They began the year with a glut of EVs on their hands and weak demand at home. The crisis in the Middle East is helping them export their way out of trouble: Chinese carmakers are sending excess supply to overseas markets, where high gasoline prices are prompting more drivers to buy EVs. The market share of traditional carmakers is the big casualty.
China's EV exports rose 120% in the first half of 2026 from the same period of last year, data from the International Energy Agency shows. EV sales have roughly doubled in Brazil, Australia, Korea and Vietnam since the war began. EV sales in Colombia have quadrupled, based on IEA data.
The energy agency now expects EVs to make up 29% of new-car sales globally in 2026, an increase from 25% last year. The shift away from gasoline cars is further along in China, where more than half of all new cars sold are now electric.
China's car manufacturers would love to see rapid, Chinese-style electrification happen elsewhere. They control 60% of EV sales across emerging markets -- compared with just 10% for traditional combustion-engine cars -- so they have the most to gain from widespread EV adoption.
High tariffs are keeping them out of the U.S. and protecting American carmakers such as Ford from an onslaught of competition in their home market. EV sales have also been falling in the U.S. since a Biden-era tax subsidy expired in the third quarter of last year.
Buying an EV still doesn't pencil out for a typical American driver even with higher prices at the pump. Based on current car prices and auto-loan rates, EVs won't be competitive with internal-combustion cars unless gasoline hits roughly $4.80 a gallon, according to ClearView Energy Partners analysis.
But in Europe and the U.K., where tariffs are less punitive, Chinese car brands including Geely and BYD are appearing more frequently on the roads. In June, five Chinese brands, Geely, SAIC Motor, BYD, Chery and Leapmotor, accounted for 12.1% of new-car registrations in the EU and U.K., up from 7.7% the same month of last year, based on numbers from the European Automobile Manufacturers' Association. New registrations also rose for Tesla.
The share of new-car registrations for European brands Volkswagen and Renault, as well as Ford, slipped over the period. Volkswagen Group increasingly has to defend its home turf at the same time as its business in China sinks. Volkswagen's vehicle deliveries to China fell 37% from a year earlier in the second quarter because of intense competition from local brands and weak consumer spending. The German company's shares have fallen to levels last seen in 2011.
European car companies such as Volkswagen and Fiat owner Stellantis will find it tough to fight back. Making an EV is around 35% cheaper in China than in Europe because of the country's low labor costs and more robust EV supply chain. China's carmakers are also willing to operate on razor-thin operating margins while they focus on winning market share.
Governments in Southeast Asia, where economies have been hit hard by the oil crisis, want to improve their energy security. They see EVs as a way to reduce their dependence on imported gasoline and are rolling out policies to encourage drivers to buy them.
Thailand cut excise taxes on imported electric cars and the country's prime minister recently swapped his Rolls-Royce for a BYD as part of a national push to save energy, according to local news reports. Laos has banned the import of gasoline cars altogether for the rest of the year. Cambodia has announced EV-friendly policies such as lower customs duties.
This is a problem for Japanese brands such as Toyota, for whom Southeast Asia is an important market, but who were losing share there even before the war. Between 2023 and 2025, Chinese carmakers increased their share of new-car sales in Malaysia, Indonesia, Thailand, Vietnam, the Philippines and Singapore from 4% on average to 11%. Japanese brands have seen their share fall more than 10 percentage points to 57% over that time, data from PwC shows.
What is happening today in the car industry has echoes of the disruption of Europe's solar-panel business more than a decade ago. Beijing's generous subsidies created overcapacity in solar-panel production, which led to disorderly competition and price wars inside China. Chinese companies then flooded overseas markets with the surplus. Global consumers benefited from cheaper goods, but at the expense of hollowing out local industries.
High gasoline prices are making it more likely that consumers in countries that have relatively low rates of car ownership will buy affordable Chinese EV's as their first cars. Some consumers might leapfrog gasoline cars altogether.
Emerging markets are expected to account for 60% of global car demand over the next decade. Traditional carmakers face a much tougher job getting a slice of the action.
