Introduction

Just as the oil crisis fueled the ascent of Japanese automobiles, it now paves the way for the breakthrough of Chinese electric vehicles (EVs).

Many may remember that following the outbreak of the Russia-Ukraine conflict in 2022, Western automakers withdrew from the Russian market, leaving a vacuum swiftly filled by Chinese automotive brands.

Data from the China Passenger Car Association reveals that China's automobile exports to Russia surpassed 900,000 units in 2023, marking a more than fourfold increase year-on-year. Brands like Chery, Great Wall, and Geely witnessed their market share in Russia skyrocket from less than 10% to over 50%.

Today, a parallel scenario is unfolding. The Iran war, which erupted in early 2026, is reshaping the global automotive landscape. With shipping disruptions in the Strait of Hormuz and persistent spikes in international oil prices, global gasoline and diesel prices have hit their highest levels in nearly four years.

Many media outlets have drawn parallels between this energy shockwave and the oil crises of the 1970s and 1980s. Back then, soaring oil prices compelled North American consumers to abandon large-displacement domestic vehicles and embrace compact, fuel-efficient cars from Japanese automakers like Toyota, Honda, and Nissan, heralding a golden era for Japan's automotive industry.

However, the spotlight has now shifted to Chinese EV manufacturers. From Europe to Australia, from Canada to Southeast Asia, Chinese brands such as BYD, Chery, and Geely—particularly their new energy vehicle (NEV) divisions—are accelerating their global entry, capitalizing on demand spurred by rising fuel prices.

Although the Iran war has curtailed Chinese automakers' access to the vital Middle Eastern market, they have swiftly redirected their focus to Europe and other emerging markets while expediting overseas localized production plans.

Moreover, even the U.S. policy of imposing a 100% tariff on Chinese electric vehicles has failed to stem their globalization. Instead, it has inadvertently pushed Chinese automakers to explore more open markets while isolating the U.S. from the world's fastest-growing EV sector.

Earlier, during U.S. President Trump's visit to China, he neither brought along executives from American automakers nor did subsequent news coverage reveal any related developments in the Sino-U.S. automotive industry. Nevertheless, it is evident that both the Russia-Ukraine conflict and the Iran war have, to a certain extent, inadvertently accelerated the global expansion of Chinese automobiles.

01 Why Can Chinese Automobiles Accelerate Global Expansion?

The reasons behind the accelerated global expansion of Chinese automotive brands amid the Iran war are multifaceted. From the perspective of global consumers, cost-effectiveness and value-for-money are the greatest strengths of Chinese automobiles, especially as oil prices continue to rise in many regions worldwide.

According to relevant data, Chinese brand EVs average around $25,000 in Europe, significantly lower than their local European counterparts. In Canada, following the reduction of import tariffs from 100% to 6.1% in early 2026, the price of the Lotus Eletre EV plummeted by nearly 50%—a price reduction almost unheard of in the era of fuel-powered vehicles.

This utmost economic efficiency has made Chinese EVs a rational choice for consumers in the era of high fuel prices. As John Zeng, Asia forecasting director at London-based consultancy GlobalData, remarked, "We may witness an effect similar to the 1970s, accelerating the rise of Chinese brands in global markets."

Another factor is the strategic flexibility and market adaptability of Chinese automotive brands. After the Iran war erupted, Chinese automobile exports to the Middle East plummeted, with imports to the UAE and Saudi Arabia crashing by 89% and 48%, respectively. However, Chinese automakers did not halt their efforts; instead, they swiftly redirected their export focus to Europe and other emerging markets.

In March 2026, China's automobile exports to Europe doubled to 160,000 units, with EV exports surging by 141%. BYD Chairman Wang Chuanfu revealed at the end of March that the company's European sales had more than tripled in March; Chery's EV sales in the UK and EU approached 40,000 units in the first quarter, marking a sevenfold year-on-year increase.

This rapid market-switching capability stems from the flexibility afforded by Chinese automakers' export-oriented factory layouts and low-cost production models. As analysts have noted, "This war has also demonstrated the resilience of a business model designed to capitalize on sudden demand shifts."

This leads us to the new phase of Chinese automotive overseas expansion: accelerating localized production abroad. This enables Chinese automakers to effectively circumvent tariff barriers and geopolitical risks. Facing rising trade protectionism, Chinese automakers no longer rely solely on complete vehicle exports but instead achieve localized production through partnerships, acquisitions, and direct investments.

As early as 2024, Chery partnered with Spanish EV manufacturer Ebro-EV Motors to commence production at a former Nissan factory in Barcelona. In January of this year, Chery acquired Nissan's production facilities in South Africa. Stellantis recently strengthened its production collaboration with Leapmotor at its Zaragoza, Spain, factory, adding a new production line for the electric crossover B10. BYD has already commenced production at its first European factory in Hungary this year and is scouting for new sites.

According to an April report by consultancy AlixPartners, Chinese automakers plan to produce in at least 16 other countries, expanding overseas output from 1.2 million units in 2025 to 3.4 million units by 2030. This strategy of deep integration into the global automotive supply chain means that the global expansion of Chinese EVs is no longer merely a trade activity but a global layout of industrial capabilities.

For a long time, "Made in China" in the automotive sector was perceived as low-end, but this is undergoing a fundamental transformation. Thanks to the effectiveness of localization strategies, the quality and branding of Chinese EVs are upgrading, altering global consumers' perceptions.

Last year, BYD's global sales of pure electric models surpassed 2.25 million units, overtaking Tesla's 1.64 million units and making it the world's largest EV manufacturer. This fact alone signifies that the quality of Chinese EVs has gained global market recognition. In Canada, where consumers were already open to Chinese EVs, sustained oil price hikes "may completely eliminate their hesitation."

Of course, high oil prices themselves are the most potent sales driver. Since the Iran war erupted on February 28, global gasoline prices have similarly soared. S&P Global Ratings automotive analyst Claire Yuan explicitly stated, "Rising fuel prices may prompt more consumers to switch to electric vehicles, boosting demand for Chinese exports."

This energy-price-driven shift in consumer behavior is not a short-term phenomenon. Analysts believe that sustained high oil prices may further accelerate EV adoption and benefit Chinese automakers in the long run.

02 In Which Markets Are Chinese Automobiles Gaining Popularity?

It is evident that the global energy price restructuring triggered by the Iran war is opening up a series of previously hard-to-penetrate markets for Chinese EVs, with Europe becoming the largest overseas market for Chinese-made vehicles.

European consumers, who previously shunned little-known Chinese EVs, are now drawn to their low prices. GlobalData's John Zeng put it bluntly: "They now have no choice."

The turning point in the North American market came in Canada. According to reports, Chery and Geely became the first Chinese automakers to enter the Canadian market. In its initial expansion phase, Chery has exported around 150 vehicles to Canada, including the Jaecoo J5 crossover, Omoda 9 plug-in hybrid SUV, and Exelantis ES sedan, with plans to export another 1,000 vehicles in the next three months. The first 10 dealerships are expected to open by the end of June.

Geely has delivered 18 all-electric luxury SUVs, the Lotus Eletre, to Canada. The model has passed Canadian safety certification standards, and Lotus opened six franchised dealerships in March, with plans to open six more by year-end. The enhanced price competitiveness resulting from tariff reductions is particularly significant, making Chinese EVs nearly unbeatable in the Canadian market. Canada is emerging as the gateway to affordable electric mobility in North America, and this policy divergence with the U.S. is causing increasing differentiation between the two countries' automotive markets.

In the Asia-Pacific market, Australia has become another success story for Chinese EVs. One in every six new vehicles sold in April was electric, with BYD ranking as the country's second-best-selling automotive brand, behind only Toyota.

The Southeast Asian market also shows strong growth potential. AlixPartners estimates that China's total passenger vehicle exports could still grow by around 20% by 2026, primarily driven by expansion into Southeast Asia and other emerging markets.

Notably, Chinese electric heavy-duty trucks are also carving out new export markets. According to a March Reuters report, at least a dozen Chinese manufacturers, including best-selling brand Sany Heavy Industry, plan to launch electric truck products in Europe this year, priced one-third lower than the current European average.

Europe is the world's second-largest electric truck market. In 2024, Chinese electric truck sales totaled 160,000 units, compared to fewer than 25,000 in Europe, indicating immense growth potential. Sany Heavy Industry's Deputy General Manager Chen Dong optimistically predicted in April that the electric tractor market would grow by 50% to 250,000 units, emphasizing that "given rising oil prices, the likelihood of achieving this target is increasing."

However, the situation in the Middle Eastern market is more complex. This region was originally the earliest and most important overseas target market for Chinese automakers. In 2001, Chery exported its first batch of sedans to Syria, and by 2025, China was exporting around 1.4 million vehicles to the region, accounting for 16% of China's total automotive exports.

But after the Iran war erupted, shipping disruptions in the Strait of Hormuz caused a sharp decline in Chinese automotive exports to the Middle East. In March, imports to the UAE and Saudi Arabia plummeted by 89% and 48%, respectively, while Israel's EV imports crashed by 56% to fewer than 4,700 units. Notably, Chinese automakers have not abandoned this market but instead view it as a frontier for localized production.

Companies like BYD and Chery are evaluating the possibility of establishing assembly plants in the Middle East to bypass shipping disruptions and geopolitical obstacles. This strategic shift from "export trade" to "local production" may deepen the long-term bond between Chinese automobiles and the Middle Eastern market.

Overall, while the Iran war has temporarily impacted China's EV export market in the Middle East, it has simultaneously created historic opportunities for explosive growth in key markets like Europe, Canada, and Australia. A BYD executive bluntly stated, "Due to recent sustained oil price hikes, we've seen a surge in overseas orders."

As one foreign media outlet put it, "Ironically, the combination of Middle Eastern geopolitical strategic failures and restrictive North American trade policies may ultimately accelerate what many U.S. policymakers hoped to prevent: the global expansion of China's electric vehicle industry, at the expense of America's long-term competitiveness."

History does not repeat itself exactly, but the rhythm is often similar. Just as the oil crises of four decades ago propelled the rise of Japan's automotive industry, today's energy upheaval triggered by the Iran war is highly likely to pave a new path for the global expansion of Chinese electric vehicles.

Editor-in-Chief: Shi Jie Editor: He Zengrong

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