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You might think that Donald Trump is an enemy of renewable energy. After all, his administration is spending billions of dollars on killing sundry sustainable power projects.
But this is just a cunning ruse. The reality is that the sudden closure of the Strait of Hormuz — so obviously foreseeable that it is surely unthinkable that the Trump administration didn’t plan for it — has been a huge boon to alternative energy sources, as mainFT’s Tej Parikh pointed out nearly two months ago.
The Strait is now reopening, and oil prices have returned to their prewar levels. But the shock could still have a powerful, long-term green impact — by reinvigorating electric vehicle sales. Just take a look at this chart of global EV sales from Goldman Sachs:
(zoomable version)
The EV market share of global car sales has jumped by 3.4 percentage points since the US and Israel decided to attack Iran. If you exclude the September 2025 spike — when US electric car sales surged ahead of a tax credit expiring — then the current 26.1 per cent is the highest ever level.
China’s EV sales have increased the most, but Goldman Sachs points out that 12 out of 15 of the biggest EV markets have seen penetration increase since February. And the main outlier is South Korea, where EV sales have only fallen because they soared earlier this year following a federal tax break.
Assuming that every 1mn shift in sales towards EVs lowers road oil demand by 30,000 barrels of oil a day in the US and 20,000 barrels a day elsewhere, Goldman’s analysts estimate that global oil demand has dropped by about 130,000 barrels of oil a day.
Sure, that’s only about 0.1 per cent of global consumption of hydrocarbon molecules, but every little bit helps.
Moreover, this is based only on the assumption that this was a temporary acceleration of EV sales triggered by the Iran war, and that penetration rates stay at May’s levels. If this proves a more persistent trend, then demand will drop by 320,000 barrels a day by December 2027, or 0.3 per cent of global consumption.
It seems like Goldman thinks that the “persistent acceleration” scenario is the most plausible one at the moment, and its analysts stress that its assumptions are conservative, because:
Higher global EV passenger car sales is just one channel via which the Hormuz shock may weigh on long-term oil demand, even if oil products prices moderate further, for the following reasons:
— Sales vs Stock: We are only considering additions to the stock of passenger cars, but substitution is already occurring within the existing stock in response to high fuel prices, as evidenced by the just over 20% year-over-year drop in China gasoline and related products sales volumes and the surge in EV charging volumes.
— Beyond Passenger Cars: We omit from this analysis all non-passenger car EVs, and the around 55% of oil demand not related to road fuels (e.g., petrochemicals, for which coal might be an alternative). Most notably, two-/three-wheeler EVs comprise a majority of total EV sales in India (92% in 2025), Vietnam (80%), and China (35%) and can displace a sizable one-third to one-half of the fuel that a passenger car EV can.
#ThankYouDonald.
