The Middle East energy crisis is quietly rewriting the demand logic for electric vehicles.
According to information from the &#34;Zhuifeng Trading Desk,&#34; a UBS report on March 30 stated that the Strait of Hormuz has blocked approximately 12% of global oil supply. To completely fill this gap, about 770 million internal combustion engine vehicles would need to be replaced by electric vehicles—nearly twice the cumulative historical global EV stock.
Sustained high oil prices will systematically improve the total cost of ownership (TCO) for electric vehicles (EVs and PHEVs) compared to internal combustion engine vehicles, thereby triggering a structural demand surge exceeding previous market expectations. For lithium and other battery raw materials, this signifies that a potential medium-to-long-term demand inflection point is accumulating.
<h2>Historical Precedent: How the 1973 Oil Shock Reshaped the Automotive Landscape</h2>
The UBS research report first cited the historical precedent of 1973. In October of that year, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced a comprehensive oil embargo against countries supporting Israel. Although the embargo lasted only about six months, oil prices surged by nearly 300%, triggering profound structural reshaping across the energy and automotive value chains:
<blockquote>
Policy Level: Governments successively introduced fuel efficiency standards, established strategic petroleum reserves, and launched incentive policies to reduce oil dependency;
Automaker Level: Carmakers who had previously disregarded fuel economy were forced into rapid transformation, fundamentally altering vehicle design and model strategies;
Consumer Level: The sharp increase in gasoline prices profoundly changed car purchasing decisions, with fuel efficiency becoming a core consideration.
</blockquote>
UBS emphasized that many of the aforementioned changes proved to be long-lasting, continuing even after the embargo was lifted. This provides a highly valuable historical framework for the current energy crisis.
<h2>Math Problem: Just How Many EVs Are Needed?</h2>
UBS constructed an intuitive yet striking quantitative framework. According to the current situation:
<blockquote>
The disruption in the Strait of Hormuz has led to a cutoff of approximately 13 million barrels per day (13Mbpd) of global oil supply, accounting for about 12% of the total global supply;
According to data from the International Energy Agency (IEA), the global passenger car fleet accounts for about 25% of global oil demand, or approximately 27 million barrels per day (27Mbpd);
Assuming that among the world's approximately 1.6 billion vehicles, internal combustion engine (ICE) vehicles account for about 94%, it means that approximately 770 million internal combustion engine vehicles need to undergo electrification transformation to completely fill the current oil supply gap.
</blockquote>
This is clearly a purely theoretical assumption. In reality, multiple constraints such as demand elasticity, supply bottlenecks, and substitution effects make it fundamentally unachievable.
Even if only 50% of the gap were addressed, it would require an incremental increase of approximately 385 million electric vehicles—which is almost equivalent to UBS's projected cumulative EV sales of about 400 million units by 2035.
<h2>Google Searches Hit Record High, But Sales Lag Behind</h2>
Real-world data presents a picture of &#34;sentiment leading, action lagging.&#34;
Google Trends data shows that the global search interest for &#34;Electric Vehicle&#34; has reached its highest level ever (index reaching 100), reflecting that consumer interest in electric vehicles is at a historical peak. However, actual electric vehicle sales data in early 2026 started relatively flat, showing a clear divergence.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/15030463-5c0c-425c-a312-29b5795c369e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Google Trends for Electric Vehicles" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/15030463-5c0c-425c-a312-29b5795c369e.png"/>
From a regional perspective, China remains the largest electric vehicle market globally, accounting for 61% of global sales over the past 12 months; Europe accounts for 21%; North America for 9%; Asia (excluding China) for 6%; and other regions for 3%.
UBS's global automotive team currently forecasts global electric vehicle demand growth of approximately 9% in 2026, which is still robust but significantly lower than the growth rates of previous years. In the Chinese market, consumption fatigue in the post-stimulus period may limit the upward space for incremental growth. Meanwhile, the TCO advantage of low-cost Chinese electric vehicle exports is becoming increasingly significant in a market with high oil prices.
<h2>Inventory Continuously Decreasing, Battery Energy Storage Pipeline Robust</h2>
The upstream lithium market is also sending positive signals.
UBS stated that Chinese lithium carbonate inventory significantly decreased by the end of 2025, briefly stopped declining in early 2026, but resumed its downward trend after the Spring Festival. The current inventory across the entire chain remains at a low level of less than one month (for both monthly and weekly lithium carbonate, and monthly lithium hydroxide). The trend of supply chain tightening is evident. UBS estimates the current inventory reduction rate to be about 25,000 tons per year.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a0cef390-59f4-4948-a21c-4771c04856c2.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Lithium Carbonate Inventory Trends" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a0cef390-59f4-4948-a21c-4771c04856c2.png"/>
Concurrently, the project pipeline in the battery energy storage system (BESS) sector is progressing strongly, further supporting the demand outlook for lithium.
The global BESS project pipeline from 2026 to 2030 totals approximately 2.1 terawatt-hours (2,077GWh), covering all stages from project proposals to under construction/operation. Regionally, China accounts for 45%, North America for 18%, and Europe and Oceania each for 12%. The average project duration is expected to exceed 4 hours by 2029.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f381765c-534c-44a6-bdd8-aa11b6a4b51a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Global BESS Project Pipeline" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f381765c-534c-44a6-bdd8-aa11b6a4b51a.png"/>
UBS concludes that in the short term, the demand shock and cost pressures arising from current geopolitical conflicts are undeniable. However, for investors with longer investment cycles, the energy crisis may drive a structural demand surge for the electric vehicle theme, thereby bringing substantial benefits to upstream materials such as lithium.

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The blockade of the Strait of Hormuz has cut off 12% of global oil supply. UBS estimates that to fill this gap, all 770 million internal combustion engine vehicles would need to be replaced by electric vehicles—twice the cumulative historical global EV stock. High oil prices are systematically reshaping the logic of automotive consumption, and a medium-to-long-term inflection point for lithium demand may be quietly forming

- The Middle East energy crisis is reshaping electric vehicle (EV) demand, with UBS reporting that a blockade in the Strait of Hormuz has disrupted about 12% of global oil supply.  
- To fully counter this supply gap, approximately 770 million fuel vehicles would need to be transitioned to EVs, highlighting a potential structural demand increase amidst high oil prices.  
- Despite peaks in consumer interest for EVs, actual sales remain tepid, with the global EV demand growth projected at 9% for 2026, significantly lower than previous years, indicating a disconnect between market sentiment and sales performance.

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