Fuel Crisis Powers Surge In EV Interest In Asia-Pacific Region

Motorists across the Asia-Pacific region are switching to electric vehicles at a rapid pace, as rising fuel costs due to the Middle East war force consumers and companies to reconsider their reliance on petrol and diesel vehicles.

The U.S.-Israeli war on Iran has nearly halted shipments through the Strait of Hormuz, which in normal times carries about a fifth of the world’s crude oil and liquefied natural gas, in what the International Energy Agency has called the most substantial supply ‌disruption ever.

More than 80% of the crude that passes through the strait is headed for Asia, making the region one of the hardest hit by the oil shock and leaving both consumers and governments to find ways to ease the rising cost burden.

Australia, a country heavily reliant on fuel for transport across its vast landscape, experienced a 100% uptick in EV loans in March, as more consumers visit showrooms, according to a report from NAB (NAB.AX), the country’s second-largest lender.

Enquiries for EV-related lending from companies have increased 88%, it said.

“We’re seeing more SMEs and larger operators explore EVs and electrification as a way to manage running costs and future-proof their operations, particularly in a period of ongoing fuel price volatility,” said Shane Ditcham, NAB’s executive for business banking.

Surging energy prices are also poised to become a strong tailwind for EV sales in some Asia-Pacific countries like Australia and Japan, where slow-charging infrastructure rollouts and consumer preferences for gas-powered cars capped EV ⁠sales growth in the past, analysts said.

Sanshiro Fukao, an executive fellow at the Itochu Research Institute, said Japan is now at a point where “the trend of shifting to EVs is finally starting to move into full swing” due to ​rising energy costs.

“With the government subsidising petrol prices in Japan, people at the moment still think that it will be OK. But I expect the situation is going to get worse within the month,” he said, adding that could drive a ​shift toward EVs.

Pure battery-powered EV sales account for less than 2% of total vehicle sales in Japan, as major producers such as Toyota (7203.T),  have pushed for the adoption of hybrid vehicles.

Toyota and Nissan (7201.T)  are expected to gradually expand their line-ups in Japan, as government subsidies for EV purchases were raised to as much as 1.3 million yen ($8,144) per vehicle starting in January.

And this week, Tesla (TSLA.O),  CEO Elon Musk said his company would make a big investment in Japan in terms of service and its Superchargers.

Australia, which has seen rising EV sales in recent years, is also experiencing accelerated momentum, propelled by rising fuel costs.

Searches for EVs on major car-sale websites have tripled over the last month and more than half of Australians would consider purchasing an EV, according to 7NEWS, a local television service.

“I don’t think there’s anyone out there today who has bought an electric vehicle who’s regretting the decision at this point in time,” Australian Prime Minister Anthony Albanese said last week.

In neighbouring New Zealand, more than 1,000 EVs were registered in the ‌week that ended ⁠on March 22, close to double the week before, Transport Minister Chris Bishop said last week.

“This makes it the biggest week in EV registrations since the end of 2023,” he said.

South Korea also reported acceleration in EV adoption, with registrations more than doubling in March from a year earlier, lifted by rising fuel prices, competition from Tesla and BYD (002594.SZ),  and as consumers rushed to benefit from government EV subsidies.

“While it’s unclear how long the current situation will last, higher oil prices are prompting more people to visit showrooms and take test drives,” said a salesperson at a BYD dealership in Gyeonggi province.

“It’s not the only reason, but it is certainly one of them.”

 Growing demand for EVs in the Asia-Pacific region is a major boon for Chinese EV makers, which are focusing more on the ⁠export market as sales slow at home. In China, EVs and hybrids already account for more than 50% of total vehicle sales, according to data from the China Passenger Car Association.

“China is already past the tipping point on (new energy vehicle) adoption … (but) it is nothing short of a major EV tailwind in other markets,” said Bill Russo, CEO of Shanghai-based consultancy ​Automobility.