The Iran war is accelerating the EV transition faster than any climate policy ever did—but it’s still just not that much

When the U.S. launched strikes on Iran in late February, the immediate concern was oil prices. The Strait of Hormuz—through which roughly 20% of global oil supply flows—closed, sending energy markets into a spiral and gas prices past $4 a gallon in the U.S. within weeks. Domestically and abroad, people felt the oil supply at the pump: Moody’s estimated it would cost Americans over $100 billion at the pump; gas rationing began in Bangladesh, South Korea imposed a fuel price cap, and so on. That gas scarcity might have sounded like what you’ve heard of the 1970s, but it’s resulted in a historic surge into electric vehicles that is still essentially a trickle.

For the first time in history, more than a quarter of all car sales were EVs, Goldman Sachs commodities team wrote in a recent research report. In the grand scheme, the number is pretty paltry, especially considering the early iteration of the Prius was first released nearly three decades ago, and Teslas and other higher-end EVs first came out nearly 15 years ago. But still, the report finds a 3.4 percentage point increase on global EV sales since the Hormuz shock began, reaching 26.1% of all car sales in May, an all-time high.

The acceleration has been broad-based: 12 of the 15 largest EV markets have seen penetration rise since February, Goldman found. The bank now estimates the shift could shave 0.13 to 0.32 million barrels per day off global oil demand by December 2027, a figure that, while modest against roughly 100 mb/d of total consumption, carries outsized significance for a market already navigating a supply crisis.

“This acceleration in global EV car sales suggests our downside oil price scenario is plausible,” the report read.

Goldman’s analysts project Brent could fall to the mid-$50s per barrel by late 2027 if Hormuz constraints persist and EV momentum holds.

China leads, but the shift is global

No market has moved faster than China, according to the report. EV penetration there has jumped 11.4 percentage points since February, driven by a combination of existing EV infrastructure, competitive domestic pricing, and fuel costs that made gasoline cars increasingly unaffordable as global oil prices spiked. China alone accounts for 61% of the total global increase in EV penetration since February, Goldman found, with OECD markets contributing 21% and non-OECD markets outside China making up the remaining 19%.

The U.S., by contrast, has barely budged: up just 0.1 percentage point, per the report. Goldman attributes that partly to the federal EV tax credit expiring in late 2025, which pulled forward purchases and left demand with less room to grow.

Goldman applies a rule of thumb: every 1 million vehicles that shift from internal combustion to electric cuts road fuel demand by 30,000 barrels per day in the U.S. and 20,000 barrels per day elsewhere. Under the bank’s more conservative “temporary acceleration” scenario—which assumes EV penetration flatlines at its current elevated levels—the cumulative demand hit by the end of 2027 reaches 0.13 mb/d. Under its “persistent acceleration” scenario, where current trends continue through late 2027, the figure rises to 0.32 mb/d.

Goldman cautions those figures likely understate the full picture. The analysis covers only new passenger car sales—it doesn’t capture the behavioral shift Goldman says is already underway within the existing vehicle stock. In China, the bank notes, owners of plug-in hybrids are increasingly opting to charge rather than refuel, contributing to what Goldman estimates as a more than 20% year-over-year drop in gasoline and related product sales volumes. Two- and three-wheeler EVs—which Goldman says command 92% of EV sales in India, 80% in Vietnam, and 35% in China—add further displacement that doesn’t appear in the passenger car data at all.

Reshaping long-term demand

The Goldman report is interesting for what it implies about the relationship between energy shocks and technology adoption. Climate policy, fuel economy standards, and government EV subsidies have spent years nudging consumers toward electric vehicles, but the Iran war may have done more in four months. Goldman’s downside scenario envisions a 1.5 mb/d persistent loss in global oil demand tied to the conflict, versus 0.5 mb/d in its base case—with Brent in the mid-$50s representing a structural headwind for producers betting on sustained demand growth through the decade.

In the U.S., new EV sales in the U.S. totaled roughly 85,000 units in May—just 5.7% of total vehicle sales, down nearly 22% from a year earlier. The collapse traces directly to the expiration of the $7,500 federal EV tax credit in September 2025, which has yet to be replaced.

In China, the dynamic is inverted: EVs accounted for nearly 63% of all retail car sales in May, with gasoline vehicles’ share collapsing to just 37%—and in April, China had already hit a record high of more than 60% electric, according to data from the China Passenger Car Association.

This story was originally featured on Fortune.com