How many electric vehicles are needed to fill this oil market gap?

The Middle East energy crisis is quietly rewriting the demand logic for electric vehicles.

According to information from Chasing Wind Trading Desk, UBS stated in a March 30 report that the Strait of Hormuz has blocked about 12% of the global oil supply. To fully fill this gap, around 770 million fuel vehicles would need to be replaced with electric vehicles—almost twice the historical cumulative global electric vehicle stock.

Persistently high oil prices will systematically improve the total cost of ownership (TCO) for electric vehicles (EV and PHEV) over fuel vehicles throughout their life cycle, triggering a round of structural demand growth that exceeds previous market expectations. For lithium and other battery raw materials, this means a potential turning point for medium- to long-term demand is building up.

Historical Reference: How the 1973 Oil Crisis Reshaped the Automotive Landscape

UBS’s research first cites the precedent from 1973. In October that year, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced a comprehensive oil embargo against nations supporting Israel. Though the embargo lasted only about six months, oil prices soared nearly 300%, causing profound structural reshaping in the energy and automotive industries:

Policy level: Governments introduced fuel efficiency standards one after another, established strategic oil reserves, and launched incentive policies to reduce dependence on oil;

Automakers: Car companies that previously ignored fuel economy were forced to quickly transform, fundamentally changing vehicle design and model strategies;

Consumers: The sharp rise in gasoline prices deeply changed car purchase decisions, making fuel efficiency the core consideration.

UBS emphasizes that these changes proved to be lasting, continuing even after the embargo ended. This framework provides great value for reference in the current energy crisis.

Math Question: How Many Electric Vehicles Are Needed?

UBS has built an intuitive but startling quantitative framework. Based on the current situation:

The blockage of the Strait of Hormuz has led to a disruption of about 13 million barrels per day (13Mbpd) of global oil supply, accounting for roughly 12% of total global supply;

According to International Energy Agency (IEA) data, global passenger vehicles account for about 25% of oil demand, around 27 million barrels per day (27Mbpd);

Assuming about 1.6 billion vehicles worldwide, with 94% being fuel vehicles (ICE), it would require approximately 770 million fuel vehicles to be switched to electric to fully fill the current oil supply gap.

This is purely a theoretical assumption; in reality, multiple constraints like demand elasticity, supply bottlenecks, and substitution effects make it fundamentally unachievable.

But even to fill just 50% of the gap requires an incremental 385 million electric vehicles—which is almost equivalent to UBS’s predicted cumulative EV sales of 400 million by 2035.

Google Searches Reach Record High, But Sales Have Yet to Catch Up

Real-world data shows an “emotions ahead, actions lagging” picture.

Google Trends data shows global search interest for “Electric Vehicle” has reached its highest level ever (index at 100), reflecting a historic peak in consumer interest. However, actual electric vehicle sales at the beginning of 2026 are relatively flat, with a clear divergence between the two.

By region, China remains the world’s largest EV market, 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%.

The UBS global automotive team currently predicts a 9% growth in global EV demand in 2026, still solid but clearly slower than previous years. In China, post-stimulus policy consumption fatigue may limit incremental growth. Meanwhile, low-cost Chinese EV exports are showing increasingly prominent TCO advantages in markets with high oil prices.

Inventory Continues to Decline, Battery Storage Pipeline Remains Strong

The upstream lithium market also sends positive signals.

UBS states that after a sharp decline in China’s lithium carbonate inventory at the end of 2025, there was a brief halt at the start of 2026, but after the Lunar New Year, destocking resumed. Currently, the entire chain’s inventory remains at a low level of less than 1 month (monthly and weekly lithium carbonate, and monthly lithium hydroxide similarly), clearly indicating supply chain tightening. UBS estimates the current rate of inventory destocking is about 25,000 tons per year.

Meanwhile, the battery energy storage system (BESS) sector is seeing strong project progress, further supporting the demand outlook for lithium.

Globally, BESS project pipeline from 2026 to 2030 totals about 2.1 TWh (2,077 GWh), covering all stages from proposal to construction/operation. By region, China accounts for 45%, North America 18%, Europe and Oceania each 12%. Average project duration is expected to surpass 4 hours in 2029.

UBS concludes that in the short term, the demand shock and cost pressure brought by the current geopolitical conflict are hard to ignore; but for investors with longer investment horizons, the energy crisis may drive a structural demand leap for the electric vehicle theme, bringing substantial benefits to lithium and other upstream materials.

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The above excellent content is from Chasing Wind Trading Desk.

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