Rising oil prices spark EV demand, threatening lithium and copper supplies

The war in Iran has driven up petrol and diesel prices, reviving interest in electric vehicles as a cost-effective alternative to conventional cars, in addition to government incentives and environmental goals. Global new-energy vehicle sales grew only 4% from January to August, but regional patterns differ sharply: the United States experienced a 33% decline in August after subsidy cuts, China’s EV market fell 12% yet its new-energy share reached 65%, Europe posted a 36% increase, and sales in the rest of the world have doubled this year.

Cheaper Chinese exports and narrowing price gaps are making battery EVs competitive in many Asian markets, shifting buyer motivation from green concerns to economics. Wood Mackenzie’s “electric shock” scenario suggests that prolonged high oil prices and continued attacks on Russian refineries could accelerate this shift, raising demand for lithium, nickel and copper. The firm estimates copper demand would need an extra 2% and lithium 14% beyond baseline, requiring new mine capacity to rise to roughly 960,000 tonnes annually by 2040. Without such expansion, metal markets could face renewed price volatility as EV adoption speeds up.