12 May 2026
A convergence of geopolitical shocks and structural shifts could drive renewed momentum for China’s EV and battery ecosystem.
With crude oil climbing as high as $119 a barrel amid Middle East tensions, the economics of electrification are shifting decisively. Chinese EVs are cost-competitive globally just as more markets look set to adopt alternatives to combustion vehicles. Already, EVs account for more than 10% of car sales in 39 countries — up from just 4% in 2019 — and that momentum is set to intensify.[1]
In 2025, China’s manufacturers exported more than 2.6 million EVs with total value rising 43% year-on-year.[2] The country is also expected to drive over 70% of global battery manufacturing investment through 2026 while its domestic energy storage market is projected to quadruple in size over the next decade.[3],[4]
But there are also constraints.
Rising input costs — from lithium to semiconductors — are squeezing margins.[5] Before the war, domestic subsidies were being scaled back while trade frictions in the US and Europe were forcing companies to rethink supply chains and market access.[6] And intensifying competition back home means that only a fraction of today’s EV players may be profitable by the end of the decade.[7]
It marks a shift to a more unforgiving phase, where only those with scale and strategic clarity will endure.
Entrepreneurs and major shareholders in China’s EV and battery space could consider equity-backed financing to unlock trapped value without diluting ownership. By leveraging existing holdings, founders and stockholders can access capital quickly and deploy it where it matters — whether to scale production, invest in next-generation technologies or by establishing a foothold in new markets.
Overcoming inertia
Despite the momentum, the path to total electrification is far from linear. For Chinese EV and battery pioneers, major obstacles could slow the shift into top gear.
The first hurdle is human. Internal combustion engines (ICE) boast more than a century of cultural relevance. Beyond practical "range anxiety", there is visceral nostalgia — the tactile feedback and acoustic "soul" of an engine that enthusiasts may be loath to trade for the hum inside EV motors.
This hesitation is reflected in shifting demand: 50% of global buyers in one survey last year stated a stronger desire for purchasing ICE vehicles over the next two years, while EV and hybrid preferences declined amid policy changes and automakers recalibrating their strategies.[8]
In global markets, Chinese manufacturers may also face a favorability gap. While they lead in technology and price, they often battle a "legacy bias" where local consumers default to established domestic or regional brands.[9] A majority of global consumers — particularly in Southeast Asia — viewed Chinese EVs as viable options in one survey primarily due to their superior value and battery technology, but other markets remained hesitant, as concerns over quality and brand reputation (cited by over half of skeptics) suggested they may be seen more as high-tech bargains.
In energy storage, it's well-understood that batteries (and solar or other renewable technologies) are no panacea for countries struggling with energy deficits. While battery storage is revolutionary for localized solar projects, data centers, and small-town microgrids, it may struggle to anchor the massive, 24/7 power requirements of megacities.
Plus, many national grids are not ready, lacking the transmission capacity to handle electricity generation from distributed sources. This has meant rising curtailment or the intentional reduction of electricity output from renewable energy sources in recent projections.[10]
Finally, the world is reacting to the current oil shock. As Middle Eastern supply chains face disruption, many countries are aggressively pivoting toward new or expanded oil and gas frontiers in Guyana, Brazil, and the US.[11],[12]
Nevertheless, this decade could be a lot like the 1970s when Gulf oil crises radically shaped industries. Back then, American "gas guzzlers" were blindsided by a sudden need for fuel efficiency, opening the door for Japanese automakers in the US.[13],[14] Today, Chinese EVs are positioned similarly — lighter, smarter, and radically more energy-efficient.
In a similar vein, the 1970s sparked a desperate global drive to diversify national energy mixes. However, at that time, the options for moving away from fossil fuel dependency were few and far between.
Today, the landscape is different. Solar-based electricity generation has shifted from a subsidized niche to the world’s most cost-competitive source of power. For the first time, the transition away from oil is being driven not just by government mandates, but by the sheer gravity of economics.
For China’s EV and battery leaders, maintaining domestic dominance is no longer enough. Mobilizing capital with agility is now the prerequisite for a truly global footprint — one that provides the staying power to outpace incumbent automakers currently waking up to the electric transition.
In this high-stakes race for scale, equity-backed financing can be a useful, and often overlooked, instrument of private credit.
[1] https://www.scmp.com/economy/china-economy/article/3347583/why-iran-war-could-be-game-changer-evs-and-chinas-car-industry
[2] https://www.reuters.com/markets/china-tightens-clean-tech-grip-with-growing-ev-export-reach-2026-02-06/
[3] https://www.climatepolicyinitiative.org/wp-content/uploads/2025/11/Global-Landscape-of-Energy-Transition-Finance-2025.pdf
[4] https://www.rinnovabili.net/business/markets/chinese-battery-stocks-us-iran-conflict/
[5] https://www.scmp.com/business/banking-finance/article/3347527/three-chinese-ev-makers-raise-prices-analysts-warn-weak-demand-could-force-reversal
[6] https://www.nytimes.com/2026/02/19/business/china-electric-vehicle-troubles.html
[7] https://www.reuters.com/business/autos-transportation/only-15-electric-vehicle-brands-china-will-survive-by-2030-alixpartners-says-2025-07-03/
[8] https://www.ey.com/en_ro/newsroom/2025/12/global-consumers-driven-back-to-ice-vehicles-as-ev-enthusiasm-co
[9] https://www.adlittle.com/th-en/insights/report/chinese-electric-vehicles-drag-or-driver-global-markets
[10] https://www.iea.org/reports/renewables-2025/renewable-electricity
[11] https://www.ft.com/content/c58370ba-0d31-4320-ad33-7c2236bd23c8
[12] https://www.offshore-technology.com/news/oil-prices-hold-us-iran-loom-hormuz-closure/
[13] https://www.toyota-global.com/company/history_of_toyota/75years/text/entering_the_automotive_business/chapter2/section4/item4.html
[14] https://gulfnews.com/world/gulf/1973-oil-crisis-pushed-consumers-to-fuel-efficient-japanese-cars-2026-crisis-could-push-them-to-chinese-evs-report-1.500479438
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