When a supply shock hits a product for which there’s no alternative — toilet paper during COVID-19, for instance — there’s not much people can do except deal with it. If a ready substitute is waiting in the wings, the outcome can be mass defection.

Think of how American drivers switched to smaller, fuel-efficient Japanese vehicles in the wake of the 1970s oil embargoes. Detroit’s big three produced almost half the world’s cars in 1973. They account for well under 10% today.

With a fresh Middle Eastern oil crisis building, Asian electric-vehicle manufacturers are poised to seize a new market. That will do to conventional gasoline cars and bikes what Toyota Motor, Honda Motor and their peers did to the U.S. auto industry in the 1980s. The same companies may be the losers this time around.

EVs have already hit solid double-digit market shares in multiple emerging markets, as falling battery costs and tax incentives helped undercut conventional cars. In recent months, battery-only models have reached around 50% in Thailand and Singapore, and about a third in China, Indonesia, South Korea and Vietnam. That’s streets ahead of the U.S. and Japan, where they’re well under 10%. All this was achieved without the helping hand of $100 oil.

Conditions are ripe for a broader shift. Hanoi and Ho Chi Minh City had already been planning to ban gasoline-powered scooters and motorbikes from their downtown areas this year, a response to the choking pollution from millions of two-wheelers. Delhi is proposing similar measures starting in 2027.

Similar regulations across China mean you’ll hardly ever see a non-electric motorbike outside of rural areas. Sales of gasoline-powered bikes in China have fallen about 60% since peaking in 2009. As e-bikes become cheaper and charging and battery-swapping infrastructure improves, expect comparable restrictions in other two-wheeler-dominated Asian megacities such as Bangkok, Jakarta and Manila.

The war will also strain government lifelines that keep retail fuel cheap. Indonesia looks certain to blow through its deficit target soon, with imported crude likely to swell the 10% of the budget spent on fuel subsidies, as my colleague Daniel Moss has written. Shares in India’s three state-owned gasoline distributors are down more than quarter this month, since they’re expected to swallow losses on gasoline and diesel when crude prices rise.

You can add to that the effect on hard-pressed local currencies. For many developing countries, crude and oil products are the biggest import categories. Spending on petroleum drains capital away from economies that need investment and transfers it to richer exporters. Those sums will surge as oil prices rise.

Bills for imported fuel dwarf what’s spent on EVs — and gasoline is an ongoing cost that must be paid each year, whereas a car is a one-time purchase. And yet Asian countries impose tariffs as high as 105% on EVs, while crude typically enters almost duty-free. That’s justified as a way of encouraging local car manufacturing, but it’s desperately counterproductive if you want to grow your economy and improve citizens’ lives.

Governments need to seize this moment to accelerate decarbonization, as the European Union did after the 2022 Ukraine war. Temporary tariff exemptions are one of the main reasons EV penetration rose so fast in Asia last year. They should be extended, or at least reset at levels below 10%.

State-owned utilities also need to increase investment in charging infrastructure and battery-swapping stations for delivery drivers. In many places, they’re almost nonexistent. There are about 40 public EV chargers shared by the roughly 10,000 people in my suburb of Sydney, about the same number as serve more than 400 million across Bangladesh and Pakistan.

If EV sales keep rising, utilities should earn solid returns from these investments. Charging will create fresh demand on the grid, bailing them out of the overcapacity problems they’ve suffered in recent years when they underestimated the growth of renewable energy.

China’s export-hungry EV manufacturers such as BYD and Geely Automobile Holdings will be the obvious winners, but they’re not the only ones.

Vietnam’s Vinfast Auto has a commanding domestic market share and has been as aggressive as the Chinese in seeking exports. India’s TVS Motor, Mahindra & Mahindra and Tata Motors have strong local presences and potential to grow overseas. South Korea is the only real challenger to China’s dominance of battery manufacturing, and Hyundai Motor and Kia each have strong EV offerings.

Japan’s hidebound automotive giants such as Toyota and Honda, meanwhile, are retreating from still-dominant positions in Southeast Asia and betting electrification will stall. That hesitancy is about to prove disastrous.

In India, shortages of the LPG used as domestic cooking fuel have already been sparking fistfights at gas-bottle retailers. If the crisis in the Strait of Hormuz doesn’t resolve soon, we may see similar scenes spread to gas stations. There is no better advert for an electric car than waiting for hours in a tense queue for rationed fuel. The energy crisis of 2026 will push Asia’s EV market past its tipping point.

© The Japan Times