At the start of 2026, something unusual happened in China's car market. BYD, the company that had spent years at the top of the domestic sales charts, was knocked off its perch by a rival.
Geely outsold it for two months in a row, and the headlines reflected a genuine shift in momentum. Then the war in Iran broke out, oil prices surged, and everything changed.
BYD, which had lost its title as mainland China's largest carmaker in the first quarter of 2026, rebounded strongly in the following two months as the U.S.-Israel war with Iran drove up oil prices. Its overseas deliveries surged 76 per cent year on year to nearly 300,000 units during the period.
By May, BYD had delivered 1.41 million vehicles globally between January and that month, 19 per cent more than Geely's 1.18 million units over the same stretch.
The conflict, which broke out on February 28, disrupted the Strait of Hormuz - the narrow waterway through which roughly 20 per cent of the world's oil supply passes.
When ships stopped moving freely through the strait, oil prices climbed sharply. And when petrol becomes expensive, the calculation for buying an electric car changes almost overnight.
The price difference between used electric vehicles and used petrol vehicles shrank from an average gap of nearly $5,000 to just over $1,300 between February 2025 and February 2026 - meaning that for millions of buyers sitting on the fence, the financial case for going electric suddenly became a lot harder to ignore.
Countries that had been slow to adopt EVs, including the United States, saw renewed interest as the oil shock brought a new urgency to the question of fuel costs.
The historical comparison is striking. Analysts have drawn comparisons with the 1970s oil shock, when a sudden spike in global energy prices accelerated the adoption of fuel-efficient Japanese cars in Western markets - ultimately reshaping the global car industry for decades.
The argument is that the Iran war may be doing something similar for Chinese EVs today - it's providing an external shock that accelerates a shift in consumer behaviour that was already underway, and handing Chinese manufacturers an opportunity to cement their position in markets they had only recently entered.
Chinese exports of electric vehicles and hybrids hit a record high in March 2026, rising 140 per cent compared to the same period a year earlier, according to the China Passenger Car Association.
Electric vehicles now account for half of all new car sales within China, which means Chinese manufacturers face no domestic demand disruption from rising fuel prices - leaving them free to focus their resources entirely on export growth while rivals in oil-dependent markets absorb rising costs. It is a structural advantage that no policy decision was created and no competitor can easily replicate.
None of this means BYD's path is entirely clear. The company recorded its first annual profit drop in four years in 2025, with net profit more than halving year on year in the first quarter of 2026, as a brutal domestic price war and subsidy cuts took their toll.
The Chinese EV market at home remains intensely competitive, with dozens of brands fighting for the same buyers and margins under pressure across the board.
And in Europe, tariff pressures are pushing BYD to manufacture locally rather than export, which is a more expensive and complicated proposition than simply shipping cars from its vast factories in southern China.
The recovery has reinforced founder and chairman Wang Chuanfu's ambition to build BYD into the world's largest carmaker by 2030, backed by advances in next-generation batteries and autonomous driving technology.
A target which seemed far-fetched, but now almost within reach thanks to the crisis in the Middle East.
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