Trump’s war has been a gift to an industry he detests

All wars tend to have unintended consequences way beyond what the protagonists are trying to achieve. Some of them are relatively trivial, others truly transformational.

So it is with Donald Trump’s war in the Gulf, which – ironically for a US president who has made “drill, baby, drill” one of his calling cards – seems to be massively accelerating the shift away from traditional internal combustion engine (ICE) cars to electric and plug-in hybrid vehicles.

You never know with Trump but this is unlikely to have been one of his key war aims.

Indeed, to the extent that it is possible to glean any economic method at all in the madness of his approach, it may be that it lays the foundations for an age of much lower oil and gas prices to come, which very much is one of his objectives.

This outcome is admittedly hard to square with the current surge in prices and fast-developing crisis in commodity supply but it is possible that once some kind of resolution is reached, today’s famine will transmogrify quite quickly into a veritable glut, driving prices lower across the board.

Already, there are early signs of the preconditions for a coming age of abundance, with the Gulf Emirates refusing to be bound by current quotas and pulling out of the Organisation of the Petroleum Exporting Countries (OPEC) oil cartel accordingly.

Once the Strait of Hormuz is reopened, it is likely to be a free-for-all with big discounts on offer to win back market share damaged by the blockade.

But for the moment, the sky’s the limit on petrol and other fuel costs and there is growing evidence that this is driving a sharp uptick of interest in electric and other low-emission vehicles.

Again, admittedly, we don’t yet really see this switch in the UK. March was a record month for electric vehicle (EV) registrations but it was also a record month for registrations as a whole.

Indeed, the best-selling car in Britain last month was the Jaecoo 7, a Chinese-manufactured but traditional petrol-fuelled vehicle. That’s not as you might expect given China’s lead in EVs, an all-electric product.

Despite a government bung of anything up to £3750 ($7084) per EV sold, most dealers are still struggling to meet mandatory EV sales targets, which require that at least a third of all new cars sold this year must be electric.

Deep discounts on listed prices are on offer in an attempt to shift the backlog of stock but to no avail. EV market share is still falling woefully short of the mandate at just 22.6 per cent.

Ministers demand one thing but the market refuses to obey. Consumers remain to be convinced. In despair and at a cost of tens of billions of pounds in write-offs, many manufacturers have been ripping up EV strategies and firing up old ICE production lines anew.

All the same, there is no doubt which way the wind is blowing, albeit not yet as strongly as once anticipated. War in the Gulf and the consequent surge in fuel prices may be just the tonic required.

Plug-in hybrid sales in the UK surged nearly 50 per cent last month compared with a year earlier and EV sales rose by 22.6 per cent. In the EU, the numbers are bigger still, with EV sales growing by nearly a half last month.

Research by the University of Exeter posits that EV take-up globally has reached a “tipping point” and is set to pass two thirds of all new car sales worldwide by the end of the decade.

We do not yet appear to have reached the point where more ICE cars are scrapped than are sold. Demand for traditional, petrol-driven vehicles is still growing strongly in the developing world.

But we may not be far off, meaning that the overall fleet of ICE vehicles may soon be in free fall. Already, nearly 100 per cent of new car sales in Norway are electric. For Sweden it’s 60 per cent, for Denmark it’s 66 per cent and in Singapore it’s 56 per cent.

Separate research by the investment bank UBS cites the emergence of what it calls “triple parity” – that is, EVs finally becoming comparable with ICE cars across price, range and refuelling time.

For now, many motorists still worry about whether they’ll reach the next available charging point before their vehicle runs out of juice.

On early EV models, cost and limited range also remain key concerns. But things are changing fast.

Charging infrastructure is becoming denser, charging times are quicker, range is no longer an issue and deep discounts mean that many EVs are now price-competitive with petrol counterparts.

Some of the models that combine the best of both forms of propulsion are truly awe-inspiring.

BYD’s “dual mode-intelligence” technology, for instance, boasts both the highest thermal efficiency of any car ever produced and the greatest range at up to 2253 kilometres.

What’s more, once the tipping point is reached, motorists who stick with the old tech could be faced with the same problem that afflicts today’s EV owners – lack of adequate refuelling infrastructure.

There comes a point where the lack of demand for petrol makes today’s abundance of forecourts too costly to maintain. Petrol stations might one day become as scarce as today’s EV charging points.

That crossover is still obviously some distance off but it is remarkable how quickly new technologies establish themselves once price competitiveness with the old has been achieved.

I’m old enough to remember the early stages of mobile telephony. Vodafone, one of the original UK licence holders, launched on the basis of a business model that anticipated no more than a couple of hundred thousand mainly high-end, business subscribers.

Within two decades, more or less everyone owned a mobile phone and today we each carry around in our pockets a communications device with more storage and computing power than an early IBM mainframe.

In any case, Trump’s attack on Iran could prove the EV accelerator that the industry’s cheerleaders have been waiting for.

If it is, the big winner will again be China, which has been planning for the current transition for years by investing heavily in battery technology and its accompanying supply chains.

The climate change brigade should be thanking Trump for furthering their cause.

Britain’s own much-depleted car manufacturing industry has not been entirely asleep at the wheel.

Overall vehicle production last year was badly hit by outages at Jaguar Land Rover and the closure of the Vauxhall van plant in Luton, Bedfordshire – but there was also a record level of EV production, which reached nearly 42 per cent of total output.

The trick with China is to do what Margaret Thatcher did in the 1980s when faced with the decimation of domestic car production at the hands of aggressive Japanese competition – which was to lean on the Japanese car giants to set up production facilities here in the UK.

Security concerns make it more difficult with the Chinese but if they want to access our markets, then there’s got to be some payback.

In the meantime, the climate change brigade should be thanking Trump for furthering their cause.

The Telegraph, London

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