Middle East Tensions Hammer China's Auto Exports: Freight Rates Soar to $400,000/Day, EVs Face 360,000-Unit Shortfall

By late February 2026, escalating geopolitical tensions in the Middle East brought shipping through the Strait of Hormuz nearly to a halt, severely disrupting Chinese automakers' exports. In 2025, China’s auto exports surpassed 7 million units for the first time, with the Middle East accounting for 1.39 million units—nearly 20% of the total. Now, disrupted shipping routes, freight rates soaring to $400,000 per day, skyrocketing war risk insurance premiums, and the looming threat of interrupted supplies of critical aftermarket parts have all impacted leading automakers such as Chery, SAIC, and BYD. Chery, heavily reliant on knock-down (KD) kits from Iran for local assembly, faces potential business contraction, while BYD has been forced to delay its plans to establish a sales network and distribution centers in Saudi Arabia. Meanwhile, upstream supply chains are also under pressure: Iran supplies 85% of the world’s high-grade celestite, a key raw material for electric vehicle motors. A supply disruption could double strontium carbonate prices, with existing inventories sufficient for only three months. Yet amid the crisis lie opportunities—if oil prices rise to $100 per barrel, it could shift demand for 100,000 to 360,000 internal combustion engine vehicles toward new energy vehicles (NEVs). Industry experts stress that automakers must now build a “triple-redundancy” system for their global expansion, shifting their strategic priority from efficiency to security.