This paper envisions how countries might respond to rapid market penetration of electric vehicles (EVs). It focuses on Eurasia which as a region encompasses several key geopolitical actors and most of the world’s largest automobile producers. The objective of this report is to increase awareness of the geopolitical risks and identify ways to strengthen rules-based international cooperation.

Even conservative forecasts show significant growth in EV adoption over the next several decades. Declining battery costs, which have fallen by 79% since 2010, and stronger fuel efficiency standards are occurring alongside ambitious EV targets and investment from governments and the private sector. EVs are likely to be cost competitive with Internal Combustion Engines (ICEs) without subsidies within the next five years, and to account for most car sales by 2035. Significant barriers remain, including limited charging infrastructure, long re-charge times and cyber risks. However, rising concerns about climate impacts, changing consumer preferences and interest in new market opportunities are catalyzing infrastructure initiatives and research and development into next generation battery technologies. Demand for ICEs is already falling in some countries – including in China where sales in November 2018 were 20% lower than the previous year. Concerns about public backlash to urban air pollution, which cost $225bn in lost labor income in 2013, is also driving interest in EVs in many countries.

EV adoption is likely to influence geopolitics through several interrelated mechanisms, including international trade, energy security and competition over strategic resources. EVs will also have second and third order effects with geopolitical or human security implications, in large part as a result of a declining tax base in oil producing countries. In each case EVs have the potential to be a catalyst for greater cooperation, or a source of conflict.