Petrol price hike from Iran war could push consumers toward EVs, hybrids

[GUILDFORD, England] The rising price of petrol from the Iran war has triggered angst and uncertainty for carmakers, dealers and vehicle owners at the pump.

For Martin Miller, it presents an opportunity.

He owns a used electric vehicle (EV) dealership south-west of London, and logged his busiest Saturday ever one week after the war began with the bombing of Iran by Israel and the US on Feb 28.

The conflict has disrupted shipping in the Strait of Hormuz, through which roughly 20 per cent of global oil supplies are transported.

Miller is now racing to stock more inventory.

“We’re turning cars very, very quickly,” he said, adding that customers at his store, EV Experts, worry that the petrol prices will climb higher. His staff has been buying more EVs at auctions “like mad”, he said, “because we’re confident this will continue”.

British government data showed that as at Mar 16, the average petrol price per litre in Britain was up 7 per cent since the war began. In the European Union, prices have risen 8 per cent, said the European Commission.

The average US gallon of petrol has risen 27 per cent since late February, up to US$3.72, the US Energy Information Administration said on Tuesday (Mar 17).

When buyers change behaviour

History has shown that oil price shocks can lead to structural changes in consumer car-shopping habits. The 1970s energy crisis led US car buyers to opt for smaller vehicles, which favoured Japanese carmakers and eroded their US rivals’ market share.

Analysts say that the recent sharp increases in fuel prices likely will not significantly alter shopping patterns for new cars right away.

It often takes a sustained period of elevated prices, or for them to eclipse a psychological milestone, before car buyers shift their focus to more fuel-efficient choices, industry watchers said.

“Consumers are highly reactive to gas prices, but it tends to be that it has to hit a certain round number,” said Kevin Roberts, director of economic and market intelligence at online marketplace CarGurus.

“The US$4 (a gallon) threshold may be the one to watch,” he said, noting that it was a tipping point for EV interest during the last oil shock in 2022, after Russia invaded Ukraine.

Zach Xavier, a customer in the US, did not want to wait. He visited Recharged, a used EV dealership in Richmond, Virginia, with his wife on Friday to trade in a combustion-engine sport utility vehicle for an electric one, and also purchased a second, smaller EV.

“I’m trying to get in before everybody freaks out,” he said.

So far, higher prices do not seem to have fazed US new car shoppers, based on the activity on some vehicle-research sites.

CarGurus said last week that it had not yet seen major shifts in EV searches. Another site, Edmunds, said that the share of shoppers looking at EVs in the first week after the war started ticked up slightly, to 22.4 per cent from 20.7 per cent the week before.

Europe ripe for EV shift

An uptick in EV interest is more likely in Europe, where fully electric cars accounted for 19.5 per cent of sales in 2025, and where government tax breaks for electric purchases are being reintroduced.

In Germany, EV-related traffic for online car dealer MeinAuto has increased by 40 per cent since the start of the Iran war.

“Our consultations have also revealed that many people are currently focusing more intently on the running costs of their cars,” the company said in a statement.

In a survey of 1,164 people conducted on Mar 12 in Germany by online marketplace Carwow, 48 per cent of respondents said that spiking fuel prices “would influence their decision to consider an EV or hybrid”.

Between Mar 2 and 12, up to 66 per cent of shoppers were looking at EVs, up from 55 per cent at the end of February, Carwow said.

Vietnamese EV maker VinFast identifies a marketing opportunity, offering a 3 per cent discount on EVs and a 5 per cent discount on electric scooters for people switching from petrol vehicles “amid volatility in global fuel prices”.

As at Mar 9, petrol prices had jumped 50 per cent since the war began, said Vietnam Petroleum Group.

In the US market, industry experts say a major move to EVs is unlikely unless fuel prices march far higher. EV sales accounted for just 7.7 per cent of new-car sales in 2025, with sales cooling after the Trump administration killed a US$7,500 federal tax break for buyers of EVs.

Research from dealer services group Cox Automotive found that most US consumers would consider switching to an EV or hybrid if petrol prices hit US$6 a gallon.

Cox’s director of insights, Stephanie Valdez-Streaty, said that the rising price of fuel could hurt US vehicle sales overall, because it adds to US car buyers’ mounting uncertainty over tariffs and broader concerns around inflation and the economy.

“Unless you really need a car right now, you might (want to) hold off,” she added. REUTERS