EV demand gets a boost from Iran war as countries shift away from oil
An electric vehicle (EV) is left charging at a charging station in Tehran on February 23, 2026.
Atta Kenare | Afp | Getty Images
The spreading Middle East crisis is expected to encourage drivers to abandon traditional internal combustion engine vehicles and turn to electric vehicles, but early evidence suggests it will be a gradual gear shift, analysts told CNBC.
The Iran war has severely disrupted oil exports through the strategically vital Strait of Hormuz, which carries approximately one-fifth of the world’s oil and liquefied natural gas (LNG). Rising oil and gas prices have rattled energy markets and triggered widespread inflation fears, underlining the extent to which the world remains dependent on fragile fossil fuel trade routes.
Various car sales platforms in the USA and Europe reported There has been a sharp increase in consumer interest in electric vehicles since the start of the war in late February. The emerging trend comes as much of the legacy auto industry is shifting back to internal combustion engine (ICE) vehicles.
Autotrader, an online vehicle marketplace reported Since the war in Iran began on February 28, there has been a 28% increase in inquiries about purchasing a new electric vehicle on March 26, and a 15% increase in inquiries about purchasing a used electric vehicle. Electric Vehicle specialist Octopus Electric Vehicles said it was seeing electric vehicle rental inquiries on March 25. 36% increase since the beginning of the conflict.
But US automakers Ford Motor, General Engines and Jeep owner Stellantis It has reversed course on its electric vehicle strategies, forking out tens of billions of dollars in total write-offs and restructuring costs, partly due to lackluster consumer demand and a changing political environment.
It’s really quite frustrating that we’re talking about electric vehicles again, as if we don’t know that this is the structural measure that will wean our transportation system away from oil.
Julia Poliscanova
Senior director of vehicles and e-mobility supply chains at Transport and Environment
Steffen Michulski, senior consultant at JATO Dynamics, said that although the situation is still evolving, it is already clear that the effects of the Iran war could affect electric vehicle demand.
Given that the sharp rise in oil prices has made traditional gasoline cars much more expensive, owning a battery electric vehicle (BEV) is becoming more attractive to drivers who cover high miles, Michulski said.
Michulski said the switch to EV could also give households an extra layer of energy independence, but cautioned that it would be important not to “oversimplify” the situation. He noted that the overall economic environment could soften if inflation and supply chain costs continue to rise; For example, these broader pressures affect all powertrains (electric or combustion).
“To shorten and summarize: Yes, higher oil prices and a renewed focus on energy security will likely provide a mid-term boost to BEV demand,” Michulski told CNBC via email.
“However, this is best understood as a gradual change rather than a sudden market-wide acceleration. Electricity price risks, technological progress on the combustion side, and general economic uncertainty all play a balancing role,” he added.
Increase in the number of automobile consumers considering electric vehicles
Consumers may be more likely to consider all-electric vehicles due to higher gas prices, but they may be slow to change their purchasing behavior from conventional to electric vehicles, according to Erin Keating, Cox Automotive’s senior director of economics and industry insights.
Cox expected gas prices would need to be inflated for six months or longer if there was any significant increase in consumers’ electric vehicle purchasing habits, officials said in a March 25 meeting. Obstacles such as cost, charging infrastructure and range anxiety (the fear that an electric vehicle will run out of power before reaching a destination) remain, according to Keating.
The average price of a new EV in the U.S. was $55,300 in the first quarter, Cox reported. That’s down from recent quarters but still higher than non-EV models at $48,768.
U.S. EV sales remain low despite high gas prices. Cox predicts U.S. EV sales will fall 28% to 212,600 units in the first quarter.
However, sales of electric vehicles, which include electric vehicles and hybrids, continue to rise as automakers shift their focus from EVs to hybrids and seek a compromise to meet consumers’ expectations for fuel economy.
GM logo on the water tank of the General Motors Ramos Arizpe assembly plant, Ramos Arizpe, Coahuila state, Mexico, January 19, 2026.
Antonio Ojeda | Reuters
Electric vehicle sales, led by Toyota hybrids, are expected to account for 26% of new vehicles sold in the first quarter, according to Cox.
Early signals from CarMax’s Edmunds.com site indicate an increase in the number of auto consumers considering electric vehicles due to high gas prices.
“Fuel prices have long influenced how drivers think about their next vehicle because they are one of the most visible costs of vehicle ownership. But whether the recent increase translates into a meaningful shift toward electric vehicles may depend less on the price of gasoline and more on how high consumers expect fuel costs to remain,” Edmunds said in a statement. he said.
An even faster change?
In Europe and Asia, the energy shock of war in Iran is expected to facilitate a deeper shift towards electric vehicles than previous fossil fuel crises.
“It’s really quite frustrating that we’re talking about electric vehicles again as if we don’t know that this is the structural measure that will de-oil our transport system,” Julia Poliscanova, senior director of vehicles and e-mobility supply chains at campaign group Transport and Environment, told CNBC via video call.
“I think this crisis could be different. In the past, there would have been a crisis, and as soon as the crisis is over, we can go back to business as usual and the oil and gas will continue to flow.”
U.S. President Donald Trump speaks with Ford chairman Bill Ford (left), Treasury Secretary Scott Bessent, Ford CEO Jim Farley (2nd right) and plant manager Corey Williams (right) while touring Ford Motor Company’s River Rouge complex in Dearborn, Michigan, on January 13, 2026.
Mandel Ngan | Afp | Getty Images
However, Poliscanova said some reported damage to the Middle East’s energy infrastructure meant it could be years before energy supplies were brought back online.
An analysis It was published A study by Transport & Environment earlier this month found that electric cars are already reducing the European Union’s oil imports, noting that around 8 million EVs in the EU would save the bloc around 46 million barrels of oil in 2025. This is equivalent to almost 3 billion euros ($3.45 billion) in avoided oil import costs.
Meanwhile, in the context of the Middle East conflict, the analysis said gasoline drivers are expected to be five times more likely to be exposed to higher oil prices than electric vehicle owners.
Poliscanova said EV growth drivers in Asia, particularly Vietnam, Thailand and Indonesia, which are benefiting from affordable models from Chinese automakers, will see a faster shift away from fossil fuels.
“We will probably see an even faster move away from oil in some of these economies, which means that today in Europe we are still discussing topics like biofuels and hybrids, looking really stupid and out of touch with reality,” Poliscanova said.
A spokesman for the European Commission, the EU’s executive arm, declined to comment.
