Global Oil Disruptions Push Gas Prices Up, Sparking EV Interest

The conflict involving Iran has caused disruptions in global oil markets, impacting the country's oil-producing capabilities and one of the most important international oil shipping channels. This has led to an increase in oil prices, which in turn has elevated gas prices. The national average for gasoline has risen to $3.58 per gallon, marking an increase of over $0.50 compared to a month prior.

Surging Interest in Electrified Vehicles

This rise in gas prices is associated with an increase in consumer searches for electrified vehicles. Edmunds reported that the share of searches for electrified models (including hybrids and full EVs) on its car-shopping website rose from approximately 20.7% at the end of February to 22.4% during the week of March 2. The majority of this increase was attributed to searches for full EV models.

Edmunds noted a similar trend during the 2022 Russia-Ukraine conflict, when electrified vehicle research queries increased from 17.5% to 25.1% within a month.

Consumers Face Market Headwinds

The impact on oil prices has been observed globally, with countries such as Japan and South Korea implementing measures to manage oil and gas costs.

Consumers are facing challenges due to these higher gas prices. The current automotive market presents a limited availability of affordable cars, while average vehicle prices and financed amounts have continued to rise. This situation, combined with potential lost value when trading in a less efficient car, has made it difficult for some consumers to switch vehicles.

Opportunities in the Used EV Market

Despite these challenges, opportunities exist in the used EV market. While used Tesla prices have increased, the majority of used EVs remain affordable. More used EV models are expected to become available as lease terms conclude, potentially offering greater accessibility.

Automakers Postpone New Affordable EV Options

Automakers have reportedly postponed or canceled the introduction of some EV models for the U.S. market. Current lower-priced EV options, such as the Nissan Leaf and Chevy Bolt, have caveats; the Bolt's market availability is limited, and the cheaper version of the Nissan Leaf is on indefinite hold. Models like the Kia EV3 and EV4 have also been postponed for U.S. sales, limiting new affordable EV choices.

Uncertain Future for Oil Prices and EV Demand

The future trajectory of oil prices remains uncertain.

Some experts suggest prices could reach levels seen during the 2008 Great Recession ($140 per barrel), though prices have recently decreased from their peak during the current conflict. The duration of this decrease is unknown as the Iranian conflict continues.

Should gas prices remain high, an increase in demand for both used and new EVs is anticipated.