After a big pullback for EVs, climbing gas prices are causing drivers to eye them again

Gas prices in the US have climbed $0.60 in less than two weeks because of the war with Iran. Prediction markets are pricing in an implied 62% chance* that the price of gas exceeds $4 by the end of the month. That has EVs once again turning car shoppers’ heads, though the EV landscape is very different than it was the last time oil prices spiked.

A person familiar with car sales across the US told Sherwood News that they’ve seen EV order growth significantly outpacing the non-EV baseline, as consumers’ EV interest has risen over the past several days.

A spokesperson for auto retailer CarMax told Sherwood that the company has recently observed a “statistically significant lift in shoppers searching for EVs, Hybrids, and Plug-In Hybrids.”

“From Feb 1st - March 1st (inclusive), compared to March 2nd to March 11th (inclusive), we saw a 6.4% lift in page views for these vehicles,” the spokesperson said.

The category garnered 22.4% of all vehicle research activity on Edmunds in the week beginning March 2, up from 20.7% the week prior.

The last time oil prices were this high — as Russia invaded Ukraine in 2022 — the EV market was in a very different position. At the time, former President Biden had recently signed an executive order seeking to ensure half of all vehicles sold in the US by 2030 were electric.

EVs saw elevated interest from rising gas prices then, with some even selling on the secondary market for more than retail consumers on waitlists had bought them for.

Today, the EV market has matured and gone through a pullback. The Trump administration eliminated the tax credit and revoked the 50% EV sales target. But the sheer number of EVs available has also grown immensely in that time, driving growth in used EV sales.

The Takeaway

At those used prices, EVs may be of more interest to cost-weary shoppers. The trend has already begun: in January, used EV sales grew 21% from a year earlier, while new EV sales fell 30%, Cox data shows. Sales could continue to swing toward cheaper used EVs if gas prices remain elevated. If prices remain elevated in the long term, however, that story could change.

“While higher gas prices do tend to refocus shoppers on fuel economy, the near‑term impact is more likely to show up in household behavior than in vehicle purchase behavior,” said Stephanie Valdez-Streaty, Cox Automotive’s director of industry insights. “To materially change buying behavior and drive a trend toward smaller, more efficient vehicles, consumers would need to believe gas prices will remain elevated for years, not just months.”

(Cross post this to Econ to show human action at work! Gas goes up 20% and people already looking for alternatives!! LOL! The thought hasn’t crossed my mind yet!)(Cross post this to Econ to show human action at work! Gas goes up 20% and people already looking for alternatives!! LOL! The thought hasn’t crossed my mind yet!)