Climbing gas prices could be a golden opportunity for struggling EV market

You don’t have to look hard to find good deals on EVs right now—and they may get even sweeter as consumers trying to avoid the gas station give battery-powered models a second glance.

The US average price for a gallon of gas is about $1 more than it was a month ago, as a result of disruptions to global oil supplies because of the US-Israel war with Iran. This sudden increase has caused car shoppers around the world to mull EVs, though earlier this month, US market analysts said higher interest in electrified models hadn’t yet translated to more sales.

Car shopping website Edmunds reported that shopper consideration of electrified vehicles (EVs, hybrids, and plug-in hybrids) made up 23.8% of vehicle research activity on its website the third week of March, up from 22.4% in early March and 20.7% in late February. On used-car platform CarMax, searches for electrified models grew nearly 13% between February and late March.

“While this trend is encouraging, we’re not in uncharted territory,” Erin Keating, executive analyst at Cox Automotive, said during an analyst call. “It tells us there’s renewed curiosity, but we should be watching whether this momentum sustains or whether it’s another short-lived spike.”

Search intelligence firm Adthena’s data suggest that after the demise of federal tax credits for EV purchases, consumers continued to search for EVs, but with more focus on value, financing deals, and the total cost of owning an EV versus a vehicle with an internal combustion engine.

Consumers are increasingly investigating electric options, and they’re looking across brands, with 40% of search clicks going to “long-tail niches and local options” instead of the top 10 brands, per Adthena. Adthena’s data also point to “an aggressive but volatile increase in ad spending, specifically on mobile,” in response to the uptick in EV interest, with more than 3,100 active advertisers in mid-February.

With an excess of new EVs sitting on dealer lots, a coming influx of off-lease EVs, uncertainty about when the war will end, and consumers looking for value wherever they can find it, there’s an opportunity for EV makers to win over new customers.

“We’re not always in this situation where people are more open to EVs,” Jessica Caldwell, Edmunds’ head of insights, told us. “To capitalize on this short window is quite important, especially for the all-EV brands. This is your moment to do what you need to do to get your message across.”

History lesson

Look to the past for proof that consumers are sensitive to price shocks—and that subsequent changes in buying patterns stick. Take the 1970s, for example, when an oil crisis drove US drivers into small, affordable sedans, which Japanese brands like Toyota and Honda leveraged to gain US market share.

The last major fuel price spike was in 2022 after Russia invaded Ukraine. At that time, Edmunds tracked electrified vehicle consideration jumping from 17.5% in February to 25.1% in March. EV market share increased throughout 2022 amid high gas prices.

But 2026’s auto market is much different. It’s more expensive to borrow money, and vehicles cost more now than they did four years ago.

“Put simply, in today’s market, trying to offset higher fuel costs with a new vehicle purchase can quickly turn a $5 gas problem into a nearly $50,000 decision,” Caldwell wrote.

Cox analysts estimate it would take six months of high gas prices to see an uptick in EV adoption. “However, all of these used EVs coming back to the market, and likely with pretty good relative value for consumers, it may help move the needle,” Jeremy Robb, Cox Automotive’s chief economist, said during a Q1 forecast call. “And I wouldn’t be surprised to see some dealers sniffing out opportunity there.”

Market snapshot

After the Trump administration killed federal support for electrification, including a $7,500 tax credit for new EV purchases, EV sales fell and many automakers backtracked on EV plans, taking billions of dollars in writedowns as a result.

In Q1, US consumers bought 212,600 new EVs, per Cox, down 28% YoY.

But used EV sales rose 12% YoY, and in February average listing prices were 8% lower YoY, putting them within $1,300 of comparable gas-powered vehicles. Advocates point to this closing price gap as a salient talking point when paired with fuel savings data.

ZETA estimates that Michigan drivers who log 10,000 miles a year could save nearly $1,200 annually with a Chevy Silverado EV compared to a gas-powered Silverado.

“That’s money back in your pocket, and that’s real,” Corey Cantor, a research director with ZETA, told us.

Cox data also underscores opportunities for buyers: There are a ton of new EVs on dealer lots, with 46% more days’ supply than comparable ICE vehicles. And though used EV inventory levels are tighter, there are deals to be found: Incentives made up 14% of used EVs’ average transaction price in February.

And experts say a new opportunity for budget-conscious shoppers will open up as hundreds of thousands of off-lease EVs hit the used-vehicle market later this year.

Getting word out

It’s no secret what’s holding would-be buyers back from going electric: concerns about cost and charging.

“It will be the fuel price that creates a lot of interest,” Savannah Wei Shi, associate professor of marketing at Santa Clara University, told us, “but then eventually it is the cost, the policy, and the infrastructure that actually determines the conversion for EV vehicles.”

Charging networks are making progress on the infrastructure front. And on the cost issue, experts say automakers need to get savvy with their messaging.

“Let’s say we’re targeting someone who drives a lot and who charges at home instead of relying on the public infrastructure to charge. That calculation may sound really powerful to them, because the variable cost of owning an EV is low, and then the charging speed is no longer an issue for that group of consumers,” Shi said.

“However, it might be very challenging for some customers who do not drive a lot…and who do not plan to charge their cars at home.”

Jiten Behl, partner at VC firm Eclipse and a former Rivian exec, told us that messages should emphasize the value of EV ownership: “Even for a vehicle that is at a slight premium to a gasoline vehicle, the fact that you will save that much more on a monthly basis is a very powerful message for folks that care about affordability.”

“The marketing teams should be busy now,” he added. “They should not let go of this opportunity to increase the volume of outreach to prospective buyers.”