The recent conflict involving Iran and the United States triggered what the International Energy Agency described as the largest supply disruption in history, after the Strait of Hormuz was effectively blocked. This shock exposed vulnerabilities in global reserves and forced dozens of countries to act quickly, with 28 nations implementing emergency conservation measures by April.
Energy crises have historically altered how people drive and what they buy. The 1973 oil embargo pushed consumers toward smaller, fuel-efficient cars. Today, the same dynamic appears to be accelerating a transition toward electric mobility, even if oil prices eventually stabilize.
Rising Fuel Costs Reshape Consumer Choices
Drivers are already responding to the changing economics of transportation. According to data from the International Energy Agency and LSEG, sales of electric and hybrid vehicles have consistently grown faster during periods of high oil prices over the past decade. This trend persists even when electric vehicles remain more expensive upfront.
What has changed since the last major oil spike in 2022 is the cost structure of electric cars. Batteries now cost roughly half as much as they did then, as noted by UBS, making electric vehicles more competitive in total ownership cost. In the United Kingdom, for instance, owning a Renault 5 Techno+ electric vehicle over four years costs 19,073 pounds when charged at home, compared with 26,407 pounds for a diesel Volkswagen Tiguan Match, according to HSBC.
This shift is already visible in the market. Reuters reports that BYD dealerships in Southeast Asia have seen surging demand, with one Manila dealer recording a month’s worth of orders in just two weeks. In Australia, where diesel prices rose by more than a third, electric vehicle loans have doubled, while Tesla registrations tripled in France in March and UK monthly EV sales reached a record.
Infrastructure And Global Supply Expand Access
Beyond fuel prices, structural improvements are reinforcing the appeal of electric vehicles. Charging infrastructure has expanded rapidly, with the number of global charging points doubling since 2022, according to the IEA. Faster charging technologies are also reducing range anxiety, including systems developed by BYD that can add two kilometers of range per second of charging.
At the same time, global supply is increasing, driven largely by Chinese manufacturers. According to Counterpoint, BYD and Geely accounted for nearly a quarter of global battery electric vehicle sales in the final quarter of 2025. Facing slowing domestic demand, both companies are accelerating exports. BYD’s chairman Wang Chuanfu stated that overseas sales will rise to “another level” in 2026, while Geely aims to increase international deliveries by up to 80%.
This expansion contrasts with the position of several Western automakers. Companies such as Ford, General Motors, Stellantis and Honda have collectively written off $70 billion in EV-related investments after weaker-than-expected demand in the United States, though they continue to develop new models and reduce costs.
Policy Responses And Economic Pressures Shape The Outlook
Government action is also playing a role in shifting demand. Historical precedent shows that energy shocks often lead to regulatory change. The 1973 oil crisis led to fuel economy standards in the United States, while a price spike in 2008 encouraged China to support electric vehicles, according to Anders Hove of the Oxford Institute for Energy Studies. By 2024, China had deployed 30 million new energy vehicles, saving about 430,000 barrels of oil per day, based on research from the Centre for Economic Policy Research.
Recent developments suggest a similar policy response may be underway. Cambodia has reduced import taxes on EV-related products, and Chile has introduced a credit system for electric taxis, signaling a broader push toward electrification.
Still, challenges remain. Rising costs for key materials—aluminium, copper, lithium and memory chips—have increased production expenses by 44% in China, adding around $1,000 per vehicle, according to UBS. Higher energy prices can also dampen overall car demand by reducing purchasing power.
In Europe, electricity prices have risen by at least 10% in some countries as of mid-March, though HSBC notes they remain far below the extreme levels seen in 2022. This relative stability helps preserve the economic case for electric vehicles, even as broader market conditions fluctuate.
If oil prices fall following a lasting ceasefire, the urgency behind the shift may ease. Yet past crises suggest that the memory of scarcity tends to persist, leaving a durable imprint on consumer behavior and policy priorities.
