Surging Oil Prices Drive EV Demand, Automaker Shifts

Historically, high gas prices have consistently pushed consumers towards more fuel-efficient vehicles, a trend observed during the 1970s oil crisis, the 2008 surge, and Russia's 2022 attack on Ukraine. A 2022 study in California, co-authored by economics professor Erich Muehlegger, confirmed a direct correlation between rising gas prices and increased EV sales.

While the period after 2020 presented complexities due to supply shortages and fluctuating incentives, Andrew Garberson, head of growth and research at Recurrent, states that the financial equation for EVs is now significantly more favorable. Despite the end of federal incentives in Q4 2025, the used EV market is four times bigger in 2026 than in 2020, with 56% of used EVs priced under $30,000.

Used EVs are the cheapest cars of any kind to own, and new EVs offer a lower lifetime cost of ownership. Hundreds of thousands of EVs leased under the Inflation Reduction Act are scheduled to enter the used car market this year, further reducing upfront costs.

Over 30 new EV models, including the BMW iX3 and a $30,000 redesigned Chevy Bolt, are launching in the U.S. this year. Ellen Hughes-Cromwick, former chief global economist at Ford Motor Co., confirms that sustained high gas prices will compel automakers to re-evaluate product cycles and increase EV production.