The war in Iran has already transformed the world’s energy map. It might yet redraw America’s auto market.
Now in its third week, the U.S. and Israeli military campaign in Iran has escalated to involve targets across the Middle East, including the Strait of Hormuz — a narrow waterway at the mouth of the Persian Gulf that serves as the world’s most critical fossil fuel chokepoint. The war has effectively closed the oil tanker traffic that used to navigate the strait, which on a normal day carries up to 20% of the world’s traded petroleum.
Fuel costs worldwide have soared as a result. Average gas prices in the U.S. are now $3.79 a gallon, up from $2.92 a month ago, reminding drivers of the 2022 energy shortage and even of the devastating oil shocks of the 1970s.
But unlike during those crises, the world now possesses a massive, rapidly scaling, and for the most part readily available asset to soften the blow: the electric vehicle.
The global EV fleet has been growing for years, gradually chipping away at the world’s oil consumption as drivers turn to charging ports instead of gas stations. Last year, EVs worldwide avoided the consumption of 1.7 million barrels of oil per day, according to a report published Wednesday by Ember, an independent energy think tank based in the U.K. That’s roughly 70% of the 2.4 million barrels Iran exported daily through the Strait of Hormuz in 2025.
While the crisis has sent global oil prices soaring, the declining need for petroleum in transportation is providing a critical cushion in some countries. And the longer fuel prices remain elevated, the more attractive EVs become to buyers.
“Oil is a particularly tricky resource to replace,” Daan Walter, a researcher at Ember and the report’s lead author, told Fortune. “It has been for 125 years now, except for the past five or six years, when we’ve had this new competitive lever in electric vehicles.”
Electrifying demand
In the U.S., EV purchases hit a wall over the past few months as President Donald Trump rescinded many of the subsidies and incentives the Biden administration had installed to facilitate the transport sector’s electrification. Those measures mostly expired in September, and EV sales for the year ended up falling by 2%.
But the Iran conflict has sparked a revival of consumer interest. Search traffic for EVs during the first week of the conflict jumped 20%, according to CarEdge, a car shopping platform, with interest in popular models like the Tesla Model Y and Chevrolet Equinox nearly doubling.
For now, the conflict in Iran and higher gasoline prices are likely to only influence drivers who were already in the market for a new car, Elaine Buckberg, a senior fellow at Harvard University’s Salata Center for Climate and Sustainability and a former chief economist for General Motors, told Fortune.
But that could change if prices stay high for much longer. “Gasoline prices are one of the biggest elements of people’s perception of inflation because you buy it so regularly,” Buckberg said. “It takes three to six months of persistently higher prices before people say, ‘Maybe I should go out and switch cars to one that’s more fuel efficient, including an EV.’”
EV drivers outside the U.S. already know how much they might be able to save. In the U.K., EV drivers saved an average of £870 ($1,162) a year by charging their cars instead of fueling up, according to an analysis published last week by the nonprofit Energy & Climate Intelligence Unit. But if oil prices remain above $100 a barrel, as they have for most of the conflict, those annual savings could jump to £1,000 ($1,336).
In the U.S., the costs of owning and charging an EV depend on several factors, including local electricity prices and whether drivers can charge their cars at home. And for now, buying an electric car tends to be more expensive than buying a gas-powered one, although prices are falling due to greater competition and more choices of lower-priced models.
But EV drivers are likely to be rewarded over the course of their car’s lifetime—the New York Times found last year that driving 100 miles in a home-charged EV costs on average a little more than $5, while the same distance in a standard gas-powered car costs on average $12.80.
Nowhere to hide
The Trump administration has framed the pain Americans are feeling at the pump as a short-term problem, and claimed that the U.S. is insulated from the oil crisis because it is a large producer in its own right. But being a net exporter of oil does little to shield the U.S. from volatility, according to Ember’s Walter.
“In some ways, no one is safe,” he said. “Even if you live between a gas well and a refinery, even then your prices are going up.”
Oil is a global commodity, and unless a government enacts export bans, a barrel of oil produced in the U.S. will go to whoever pays the most wherever they are, Walter said. That means American consumers remain tethered to the same price volatility as the rest of the world, regardless of how much crude is pumped from U.S. soil. In Texas, for example, one of the world’s largest oil-exporting regions, gasoline prices have risen 25% since the war began, faster than in oil-importing nations like the U.K. and France during the same period, Walter said.
Because volatile gasoline prices have such a significant bearing on consumer sentiment, experts have long argued that transportation reliant on locally generated electricity can be an economic and political hedge.
“A shift towards EV basically would protect the economy from downside,” Buckberg said. “That link from oil geopolitics to oil prices to gasoline prices could be broken.”
The last time a global geopolitical shock sparked an energy crisis was in 2022, when Russia’s invasion of Ukraine sent global oil and gas markets into a frenzy. A lot has changed since then to make EVs a more palatable option as gasoline prices rise, Buckberg said. For one, the world is no longer limited by a microchip shortage that strained EV manufacturing in the early 2020s.
But electric and hybrid vehicles have also become more affordable and accessible to a wider variety of consumers, particularly in emerging markets in East and Southeast Asia, according to previous Ember research. In China, the world’s biggest EV market, the country’s existing electric car fleet accounts for more than $28 billion a year in avoided oil imports, Ember’s latest report found.
“We’re no longer living in a world of risk-free fossil fuels. We’re living in a world where everything is risky and it now becomes a question of which risks do you want to take,” Walter said.
