Iran war fuel spikes lift Europe

The market for both new and used electric vehicles is seeing strong growth.

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Rising fuel prices driven by the Iran war are boosting demand for new and used electric vehicles across Europe, industry data shared with Reuters shows, though some executives warn interest could fade if petrol costs fall.

Industry experts say improvements in charging infrastructure and a wave of more affordable models – ‌including from Chinese automakers – are ⁠helping ⁠make EVs more mainstream, supporting demand.

The US and Iran have agreed to an extended ceasefire, but shipping disruptions mean oil flows through the Strait of Hormuz may take weeks to normalise, with fuel prices likely to remain elevated for months.

Data provided to Reuters by research group New Automotive and industry group E-Mobility Europe show new EV registrations rose 34 per cent year-on-year in May across 17 markets covering more than 90 per cent of European Union and European Free Trade Association car sales.

Fully electric models accounted for almost one in four new registrations in those markets.

Renault’s EV order book has risen by 50 per cent in some ⁠countries since the ‌Iran war began in late February, CEO Francois Provost told Reuters last week, though he predicted growth “will decrease” if fuel prices fall.

Ford’s Europe chief Jim Baumbick said the war has “increased customers’ interest” in EVs, ⁠but cautioned against seeing it as a lasting shift.

Market shifts for new and used EVs

The conflict has come as automakers roll out cheaper EVs in Europe, addressing one of the main barriers to adoption – higher upfront costs compared with combustion-engine cars.

Chinese automakers are expanding beyond larger models into smaller hatchbacks for Europe, with BYD launching its Dolphin G in Berlin last week.

“Consumer interest in EVs is clearly stimulated by low-cost, very good Chinese cars arriving on the market,” said Andy Palmer, a former Nissan executive who launched the mass-market Leaf EV.

Supply of used EVs is also rising, with strong demand. Online marketplace OLX said sales leads for ‌Chinese brands in France jumped more than fourfold year-on-year in May.

German new and used online marketplace Carwow said EV interest – measured by configurations and purchase enquiries – has stabilised at 70 per cent to 75 per cent, up from around 40 per cent earlier this year.

“This development has long ⁠since evolved from a short-term effect to a sustainable trend,” said Philipp Sayler von Amende, managing director of Carwow Germany.

Used EVs are also relatively cheap. Price cuts led by Tesla in 2023 sharply reduced resale values, though prices are now edging higher as demand strengthens.

Danish used-car platform Bilbasen expects used EV prices to rise 10 per cent this year.

For now, used EVs are cheaper than comparable combustion-engine models.

In Britain, two- to four-year-old EVs sell for about 33 per cent of their original price versus 52 per cent for fossil-fuel cars, according to dealer services firm Cox Automotive.

Cox’s insight director Philip Nothard said a growing supply of affordable new and used EVs should sustain demand even if fuel prices ease.

“The market should stabilise,” he said. “I very much doubt that we’ll see a downturn.”

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