Gas Prices and EV Demand Surge

Dealerships across the US are reporting a significant increase in customer traffic as gas prices continue to climb. The ongoing conflict involving Iran and disruptions to shipping through the Strait of Hormuz are contributing factors to the rising costs at the pump.

Used EV Sales on the Rise

Data from Cox Automotive indicates a 12 percent increase in US sales of used electric vehicles (EVs) in the first quarter of the year, reaching 93,500 vehicles sold in 2026. While still a small portion of the overall used car market, Stephanie Valdez Streaty, Director of Industry Insights at Cox Automotive, notes that this trend is “the trajectory stands out.”

Consumer Interest Increases

Edmunds, a resource for vehicle shopper research, has observed a few percentage point increase in consumer interest in electrified powertrains since the beginning of the year. This shift in consumer behavior is directly linked to the increasing cost of gasoline.

A Convenient Time for Used EVs

Interestingly, this surge in demand for used EVs coincides with a period where automakers are scaling back their EV offerings. Companies like Honda, Ford, and Stellantis have recently canceled or postponed plans for new electric vehicle models.

Price Gap Narrowing

Despite new battery-powered cars remaining more expensive than their gasoline counterparts – with an average price gap of $6,500 in January, according to Cox – the price difference is shrinking in the used car market. The average price of a used EV is currently $34,800, only $1,300 more than the average gas-powered vehicle.

Increased Supply Expected

The supply of used EVs is expected to grow significantly in the coming months. Approximately 200,000 used EVs are projected to come off lease this year, a substantial increase from the 2024 levels. This influx is due to consumers returning leased EVs after benefiting from previous tax incentives.

Battery Longevity Concerns Alleviated

Concerns about the longevity of EV batteries have also been eased, as data suggests they are holding up better than initially anticipated. This positive development further enhances the appeal of used EVs.

Regional Trends and Future Outlook

Alex Lawrence, CEO of EV Auto in Utah, reported increased buyer interest spreading inland from California in mid-March, correlating with rising gas prices. He is actively increasing his inventory in anticipation of continued demand growth. By the end of the month, Lawrence noted a continued increase in business activity.

Cox analysts suggest that sustained elevated gas prices for at least six months will be necessary to significantly shift consumer behavior towards EVs. The duration of the current conflict and potential damage to Middle Eastern oil facilities will likely play a crucial role in future fuel prices and EV adoption rates.