EV sales aren’t rising despite the Iran oil shock

Estimated reading time: 5 minutes · Last updated: 11 October 2026

Rising oil costs and higher gasoline prices would, in principle, hasten the switch to electric vehicles. Yet North American EV demand has cooled even though U.S. pump prices recently averaged more than US$4 a gallon and crude oil traded near US$100 per barrel. The basic explanation is cost: new battery-electric models now carry average sticker prices above US$55,000, while a comparable new petrol vehicle averages about US$48,000, and used EVs fetch more than US$37,000 on average. Gus Carlson analysed these dynamics, as first reported by The Globe and Mail. Carlson explains how price, policy and charging availability have pushed many buyers to the sidelines and what would have to change for EV sales to regain momentum.

Why higher pump prices haven't pushed EV demand

Price signals from the forecourt are clear but buyers weigh more than fuel savings. With U.S. pumps averaging north of US$4 a gallon and oil hovering near US$100 a barrel, the ownership math improves for electrics, yet sticker shock remains the dominant deterrent. The average new EV price — listed by the American Automobile Association at more than US$55,000 — keeps many households from switching, particularly when comparable new gas vehicles run about US$48,000.

Consumers also see a narrower near-term saving on fuel when affordable hybrids are available. Dealers are offering used EVs at a premium compared with used gasoline cars, which reduces the usual entry point for price-conscious buyers. Until the upfront purchase cost for mainstream EVs drops closer to those hybrid and gas comparators, higher pump prices alone are unlikely to produce a broad, sustained shift in buying patterns.

Policy and incentives: a missing lever

Federal incentives matter at the margin. In the U.S., the removal of the US$7,500 per-vehicle federal credit late last year removed a clear headline incentive that made many EVs more affordable on paper. That change is a structural brake: buyers who factored that credit into budgets are now confronting higher effective prices.

Governments can and do change incentives, but until a replacement or reinstatement appears, automakers face a smaller pool of customers prepared to pay EV price premia. The policy shift has also altered automakers' product and pricing decisions, reducing commercial pressure to bring lower-priced EV models to market rapidly.

Charging: the network still lags the promise

Range and access concerns remain consequential. A 2021 Biden-era pledge committed US$7.5-billion to a target of 500,000 charging stations by 2030, but deployment has been slow: there are still fewer than 90,000 charging locations in the U.S. That gap is tangible to many buyers who cannot rely on convenient public or workplace chargers.

Infrastructure shortfalls raise non-price costs — time, convenience and planning — that weigh heavily on mainstream adoption. Automakers and policymakers aiming to convert price-sensitive buyers need fast, visible progress on chargers in suburbs and smaller cities as well as on intercity corridors to change those calculations.

Model pipeline and market coverage limit uptake

Availability of affordable new models is the final practical constraint. Several makers have concentrated on higher-margin vehicles, and some lower-cost entries have been delayed. Rivian, for example, said it would postpone the rollout of an R2 base variant priced at about US$45,000, leaving the company dependent on models in the US$80,000-to-US$122,000 range.

Outside North America the picture is healthier where value-priced Chinese models have reached showrooms. Those lower-cost offerings are driving growth abroad, but most are not available in the U.S. or Canada. For North American buyers to respond to higher pump prices, more broadly distributed, lower-priced EVs must arrive and be actively marketed alongside hybrids and conventional cars.

What could move this either way

The bottom line

Higher oil prices create a clearer economic argument for electric vehicles, but that signal alone has not overcome three persistent barriers: purchase affordability, weakened federal incentives and inadequate charging availability. The average new EV price (more than US$55,000), the removal of the US$7,500 federal credit and a charging base still under 90,000 locations together explain why buyers are choosing hybrids or conventional cars. Unless automakers bring lower-cost models to market or policy and infrastructure push total costs down, higher pump prices will remain necessary but not sufficient to trigger a rapid EV rebound.

What to watch

• Watch for the market debut of Rivian’s R2 base model; no date has been set for the delayed US$45,000 variant.
• Watch progress toward the Biden-era target of 500,000 charging stations by 2030 and whether installation accelerates from the current count of fewer than 90,000.
• Watch for any legislative action to reinstate or replace the US$7,500 per-vehicle federal EV credit; no date has been set.