Iran war fuel spikes lift Europe's EV sales again, but growth may not last

LONDON/PARIS/STOCKHOLM — Rising fuel prices caused by the Iran war are driving increased demand for new and used electric vehicles (EVs) across Europe, according to industry data shared with Reuters. However, some industry executives warn that the surge in interest may fade if gasoline prices decline.

Experts say improvements in charging infrastructure and the arrival of more affordable EV models, including those from Chinese automakers, are helping make electric vehicles more accessible to mainstream consumers.

Although the United States and Iran have agreed to an extended ceasefire, disruptions to shipping routes continue to affect oil flows through the Strait of Hormuz. Industry analysts expect fuel prices to remain elevated for months as supply chains gradually recover.

Data from research group New Automotive and industry association E-Mobility Europe show that new EV registrations increased by 34% year over year in May across 17 markets representing more than 90% of car sales in the European Union and the European Free Trade Association.

Fully electric vehicles accounted for nearly one-quarter of all new vehicle registrations in those markets.

French automaker Renault reported that its EV order book has increased by as much as 50% in some countries since the conflict began in late February. Renault CEO Francois Provost told Reuters that demand has strengthened, although he expects growth to slow if fuel prices fall.

Ford Europe chief Jim Baumbick said the conflict has increased consumer interest in EVs but cautioned that the trend may not represent a permanent shift in buying behavior.

Growing Demand for New and Used EVs

The increase in EV demand comes as automakers introduce lower-cost electric models in Europe, addressing one of the biggest obstacles to adoption: higher purchase prices compared with gasoline-powered vehicles.

Chinese manufacturers are expanding their offerings beyond larger vehicles and into smaller hatchbacks designed for the European market. Last week, BYD launched its Dolphin G model in Berlin as part of its continued expansion in the region.

Andy Palmer, a former Nissan executive who helped launch the mass-market Leaf EV, said consumer interest is being fueled by the arrival of affordable and competitive Chinese electric vehicles.

The supply of used EVs is also growing, accompanied by strong consumer demand. Online marketplace OLX reported that sales inquiries for Chinese EV brands in France increased more than fourfold in May compared with the same period last year.

German automotive marketplace Carwow said EV interest, measured through vehicle configurations and purchase inquiries, has stabilized between 70% and 75%, up from about 40% earlier this year.

Philipp Sayler von Amende, managing director of Carwow Germany, said the trend has evolved beyond a temporary reaction and now reflects sustained market growth.

Used electric vehicles also remain relatively affordable. Significant price reductions led by Tesla in 2023 lowered resale values across the market. However, prices have recently begun to recover as demand strengthens.

Danish used-car platform Bilbasen expects used EV prices to rise by 10% this year.

Despite the increase, used EVs continue to be less expensive than comparable gasoline-powered vehicles. In the United Kingdom, electric vehicles that are two to four years old retain about 33% of their original value, compared with 52% for conventional vehicles, according to Cox Automotive.

Philip Nothard, insight director at Cox Automotive, said the growing availability of affordable new and used EVs should help sustain demand even if fuel prices ease.

“The market should stabilize,” Nothard said. “I very much doubt that we’ll see a downturn.” -Reporting by Nick Carey. Editing by Mark Potter/Reuters