Rising Oil Prices and Iran Conflict Drive Shift to Electric Vehicles

The ongoing conflict involving Iran and subsequent increases in fuel prices are accelerating a trend already underway: a move away from gasoline-powered vehicles towards electric alternatives. While the economic benefits of switching to electric vehicles (EVs) aren’t always straightforward, the current geopolitical climate is prompting consumers to re-evaluate their transportation costs.

Impact on Automakers

Several automakers are particularly vulnerable to disruptions caused by the U.S.-Israel war with Iran. According to an analysis by Bernstein, Toyota, Hyundai, and Chinese manufacturers like Chery face the most significant potential impact. These three international automakers collectively account for roughly a third of sales in the Middle East, with Toyota leading at 17%, Hyundai at 10%, and Chery at 5% [1]. In Iran itself, Iran Khodro and SAIPA are the dominant automakers, followed by Chery with a 6% market share. Other Chinese automakers are also expected to be affected, as the Middle East is a growing export destination for Chinese vehicles, representing about 17% of China’s passenger vehicle exports in 2025 [1].

Beyond regional sales, the potential closure of the Strait of Hormuz – a critical waterway linking the Persian Gulf to the Indian Ocean – and rising oil prices will have broader repercussions for the global automotive industry. Bernstein analysts estimate that closure of the Strait could add 10-14 days to transit times, increasing logistics costs and delaying deliveries [1].

Hyundai Kona: A Case Study

A comparison between the Hyundai Kona petrol and the Hyundai Kona Electric illustrates the potential, but not guaranteed, cost savings of switching to an EV. The 2026 Hyundai Kona offers a stunning design and available all-wheel drive (HTRAC) with a turbocharged engine [3]. The Hyundai Kona is a subcompact crossover SUV positioned between the Venue/Bayon and the Tucson in Hyundai’s lineup [4]. A detailed analysis factoring in charging costs, insurance, and other expenses is necessary to determine the true economic benefits for individual consumers [2].

The Broader Shift to Electric

The conflict in Iran is likely to accelerate the adoption of EVs as consumers seek to mitigate the impact of rising fuel costs. While EVs aren’t always a straightforward cost-saver, the increasing volatility in the oil market is making them a more attractive option for many.