Oil Price Shock fuels EV surge in Asia-Pacific as used EV sales rise and US automakers retreat

Cost of crude oil has risen by more than a third since the first US strikes hit Iran on 28th February. The increased cost of living and the high petrol prices have brought increased pressure on households. Amid such burgeoning trends, households in the UK have started shifting towards older used EVs.

As per a recent report by Autocar UK, enquiries for used EV cars have increased by 28% for new cars and 15% for used. Beyond the upstick in EV sales, dealers across the UK have also highlighted the presence of increased sales for EV vehicles across different segments. EVs, being a new addition to the market, were once out of approach for consumers. Witnessing slow sales and lack of infrastructure in some countries, EVs have now reached price parity with petrol and diesel equivalents, and many models have become cheaper, indicating the growing interest in EVs.

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Melanie Lane, CEO, Pod Point Group Holdings PLC, told Auto Car UK that volatility in fuel prices coinciding with the growing access to flexible energy tariffs that lower the cost of charging at home, gives households better control over energy costs.

She further added, “What we’re seeing now is consumer behaviour catching up with that reality.” The shift has the potential to last longer if the government plans to invest in infrastructure and drive the prices of charging further down.

US automakers’ reversal from EV vehicles

US automakers Ford Motor, General Motors, and Stellantis have all tried to shrink their EV operations. Major manufacturers have booked tens of billions of dollars in combined write-offs and restructuring costs, in part due to lackluster consumer demand and shifts in political landscapes. In the past few days, General Motors has halted EV production in Detroit. Beyond that, Honda has reversed from its EV production to spawn Honda 0 series.

The sudden shrink in EV ambitions can also be attributed to a rollback on federal EV tax credits of up to $7,500 for new vehicles and $4,000 for used EVs in America. The shift initiated a change in the market that has affected manufacturers.

Demand Rise in Asian markets

The upstick in EV demand in the aftermath of the oil crisis has been faster than expected. A more profound shift is expected towards EVs than in previous fossil fuel crises. A Reuters report had recently revealed that more than 80% of the oil that is passing through the Strait of Hormuz is headed for Asia, making the region one of the hardest hit by the oil shock, and leaving both consumers and governments to find ways to ease the burden.

The report also revealed that Australia, a country that is heavily reliant on fuel for transport across its vast landscape, experienced a 100% upstick in EV loans in March. Beyond Australia, South Korea has also reported an acceleration in EV adoption, with registrations more than doubling in March from a year earlier. The sudden increase in EV sales is a boon for Chinese EV makers who are focusing on export markets, as demand lags behind in their domestic markets.