Middle East conflict drives 25% EV rental surge amid U.S. gas spike

American car rental companies are experiencing a significant jump in electric vehicle bookings as drivers seek to avoid soaring fuel costs tied to Middle East conflict-related disruptions, with Hertz reporting a 25% rise in EV reservations in March 2024 compared to February. The surge follows U.S. gas prices crossing $4 per gallon on March 31, 2024—the first time since 2022—amid disruptions to oil supplies through the Strait of Hormuz following a U.S. strike on Iran on February 28.

Rental Platform Surge

Hertz, which rents cars to Uber and Lyft drivers on longer-term arrangements, recorded the 25% increase in EV reservation requests in March versus February, with the biggest increases coming from the West Coast, where fuel costs are already among the country’s highest, according to Doria Holbrook, executive vice president of Hertz’s mobility division.

Peer-to-peer rental platform Turo reported an 11% rise in EV bookings during the last three weeks of March compared to the three weeks prior. On March 31, EV bookings on Turo were 47% higher than on the same date the previous year, as reported by Reuters. Car Rental Gateway, a digital booking platform, reported a 16% increase in EV and hybrid reservations in March.

Fuel Price Spike Context

The price surge traces back to disruptions in the Strait of Hormuz, a narrow waterway off Iran’s coast through which roughly 20% of the world’s oil and liquefied natural gas travels. According to the U.S. Energy Information Administration, average gas prices in the country have climbed more than a third since the war began, reaching $4.02 per gallon.

U.S. Market Shows Mixed Signals

Analysts and dealers note that fuel price spikes do not usually change car-buying habits overnight, but this spike has been sharp enough that many people are already making different choices. In Europe, EV registrations across 15 countries jumped more than 50% in March.

The picture in the U.S. is more complicated. New EV sales fell 25% in March compared to a year earlier, according to Cox Automotive, largely because a $7,500 tax credit expired last autumn. Used EV sales, however, have risen sharply, and renters appear more open to going electric in the short term.

Used EV prices, which had been falling for months, have stabilized. John Coles, vice president of data science and analytics at ACV Auctions, said values firmed up after oil prices spiked in early March: “We have seen EVs get a second lease on life due to the sustained pressure at the pump.”

Tesla reported a “resurgence” in global demand, including what it called “slight growth in the United States,” along with its highest first-quarter order backlog in two years, as reported by Cryptopolitan. Tesla CFO Vaibhav Taneja pointed partly to rising gas prices as a factor. However, the company faces steep costs ahead, with planned spending of more than $25 billion this year, compared to roughly $8.5 billion last year.

Global EV Momentum

Outside the U.S., the shift toward EVs is visible across multiple markets. The U.K. recorded a record 86,120 EV sales in March. In Germany, EV searches on car marketplace mobile.de tripled from 12% to 36% of all searches, with dealers fielding 66% more inquiries for used electric cars than in February.

South Korea saw EV registrations more than double in March. In New Zealand, over 1,000 EVs were registered in the week ending March 22, nearly double the week before and the country’s biggest such week since late 2023.

Nepal stood apart, with EVs already making up 76% of new car sales in 2024, which has helped shield many residents from the current fuel price shock.