Analysis: At $4 Gas, EVs Without Incentives Still Struggle

MIAMI, FL (DTN) – Gasoline prices rising from the Middle East conflict are once again raising questions about whether consumers will accelerate the shift to electric vehicles (EVs).

California gasoline has risen almost $1 gallon over the past six months, with pump prices in the state averaging $5.396 gallon during the week ended April 7, versus $4.568 gallon in the first week of October 2025.  In some parts of Los Angeles, prices at the pump are already above $8 gallon.

In West Coast areas outside of California, gasoline averages $4.95 gallon, putting both the region and state well above the U.S. national average of $4.12.

Higher crude prices linked to geopolitical tensions, like the current conflict over Iran, typically push pump prices higher and encourage interest in EVs.

However, with the Trump administration eliminating a range of incentives for purchasing and charging EVs and rolling back fuel efficiency standards as well, the transition to electric from gasoline may be slower than previously expected.

Stretched Refiners

Many on the West Coast could continue paying high prices at the pump, supporting gasoline demand in a region that probably needs EVs more than elsewhere in the country due to a highly stretched refining industry.

On top of daily disruptions in the form of flares, California’s refining system is under further pressure from a wave of refinery closures, including Phillips 66’s 139,000 bpd Los Angeles facility, that closed late last year, and Valero’s 145,000 bpd Benicia refinery, which is to shutter this month.  Combined, this eliminates 17% of California’s refining capacity, squeezing a market already operating with limited flexibility, where even small shifts in demand can have an outsized impact on prices.

The cumulative effect of the changes to U.S. EV policy is that “we will see fewer electric vehicles and hybrids going forward,” said Mark Jacobsen, a professor at the University of California, San Diego, who has been studying the transition. Recovery for EVs and hybrids will be “a very slow, long-cycle effect,” he added.

Nationwide, EV sales fell nearly 28% year over year in the first quarter of 2026 from 240,000 to 250,000, while used EV sales are expected to have grown 12% in the same period, data from Cox Automotive shows.

In California, EV sales were steady in the fourth quarter of last year, accounting for 20.1% of all new-car registrations, little changed from 21.4% a year ago.

“Sales are no longer swinging wildly month to month, but growth is also harder to come by,” Charlie Chesbrough, senior economist at Cox, said in a sales update published on March 25. “Affordability remains the central challenge for the industry.”

E15, Before EV

If gasoline prices keep climbing, analysts say drivers in the U.S. West Coast are as likely to look for cheaper refueling options than making the steep upgrade to EVs.

In California, momentum is gaining for a statewide rollout of the E15, the gasoline blend with15% ethanol. The E15 is expected to retail at 20cts gallon below E10 – the regular gasoline with 10% ethanol.

Biofuel advocates say the higher ethanol blend will allow refiners to stretch supply during tight market conditions in California, where refinery outages were a constant theme even before the supply disruptions related to the Iran war that broke out on February 27.

Globally, nonetheless, the long- term trend still points toward electrification. The International Energy Agency said in its World Energy Outlook 2025 that electric vehicles could account for more than half of global car sales by 2035, displacing roughly 10 million bpd of oil demand.

But adoption rates vary widely by region. China, for example, is moving much faster than the United States. “In China, EVs in 2025 were around 53% of those new vehicle sales,” Jacobsen said.