The geopolitical turmoil in the Middle East that saw the US and Israel launch strikes on Iran at the end of February has radically changed the UK car market as petrol and diesel prices rocketed.
In late February this year, petrol was selling for 133p per litre, with diesel at 142p per litre.
According to RAC Fuel Watch data, diesel prices rose every single day for 40 consecutive days, peaking at 192.14p before the first small dip in mid-April. Petrol followed a slower trajectory, not reaching its peak of 158.78p until late May.
Globally, fears about inflation and the need to raise interest rates, which had been on a downward trajectory, to control it became front-page news.
At a household level, the immediate impact of fuel costs, with increases of around 50p per litre for diesel and 26p for petrol, re-ignited cost of living concerns and the appeal of lower running costs for an EV sparked immediate demand for used EVs, which were retailing at equivalent levels to those of used ICE cars.
In recent weeks, hopes of peace have been raised, and oil prices have fallen.
Diesel is down to 164.76p per litre and petrol to 150.68p per litre. Encouraging, but this is still around 18p per litre higher than back in February for petrol and 23p higher for diesel.
Is it enough to change the upward trajectory for used EVs?
I doubt it. According to Fraser Brown, director at specialist used EV dealer Browns of Richmond, as long as buyers have space at home for a charger, they should save a typical £154 a month on a two to three year old small car by going electric. It’s a compelling number, and there are other supporting factors.
Originally introduced by the Conservatives in 2022 following Russia’s invasion of Ukraine, a 5p reduction in fuel duty was due to end in September 2026. This has been delayed until the end of the year, but it will still happen at some point.
The other factor is that the Middle East position remains fragile. On July 8th, US President Donald Trump said an interim peace deal with Iran was “over”, sending oil prices higher.
Yes, there are concerns about pay-per-mile for EVs in the future, but overall, an EV offers greater affordability certainty, and certainty in today’s world is in short supply right now.
