West Asia conflict | Oil price volatility lends EVs a strategic charge in India

As crude surges due to the West Asia war, consumers and businesses rethink mobility, eyeing electric vehicles for cost and energy security.

Bengaluru: The recent surge in oil prices, widely seen as a domino effect of escalating tensions in West Asia, has created uncertainty around fuel costs. This has raised concerns about the smooth functioning of mass transport systems, personal vehicles, and airlines, prompting a search for alternatives. In this context, electric mobility is emerging as a potential solution to mitigate some of the risks associated with fuel dependence. While expert views vary, there is broad agreement on the strategic role of electric vehicles (EVs) in sustainability and energy security.

In early March, following the US and Israel attacks on Iran, Brent crude first surged past $110 per barrel amid fears of supply disruptions through the Strait of Hormuz — a chokepoint carrying over 20 per cent of global oil. By mid-to-late March, prices repeatedly touched or exceeded $110 due to strikes on energy infrastructure and supply concerns. As of April 19, Brent crude was trading in the $90-$100 range.

On April 8, news of a two-week US-Iran ceasefire and the reopening of Hormuz led to a sharp drop in oil prices, with crude falling about 15 per cent in futures trade as supply concerns eased. Iran had said the strait would be fully open to shipping, raising hopes of smoother flows. However, tensions soon resurfaced, with reports of disruptions and vessel incidents, making the route uncertain again. As a result, oil prices remain volatile — falling on positive news, but rising quickly with any disruption. The episode underscores India’s vulnerability due to its heavy dependence on imported fuel.

India imports 85-90 per cent of its crude oil (about 5 million bpd), making it highly dependent on global markets. It is the world’s third-largest oil importer and consumer, with over half of imports passing through Hormuz.

At the same time, the country’s vehicle market remains enormous. Total registrations reached around 28 million in 2025, dominated by two-wheelers, while EVs still account for a small share of sales, with about 8 per cent penetration. However, rising fuel costs are nudging sentiment in favour of electrification.

Experts note a clear connection between oil shocks and EV adoption. The conflict has disrupted global oil supply and pushed prices sharply higher. When petrol gets expensive, EVs suddenly look cheaper to run over time, they say. Sustained high fuel costs may shift consumer behaviour, while EVs also provide strategic benefits. EVs reduce dependence on volatile oil regions. In 2025 alone, EVs cut about 1.7 million bpd of oil demand, according to Ember. Policymakers are increasingly framing EVs as energy security tools, not just climate solutions.

Globally, roughly 79 per cent of people live in oil-importing countries, making economies vulnerable to price spikes. Ember estimates that every $10 rise in crude prices adds around $160 billion to global import bills annually, with Asia particularly exposed. Electrifying transport could cut global fossil fuel imports by about a third, potentially saving $600 billion per year.

“Due to their high efficiency, EVs are a powerful tool to reduce fossil fuel dependence,” Ember reported, noting that EVs use roughly 80 per cent of the energy they consume, compared to about 20 per cent for ICE vehicles. “This is a major turning point. Emerging markets are leading the shift to electric mobility, recognising cleaner air and reduced fossil fuel dependence. India is one such market,” Euan Graham, Electricity and Data Analyst at Ember, said in a report.

Others also view the current oil volatility as a structural inflection point. Zelio E-Mobility Co-founder and MD Kunal Arya said, “It is pushing policy thinking beyond climate into energy security. Electrification, especially electric two-wheelers, reduces India’s exposure to imported fuel risk. While incentives were already in motion, this environment strengthens the case for faster execution and wider reach.”

On the ground, fuel price sensitivity is translating into consumer interest, particularly in semi-urban markets where running costs matter most. Zelio E-Mobility reports increased inquiries since late February and is responding by scaling dealer presence, improving battery efficiency, and strengthening supply chains.

S&P Global notes that buyers may increasingly consider hybrid or EV options to hedge against fuel price volatility, though any rise in vehicle costs may appear gradually.

Enterprise adoption

Enterprises are also accelerating adoption. Hari Krishna, Founder and CEO of Green Drive Mobility, said demand has risen sharply, particularly in Bengaluru, with adoption up 30-40 per cent. “Price shocks alone cannot drive sustained adoption,” he noted, highlighting the need for a strong EV ecosystem.

Fleet operators are closely monitoring the shift. Routematic, which runs around 8,000 cars across multiple cities, has about 10 per cent of its fleet electrified. CEO Sriram Kannan explained, “EVs offer lower running costs, but high upfront capital remains a barrier. The break-even distance is around 2,500 km. Anything below this, EVs remain expensive.”

Poonam Upadhyay, Director at Crisil Ratings, emphasised affordability. “National EV penetration is around 5 per cent, still early-stage. Policy stability and charging infrastructure rollout are critical to sustain momentum,” she said. Structural challenges such as limited charging infrastructure, high upfront costs, and financing gaps slow adoption, particularly outside major urban centres. Sharif Qamar, Fellow and Associate Director, Transport and Urban Governance Division, TERI, suggested measures such as off-grid megawatt charging and toll exemptions for commercial EVs.

“Fluctuating global oil prices are pushing more people toward EVs. In India, when petrol prices rise by 10-15 per cent, EV interest typically increases by 20-25 per cent, especially in cities where savings are clearer. However, faster implementation of policies like PM E-DRIVE and FAME is needed to boost EV adoption and expand charging infrastructure,” said Bharat Bala, Builder and CEO, AMP EV.

Kannan added that policy support must go beyond incentives to address ecosystem fundamentals, including manufacturing scale, charging network density, service infrastructure, and financing models.

Experts caution that if oil prices fall quickly, the EV advantage could weaken.

The current surge reinforces the case for EVs as a hedge against fuel volatility, though adoption is likely to increase gradually rather than spike immediately.