Australians are increasingly turning to electric vehicles as soaring petrol prices position a strain on household budgets. What was once a considered, environmentally-driven purchase is rapidly becoming a financially pragmatic one, with dealerships and finance brokers reporting a surge in interest and sales. The shift comes amid global energy market volatility, fueled in part by geopolitical tensions, and is prompting a re-evaluation of transportation costs for many.
For Matt Hurlston, a long-time petrol car enthusiast from Melbourne, the decision to buy an electric vehicle was a recent one, triggered by a conversation with his son about the rising cost of fuel. “My son was getting his diesel car serviced, and he was complaining about the price of fuel, so I went home, opened up my phone, put my credit card in, got the finance done, and bought an EV,” Hurlston said. “Petrol was already expensive when I was considering a purchase, and then as fuel prices kept going higher, it was an straightforward decision.” His experience reflects a broader trend gaining momentum across the country.
Regular unleaded petrol is now averaging around $2.50 a litre across much of Australia, with diesel approaching $3 a litre, according to the Australian Institute of Petroleum data. This surge is linked to concerns about supply disruptions stemming from the conflict in the Middle East, specifically anxieties surrounding the Strait of Hormuz, a critical waterway for global oil transport. Whereas initial price spikes following strikes against Iran were somewhat contained by expectations of a swift resolution, escalating concerns about a prolonged conflict have pushed prices to levels not seen since 2022.
A Rapidly Accelerating Shift to Electric
Sales of electric vehicles (EVs) have been climbing steadily in Australia, but the recent fuel price increases have dramatically accelerated the trend. The Electric Vehicle Council reports that over 454,000 battery electric and plug-in hybrid electric vehicles (PHEVs) were registered in Australia at the end of 2025, representing approximately 13% of all new car sales. This represents a significant increase from previous years, and industry experts predict continued growth.
Car yards are reporting a noticeable uptick in showroom traffic and sales inquiries. Auction house Pickles is on track to record one of its biggest months ever for EV sales, with a 20% increase compared to the previous month. Brendon Green, General Manager of Automotive Solutions at Pickles, notes a growing confidence among buyers considering secondhand EVs. “Rising petrol prices are likely part of that equation, as they tend to sharpen consumer focus on running costs and make EVs a more compelling option,” Green said.
Beyond Price: Incentives and Changing Attitudes
The financial incentive to switch to electric isn’t solely based on fuel costs. Eligible EVs are currently exempt from fringe benefits tax (FBT), a significant draw for company car buyers. This tax break, combined with lower running costs (electricity is generally cheaper than petrol, and EVs require less maintenance), is making EVs increasingly attractive to a wider range of consumers. The Australian Taxation Office provides detailed information on FBT exemptions for EVs here.
The current EV fleet is already making a measurable impact on petrol consumption. Given that a typical petrol car travelling 15,000km a year consumes around 1,150 litres of fuel, the more than 454,000 EVs on Australian roads are collectively saving the country over 500 million litres of petrol annually, although this figure varies depending on the type and usage of PHEVs.
James Voortman, Chief Executive of the Australian Automotive Dealer Association, believes the current situation builds on a shift that began with the price increases following the Russian invasion of Ukraine. “This oil shock shouldn’t be looked at in isolation,” Voortman said. “People were ready to buy EVs.”
Financing the Transition
The increased demand for EVs is also being reflected in the finance sector. Loan Market asset finance specialist, Will Hamer, reports a change in customer conversations. “It’s forcing a deeper conversation and people are pivoting on what they have been used to buying,” Hamer explained. “We are seeing the average professional move from the medium or small SUV to a full electric option. It makes no sense to buy a petrol or diesel car at the moment. If you are in that cycle of buying a vehicle, which could be once every five to seven years, it would be crazy not to explore electric options.”
However, the transition isn’t without its challenges. Supply chain issues and limited charging infrastructure remain concerns for some potential buyers. The federal government has committed to investing in charging infrastructure, but widespread availability is still some years away. The National Electric Vehicle Strategy outlines the government’s plans for accelerating EV adoption and addressing these challenges here.
Looking Ahead
The current surge in EV interest is likely to continue as long as petrol prices remain high and concerns about energy security persist. While Hurlston, the Melbourne resident who recently purchased a Tesla, still enjoys the thrill of a classic petrol engine – “I’ve got a classic Holden sitting in my garage, so I will still have the opportunity to move pay a lot for petrol,” he says – his story illustrates a growing acceptance of electric vehicles as a viable and increasingly attractive alternative. The next key indicator to watch will be the release of official sales figures for April, which will provide a clearer picture of the sustained impact of rising fuel costs on consumer behavior.
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