Petrol prices are rising again, and drivers across Australia are starting to notice. As global tensions push oil markets higher, the cost of filling up could climb even further. That raises an increasingly common question: could higher fuel prices push more Australians toward electric vehicles (EV) ?
Higher Fuel Prices Change the Cost Equation
Electric vehicles typically cost more to buy than petrol cars, and that upfront difference is often the main barrier for buyers. However, once the vehicle is on the road, the financial picture starts to shift. EVs usually cost less to run because electricity is cheaper than petrol and maintenance requirements tend to be lower. Economists often compare vehicles using the “total cost of ownership”, which includes the purchase price, energy costs, servicing, insurance and depreciation.
When these factors are considered over many years, electric vehicles can gradually become cheaper to own than petrol cars. The key factor that influences this balance is the price of fuel.
When Electric Vehicles Become Cheaper
Modelling comparing a mid-size petrol SUV and its electric equivalent shows the EV becomes cheaper overall after around five years of ownership. This estimate assumes the vehicle is driven about 15,000 kilometres per year, which is roughly the national average. Fuel prices can significantly affect that timeline. Before recent market disruptions, the average price of unleaded petrol in Sydney was around $2.08 per litre.
If petrol prices rise to $2.50 per litre, the break-even point between petrol and electric vehicles arrives about one year earlier. If prices climb closer to $2.90 per litre, the savings appear even sooner. Over ten years of driving, every 40-cent increase in petrol prices can add roughly $4,000 to the cost of running a typical petrol car.
Evidence From International Markets
Rising fuel prices do not only affect theoretical calculations — they also influence real-world buying decisions. Research examining vehicle registrations in Denmark, Finland, Norway and Sweden found a strong link between petrol prices and electric vehicle adoption. The study showed that a 1 per cent increase in petrol prices was associated with a 0.85 per cent increase in EV sales. If fuel prices rose by 20 per cent, electric vehicle sales could increase roughly 17 per cent faster than usual.
Another study looking at China, the world’s largest EV market, found similar patterns. Even modest increases in petrol prices encouraged more drivers to choose electric vehicles.
Why Australia May See a Slower Shift
Australia’s transition to electric vehicles may move more slowly than in some overseas markets. Charging infrastructure is still expanding and incentives vary across states. These factors can influence whether drivers feel confident making the switch. Experts also say fuel prices must stay high for a sustained period before consumer behaviour changes. Short spikes in petrol prices may not be enough to influence purchasing decisions.
Industry modelling suggests higher fuel prices would need to persist for at least six months to significantly boost EV sales. If the increase lasts six to eighteen months, electric vehicle adoption could rise about 10 per cent above normal trends, reports ABC News.
A Growing Financial Argument for EVs
Whether the current rise in fuel prices will trigger a surge in EV purchases remains uncertain. Much depends on how long global oil prices remain elevated. However, one thing is becoming clearer. As petrol becomes more expensive, the financial argument for electric vehicles grows stronger. For many Australians considering their next car purchase, rising fuel costs could slowly tip the balance toward electric mobility.
