March 27, 2026

The U.S. national average gasoline price rose to USD $3.98 per gallon on March 26, 2026, up from USD $2.98 per gallon on February 26, 2026—a 33% increase, largely due to the war in Iran. The question is whether such an increase will lead to higher demand for electric vehicles (EVs) in the U.S. and potentially in other countries.

How Much More Will U.S. Consumers Pay for Gas?

According to JD Power, U.S. households spend around 50–60 gallons of gasoline per month. Actual consumption varies significantly by state and city. For example, a driver in Connecticut consumes about 42 gallons per month, while a driver in Wyoming consumes around 98 gallons per month.
At an average price of USD $3 per gallon, a typical U.S. household spends approximately USD $1,800–$2,100 per year on gasoline. With the recent price increase, the same household will spend at least USD $600 more annually.

Will U.S. Consumers Buy More EVs?

Demand for EVs in the U.S. did not grow in 2025 and is likely to decline significantly in 2026 for the following reasons:

• Federal incentives for EV purchases expired on September 30, 2025. These incentives were up to USD $7,500 for new vehicles, although some smaller incentives still exist.
• Even with incentives, EV prices remain higher than comparable internal combustion engine (ICE) vehicles. The EV price premium is estimated at 15–30%, although it is narrowing over time, primarily due to declining battery costs.
• Market saturation: early adopters have already purchased EVs, while other potential buyers are waiting for lower prices and improved charging infrastructure.
• “Range anxiety”: although the number of charging stations—particularly fast chargers—has increased, overall infrastructure remains insufficient.

Battery Costs

Lithium-ion battery pack prices continued to decline in 2025, with the global average falling to around $108/kWh, down from roughly $118/kWh in 2024 and $152/kWh in 2023. Despite temporary cost pressures earlier in the decade, average battery prices have declined by more than 55% since 2017 and by roughly 93% since 2010 in real terms, reflecting structural improvements in manufacturing scale, yield, and technology.

Figure 1. EV Battery pack cost USD/kWh

Figure 1 shows EV battery pack costs in USD/kWh. These are average prices worldwide. China remains the lowest-cost battery market, with average pack prices near $84/kWh in 2025, compared with global averages that are 40–55% higher in North America and Europe. This cost advantage has enabled electric vehicles in China to reach upfront price parity with internal combustion engine (ICE) vehicles across most segments, while higher battery costs continue to weigh on EV affordability in Western markets. However, this decline in battery pricing has been driven largely by substantial government incentives across the entire battery supply chain in China.

EV battery pack costs have not yet reached parity in the U.S. This continues to drive EV vehicle prices higher than ICE vehicles. An increase in gasoline spending of approximately $600 per year may not justify paying an additional USD $5,000–$7,000 for an EV. Some models cost even more. For example, the electric F-150 Lightning, discontinued in December 2025, was priced about $17,500 higher than a comparable ICE F-150.

Conclusion

Battery prices in the U.S. are expected to decline primarily due to technological improvements. Incorrys has analyzed various emerging battery technologies and concluded that cost parity in the U.S. could be reached within a few years, although significant uncertainties remain. New battery technologies are also expected to offer additional advantages, such as faster charging times, higher efficiency, improved driving range, and greater energy density.

With lower battery and vehicle costs, EV adoption is expected to increase after 2030.

See Also:

How Long Will High Oil Prices Last?

References:

“National Gas Average Jumps One Dollar in One Month”, AAA, March 26, 2026, https://gasprices.aaa.com/national-gas-average-jumps-one-dollar-in-one-month/

Isidore, Chris. “Why $4 gas won’t spark an EV buying spree”, CNN, March 26, 2026, https://www.cnn.com/2026/03/26/business/4-dollar-gas-impact-on-ev-sales

Bernard, Corentin. “How Much Do People Spend on Gas Each Month?”, JDPower, December 05, 2024, https://www.jdpower.com/cars/shopping-guides/how-much-do-people-spend-on-gas-each-month

McKerracher, Colin. “New Record Lows for Battery Prices”, BloombergNEF, December 19, 2025, https://about.bnef.com/insights/clean-transport/new-record-lows-for-battery-prices/