Tesla sales and elevated gasoline prices: Interest in electric vehicles is increasing, yet the US market contracted by 28% following the expiration of the tax credit.

      Summary: US petrol prices exceeded $4 per gallon in April for the first time in four years, marking a 30% increase year-over-year, influenced by the Iran conflict and disruptions in the Strait of Hormuz. Tesla delivered 358,023 vehicles in Q1 2026, representing a 6% increase from a weak comparative quarter, but falling short of expectations by 7,600 units. There is a growing interest in consumer EVs, with 23.8% considering purchasing one, according to Edmunds, but overall US EV sales dropped by 28% year-over-year following the expiration of the $7,500 federal tax credit. Tesla's share of the US EV market rose to between 54% and 58%, primarily due to a more rapid decline in competitors' sales.

      In April, the national average price for a gallon of petrol surpassed $4 for the first time in four years, a rise of about 30% year-over-year. The prevailing narrative suggested that high fuel prices would boost electric vehicle sales, particularly benefiting Tesla. Bloomberg’s coverage post-earnings portrayed this view, although it was somewhat misleading. Tesla's Q1 2026 vehicle deliveries outperformed a weak comparative quarter by 6% but missed Wall Street estimates by 7,600 units, amidst data indicating a 28% year-over-year contraction in the overall US EV market. Although rising gas prices are steering consumers towards electric cars, this shift wasn't enough to compensate for the absence of the now-expired $7,500 federal tax credit.

      Tesla announced its first-quarter earnings on Tuesday, prior to the Bloomberg segment airing. The company reported revenue of $22.39 billion, a 16% increase year-over-year, although this was $780 million less than consensus estimates. Net income rose by 17% to $477 million, and earnings per share of $0.41 exceeded the estimated $0.38. Tesla delivered 358,023 vehicles, with production at 408,386, leaving a gap of around 50,000 units that may indicate either lower demand or a strategic inventory buildup ahead of the Model Y Juniper refresh. Although Tesla reclaimed the global quarterly EV sales lead from BYD, the production surplus and delivery miss added complexity to the achievement.

      The figures indicate an increase in consumer interest, with data from Edmunds during the week of March 9 to 15 showing 23.8% of vehicle research focused on electrified vehicles, the highest weekly level in 2026, up from 22.4% the previous week. Cox Automotive reported a 20% rise in new EV sales for March compared to February, with a 16% increase in interest during the quarter relative to the last quarter of 2025. Colin McKerracher of BloombergNEF noted that interest in EVs is at an all-time high according to various indicators. Used EV sales also rose by 12% to 93,500 units in the quarter, with prices now within $1,300 of equivalent petrol cars.

      Despite genuine interest from consumers, the conversion rate remains disproportionate. New EV sales in the US fell to between 212,600 and 216,400 units in Q1 2026, a 28% drop from 296,304 in Q1 2025, with January alone experiencing a staggering 41% year-over-year decline. CNN Business bluntly stated that "$4 gas won’t spark an EV buying spree." NBC News noted that while rising fuel costs ignited renewed interest, affordability remains a significant barrier. This gap between interest and sales can be attributed to a critical policy change: the expiration of the $7,500 federal EV tax credit on September 30, 2025, under the “Big Beautiful Bill,” alongside the $4,000 used EV credit. Ford and GM have initiated their own $7,500 incentive programs to fill the gap left by the federal credit, while Tesla has not.

      The recent surge in petrol prices is not a gradual adjustment but rather the result of a specific geopolitical crisis. Military actions against Iran beginning on February 28 and the practical shutdown of the Strait of Hormuz raised Brent crude prices from $61 per barrel at the year’s onset to $118 by the end of March. Middle Eastern and Asian refineries reduced output by approximately 6 million barrels per day. Record highs for distillate crack spreads reached $1.42 per gallon, compared to a five-year average of $0.68. By mid-April, de-escalation signals led to a reduction in prices, with WTI at $87.42 and Brent at $95.48, though the national average for petrol stayed above $4.

      Tariffs implemented by the Trump administration on Canadian petroleum could increase regional prices by 20 to 50 cents per gallon, although the overall impact on fuel prices is varied. The IEA’s April oil market report anticipates