By Jeffrey A. Newman Esq.
The Strait of Hormuz crisis and resulting gasoline price spike are already pushing more U.S. buyers to consider EVs, hybrids, and plug‑in hybrids, but domestic policy, tariffs, and enforcement—especially around tariff fraud—will largely determine how this plays out. American automakers can rise to the occasion if they scale up competitive, profitable electrified models quickly while navigating a high‑tariff, high‑enforcement trade environment that largely excludes low‑cost Chinese EVs from the U.S. market.
Strait of Hormuz, gas prices, and EV demand
The Strait of Hormuz typically carries roughly 20% of global oil trade, so attacks and threats there have an outsized impact on crude prices and, by extension, gasoline. The Iran war and associated disruptions have sharply reduced tanker traffic, driving up benchmark crude prices and lifting U.S. pump prices from under 3 dollars to well above 3.50–3.80 dollars per gallon in a matter of weeks.
Media and analysts already report that higher fuel prices are making consumers re‑evaluate their next vehicle purchase, with more buyers exploring EVs and other high‑efficiency options. Experts note that it typically takes 3–6 months of persistently elevated gasoline prices before large numbers of drivers decide to switch into significantly more fuel‑efficient vehicles, including EVs. This means the full behavioral response to the Hormuz shock is likely still ahead, assuming gas prices remain elevated through mid‑2026.
Hybrids, PHEVs, and the “bridge” to full EVs
Recent U.S. data show that electrification is not just about pure battery EVs; hybrids and plug‑in hybrids are gaining ground even as BEV sales wobble. In 2025, about 22% of U.S. light‑duty vehicles sold were “electrified” in some form—hybrid, BEV, or PHEV—up from 20% in 2024, but that growth was uneven: hybrids kept gaining share while BEV and PHEV sales declined after key federal tax credits expired.
According to the Energy Information Administration, BEVs briefly hit around 12% of monthly U.S. light‑duty sales in September 2025 before falling below 6% in subsequent months once incentives lapsed, marking the first annual decline in BEV sales and share. Automakers such as Ford saw BEV volumes fall sharply while hybrid sales rose, reflecting a consumer pivot toward lower‑risk, more familiar technology that still offers substantial fuel savings. Analysts point to price and convenience: with many new EVs still transacting above 60,000 dollars in 2025, hybrids offer meaningful efficiency gains without the range and charging concerns that deter some mainstream buyers.
In the current Hormuz‑driven fuel price environment, hybrids and PHEVs become especially attractive as a “hedge”: they reduce gasoline consumption dramatically without requiring the driver to fully bet on charging infrastructure. This dynamic suggests that U.S. automakers who can rapidly expand hybrid and PHEV offerings—particularly in high‑volume segments like crossovers and pickups—will capture a significant share of the near‑term demand response to higher gas prices, even as pure EV adoption resumes a slower, policy‑driven climb.
Will American automakers rise to the occasion?
Detroit and its peers have already made big EV commitments but are adjusting their trajectories in real time as market and policy conditions change. Ford, GM, and Stellantis pledged in 2021 that 40–50% of their new U.S. vehicle sales would be electric (including plug‑ins) by 2030, and GM has stated a long‑term ambition to sell only zero‑emission light‑duty vehicles by 2035. These goals are backed by tens of billions of dollars in announced investments in EV platforms, battery plants, and software ecosystems.
Yet the first real test came in 2025, when BEV sales slowed and some manufacturers pulled back on short‑term EV capacity expansions, emphasizing hybrids and cost control. EV sales in 2025 were still historically high—roughly 1.3 million units—but they declined slightly compared with 2024, and EV share dipped in late 2025 as credits expired and consumer hesitancy became more evident. Bloomberg NEF and others now forecast continued EV growth through 2030, but from a lower base and with a greater role for hybrids than in earlier, more optimistic scenarios.
The Strait of Hormuz shock gives U.S. automakers a second chance to prove they can scale electrified products when economics are strongly in their favor. To truly “rise to the occasion,” they will need to:
– Drive down EV and PHEV pricing toward mass‑market levels, not just premium segments.
– Expand hybrid lineups rapidly, capturing buyers who want fuel savings without full electrification.
– Partner with government and private networks to build enough charging and service infrastructure to make EV ownership feel routine.
If they succeed, higher fuel prices and supportive (or at least stable) policy could push U.S. electrified share from roughly 22% today into the 30–40% range by the early 2030s, even without large numbers of Chinese EV imports. If they fail, the U.S. risks a stall: high fuel prices, frustrated consumers, and a patchwork of expensive electrified options that do not fully convert interest into sales.
China, tariffs, and “reasonable” market access
Chinese OEMs like BYD and SAIC have built formidable advantages in cost, scale, and domestic supply chains, enabling them to sell competitive EVs at prices that would be highly disruptive if imported into the U.S. at low tariff rates. U.S. policymakers have responded by sharply increasing tariffs on Chinese EVs and related products, explicitly to protect domestic industry and address national‑security concerns.
In 2024, following a Section 301 review, the administration raised tariffs on Chinese EVs from roughly 25% to around 102.5%, effectively quadrupling the duty rate. Tariffs on Chinese steel, aluminum, and key components like lithium‑ion batteries also increased, in some cases to 25–50%. These measures make it nearly impossible for Chinese‑branded EVs to enter the U.S. at mass‑market price points unless manufacturers localize production or accept razor‑thin margins.
Given current bipartisan skepticism toward Chinese industrial policy and data security, there is little indication that these tariffs will be rolled back to “reasonable” levels—say, in the teens or low twenties—any time soon. Instead, enforcement is tightening DOJ and other agencies have explicitly identified trade and customs fraud, including tariff evasion, as enforcement priorities, and they are expanding whistleblower programs that target misclassification and evasion schemes. In this environment, it is more realistic to expect continued high barriers to direct Chinese EV imports, with any presence likely limited to joint ventures or localized production that meets “friend‑shoring” or North‑America‑content rules.
Rising tariffs, rising tariff fraud
High tariffs create strong incentives for evasion, and the recent wave of tariff hikes—especially on China‑origin goods—has already produced a measurable uptick in customs‑related fraud and enforcement. Law firms and trade practitioners report that, as tariffs climb, some importers resort to misclassification, undervaluation, and false country‑of‑origin declarations to reduce their duty liability.
One common tactic is “country‑of‑origin washing,” where Chinese goods are shipped through third countries and re‑labeled as originating in, for example, Vietnam or Mexico to avoid high China‑specific duties. This practice surged during the 2018–2019 U.S.–China trade war and is resurging as new tariffs proliferate across sectors, including EVs, batteries, and related components. Another involves classifying EV‑related components under tariff codes with lower duty rates—for instance, declaring batteries or electronics as generic parts rather than specialized automotive components subject to higher tariffs.
The Department of Justice has explicitly flagged customs and tariff evasion as priority areas for white‑collar enforcement. A 2025 DOJ memo on white‑collar crime emphasized trade and customs fraud, and DOJ has expanded its Corporate Whistleblower Awards Pilot Program to cover tips that lead to forfeitures in trade, tariff, and customs matters. The Civil Fraud Section has likewise identified customs and tariff evasion as a “key area” for enforcement, and since 2020 DOJ has resolved dozens of False Claims Act matters involving alleged duty underpayment, often initiated by whistleblowers.
For EVs and related supply chains, this means that increasing tariffs on Chinese vehicles and components are not just an industrial‑policy tool; they are also expanding both the incentive and the legal exposure for any company tempted to cheat. A misdeclared 100‑dollar item that dodges a 125% China‑specific tariff instead of a 10% baseline tariff, for example, creates a much larger duty shortfall and correspondingly larger potential damages under statutes like the False Claims Act. As more value‑dense, tariff‑exposed goods—such as EV batteries, motors, and electronics—enter U.S. supply chains, the stakes rise further.
In short, higher tariffs on Chinese EVs and components are likely to:
– Keep low‑cost Chinese EVs effectively out of the U.S. mass market.
– Increase the financial incentive for some actors to engage in tariff fraud.
– Trigger intensified enforcement, whistleblower activity, and False Claims Act exposure across auto and battery supply chains.
Assumptions, outlook, and what to watch
This blog rests on several key assumptions about geopolitics, policy, and markets:
– The Strait of Hormuz remains risky enough to keep oil and gasoline prices materially above pre‑crisis forecasts for at least several quarters.
– U.S. policy continues to support electrification through emissions standards, infrastructure build‑out, and at least some consumer incentives, even if credits are narrower than in early 2020s programs.
– High tariffs on Chinese EVs and components remain in place, and enforcement against evasion intensifies rather than weakens.
Under those conditions, the Strait of Hormuz crisis acts as a macro shock that strengthens an existing structural trend: rising U.S. demand for more efficient, electrified vehicles. Hybrids and PHEVs are likely to be the first big winners, because they fit current consumer constraints and infrastructure limitations. Pure EVs should also regain momentum as manufacturers adjust pricing, expand model lineups, and as high fuel prices normalize the idea that paying more up front for a vehicle with lower operating costs is rational.
American automakers are positioned to benefit if they can deliver compelling, reasonably priced electrified models quickly, but they will do so in a policy environment that both protects them from Chinese competition and exposes their global supply chains to heightened tariff‑fraud risk. For investors, compliance officers, and policymakers, the critical metrics over the next few years will be:
– The share of hybrids, PHEVs, and BEVs in U.S. light‑duty sales.
– Domestic EV and battery capacity announced vs actually built and utilized.
– The volume and nature of customs‑ and tariff‑related enforcement actions, especially in auto and battery supply chains.
These will show whether higher fuel prices and high tariffs produce a resilient, domestically anchored EV ecosystem—or a fragmented, compliance‑burdened transition that falls short of its potential.
Jeffrey Newman, JD, MBA, is a whistleblower lawyer whose firm represents healthcare fraud whistleblowers and whistleblowers reporting violations of export controls, tariff evasion, money laundering, and other WB cases. Mr. Newman and his staff also represent many physician whistleblowers in healthcare fraud cases. Whistleblower laws in the U.S. allow individuals with information about export control violations or tariff fraud to report it under the False Claims Act. The Firm’s website is www.JeffNewmanLaw.com. Attorney Newman can be reached at Jeff@Jeffnewmanlaw.com or at 978-880-4758. For other blogs see: http://JeffNewmanLaw.com
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