What the Iran War Could Mean for Electric Vehicle ETFs

It’s more than just range anxiety.

Things weren’t looking great for the electric vehicle market as it is, with Trump administration policies taking away tax incentives and culling regulations that were hurdles to the oil industry. One major auto manufacturer, Honda, took a big step back from its EV plans, citing billions of losses stemming from its investments in the tech. Industrywide, new-car sales slumped, and EVs barely off the lot suffered dramatic depreciation, while company profits declined. But that was just a few weeks ago. Since then, the US and Israel have waged a war with Iran, and the most critical bottleneck for oil transport in the world has been closed.

Suddenly, the outlook for EVs, including a handful of exchange-traded funds focused on the market, may be improving. The Bloomberg Electric Vehicles Total Return Index, for example, was up 4% year to date as of Friday, compared with the S&P 500’s 7% decline. “Consumers will be reminded, going to the pump, that potentially EVs and hybrids are a way to mitigate not just short-term oil prices but also events out of our control,” KraneShares chief investment officer Brendan Ahern told ETF Upside.

Taking a Foot Off the Gas

The four US-domiciled ETFs focused on EVs have mostly fared better than the S&P 500 so far in 2026, but investors have nonetheless pulled money from those funds, to the tune of a collective $26 million. The war, and its effect on oil prices, may be a test of whether investors (and some automakers) were hasty in abandoning EVs. Currently, those four funds represent about $500 million, per data from Morningstar Direct, far less than the $1.7 billion in a pair of lithium and battery-technology funds that have some overlap with the EV market. 

Here’s a look at those funds:

• The Global X Autonomous and Electric Vehicles ETFs (DRIV) is the largest, at $327 million, followed by the $146 million iShares Self-Driving EV and Tech ETF (IDRV). Those funds have returned -3% and -4% year to date, respectively, and 34% and 22% over 12 months. 
• Meanwhile, the $75 million KraneShares Electric Vehicles and Future Mobility ETF (KARS) has returned less than 1% year to date and 43% over 12 months. However, an Ireland-domiciled UCITs version of that fund is shutting down, having failed to attract assets. State Street’s $19 million SPDR S&P Kensho Smart Mobility ETF (HAIL) is down nearly 9% year to date but up 17% over 12 months.
• Separately, Global X’s $1.7 billion Lithium and Battery Tech ETF (LIT), which has pulled in about $62 million this year, is up 9% year to date and 79% over 12 months.

Hybrid Model: EV owners have been less affected by the energy price spikes, given that electricity costs are less volatile than those for hydrocarbons, Global X research analyst Madeline Ruid said. “There has been a noticeable jump in searches for both new and used [electric] vehicles since the start of the conflict in key auto markets such as the US and UK,” she told ETF Upside. There may also be more interest in hybrid vehicles, and consumers can now more easily justify the premium prices of new cars with battery power, she said. “Periods of high gas prices, even if it’s for a short timeframe, can still bring down the lifetime cost difference,” she said.