Could Surging Gas Prices Lead to Higher EV Sales? Here’s What You Should Know
If there ever were a time to consider buying an electric vehicle, it’s now, with gas prices hitting record highs and Russia’s war in Ukraine creating even more disruption to the world’s oil supply. Automotive experts predict that more American consumers will consider buying EVs, though the market still faces numerous hurdles.
EV sales had already been on the rise in recent years, NBC News reported, and the pace has increased over the past year as gas prices have moved steadily higher. In 2019, only 3% of U.S. motorists said they would buy an EV the next time they shopped for a car, according to survey data from AutoPacific Research. By January 2022 that number had risen to 10%, and nearly one-quarter of respondents said they would consider changing the type of vehicle they buy if fuel prices keep rising.
Well, fuel prices have kept rising and are now at record highs, hitting a national average of $4.318 a gallon early Thursday and surging by nearly 25% in the last month alone, according to AAA.
“The war is clearly pushing up prices for gasoline,” Alex Chew, head of Auto Partnerships at car insurance app Jerry, told GOBankingRates in an email. “And with a ban on Russian imports of oil, U.S. gas prices are unlikely to drop in the immediate future.”
Historically, increases in EV sales tend to follow spikes in the price of gas. When gas prices rose 10% in January 2011 there was an equal 10% increase in EV sales, WGBH reported. A similar spike occurred in 2012.
“I would be surprised if EV demand didn’t go up because of rising fuel prices and all the uncertainty the Ukraine invasion entails,” AutoPacific President Ed Kim told NBC News.
But there are some potential hurdles, including the price. In 2021, EV prices were on average $11,000 higher than full-sized gas-powered cars, according to the “Jerry 2022 State of the American Driver” report, released earlier this year. Other sources put the price difference closer to $4,000 based on similar models.
However, as NBC news noted, the federal government is offering incentives of up to $7,500 to help offset the higher costs, and the Biden administration has proposed pushing that figure up to as much as $12,500.
The Jerry report also found that while drivers save money on gas with EVs, they might pay more in other areas such as car insurance. In 2021, EV drivers paid an average of $214 per month for car insurance vs. $156.50 for gas-powered vehicles.
Other potential barriers to widespread consumer EV adoption are range and charging times. For the 2021 model year, the median driving range of all-electric vehicles was 234 miles vs. a median range of 403 miles for gasoline vehicles, according to the U.S. Office of Energy Efficiency & Renewable Energy. The good news is, more EVs with ranges of 500-plus miles are hitting the market.
Charging times could also turn off some potential buyers. Depending on the type of EV, its battery size and other factors, it can take anywhere from 30 minutes to half a day to fully charge a vehicle, according to Kia.
Even with these obstacles, many analysts expect EV demand to rise at a faster pace due to a combination of historically high gas prices and a variety of new models flooding the U.S. market. For example, the number of long-range EV models is expected to more than triple in 2022, and they’ll be available across more market segments, ranging from compact SUVs to full-size pickups.
More From GOBankingRates