Why $4 gasoline is the tipping point for EVs
Why $4 gasoline is the tipping point for EVs
Even as the U.S. and Israel reached a fragile two-week ceasefire with Iran, gasoline prices show no signs of a quick retreat. As of April 8, the stands at $4.16 per gallon, more than a dollar higher than at the start of the conflict. That's beyond a tipping point that experts say could push consumers toward electric vehicles, reports.
When gas prices top $4 per gallon, BloombergNEF estimates that the total cost of ownership for EVs becomes lower than for gas-powered vehicles. The exact crossover point depends on local prices for both gasoline and electricity. 鈥淸But] even when I run the model using the more expensive electricity cost, we are still seeing this very similar pattern,鈥 said Huiling Zhou, an electric vehicle analyst at BloombergNEF. In California, for example, where electricity costs are high, gas is also expensive. At more than $5 a gallon, the state has already passed the point at which EVs are the cheaper option.
According to a 鈥 when Russia鈥檚 invasion of Ukraine drove a monthslong price spike 鈥 $4 a gallon is also the threshold at which a majority of Americans will make changes to their driving habits or lifestyles. Stephanie Valdez Streaty, director of industry insights at Cox Automotive, agrees that 鈥渢he high gas prices definitely start the conversation with a consumer.鈥
has reported an uptick in search traffic for EVs since the war started on Feb. 28. It鈥檚 too soon to tell whether that interest will convert to more purchases, said Valdez Streaty. But when prices surged at the outset of the war in Ukraine, sales of electrified vehicles rose as well. From January through March 2022, EVs鈥 share of car sales in the US climbed 69%, with hybrids jumping 32%. Robbie Orvis, who directs modeling and analysis for the think tank Energy Innovations, said the general trend pre-dates electric powertrains.
鈥淚n the past, when prices have gone up, people would start choosing more fuel-efficient cars,鈥 he said. The oil shocks of the 1970s and 1980s, for example, led to a focus on fuel efficiency and helped make relatively efficient Japanese cars more popular. Avoiding gas guzzlers could become trendy this time, too.
鈥淚f you drive an EV, you鈥檙e nicely insulated,鈥 said Orvis. 鈥淵our retail electricity rate isn鈥檛 going to double from one month to the next, like it can with gasoline.鈥
Still, Orvis highlighted some factors that might mitigate a rush toward EVs. For one, it鈥檚 unclear how long high fuel prices will last. Limited availability of chargers for electric vehicles is another barrier to adoption. People also tend to put more weight on upfront costs than long-term financial gains. Then there鈥檚 the fact that higher oil prices can put a damper on consumer confidence more broadly.
鈥淭he current situation is very likely going to lead to higher prices all around,鈥 said Orvis. That pressure could mean people are more hesitant to make a big purchase like a car. As Valdez Streaty put it, 鈥渋f they can delay it, they鈥檒l delay it.鈥
At the same time, EVs are in many ways more attractive than ever. Cox Automotive reported , the price premium for EVs compared to new gas-powered cars was the lowest on record, at $6,532. The pre-owned market had an even narrower $1,334 gap, with 18 of 26 brands now having an average used EV price below their used gas equivalents.
鈥淚f you can have access to charging, now is the perfect time to get an EV,鈥 said Jenny Carter, a professor at Vermont Law School who has researched consumer EV adoption. But higher gas prices, she continued, also put a spotlight on equity issues.
鈥淟ow-income people have the most to gain by owning and driving an EV, but they鈥檙e the hardest market to reach,鈥 she said. Those households often spend the highest portion of their incomes on gasoline, she explained, but are the least likely to be able to afford alternative vehicles or have access to charging. 鈥淚t鈥檚 a real paradox.鈥
Orvis thinks that part of the problem is the dearth of information available to prospective buyers. Because dealers generate much of their revenue providing maintenance that EVs don鈥檛 need, he said, they may not fully explore the financial benefits of going electric with customers. He suggested that shoppers use one of the many that can show how, even when the upfront cost of a gasoline car might be lower, the monthly costs of ownership could be higher when you consider fuel and maintenance costs.
鈥淭here鈥檚 a real issue with how EVs are marketed,鈥 he said. 鈥淚t鈥檚 very hard for a new buyer, especially if you鈥檙e not really versed in this stuff, to get a real sense of what the trade-offs are.鈥
For those who either can鈥檛 afford electric cars or don鈥檛 have access to charging, Valdez Streaty points to hybrid vehicles, which can be 25% to 45% more fuel efficient than their standard counterparts. A HondaCR-V, for example, 29 mpg while the hybrid version gets 37.
Even if soaring oil prices don鈥檛 last long, electrified cars can help soften the blow the next time they spike. A by the energy think tank Ember found that EVs already displace around 1.7 million barrels of oil per day. While a far cry from the roughly 20 million that normally flow through the embattled Strait of Hormuz daily, it represents about 70 percent of Iran鈥檚 oil output.
鈥淭he main thing to watch is national plans of how to respond to this,鈥 said Daan Walter, a principal at Ember. He is optimistic that many countries will use moments like this to start turning to climate-friendly policies that help reduce their dependence on fossil fuels, including gasoline.
So far, President Donald Trump doesn鈥檛 appear poised to lead the United States in that direction. Last summer, a Republican-led Congress gutted the Inflation Reduction Act, which included tax rebates for electric vehicles. But, particularly in the short term, American policymakers also lack levers for keeping rising gas prices in check, so people may very well start to shift on their own.
鈥淭here is no meaningful policy tool to mitigate this,鈥 said Orvis. 鈥淭he only way to do that is to just get off the roller coaster, and EVs allow you to do that.鈥
was produced by and reviewed and distributed by 麻豆原创.
