An Increase In Gas Prices Does Not Mean An Increase In Electric Vehicle Sales

The LA Times recently reported on a new publication by Experian Automotive indicating that, contrary to what we might like to believe, a $1 increase in gasoline prices here in the U.S. would not boost sales in hybrids and electric vehicles (EVs). However, the Experian group’s report claims that higher fuel prices would increase sales of new, small, gas-powered cars.

Experian’s analysis is based on what the Schaumburg, IL based group called “an average month” of 1 million new car sales. Within that month, a $1 per gallon increase in gas prices would increase sales in the small car economy segment by 0.7% (close to 7,000 vehicles). In the same month, hybrid sales would grow by just 0.2% (about 1,000 cars), while EV sales would grow by just 0.1%.

Experian explains that the reason for the lack of a sales spike in the hybrid and EV market is that, even as gas prices increase, new small gasoline powered cars simply cost less than current hybrids and EVs. On the surface, then, it seems that the American consumer is motivated more by sticker price than any potential long-term savings.

Before jumping to that conclusion, however, it should be noted that most EVs and hybrids are more expensive than their ICE counterparts, and that gas-powered cars have been making huge strides in MPG in recent years. Additionally, the potential fuel savings made by switching from a new gas powered vehicle to an EV or hybrid has been brought into question in the past, and easy access to public charging stations is still a major issue facing electric car owners across the U.S. These factors, along with an American economy that is still not “back up to speed” and the populations’ compliance with the roller coaster ride of gas prices, means that consumers may just feel more comfortable going with what they know and understand – conventional gasoline powered vehicles.

Source:  Experian