High Gas Prices Boost Interest in Electric Vehicles

OWhen Eric Dirksen received his first electric car in December, a new Tesla Model Y, he had no idea gas prices would skyrocket a few months later. But with fuel costing around $4.20 a gallon on average this week, he’s happy with the decision.

“Very lucky at the time,” he says. Dirksen has spent $62 on refills in the past month, roughly the same amount as 15 gallons of gas. “I wanted to be more intentional in making sure I was doing what I could to secure a sustainable future for my daughter. It was the obvious choice,” Dirksen says of his purchase. “The savings are always mind blowing to me .”

With gas prices painfully high for the third month in a row, more Americans like Dirksen are turning to fuel-efficient vehicle alternatives to save money, new data shows.

A never-before-seen report from CarGurus, an automotive research and shopping company, shows that 53% of active shoppers say they are considering a more fuel-efficient vehicle in response to high gas prices. The data, shared with TIME, examines consumer sentiment toward electric vehicles based on an online survey of 2,176 U.S. auto owners at various times this year. It reveals that 40% of Americans now expect to own an electric car within the next five years, up from 32% in February and 30% last year.

The data, shared with TIME, examines consumer sentiment toward electric vehicles based on an online survey of 2,176 U.S. auto owners at various times this year.

CarGurus

“Gasoline prices have really pushed buyers to consider electric vehicles that otherwise wouldn’t have been sooner,” says Ali Chapman, principal customer insights analyst at CarGurus. “And that has led to an increase in electric vehicle activity at our site.”

Google searches for electric cars were also boosted by gasoline prices, hitting a record high in March. And the results are being felt throughout the automotive industry. Companies that make electric vehicles have recorded successful sales in recent months, exceeding even the most optimistic expectations on Wall Street.

Tesla, the largest electric vehicle maker, generated a record $3.32 billion profit in the first three months of 2022 as sales of its vehicles jumped about 80% from a year ago. . German automakers Volkswagen and Mercedes also reported increased sales of their electric vehicle fleets, up 65% and 37%, respectively.

But despite the increase in sales and activity, data from CarGurus reveals that consumer buying habits are a bit more complex. In a survey of respondents last year, 56% said they would be much more likely to consider an electric vehicle if gas prices hit $5/gallon. Today, this figure drops to 27%, more realistic.

“The initial shock of paying $5/gallon really gets people looking,” says Kevin Roberts, director of industry analytics and insights at CarGurus. “But as that awareness grows, the interest eclipses.”

This interest in electric vehicles is also impacted by supply chain issues, particularly shortages of items such as lithium-ion batteries and semiconductors, which prevent consumers from returning home in a new vehicle. electric. For nearly a year, long waiting lists for electric vehicles have been common, and the war in Ukraine has further disrupted production.

Finding an electric vehicle takes a bit of luck and a bit more of your wallet. At many dealerships, only a small handful of EVs, if any, are available. Ordering one could take over a year to arrive, and some dealerships only have used electric stock on their lots. The problem is not only the shortage of chips, but this demand considerably exceeds production.

On April 20, Ford halted orders for the rest of the year on the Mach-E, its signature electric crossover, dubbed Car and Driver’s Electric Vehicle of the Year, meaning anyone who wants to buy one will have to pay a higher price. “Most people come here to ask questions about the Mach-E,” a Ford salesman said last week, citing higher-than-normal gas prices as the reason for the increased interest. “If we had more, they would sell out the fastest.”

But although automakers are raising prices, consumers still seem to want electric vehicles. “Two-thirds of people say they agree electric vehicles are the way of the future,” Chapman says. “They seem somewhat inevitable.” Experts say it will take time, as less than 1% of the 250 million cars on the road today are electric, but high petrol prices could be one way to encourage change.

“Interest in electric vehicles will continue to grow organically over time,” Roberts says. “Gas prices are kind of accelerating that.”

Today, experts see the 2008 financial crisis as a potential example of what could happen in the electric vehicle industry. As gas prices soared that year, consumers drastically changed their driving habits and the types of vehicles they wanted, especially as more and more electric vehicles were introduced. said Roberts.

“But then when those gas prices came back down, people immediately went back to their previous practices.”

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