When Carol King bought a compact Hyundai Tucson SUV last year, she thought she’d be fine getting around 26 miles to the gallon. But as fuel prices in Los Angeles approach $5 a gallon, she’s thinking she may trade in her new SUV earlier than planned — even as early as next year.
“The price I’m paying [for fuel] right now is pretty frightening,” she said, adding that her next car is “almost certainly going to be electric.”
King isn’t the only one frightened about rising gas prices. President Joe Biden attempted to contend with the problem during his State of the Union address Tuesday, announcing the U.S. will release 30 million barrels of oil from the strategic reserve. The move appeared to have little immediate impact, however.
As trading ended Wednesday, the price of benchmarks like West Texas Intermediate crude were up as much as $9 a barrel, to more than $110. And at the pump, regular self-serve was going for $3.656 a gallon on average, up nearly 4 cents for the day and 26 cents over the previous month.
Electric vehicle sales have been rising for several years, and the pace is picking up as gas prices climb.
In 2019, just 3 percent of U.S. motorists said their “intention” was to buy a battery-electric vehicle the next time they were in the market, according to data from AutoPacific Research.
That rose to 10 percent in January, and nearly a quarter of the people surveyed said they’d consider changing the type of vehicle they buy if fuel prices keep rising.
At the time, AutoPacific was forecasting that demand for electric vehicles would grow to 700,000 for all of 2022, a considerable jump over last year, when Americans bought 491,000 all-electric vehicles.
But “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 said.
There are a variety of reasons why American motorists consider EVs, according to AutoPacific. Some are “early adopters,” some want the increased performance EVs can deliver, and for some it’s fighting climate change. But 83 percent of people the research firm describes as “EV handraisers” listed lower energy costs as their No. 1 reason.
“We’ve seen a twofold increase in sales including unprecedented reservations” for products like the GMC Hummer EV, the Ford F-150 Lightning and the Cadillac Lyriq in recent months, said Ryan LaFontaine, CEO of the LaFontaine Automotive Group, a major Midwest dealer group.
“Rising fuel prices certainly play a role,” LaFontaine added, noting his organization is confident enough about the market for EVs that it’s opening a showroom for Polestar, the all-electric brand spun off from Volvo.
Sales of “electrified” vehicles — which include hybrids and plug-in hybrids, as well as battery-electric vehicles — remain strongest along the coasts, especially the West Coast. California hit a milestone at the end of 2021, when the millionth plug-based model was sold there.
Stockton, California, resident Michael Macias, who bought the all-electric Volkswagen ID.4, called it “the perfect opportunity to put my principles of being a good steward of the Earth into practice.”
Mike Huntzinger, sales manager of Five Star Ford, the biggest Ford dealer in Texas, said he’s “starting to see increased traffic” and growing interest in vehicles like the Mustang Mach-E electric SUV. Huntzinger said demand for the Mach-E, which starts at $43,895, has doubled in recent months.
Dealers are also getting an assist from automakers, which have amped up advertising and marketing for their EVs. “You couldn’t watch a football game last fall without seeing an ad for the Mach-E or [F-150] Lightning,” Huntzinger said.
There are still a number of obstacles holding back widespread consumer EV adoption, including range and charging times. Longer-range models, such as the 520-mile Lucid Air, are helping reduce consumer resistance.
Then there’s price: On average, a battery-electric vehicle costs at least $4,000 more than a comparable, gas-powered model, according to industry data. And it can take a long time before an EV pays off in overall savings. The federal government is offering incentives of up to $7,500 to help offset the higher costs. A Biden administration proposal would take that figure up to as much as $12,500, but it’s stalled in Congress.
One thing analysts expect to boost demand is the array of new models flooding the U.S. market in 2022. Not only will the number of long-range EVs more than triple — to nearly 60 — but they’ll be available in more market segments, from compact SUVs to full-size pickups.
And they won’t all come with four wheels. Carl Malek, a researcher and analyst from Sterling Heights, Michigan, said he plans to buy an all-electric motorcycle this spring because “I wanted something good for commuting, especially with the current volatility of gasoline prices.”
He said he’s also considering trading in his “four-wheeled commuter,” a Buick Verano, for an EV.