How Are High Gas Prices Effecting EV Cars?

Do increases in gas prices drive people to purchase EV cars? There’s certainly an argument for this. It’s up to automakers to take advantage when that happens.

There are rumors that are unconfirmed that the Toyota Prius is the “$3 car.” This means that when gas prices cross to upwards of $3 per gallon, the sale of hybrids increases. In today’s market of inflation, this number is much closer to $5 per gallon, but there’s something unique that happens in the economy, which is both sickening and a bit disturbing.

Gas Prices are Ridiculous

Inflation has an impact on all consumer goods in the market. We’re now in a world where grocery prices have gone up more than ever before. Gas prices led the way, and there isn’t truly an explanation for this phenomenon. If a gas station sells gas with a set level of profits, the price won’t jump overnight. It might go up as each delivery takes pace, but that’s not the case. We’ve all seen it; gas prices crossed $4 per gallon and kept going. In some areas, the price of regular gas was close to or above $5 per gallon. This is truly ridiculous, and there’s no good explanation for it.

Has the Change in Prices Pushed More Alternative Fuel Sales?

The higher the gas prices go, the more chances that people will buy EV cars. This has been the case for a long time with hybrids, and now we have electric vehicles. With EVs, people won’t have to worry about paying for gasoline ever again, but they are limited to the driving ranges of an electric vehicle. For most people, this is just fine. The road trips and vacations can be made with a rental car instead of the EV, and that means plugging in an EV every night.

Is Buying an EV Becoming an Impulse Purchase

If you think buying any vehicle couldn’t be an impulse item, think again. While it’s not the same as seeing a candy bar at the cash register, the same impulses can drive people to buy an electric car. As gas prices rose, as many as 56% of people said they would be willing to buy an EV when gas prices reached $5 per gallon. That figure has dropped to 27%, which is part of the disturbing and sickening part of this conversation.

Can Enough People Act on Their Impulses?

Automakers need to ensure dealers have enough inventory on hand for impulse shoppers to drive home in a new EV. The continued challenge of the semiconductor shortage and supply of lithium-ion batteries make it difficult for dealers to have EVs ready to drive. If customers are responding to higher gas prices to buy EV cars, those cars need to be readily available. Unfortunately, shortages are prevalent, and some customers might place an order today but change their mind if the vehicle takes several weeks or months to arrive for the customer.

Some Manufacturers Have Reported Record Profits

The largest manufacturer of electric vehicles is Tesla, and they showed record profits during the first quarter of the year. This figure reached $3.32 billion, and sales increased to nearly 80% compared to last year. This increase had a lot to do with the increased gas prices that resulted from the Russian invasion of Ukraine earlier this year. Other EV automakers also reported increased profits. Volkswagen was up 65%, and Mercedes showed growth of 37% in the electric vehicles sold. Amidst these increased sales figures, there are some interesting things happening.

Some Impulse Buyers Are Getting a Reality Check

Those shoppers that head to dealers because they’re tired of paying the high prices of gas are finding bigger challenges in buying an EV. The higher gas prices might have an impact on the sales of EV cars, but if these cars aren’t readily available, that can be a problem. Additionally, many automakers don’t install home chargers, and those that do require that homeowners have a 240V outlet ready for them to use for the charger. This puts a serious damper on the emotional impulse to buy an EV and might cause some shoppers to turn away and leave.

What’s the Disturbing Part of this Situation?

If you notice the decline in the interest in buying an EV, you’ll understand what’s disturbing. Most of us might complain about the higher prices of gas and increased cost of groceries, but we often shrug it off and say things like, “what are you going to do?” Unfortunately, Joe Six-Pack doesn’t have control over gas prices, the availability of EVs, or what they have to pay for consumer goods. Inflation takes its toll on the average person while large companies rake in record profits, which is both disturbing and sickening.

EVs are Gaining Interest at Dealerships

Some dealers have reported most customers that visit their locations show interest in the EVs sold by that particular brand. At Ford dealers, most customers ask about the Mustang Mach-E and F-150 Lightning, which are both impressive electric vehicles. That said, many consumers don’t consider the initial cost to get into an EV, which can be quite a bit when they head to the dealership. Even though some shoppers show interest in these vehicles, those that seriously want to drive an electric vehicle are willing to wait for the new model to arrive, even if it takes several months.

Are We Headed to an EV Future?

Even though higher gas prices do have a direct impact on the sales of EV cars, this isn’t the only reason we’ll have more EVs in the future. Electric vehicles are the future, as directed by some governmental bodies and automakers. Gas prices do accelerate the desire for these electric cars, but this growth is likely to increase with more models becoming available. More EVs are filtering into the market, and we expect to see electrified versions of nearly all models in the near future.

How long will it take before we only see electric vehicles offered in the auto market? This might happen sooner than you think.