Cheap Gas Will Cause Electric-Car Sales To Plummet: True Or False?Cheap Gas Will Cause Electric-Car Sales To Plummet: True Or False?

There’s been a lot of conventional wisdom floating around lately.
In this case, it’s the notion that electric car sales will plummet with the arrival of vastly lower gasoline prices.
We’d suggest that perhaps this is not quite as much of a foregone conclusion as many pundits think.
DON’T MISS: Green Car People: Who Buys Electric And Plug-In Vehicles?
Since June, the price of a barrel of oil has fallen roughly 40 percent, to about $58 for West Texas light sweet crude and $63 for Brent oil.
We also know from history that hybrid vehicle sales are fairly well correlated to gas prices; lower gas prices make more fuel-efficient cars less appealing on an economic basis.
Monthly gas price vs. electricity price in $/gallon equivalent 1976-2012 (Edison Electric Institute)
Yes, buyers often focus far too much on today’s gas prices rather than what they might expect gas to cost over the period they own the vehicle.
Still, it’s undeniable that hybrids cost more to buy than cars of the same size with conventional gasoline engines.
But plug-in electric cars have a variety of advantages that hybrids don’t. And that makes any correlation of their sales to gas prices rather more complicated.
2013 Tesla Model S and 2014 BMW i3, Hudson Valley, NY, Nov 2014
Several factors separate electric cars from hybrid cars. (And as one commentator noted on the stock-investor site Seeking Alpha, it’s likely Tesla sales won’t be affected at all.)
First, people buy plug-in cars for a whole variety of reasons.
Saving money on “fuel” costs is one purchase motivation, but it’s far from the only one–or even the major one at the moment.
ALSO SEE: Who Buys Plug-In Electric Cars, And Why? CA Report Explains It All For You
Many owners discover the often much cheaper per-mile cost of driving electric and view it a great side effect, but it may not have been the deciding factor.
Other reasons include eagerness to adopt new technology, environmental concerns, and an interest in U.S. energy security.
Then there are the driving qualities: Electric cars are quieter, smoother, calmer, and provide maximum torque from a standstill–all of which appeal greatly to drivers once they get behind the wheel.
Green HOV-Lane Sticker
Electric cars also benefit from a wide array of incentives–from tax credits + purchase rebates to carpool-lane access–that remain in place regardless of gas price.
Most of those factors used to apply to hybrid cars as well, but no longer do.
After 15 years, hybrid cars have “normalized” and are no longer the cutting edge of car technology, nor the cleanest and lowest-carbon way to drive.
MORE: Five Cheap Oil Myths (blog post by James Russell)
Both national and California incentives for hybrid purchase have now expired, and won’t be renewed.
For all those reasons, we’re skeptical that plug-in electric car sales will fall just because gas prices have gotten a lot lower.
It could happen–we’ll let the data tell the story over the coming months–but we suspect it’s far from the open-and-shut case that many, many outlets have assumed.
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