As gas prices climb to $3.98 a gallon in the US, EV searches double for models like the Tesla Model Y, signaling a potential shift amid fossil-fuel volatility.
Rising gas prices, driven by escalating conflicts in Iran, have reached $3.98 a gallon in the US as of March 25, sparking renewed interest in electric vehicles (EVs). This volatility has led to a 20% increase in EV search traffic on one US online car marketplace, with popular models like the Tesla Model Y seeing nearly double the queries.
Historical Parallels and Current Trends
The 1970s oil crisis prompted a shift to more efficient cars, benefiting Japanese automakers, and similar patterns are emerging today. Globally, EV demand is surging; a dealership outside London reports struggles to meet orders, while one in Manila received a month’s worth of orders in just two weeks, according to reports from Reuters and Bloomberg.
A wave of affordable used EVs is expected in the US this year, with about 300,000 leases expiring due to incentives from the Inflation Reduction Act. This influx could make EVs more accessible, potentially lowering the barrier for drivers considering a switch.
At $4 per gallon, the total cost of owning an EV becomes lower than that of a gas-powered car, even with higher electricity prices, based on data from BloombergNEF. A Cox Automotive survey indicates that many US consumers might switch to EVs or hybrids if prices hit $6 per gallon.
However, sustained high fossil-fuel prices pose broader challenges. Fuel accounts for 50% to 60% of overseas shipping costs, and natural gas prices have risen, impacting fertilizer production, particularly in Europe.
Jet fuel prices have doubled in the last month, according to the International Air Transport Association, potentially increasing air travel costs and affecting goods shipped by plane. This could lead to an economic downturn, complicating financing for projects like wind and solar farms or loans for EV purchases.
