Lower Oil Prices Don’t Dampen Interest in Electric Vehicles

Lower Oil Prices Don’t Dampen Interest in Electric Vehicles

24 Mar 2020 by NIO
Lower Oil Prices Don’t Dampen Interest in Electric Vehicles

A recent price war between Saudi Arabia and Russia caused crude oil prices to crater, touching off a debate about how lower gasoline prices might impact public adoption of electric vehicles. The short answer seems to be, not very much.

Plug-in electric vehicles – also known as electric cars or EVs – can save money for consumers, with lower average fuel costs than conventional gasoline-powered vehicles. The cost of fueling a battery-powered EV equals $1.15 per “e-gallon,” compared to $2.42 per gallon of regular gasoline, according to the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy. In other words, on average it costs less than half as much to travel the same distance in an EV as in an internal combustion vehicle.

Because the average U.S. household spends nearly one-fifth of its total family expenditures on transportation, saving on fuel can make a big difference in terms of a family's budget. EVs are much more efficient than gasoline vehicles, and electricity is less expensive than gasoline. Electricity prices are also generally much more stable than gasoline prices. In addition, some utilities offer even cheaper rates to charge up EVs overnight, which can further reduce electricity costs.

To be fair, EVs can be more expensive to purchase upfront than their conventional counterparts. But the federal government and a number of state governments offer tax credits and other incentives to EV buyers that can lower those upfront costs. And over time, the operating costs of EVs are substantially lower.

According to a recent survey by J.D. Power, the perceived advantages of EVs over traditional gas-powered vehicles seem to be more influenced by a consumer’s environmental concerns (60% of those surveyed) than by the relative cost of fuel (49%).

"On the margin, some customers will stay away from EVs in light of cheap gas, but overall, the environmental movement [as well as] next-generation technology and design.... neutralizes most of this dynamic," said Daniel Ives, technology analyst for Wedbush.

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