Electric vehicles will not save us from rising gas prices

With gas prices above $4 a gallon, electric cars are starting to look more attractive to car buyers. But a combination of supply chain restrictions, global chip shortages, above-average prices and low dealer inventory will conspire to keep electric vehicles out of most people’s reach.

Interest in switching from gas to electricity is at an all-time high. Car shopping site Edmunds reports that the number of people searching for hybrid, hybrid or electric vehicles jumped 39 percent from February to March and 18 percent over the past week.

Pursuing this purchase will be difficult for most people, given the dearth of new electric vehicles on the market. Available electric vehicles are more expensive than the gas equivalent, and stock is very low. The same is true for hybrids and small and medium-sized cars, which generally lie near the bottom in terms of width. So for anyone looking for relief from rising gas prices, the solution is either patience – more electric cars are coming! – Or drive less.

Electric vehicle sales increased significantly year-over-year, but still account for only 4.5 percent of new cars sold in the United States. The average selling price of a new electric vehicle is still about $10,000 more than the general industry average that includes both gas and electric vehicles. In terms of pricing, the EV is the equivalent of an entry-level luxury vehicle.

Even if you can afford to buy a new electric car, good luck finding one. U.S. auto inventory levels — the number of cars available to buy at any time — are down about 60 percent from a year ago and 70 percent from 2020 to nearly 1.1 million vehicles, according to Cox Automotive. Electric and hybrid vehicles account for only about 25,100 units, or 2.4 percent of total supply, as of February 21, according to the company.

See also  Investors say judge rules Musk's tweets about making Tesla private are false

“If jumping into a new electric vehicle is a top priority for you right now, it wouldn’t be easy to make a purchase especially,” said Jessica Caldwell, Edmunds executive director of statistics.

Automakers have been slow to realize the demand for electric vehicles; It wasn’t until Tesla’s valuation started to soar that most auto companies’ EV plans really kicked in. Prior to that, the auto industry deprioritized or phased out more fuel-efficient vehicles, such as sedans and wagons, in favor of bulky trucks and SUVs, which have higher profit margins and consume more fuel.

In recent years, automakers have stopped producing smaller, more fuel-efficient cars such as the Honda Fit, Chevy Sonic, Ford Fiesta, and Toyota Yaris. In their place, we got giant cars, such as the Cadillac Escalade, or even mid-size SUVs, such as the Ford Bronco.

Not surprisingly, owners of mega-cars feel the pain of rising gas prices the most. A driver of a full-size SUV pays about $110 extra each month to operate his vehicle, according to Cox. A full-size pickup truck now costs $100 a month to run compared to March 2021.

The last time gas prices topped $4 a gallon, during the 2008 financial crisis, demand for mega-vehicles collapsed. More car buyers are turning to fuel-efficient cars, and some have stopped shopping altogether.

The dynamic is different this time. High gas prices contrast with vehicle scarcity, supply chain constraints, and a lack of global chips, creating a perfect storm of uptake for car buyers. The cars they would convert into—small, fuel-efficient, or even just electric—are not available. What’s available are mega trucks and SUVs, such as the Ram 1500 or Jeep Grand Cherokee, both of which Cox Automotive says are the most readily available new cars at the moment.

See also  Carl Icahn starts a proxy fight with McDonald's over the welfare of pigs

“We live in a time like no other,” said Michelle Krebs, senior analyst at Autotrader and Cox Automotive.

To make matters worse, car dealers are charging huge prices on most new electric vehicles. According to Edmunds, the average deal price for a new electric vehicle increased 3 percent in February compared to the manufacturer’s suggested retail price, largely due to higher prices. This is steeper than the rise in the average transaction price of all new vehicles (gas and electric vehicles) in February, which was 1.5 percent higher than the MSRP average. And remember that the average MSRP for an EV is Previously More expensive: The average price for a new electric vehicle was more than $60,000 in February.

On top of all this, the prices of raw materials are on the rise. The Russian invasion of Ukraine drove up prices for steel, nickel and palladium – used in body panels, exhaust purifier catalysts, and electric car batteries. according to BloombergRaw material costs were about 10.5 percent of the average price paid for new vehicles in January, up from 5.9 percent in April 2020.

And if that wasn’t enough, earlier this week President Joe Biden banned imported Russian oil, acknowledging that it would likely push gas prices higher. Biden said he is committed to relieving the pressure on car owners, noting that more oil will be released from emergency stocks to help offset the cost.

But there are other things people can do to ease the pain that doesn’t involve crashing from agency to agency in search of that elusive electric vehicle. In the 1970s, in the midst of the gas crisis, about 20 percent of Americans took trips on their way to work. That number is about 7 percent today. There may be more shared car use on the horizon.

See also  The Bitcoin (BTC) bull market may not return until 2024: Huobi co-founder

The 1970s also saw an explosion in bike sales, as a result of rising gas prices and the introduction of a 10-speed derailleur. Bicycle sales — especially e-bike sales — have surged during the pandemic, driven by lockdown orders and a desire for a safe, socially distancing way to get around.

A simple change in driving habits can also help relieve pain. Autotrader’s Krebs suggested lowering driving speeds and consolidating errands into fewer trips as among the “usual gas-saving tips”.

You can also get a bus pass.

Leave a Reply

Your email address will not be published.