As gasoline costs soar amid ban on Russian oil, will extra drivers transfer to electrical automobiles?

Gas prices in Seattle on March 8, 2022. (GeekWire Photo / Lisa Stiffler)

President Biden this week announced a ban on the import of Russian oil and gas because of the war in Ukraine. The decision is intended to put heightened economic pressure on Russia and President Vladimir Putin, but will also drive up fuel prices, which reached an average of $4.55 per gallon in Washington state on Tuesday.

“Defending freedom is going to cost,” Biden said, “and it’s going to cost us as well in the United States.”

But there could be a way to duck some of that financial hit for individual drivers: making the jump to electric vehicles.

“The savings from switching to an EV right now are so substantial that it can make [the purchase] worth it,” said Matthew Metz, founder and co-executive director of Coltura, a Seattle-based nonprofit advocating for EV use.

If you drive a lot, there’s no question, he said.

“If you’re using 100 gallons or more a month, you should definitely get an EV,” Metz said, adding that’s particularly true for lower-income drivers who are especially hard hit by the spiking gas prices.

Historically drivers have shifted to vehicles with greater fuel efficiency when prices at the pump rise. U.S. data going back to 1999 shows increased sales in hybrid and plug-in electric vehicles as gas got more expensive, and decreased sales in hybrids and EVs as gas prices declined.

Starting back in 1999, higher gas prices correlated with the sale of more new hybrid electric vehicles (HEV), and then plug-in electric vehicles (PEV) — both hybrid and battery only. Beginning in 2020, EV sales began a sharp rise that might at last be uncoupled from gas prices. (Argonne National Laboratory, data are through January 2022)

However, that started to change in 2020 as the vehicles became more readily available and climate change impacts more apparent. Global EV sales reached 6.6 million for plug-in vehicles in 2021, more than doubling year-over-year, according to the International Energy Agency.

“Hybrid and plug-in EV sales have skyrocketed to levels never seen before, despite the overall economic slowdown and supply chain issues,” said Scott Case, CEO of Recurrent, a startup generating EV battery data to help consumers shop for used EVs.

New record-setting gas prices could leave an indelible impression with shoppers and create a more substantial, lasting pivot to electric.

“It may be very difficult for an American car buyer to walk into a dealership in future years without thinking about these gas prices and the prospect of them returning,” Case said by email.

Long-term demand of EVs remains a potential issue. A recently released global study from Deloitte found that 69% of Americans expected their next vehicle will be powered by fossil fuels, while only 5% said it would be all-electric. An earlier study from Consumer Reports, however, reported that 71% of drivers were at least interested in purchasing an EV.

For Grace Reamer, who serves on the board for Drive Electric Washington and the Seattle Electric Vehicle Association, the present situation has created both a political and pocketbook issue.

“The war in Ukraine highlights the need for energy independence. Driving electric supports clean energy jobs in the U.S. and keeps money here at home that otherwise would be going to buy oil from foreign regimes such as Russia,” Reamer said by email. “Ditching gas cars for EVs is an act of patriotism.”

In his comments this week about the ban on Russian oil, Biden specifically called out electric vehicles.

Washington state is a leader in electric vehicle ownership, ranking fourth nationally and running close behind more populous states like Texas and Florida, while California outpaces the rest of the country.

Data shows that existing EV owners in Washington state tend to live in more affluent, tech-centric cities to east of Seattle, including Mercer Island, Redmond and Issaquah. Tesla, the lead EV producer worldwide, is top ranked in the state. The cheapest available Tesla — a base version of the Model 3 — is listed by the company at $44,990.

But ownership demographics will likely start expanding as automakers begin offering a much wider range of EV options in the near future. Ford’s electric F-150 Lightning pickup is expected to start rolling out this spring. Nissan, maker of the popular Leaf EV, has an electric SUV coming in the fall. GM aims to have 20 EV models by 2025, and plans to be all electric by 2035.

Public policy is likewise promoting widespread EV adoption:

  • Legislation approved by the Washington state House and Senate sets the goal that by 2030 all cars sold, purchased and registered in the state will be electric.
  • Another measure close to becoming law earmarks $69.5 million of federal funding for developing EV charging infrastructure in Washington for rural areas, multifamily housing, office buildings, schools and other public locations.
  • There is a partial sales tax exemption on new and used EVs sold in Washington, and shoppers can receive up to $7,500 in federal income tax credits for new vehicles.
  • A proposal by Gov. Jay Inslee to provide generous rebates on EV purchases appears to have stalled in the 2022 legislative session. It aimed to help address equity issues by offering rebates for used EVs and by providing bigger rebates to lower income drivers. Many EVs remain financially out of reach for consumers because of upfront costs, preventing them from benefiting from long-term savings due to lower maintenance and fuel costs.

But even with motivated shoppers, supply chain issues continue to hobble car production. So an important question remains: Are there enough EVs to meet the demand?

Vicki Giles Fabré, executive vice president of the Washington State Auto Dealers Association, said the vehicles are out there, though patience could be needed.

“Demand for new and used vehicles of all types is very high and supply can be a challenge,” said Giles Fabré by email. “However, franchised dealerships are constantly refreshing their inventories and customers can place an order if a vehicle with the options they want is not in stock.”

Electric vehicle recharging. (Photo by Andrew Roberts via Unsplash)

A recent online perusal of some dealerships in the greater Seattle area found used Volts, Leafs, Teslas and other EVs for sale, but no new EVs on the lot. The Chuck Olson Chevrolet dealer in Shoreline listed 16 used EVs and hybrids, starting from $14,990 for a 2013 Toyota Prius. Campbell Nissan of Edmonds listed 14 used Leafs on its site. Both dealerships gave the option of ordering new cars.

The Tesla site is also taking orders, with its Model 3 estimated for availability in May, the Model S in July, and the Model Y in August.

Coltura’s Metz said a switch to EVs needs to happen as quickly as possible given the dire environmental consequences of continuing to burn gasoline. That means ramping up EV production, bolstering the charging infrastructure, and making sure low- and medium-income consumers can afford the cars — particularly those who are using much more fuel than the average driver.

“We have to look beyond this present crisis,” Metz said. “It’s a long-term effort.”

Editor’s note: Story was updated to include more information on Gov. Inslee’s EV rebate proposal as it impacts lower income consumers, and to correct a misstatement on the sales tax exemption, which is only a partial exemption, and the price of the Model 3.

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