High Gas Prices Fuel Interest in EVs

Electric vehicle (EV) car sales are on the rise as gas prices soar.

Gas prices spiked more than 45% over the last year. The average price of gasoline just reached $4.23 per gallon, which is the highest it’s ever been in US history.

These high gas prices are finally starting to change the way people think about vehicles. . According to the US Department of Energy, EV sales increased 85% from January 2021 to January 2022. And in Q1 of 2022, Tesla reported an 87% increase in sales from the quarter before, while the overall industry reported a 15.3% decline in new vehicle sales. EVs represented the only area of growth last year.

The U.S. Energy Information Administration estimates that as of May 2022, there are currently about 2.84 million EVs in the U.S. , not including hybrids. This represents approximately 1% of all vehicles on the road in America today.

The industry aims to convert 50% of all vehicle sales to EVs by 2030, and gas prices rising appears to be helping in early gains toward that goal.

Lowered Costs Spurring a Surge of Interest

The initial cost of EVs is usually higher than that of a gas powered vehicle. Often, upfront costs can be offset by potential for tax credits.

Still, on average AAA finds that owning a new, compact electric vehicle was only slightly more expensive—about $600 annually—than its gas-powered counterpart.

However, the real benefits come from operation.

Driving 15,000 miles in an EV costs just below $600 in power at $0.13 kw/h. Powering a gas powered vehicle at today’s price of $4.24/gallon shoots annual costs past $2,000. This rapid offset of upfront costs is becoming more and more appealing to drivers.

Cost of driving 15,000 miles

Source: US Dept of Energy

Eric Dirksen, for one,  is thankful he made the decision to purchase his first EV in December—a new Tesla Model Y.

“Very fortunate at the timing,” he says. Dirksen spent $62 on charging in the last month, roughly the same amount as 15 gallons of gas. “I wanted to be more intentional with ensuring I was doing what I could to ensure a sustainable future for my daughter. It was the obvious choice,” Dirksen says of his purchase. “The savings are still mind blowing to me.”

A Changing Mindset

With gas prices rising for the third straight month, more drivers like Dirksen have been turning to EVs as a way to save money, new data shows.

A report from CarGurus, shows that 53% of active shoppers say they are considering a more fuel-efficient vehicle in response to high gas prices. The data, shared with TIME, finds that 40% of Americans now expect to own an electric car in the next five years, up from 32% in February and 30% last year.

Consumer sentiment towards electric vehicles

“Gas prices have really pushed shoppers to consider EVs that otherwise wouldn’t have sooner,” says Ali Chapman, a senior customer insights analyst at CarGurus. “And it’s led to increased activity in EVs on our site.”

CarGurus insight also revealed that interest in EVs tripled in correlation with the rise of gas prices.

Interest in electric vehicles keeping pace with gas prices

According to a poll by CBS, gas prices still rank second for reasons consumers want to go electric. Environmental concerns still top out their motivations for switching, but fuel costs recently caught up.

Poll: why would you consider an electric or hybrid car?

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