Gas Prices Must Hit $3 Per Gallon In U.S. Before Buyers Will Shift Towards Plug-In Electric Vehicles

7 months ago by Steven Loveday 69

There was a time, not so long ago, when gas prices were pushing $4 to $5. However, EVs weren't really an option.

There was a time, not so long ago, when gas prices were pushing $4 to $5. However, EVs weren’t really an option.

According to a study performed by MaritzCX, $3 per gallon in the U.S., is the number that gets consumers talking. Once gas prices hit this mark, or above, people consider it “expensive.”

Cars like the Chevrolet Bolt will pave the way for EVs to be in a much better place when gas prices rise yet again

Cars like the Chevrolet Bolt will pave the way for EVs to be in a much better place when gas prices rise yet again

Gas prices have become nearly impossible to predict, and even the most respectable predictions have come out wrong as of late. It seems, especially in the U.S., that fuel economy is only a consideration of the average driver when fuel prices are high.

The Maritz study shows that people rank fuel economy as a No. 1 priority when the price of gas is over $3 per gallon. Now, when it is below $2.50, study respondents rank is as low as No. 10.

MaritzCX estimates:

“With gas prices projected to remain under $3 per gallon over the next couple of years, we would look for fuel economy to remain at or near the bottom of the top 10 reasons to purchase.”

Quality and value were among the top priorities for most respondents, however, fuel economy was barely mentioned in the 2016 study. Obviously, the research found it to be more important to those that were shopping for a small sedan, than for those in the market for a Ford F-250 pickup truck.

U.S. gas prices have fluctuated between the $2 and $4 mark in recent years. In some places, there was a time that prices were even higher. But lately, the $2 to $2.50 pricing has stayed fairly consistent. Unfortunately for the EV revolution, people seem to be pretty content with this price point. It will exceed $3 again at some point. The low prices can’t last forever.

When that time comes, EVs will be in a far better place than they are today in terms of availability, technology, pricing, and charging infrastructure. The rise in fuel prices will be surefire motivation for the masses to join the EV club. Until then, it remains the environmentally conscious shoppers that are crossing the bridge sooner.

Source: WardsAuto

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69 responses to "Gas Prices Must Hit $3 Per Gallon In U.S. Before Buyers Will Shift Towards Plug-In Electric Vehicles"

  1. ItsNotAboutTheMoney says:

    Nothing in that article says what the headline says. It just says that fuel economy is less important when US gasoline is under $3/gal.

    Plug-ins sell for other reasons.

    1. From a number of studies it has been proven that BEV sales and usage is decoupled from petro pricing. Using only electricity, the attraction tends to be the steady and predictable price from the home electric meter.

      For PHEV and more so for HEV’s, there is some relationship between sales and petro prices. The fact that HEVs and PHEVs use petro, the drivers will be interested in petro pricing vs electric “cost per mile”. The shorter the plug-in range of a PHEV, the more the petro range-extending engine will need to run.

      A short electric range can mean a higher dependancey on higher priced public charging vs cheap home electric energy supply.

      1. SJC says:

        People and businesses like predictability which is why this recent chaos is harming everyone.

      2. Brandon says:

        Brian, if you are saying that a short range pure electric car would rely more on higher priced public charging, I would agree. But if you were meaning a PHEV does, I would have to say that it’s gas that a PHEV relies upon the most to extend its range.

        1. Pushmi-Pullyu says:

          Perhaps so, but at least one 2012 study suggested Volt owners stop to recharge enroute more often than Leaf owners:

          http://www.greencarreports.com/news/1079936_forget-range-anxiety-chevy-volt-owners-have-gas-anxiety

          However, I certainly wouldn’t claim that’s definitive, as it applied only to one brand of public EV charger.

  2. TahoeBear says:

    It’ll be interesting when electric 4×4 pickups and SUVs arrive to challenge the other performance status quo. Can you imagine how well an electric jeep would perform?
    Low cost batteries make this advent an inevitability.

  3. ffbj says:

    No. 10 not 1o.

  4. Eco says:

    If the TRUE COST of gasoline was included in the price at the pump the cost would have to be doubled or tripled, immediately.

    TRUE COST includes environmental & health damage, military (wars in the middle east) and oh yes, climate change.

    1. (⌐■_■) Trollnonymous says:

      And the big one…….
      US Gooooberment Gas subsidies!

      Reduce or eliminate that and the price damn near quadruples.

      Reduce that and it brings a “Level Playing Field” for the ICE vs. EV.

      1. ArkansasVolt says:

        remove all subsidies on both gas/oil and ev’s… ev’s will prevail. I get into that argument with many people who are against EV tax credit. When we pull up google and the facts and math, ev’s win.

        1. (⌐■_■) Trollnonymous says:

          Yup. I get into the same arguments too.
          People just don’t see the true cost of gasoline here in the US.

          1. JH says:

            ever bring data and fact in to a gun match.

  5. Michael Will says:

    I would never go back to a gas car even if gas was free. Just like I would never sell back my iPhone in trade for a free landline. It’s just not convenient for my everyday life nor enjoyable.

    No more hanging around gas stations or oil change or smog check appointments for me, no more stink, no more lousy hesitating accelaration, no more unnecessary brake pad wear and waste of energy when slowing down, no more shuddering engine and expensive service appointments for me.

    It’s 2017.

    1. philip d says:

      We’ve been driving two EVs for a number of years now. Our i3 got damaged when a truck backed into it and we’ve been driving a rental while waiting for repairs. They paid for a fairly well appointed full sized vehicle but even then it’s still a huge step down.

      It’s awful driving on the freeway due to acceleration lag. Lots of theatrics with the engine screaming and transmission lurching.

      Then while trying to maintain a pretty safe distance I realize I’m still constantly moving my foot back and forth between the brake and accelerator over and over and over and over mile after mile. Obnoxious.

      It drives nicely when I’m cruising along at a steady speed but any change either way is annoying.

      1. MikeM says:

        Same here!
        Our trusty, occasional use, Subaru backup/travel vehicle scares the heck out of me when I forget, and foolishly try to do a Leaf-style speed spurt for traffic avoidance.

        “. . engine screaming and transmission lurching” says it all.

        1. ModernMarvelFan says:

          ” Subaru backup/travel vehicle scares the heck out of me when I forget, and foolishly try to do a Leaf-style speed spurt for traffic avoidance.”

          I agree with your point in general as far as EV power train response is superior to ICE cars. But to be fair, Subaru is generally a slow brand except for WRX and to some extent, BRZ.

      2. Spider-Dan says:

        It’s ICE automatic transmissions that are the culprit.

        I still have an ICE convertible sportscar (waiting to replace it with BEV AWD convertible, when available) with a manual transmission, and I don’t really notice the “acceleration lag” (compared to my Volt) when I’m shifting manually.

        However, on the occasions that I’ve had to rent an automatic ICE, the lag is brutal.

        1. ModernMarvelFan says:

          Yes that is true.

          But that is also due to the fact that manual transmission drivers are more attentive (as required) so they have to plan their shifting ahead so the “gear box” is always ready with downshifting… The good manual drivers always make sure the car is in the correct gear and engine is within its power band…

          So, for good drivers, it isn’t an issue. But for dummies, EVs are superior because it is always ready.

          It is no different than comparing Tesla with other sports cars. Other sports cars requires skills and perfect launch to get consistent acceleration, in Tesla, it is so easy, even a Grandma can do it. All you need is just to stump on it.

    2. Guy Hall says:

      Michael,

      Love the example: I would never go back to a gas car even if gas was free. Just like I would never sell back my iPhone in trade for a free landline. I would never go back to a gas car even if gas was free. Just like I would never sell back my iPhone in trade for a free landline. It’s just not convenient for my everyday life nor enjoyable.yday life nor enjoyable.

  6. ffbj says:

    With new huge finds and the continuing glut oil is not going up anytime soon, even with the Saudis (OPEC) cutting production.

    1. Just_Chris says:

      Trump today moved a US war ship closer to Yemen to monitor activity in that country and imposed sanctions on Iran over a missile test. I am assuming there isn’t a big red and white target drawn on the side to the ship but there may as well be. I wonder how many Iranian supplied missile banks are sitting on that coast line.

      I hope I’m wrong but I am increasingly convinced we will see $100 per barrel this year, perhaps even by mid-year.

  7. speculawyer says:

    Wow, that’s a pretty low price for such a claim. I figured more like $4 or even $5/gallon considering that people are reluctant to change.

    1. Ambulator says:

      Yeah, $5 has long been my estimate. Anything less and the depreciation costs bury the gas cost. It’s a shock when gas prices go up but people adjust quickly at lower price levels.

      1. MikeM says:

        The trouble is:
        It’s insanely hard to actually predict gas prices long term.

        We bought a Prius in late 2004. I was certain gas would hit $6/USgal during its lifetime with us.

        (Car’s still going strong with another family member – now replaced by a Leaf)

        1. speculawyer says:

          Well, full-serve premium gasoline did go above $6/gallon where I live. Didn’t last long though.

          It is over $4/now.

          1. Pushmi-Pullyu says:

            I’m guessing you do not live in the 48 contiguous United States?

            Hawaii or Alaska, perhaps? Assuming you are paying U.S. dollars…

    2. ItsNotAboutTheMoney says:

      Ignore the headline. The study’s just about the price point at which people take fuel economy seriously, not when they’d consider a plug-in.

      1. Pushmi-Pullyu says:

        Well, there is a post which needs to be repeated a half-dozen or so times.

        And it shows the importance of critical reading. I wasn’t giving it my full attention when I read the article, so thanks for giving us a reality check here, ItsNotAboutTheMoney!

  8. Alan says:

    Try $7-$8 for for us here in the UK :o((

    1. speculawyer says:

      That always brings up the European EV paradox . . . why don’t plug-ins sell better in Europe since they have such high gasoline prices?

      My general answers:
      -lower single family home ownership such that it is hard to install home-chargers.
      -Public transport often used for commuting such that cars are more for long weekend trips
      -Electricity is more expensive too (especiall Germany)

      Do you have any additional thoughts on that paradox?

      1. KM says:

        Spot on. You could add that Europeans tend to buy smaller thus cheaper cars. The best selling cars in UK are fiesta and corsa.

      2. Alan says:

        I would argue that single family home ownership here in the UK with home charging possibility is one of the highest in Europe, I gather most tend to rent in Germany but not sure about other countries,

        Public transport is used quite a lot but is one of the most expensive in Europe here, I can only assume it’s because of traffic jams & parking problems/cost in cities why people use PT.

        Electricity is around 15-20c per kWh so not too bad here but apparently very expensive in Germany.

        I believe when EV’s have a 200 mile range and are not prohibitively priced, an explosion in uptake will occur.

        Car in the UK are expensive compared to the US and even other European countries so people tend to buy small less expensive and cheaper to insure and run.

        That’s my take on it and hope I’m correct in that around 2020 will prove revolution as far as EV take up in concerned.

      3. Pushmi-Pullyu says:

        Europeans tend to drive more fuel-efficient cars, and the price of electricity there tends to be higher.

        I’ve seen a lot of claims that the lack of garages at homes there is an important factor, but I’m not convinced, since an EV charger can be mounted on the outside of a house, or on a post beside the driveway, where necessary.

      4. Priusmaniac says:

        Don’t know for the UK but in Belgium, where gasoline has never been below 5 $/gallon and many people have their own individual house, it really comes down to the ev car side. Apart from the Model S, which sells well but which is very expensive here, the other cars available just don’t fit the requirements. The i3 and ampera seat 4 a non starter with the local psyche and the Leaf is ugly. The ionic is too low in range and the zoé is just to small. So people are really expecting the Model 3 and I guess the Bolt and improved Ionic as well. That sums it up, unfortunately it still is the ev car that isn’t there to fit both range and price while being beautiful and seating 5.

  9. speculawyer says:

    So when will gas go above that level again? Conventional wisdom is that it is not happening anytime soon due to the ability of Fracking be able to ramp up.

    I don’t know. I suspect some black swans will be the real price drivers. A terrorist attack, a mid-east war, a trade war, a massive discovery, etc. I also feel that Trump advisors Rex Tillerson, Rick Perry, Scott Pruitt, and Vladimir Putin will advise some policies that push oil prices up.

    No one knows . . . we’ll find out.

  10. Anon says:

    It’s not about the short term cost per gallon, but the long term cost of dumping more carbon into the atmosphere. Education is key to influencing buyers, who vote with their dollars.

    A Carbon Tax on fuel would also help nudge society from a purely economic standpoint.

  11. Someone out there says:

    Or plugins must be cheaper with longer range. People are not willing to make a sacrifice if they are not compensated economically, i.e. people are not willing to buy a much more expensive car with significantly shorter range if they are not compensated with a significantly lower cost per mile.
    The Bolt may be “affordable” but it’s still too expensive for many people with its limitations. It’s big step forward but we still need to take a few more steps.

    1. Alan says:

      +1

      The other problem here in Europe is residual value, cars can lose half their value after 3 years and with EV’s that could be even worse unless they have a high mileage range ?

      They need 200 mile range minimum and cost the same as an ICE for starters, after that it’s all down charging infrastructure and personal charging capability IMO.

  12. David Murray says:

    I’m not sure $3 would be enough. It was that high and even higher when the Volt and Leaf came onto the market and it didn’t seem to push a lot of people to buy those. Although it did help Prius sales a lot. I think even at $4 per gallon, few people would shift to a plug-in car. It really takes a different mindset. However, as somebody else mentioned above, one advantage we do have next time gas prices go high is higher availability of different models and body styles. That will certainly help.

    1. ModernMarvelFan says:

      2013 correlated with fairly high gas price and it is also one of the highest Volt sales year.

  13. TM says:

    I thought all producers of EV and PHEV were supply limited.

    Like others have said, infrastructure is not quite ready for the sales numbers to go from 1% of new cars to 10%.

    But yes, charging at home and not going to the smelly gas station is really nice.

    1. Pushmi-Pullyu says:

      I think it would be difficult to find any product for which market demand could be met if the demand increased by ten-fold in a single year! But sales can’t grow until demand does. If demand for PEVs (Plug-in EVs) was to increase sharply, you can be sure that some or all of those legacy gasmobile makers who have been reluctant to jump into making compelling EVs in large numbers, would start doing so.

      In every disruptive tech revolution, there is a period where sales of products using the new tech enter an “S-curve” of sustained exponential growth, followed by tapering off of growth as the new tech approaches 100% of the market. That growth trend has not yet become evident in EV sales.

      The question is, just what is going to push the sales trend into the beginning of that “S-curve”? Or has it already started, and it’s just too soon to see the trend? Only time will tell.

      The price of gasoline isn’t the only important factor affecting market penetration of EVs. It may not even be the most important factor. But it certainly is a significant one.

  14. VS says:

    You in the US are lucky and spoiled energy consumers.
    At the moment we pay ca 8.3 USD in Norway.
    And we are a major oil export nation.

    1. needa says:

      I pay 4.1 Kr per liter. Fuel was at $1.99 ($2.39 for 93 octane premium) a gallon today, and I cannot wait till the day I never go back.

  15. Get Real says:

    All it will take is the inevitable Trump war and liquid fuels will surge in price as long as we are still alive sine it is ALWAYS a good possibility that the psycho will use the nuclear weapons he is so obsessed with.

    1. Mister G says:

      US war ship is on the way to Iran, we might get our holy war sooner than later. Elections have consequences and Americans screwed up big time.

  16. James says:

    I’m not sure about this logic. I wouldn’t have kept my tube TV for any price after I saw the picture on an LED. I wouldn’t buy a BMW M5 after I drove a Tesla Model S 100D. Make a better product and people will come. That’s why Tesla is slaughtering the competition in the luxury segment, and that’s why the big boys are freaked out by the Model 3.

  17. Mister G says:

    American conservatives are itching for a holy war…oil prices might spike.

    1. speculawyer says:

      I don’t think conservatives in general feel that way . . . but Bannon & Flynn? Yes, they do. And considering their jobs, that is extremely scary and we could end up in a war.

      Crazy Trump threatened sending tanks into Mexico, so it won’t take much for him to send them into some Holy war that Bannon and Flynn foment.

      1. Pushmi-Pullyu says:

        Regarding The Donald’s ongoing crass and destructive attempts to bully leaders of other countries, the reality is bad enough; I hardly think we need to exaggerate it by suggesting Trump threatened to invade Mexico with tanks!

        Here’s what is being reported, which is at best a second-hand report, if not worse, so I wouldn’t claim it’s actually what The Donald said to the Mexican leader:

        “You have a bunch of bad hombres down there,” Trump told Pena Nieto, according to the excerpt given to AP. “You aren’t doing enough to stop them. I think your military is scared. Our military isn’t, so I just might send them down to take care of it.”

        http://time.com/4657474/donald-trump-enrique-pena-nieto-mexico-bad-hombres/

  18. Warren says:

    What percentage of sales went to Prius when gas was at $4 a gallon? And EVs are more expensive. We will likely be getting a Bolt as our last car, in hopes of hurting the oil industry the only way we can. But EV fans are delusional, if they think Americans will be rushing to buy them.

    1. ItsNotAboutTheMoney says:

      I’m fine with the driving experience in a Prius, but I many multiple people that aren’t.

      I’d be willing to bet that a much higher proportion of people would be happy with the driving experience in an electric car.

      That’s why I think that plug-ins can get market penetration in the USA that hybrids never would.

      1. Warren says:

        We will know the answer before the next presidential election.

  19. CDAVIS says:

    Article Headline Says:
    Gas Prices Must Hit $3 Per Gallon In U.S. Before Buyers Will Shift Towards Plug-In Electric Vehicles

    …So how is the following explained?:

    Tesla Model S in 2016 outsold Mercedes-Benz S-Class by 60% and BMW 7-Series by over 100%.

    Average U.S.A. Gas prices start of 2016 was under $2 and today at $2.27 (regular).

    1. speculawyer says:

      Because that is a completely different market . . . people buy $70K to $100K cars don’t really worry about gas prices.

      But Tesla has proven that EVs are just better cars when the price doesn’t matter.

      But down market . . . the Volt, Bolt, LEAF, etc. are making inroads.

      1. CDAVIS says:

        @speculawyer said: “…But down market . . . the Volt, Bolt, LEAF, etc. are making inroads.”
        ——–

        Add to that the 400,000+ Model 3 paid reservation holders. So a “shift” towards EV even in the mid luxury segement is not dependent on gas >$3. Higher gas prices would perhaps take us from a shift to a wave.

  20. JyBicycle says:

    $3 is not gonna do it. It takes Norway gas prices, $10/gal, for people to jump.

  21. przemo_li says:

    Another logical fallacy.

    Study findings looks sound. Conclusions that EVs are out because gass is 2.x$ is illogical.

    2.x$ means small cars/sedans are OUT. C/SUVs are IN.

    USA now have EV SUVs so EV SUVs are IN and small cars/sedans EVs are OUT.

    Obvious? Yes.

    Provable? Yes. (Look at EU who had Outlander and got constant YoY increases in sales), despite cheap gas.

    1. Pushmi-Pullyu says:

      przemo_li said:

      “Another logical fallacy.

      “Study findings looks sound. Conclusions that EVs are out because gass is 2.x$ is illogical.”

      Indeed. As ItsNotAboutTheMoney said in a comment above:

      “The study’s just about the price point at which people take fuel economy seriously, not when they’d consider a plug-in.”

  22. Rick (no, not that Rick) says:

    If you’re waiting for mass market share, forget about the price of the fuel. It’s all about the price of the car, compared to other similarly equipped cars.

    1. PHEVfan says:

      “similarly equipped” would also include similar range, to the average car buyer. This is why PEVs are only ~1% right now. PHEVs are more expensive (though dropping) and EVs don’t have the range (yet).

      1. Brandon says:

        Right. I think it’s mostly agreed upon that gas prices don’t actually sway the purchase decision for most buyers. It’s other factors like the cost of a new EV and it’s range, as well as DCFC infrastructure availability.

    2. Pushmi-Pullyu says:

      Rick (no, not that Rick) said:

      “It’s all about the price of the car, compared to other similarly equipped cars.”

      Right. Unless the pump price of gasoline in the USA goes to some insane level like $7 per gallon or more, the purchase price of the car will have far greater effect than the price of gasoline, when it comes to PEVs “going mainstream”… or not.

  23. Todd Pratt says:

    Interesting that you end the article with the statement, “it remains the environmentally conscious shoppers that are crossing the bridge sooner.”

    To be honest, the environment was at the bottom of my list of reasons for buy a Leaf a couple years ago.
    #1 Great Economics
    #2 Great Performance
    #3 Low Maintenance
    #10 Environment

    All of the EV owners that I know all bought for the economics of it. That’s why we have to stop framing the purchase of an EV as an environmental decision in favor of the economic one. I think that will be far more successful in getting others to join the revolution.

    While I was loath to do so, I recently purchased another gas guzzler to replace my wife’s small and very old car. I waited as long as possible for a suitable EV to show up, but it’s just not going to happen any time soon. My family is growing and the Honda CRV is a compelling vehicle. I told my wife that if they would simply make it into a BEV it would be an unbelievable hit and possibly the best vehicle on the road (aside from Model S of course). Unfortunately, no manufacturer seems interested in releasing a PHEV or BEV SUV in the US.

  24. Loboc says:

    I’m probably one outlying stat, but, cost of fuel had pretty much zero influence on my decision to buy an ELR. Competitive cars I was cross-shopping included Camaro SS, Challenger SRT, ATS-V and Corvette. Hardly economical vehicles.

  25. jim stack says:

    The higher price of FUEL is a big factor. Here are a few others.
    -50% buy for the HOA lane access.
    -10% buy for the Environment.
    -10% buy becuase of the acceleration.
    -5% buy for the status…..

    1. Daniel says:

      Those reasons with exception of the environmental concerns only exist in carb States out here in the great deserts of Arizona where I live or in most of the rest of flyover country electric vehicles are just a better Driving Experience. When compared to any internal combustion powered car. Every lane out here is a high-occupancy vehicle Lane our roads are wide open and stretch for many miles.

  26. rob says:

    $3 a Gallon! and you think its expensive?