Take a look at this chart from EIA, which has been updated through January 2022. It compares hybrid and plug-in EV sales against gasoline prices.
Editor's Note: Scott Case is the Co-founder and CEO at Recurrent, a company working to accelerate EV adoption by providing essential insight into used electric cars, such as battery and range reports.
From 1999 through 2020, there's been a pretty tight and long-standing correlation between hybrid sales and gas prices. Gas prices rise and people respond immediately by buying more hybrid vehicles with better fuel efficiency. Unfortunately, you've also seen that the opposite has been true as well: when gas prices have fallen over that period, hybrid sales have fallen.
Rationally, this doesn't make much sense because an inefficient new car purchase lasts a lot longer than low gas prices. The correlation between gas prices and plug-in electric sales is similar, though, since 2010, there's been a steady underlying growth in EV sales that isn't correlated with gas prices – the sign of a market shift.
Since 2020, there's been a marked change in this correlation. Gas prices have been climbing, but not to all-time highs (prior to this month). Hybrid and plug-in EV sales have skyrocketed to levels never seen before, despite the overall economic slowdown and supply chain issues.
The above chart is updated to the end of January. February added another 20 cents per gallon, and in eight days of March so far, we're up another 50 cents/gallon. Given this data, it's easy to forecast a historical surge in hybrid and plug-in EV sales over the course of the next several months.
What's more interesting is whether we breach a psychological tipping point when drivers see $5, $6 or $7/gallon gas prices that will be so painful for ICE vehicle owners that there's a permanent preference shift to EVs that transcends short-term gas price drops.
In social psychology research, people tend to remember the peak of an unpleasant experience more than the average of it. I think 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.