When Eric Dirksen received his first electric car in December—a new Tesla Model Y—he didn’t know gas prices would spike a few months after. But with fuel costing about $4.20 per gallon on average this week, he’s happy with the decision.
“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.”
With gas prices painfully high for the third straight month, more Americans like Dirksen have been turning to fuel-efficient vehicle alternatives as a way to save money, new data shows.
An unreleased report from CarGurus, an automotive research and shopping firm, 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 INM, looks at consumer sentiment toward electric vehicles based on an online survey of 2,176 U.S. automobile owners at various points this year. It 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.
The data, shared with INM, looks at consumer sentiment toward electric vehicles based on an online survey of 2,176 U.S. automobile owners at various points this year.
“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.”
Google searches for electric cars have also been boosted by the gas prices, reaching a record high in March. And the results are being felt all across the auto industry. Companies that manufacture electric vehicles have reported blockbuster sales in recent months, exceeding even the most optimistic Wall Street expectations.
Tesla, the largest electric vehicle manufacturer, generated a record profit of $3.32 billion in the first three months of 2022, with sales of its vehicles jumping roughly 80% from last year. German automakers Volkswagen and Mercedes also reported a bump in sales for their electric vehicle fleet, up 65% and 37%, respectively.
But despite the increase in sales and activity, data from CarGurus reveals consumer buying habits are a little more complex. In a survey of respondents last year, 56% said they’d be much more likely to consider an electric vehicle if gas prices reached $5/gallon. Today, that figure drops to a more realistic 27%.
“The initial shock of paying $5/gallon really kind of gets people looking,” says Kevin Roberts, director of industry insights and analytics at CarGurus. “But then as that awareness grows, interest slips out.”
That interest in EVs is also impacted by supply chain problems, particularly shortages of items like lithium-ion batteries and semiconductors, which are making it difficult for consumers to ride home in a new electric vehicle. For almost a year, long wait lists for electric vehicles have been common, and the war in Ukraine has further disrupted production.
It’s made finding an electric vehicle take a little bit of luck—and a little more from your wallet. At many dealerships, only a small handful of EVs—if any—are available. Ordering one could take over a year to arrive, and some dealers only have pre-owned electric inventory on their lots. The problem isn’t just the chip shortage, but that demand is significantly outpacing production.
On April 20, Ford shut down orders for the rest of the year on the Mach-E, its signature electric crossover, dubbed Car and Driver’s electric vehicle of the year, meaning anyone who wants to buy one will have to pay a premium price. “Most people come in here to ask about the Mach-E,” one Ford salesman said last week, citing higher than normal gas prices as the reason for increased interest. “If we had more of them they would sell the fastest.”
But although carmakers are raising their prices, consumers still appear to want electric vehicles. “Two-thirds of people say that they agree EVs are the way of the future,” Chapman says. “They seem somewhat inevitable.” Experts say it will take time, as less than 1% of the 250 million cars on the road today are electric, but high gas prices could be one way to encourage switching.
“EV interest is going to continue to grow organically over time,” Roberts says. “Gas prices just kind of accelerate that.”
Now, experts are looking back on the 2008 financial crisis as a potential example of what could happen in the electric vehicle industry. As gas prices spiked that year, consumers drastically shifted their driving habits and the kinds of vehicles they wanted, particularly as more electric vehicles were being introduced, Roberts says.
“But then when those gas prices went back down, people went back immediately to what their previous practices were before.”