Response To Fortune’s “Is Cheap Gas Pulling The Plug On Electric Cars?”
While gas prices may have some short-term impact on electric vehicle (EV) sales, the April 22 article “Is cheap gas pulling the plug on electric cars?” takes an unfortunately short-sighted view of the future of American mobility.
The recent increase in gas-guzzler sales is noteworthy, but history tells us this period of cheap fuel will not last forever. Volatility in the global oil market—responsible for rapid swings in gasoline prices—has returned to levels not seen since the aftermath of the financial crisis. Prices will go up again; the only question is how soon.
Electricity prices, by comparison, are stable, taking advantage of diverse, domestic energy sources. EV drivers are insulated from oil price spikes and enjoy lower maintenance costs than their gas-powered driving friends—two distinct advantages of EV ownership, even at today’s low fuel prices. Consumer studies show EV drivers are very satisfied with their cars, more so than conventional vehicle owners.
The second generation of EVs is coming soon with battery prices dropping an average of 14 percent annually in recent years, increasing range and affordability. And consumers have more choice—Americans can pick one of 24 EV and plug-in hybrid models spanning every product segment, up from 16 a year ago.
Consumers know high prices at the pump will inevitably return. Fortunately, new trends and pioneering technologies are transforming American mobility, freeing it from the unpredictable global oil market. These innovative alternatives put healthy pressure on oil demand, creating the competition that drives our country, and EVs are here to compete for the long-term.
Tony Posawatz is President and CEO of Invictus iCAR LLC. Posawatz is a leader in automotive innovation, spending 30 years at General Motors, 18 of which he served as Vehicle Line Executive Director, including leading work on the Chevrolet Volt.
Photo credit: Natalia Bratslavsky via Shutterstock
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It’s strange to see a sign saying $1.79 per Gallon. Here in San Diego, I saw a a sign just yesterday for $3.89 per gallon. It’s always been more expensive here, but that’s a LOT more expensive.
Gasoline and diesel could be even cheaper, if we didn’t export so much refined product. Even crude is starting to be exported from the US in a big way. btw, gasoline is about $2.80 in Chicagoland. And that’s with three refineries capable of using diluted bitumen from tar sands as feed. My opinion why gasoline and diesel aren’t even cheaper is because the US is exporting a lot. Like a whole lot. US exports of refined products have boomed over the past several years. World market crude oil price is anyones guess. There’s just as much and more in supply throughout the world as there was two months ago. Why it went up about $10/bbl is a mystery.
The first graph is US exports: crude, gasoline and diesel. The second graph is US crude production. Most of the increase over the past five years is from North Dakota and Texas. Both shale fields.
We’ve cut our OPEC imports drastically over the last five years. However, tar sands derived bitumen has greatly increased. Total imports is about 4 million bbls/day out of a total refined of about 19 million bpd. Most of Canada’s bitumen goes to Midwest and Gulf Refineries and out to the world as refined products. Or into my car. Sadly.
And they don’t like flooding the Midwest with bit oil because they want to export it for more profit. So much for domestic or Canadian oil making us independent of oil or keeping oil prices low.
Since the export chart is never negative for oil, it isn’t a net import/export. So is not very meaningful to you talk.
I don’t understand your point. The chart is US exports of crude and refined products. Not the net. You could have gone to EIA to generate and present that chart for your talk. Do you want some help pulling together a chart off of EIA? It’s not that hard. And it’s good to know what the competition is up to.
For US to be exporting crude is silly. And refined products even more silly. US is still importing a lot of crude, but much less than 10 years ago. It is exporting due to there being a surplus in some regions so its more economical to ship crude from say Texas to Mexico than to pipe it to the east coast. On the other hand imports from Saudi Arabia and the Middle east are way down due to North Dakota Bakken crude being a light sweet substitute. All those oil trains exploding is the result of rail shipments from ND to east coast refineries that use to take in crude from the Middle East.
The important issue is exporting refined products. This is regardless of whether the crude came from US domestic production or foreign. Why are we exporting so much refined product? Probably because refiners can get a better price and probably due to transmission issues. I’m going to assume there are product pipelines in the works.
So the point is gasoline and diesel could probably be even cheaper. Do you have something to add? Is this a non issue in your opinion? Do you have an opinion? Are you capable of forming one?
Did you take a picture to show to your grandchildren?
I saw a sign for $2.49, and I thought it was a strange omen. So I took a picture. Then it dropped to $2.13. I thought, great, maybe this will last a year.
A few months later, its $3.59.
Oh people want SUVs alright. Efficient ones. When are we going to get %1.79 again. Ever?
Hopefully grand-children won’t understand anyway, looking at gas vehicles the same way we see steam engines…
Your grandchildren: “Wait what? You were pumping some nasty stuff up from the underground and then make it explode in a car? What the heck were you guys thinking!?”
I wouldn’t worry about it. EVs will be fine. For some reason this battle between auto technology reminds me of my soil and groundwater remediation days. When the industry started back in the 1980s there was a rush to develop and sell the bestest technology. Many lost focus on the problem at hand, that was a cleaned up groundwater aquifer at the lowest cost. Companies that focussed on one technology seemed to push its technology for a sale over a solution to the customer’s problem. Then companies took a toolbox approach and added many technologies to its portfolio (or line sheet). As in, providing the right tool for the problem at hand. Metaphorically this is explained by the old idiom, “if all you have is a hammer, all your problems become nails.”
For clean technology the focus should always be global warming and environmental protection of land, water and air. EVs will win out at some point in time simply on usability. Maybe rapid deployment may be not so rapid. A lot of folks like being beta testers and early adopters. Many don’t. Even more don’t really care and are fine with what they have. EVs, like it or not are in beta mode at this point. Like Apple’s iwatch. What EVs don’t want to become is Google’s Glass.
But if you can compete on cost of ownership, quality (often equated with quite-running), and performance or sexiness (Tesla), you can get a lot of customers who wouldn’t buy a product simply because its green. And I think EVs are reaching into that territory already.
“For clean technology the focus should always be global warming and environmental protection of land, water and air. EVs will win out at some point in time simply on usability.”
For personal motivation reasons sure. However, if you really want change then it’s about cost. EVs will be able to compete head on with ICEVs at the dealers door in about 3 years. They are already cheaper to maintain and operate …even when oil is $50/barrel and it’s likely to settle closer to $60/barrel. When EVs start competing head on, with their costs still falling, it’s game over for ICEVs.
COST is KING. Get the cost down, save the world!
I’d stick with focusing on environmental issues. There’s still that tax incentive going on at the federal level and for some states. Republicans would love to get rid of it. They don’t need EV social media and marketing folks telling them environmentalism isn’t the driving issue. Yet.
https://www.fueleconomy.gov/feg/taxevb.shtml
He’s dead on right. Lower gas prices do hurt plug-in sales to some degree . . . but if people really thought about it they really shouldn’t because the low prices are just temporary. I think we are going to have a lot of people regretting recent gas guzzler purchases a few years down the road.
And for me, prices are already high . . . over $4/gallon at my closest gas station due to the area, a new tax added, the summer blend, and a bunch of California refineries that had explosions or fires.
Look for a used cheap Nissan Leaf, they’re just now coming off lease. This is your biggest bang for the buck.
Indeed. And you may even get a better deal on a Volt. They are coming off leases plus the current Volt is being replaced by a new model in a few months. This is a great time to buy a plug-in.
I have to adjust my talking points because now driving an EV is only half the cost of gas instead of a fourth of it. But the message is the same.
I have a hybrid, no matter what the price I always pay 60% less. I don’t care about the price, I will NEVER go back to a pure ICE vehicle.
My next car will be either the Volt or the Bolt.
Not sure yet.
It’s real simple math: I drive my Prius ~1300 miles per month and use about 26 gallons of gas. Average ICE uses 54 gallons for the same amount of driving. Gas could go up by $2 a gallon (not at all unlikely) and I would barely feel it. Whereas an ICE owner suddenly has some rearranging to do with the monthly budget.
Yes. What matters for fuel costs is the expected average price over the whole 20-year expected life of the vehicle. It’s now clear that the transition to renewable electricity will involve very little or no increase in average prices, and quite likely a fall in off-peak. For gasoline, nobody knows. It will cycle up and down for sure. Again, you can’t be sure if there will also be a carbon tax on it, or (more likely IMHO) city-wide restrictions, fees, even bans. If Amsterdam is now committed to all-electric buses in 10 years, how long before there’s an ICE user charge for cars? All the prudential arguments point to the ev, except for “it will be cheaper and better next year.”
In a very real sense, if gas prices go up, so will EV sales (and plugins and efficient ICE vehicles), and that will decrease demand for gas, pushing oil prices back down. So we might find that oil/gas prices have price periods where they are high and periods where they are low, but to some extent the price mechanism, and supply/demand will probably mean we have roughly as many EVs as are needed to keep oil prices from skyrocketing.
Of course there are large time lags, ten million ICE owners can’t suddenly trade in for EVs the moment the price spikes, so demand reduction delays will allow instability in gas/oil prices to keep happening.
The long-term trend of gasoline prices is up. It is a finite commodity that we literally burn up. Occasionally it goes down due to overproduction (the current shale bust that followed the boom) or a big new discovery. But in the long-term . . . it always goes up.
Too bad most people don’t bother to consider total cost of ownership and merely look at purchase price, especially when fuel costs are relatively low like they are now. And hardly anybody is looking more than a year or two into the future when they consider buying a car. Most of the time, the thought pattern goes like this: “Ooh, this car looks pretty cool, and it has 2 more cupholders than last year’s model too!” And the knee-jerk range anxiety always rears its ugly head whenever EVs are brought up.
I’m not saying that EVs will fail. It’s just that EV makers are fighting against a lot of irrational crap swirling around in car buyers’ heads, that’s all.
Yes. Like the other article says, grandchildren ask..
you bought a vehicle from a repair shop that wants you to come back for lots of maintenance and repairs and they are in cahoots with the manufacturers of these dirty, smelly, noisy vehicles?
Its not wonder EVers never want to go back. Who needs that maintenance and repair headache and cost.
Well, let’s see. According to an article by Zachary Shahan published on this site a week ago, “electric car sales were up 31% in the USA in April 2015 compared to
April 2014, and sales from January through April were up 63%”. So I would say the answer to the question posed in the title of the Fortune article is a resounding NO.
I recently got a volt. One thing that struck me as odd was that the dealer had very few trucks and SUV on the lot. They were on display in show room but on the lot it was mostly volts and smll economy cars.
That isn’t proof cheap gas hasn’t dented demand. Perhaps if gas had stayed at $4, demand for EVs would have been even higher still. What is shows is that a year or two of cheap gas won’t kill of the EVs.
Cheaper Nissan Leafs are just now coming off lease. We will see. A cheap Reliable EV that doesn’t need ANY Gas ForEver!
Kind of like a Perfect second car for Most of America.
Buy an EV as second car, and watch it being used for every errand possible and put on 3× more miles than the “first” car…
Psst. Don’t tell everyone until after I get one cheap. 🙂
Fortune probably wrote a similar article after Reagan got the Saudis to open up the oil spigot back in the 1980’s. And it would have been just as wrong as this one for similar reasons. The only difference is that we’ve pumped billions of barrels out of the USA since then, making our domestic supply situation that much more precarious. When the fracking fairy tale ends with a “not so happily ever after”, prices are going to shoot up real fast.
How many affordable SUV EVs are there though? None?
The Outlander PHEV is affordable. Unfortunately, it is not yet available in the USA but it has been a big hit in Europe.
A news story from Germany:
Aldi – the German discounter supermarket chain- opened a first free power charging station in Schwaebisch-Gmuend in Germany, just recently.
Every one is allowed to get free power charges there, not only clients but every one.
One of the first clients was a Tesla driver.
There were discussions before if Aldi clients would actually use the charging station since they tend to be from the lower income range.
When the Tesla turned up the discussion was stopped, well, with a laughter:
http://green.wiwo.de/sonne-tanken-aldi-bietet-kostenloses-laden-fuer-elektroautos/
The organised Tesla drivers about Aldi:
http://tff-forum.de/viewtopic.php?f=9&t=7051&start=30
Aldi has some supermarkets in the USA as well:
http://www.aldi.com/
So cheap fuel will attract any driver, esp. if it is for free 🙂
I can’t imagine a petrol station adjoining a supermarket will give away free Diesel or petrol in unlimited quantities to everyone.
PS
The list of 50 free charging points at Aldi supermarkets in Germany which should be installed by summer:
https://www.aldi-sued.de/de/aldi-sued-a-bis-z/aldi-sued-a-bis-z/e/elektrotankstellen/
( there are over 1,000 of their supermarkets in the USA already, send them an e-mail)
The same German family (brothers) that owns Aldi owns Trader Joe’s in the U.S. Now wouldn’t that be cool if they did the same thing “here”. What are the odds?
I don’t know.
Send an e-mail to aldi.usa and ask.
Maybe they’re working on it already, things are changing very quickly. .
Rhetorical question.
Doesn’t Tesla use a charging connector that is not the same as other EVs? Or maybe I should ask – do they have charging stations that accommodate both (or all three) connectors?
These Aldi charging stations allow for 3 different types of charging in paralel,
they are developed by RWE (one of Europe’s still big utilities).
I quote:
” Combined Charging System (CCS), CHAdeMO and as well Typ 2 integrated. AC or DC – it doesn’t matter”
Plus 3 e-bicycles 🙂
With gas so cheap isn’t it time to FUND the highway fund and fix some bridges. Just bump it $0.10/gal on the first of the month for 2 years. Why a big bump now would help be simpler, doing the ramp makes it less of a shock.
Yes that is definitely what should be done.
Now how do we convince the ‘no more taxes’ republican politicians majority?
That is the real issue with everything from this, to voters rights, health insurance, campaign finance, etc etc etc.
Changing the established political majority at all levels in every election is the only thing that can bring about some change.
It falls to us our friends and family to get out and let our opinions be known. Having a majority of the US be concerned about the effects of climate change in the polls doesn’t do any good unless it is reflected in their votes.
As others have mentioned. Unleaded regular gas here in Arizona is $2.86/gallon. $1.07 more than shown above. An EV will make great sense when their price drops to less than $35,000 before incentives. When or if that happen, it will be the beginning of the end for fossil fuels as a means of moving most of society from point “A” to point “B”.