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Gas Price Spike Could Drive More Buyers To Tesla, EVs

Tesla’s stock price has spiked due to a massive Hertz deal but soaring gas prices certainly won’t hurt.

Hertz announcement that it is buying 100,000 Tesla cars to boost its struggling car-rental business sent Tesla’s stock soaring to a first-time $1 trillion market cap. But gas prices are also trending in Tesla’s favor with prices rising to over $4.50 per gallon for regular in California.

The national average price for a gallon of gasoline rose six cents over the past week to $3.38, with the price at the pump up every day in the past 27 days, adding about 20 cents to the cost of a gallon of gas, according to a press release from the AAA.

“With the U.S. economy slowly recovering from the depths of the pandemic, demand for gas is robust, but the supply is tight. We haven’t seen prices this high since September of 2014,” said Andrew Gross, AAA spokesperson, in a statement.

And new data from the Energy Information Administration (EIA) — cited by the AAA — shows that total domestic gasoline stocks decreased by 5.4 million barrels to 217.7 million barrels last week.

“However, gasoline demand increased from 9.19 million b/d to 9.63 million b/d. Since the cost of oil accounts for more than half of the pump price, consumers will be paying more as long as crude prices remain high,” the AAA said.

High gas prices increase likelihood of switch to EVs

High fuel prices will make even diehard gas car owners consider buying an EV.

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A March 2021 survey showed that as gas prices rise, the percentage of those who would consider an EV rises too.

“Rising gas prices would be especially influential to those on the fence who ‘possibly’ would own an EV in the next decade,” according to the CarGurus Electric Vehicle Sentiment Survey United States (PDF).

In the survey, the question was posed:

If prices for gasoline increased, at what price ($ per gallon) would you be much more likely to consider buying an electric vehicle?”

—At 4$ per gallon, 26% percent would be much more likely to consider buying an EV.

—This jumps to 57% at $5 per gallon. And goes up from there.

Brand matters too — with Tesla the clear winner.

“Tesla continues to be the most trusted brand to develop EVs (and that lead has grown),” CarGurus said.

“But nearly 80% of those interested in EVs say they’re open to several brands when it comes time to buy,” according to the survey.

Plenty of data supporting cheaper ‘fueling’ with EVs

The Department of Energy’s eGallon.com says it costs on average about half as much* to drive an electric vehicle compared to a gas car.

That’s based on what the DOE calls an eGallon: the cost of fueling a vehicle with electricity compared to a similar vehicle that runs on gasoline.

And EVs have a thing called regeneration or “regen” that uses regenerative braking and downhill momentum to recapture and reuse energy that is lost in a gas car. And there is no energy wasted when idling.

Factoring in things such as regen, the Environmental Protection Agency says that EVs are more efficient than gas-powered cars.

Consumer Reports also says EVs offer significant cost savings over gas cars.

“Owning an electric vehicle will save the typical driver $6,000 to $10,000 over the life of the vehicle, compared to owning a comparable gas-powered vehicle…

“The average EV driver will spend 60% less to power their vehicle than the owner of a gas-powered vehicle.” — Consumer Reports

Other non-energy EV cost savings include federal and state tax credits for EV purchases and lower maintenance costs because of fewer moving parts and fewer visits to service centers for things such as oil changes.

Finally, note that there was a contrarian study that came out last week bucking the consensus that EVs are cheaper to drive than gas cars. That study, however, is considered an outlier.

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Notes:

*I’m living proof of this. When I switched to an electric car in 2013 my monthly “fuel” bill dropped like a rock, from roughly $150 a month (previous gas car) to about $50 (charging at home). Though all of those savings came from home charging, in the last few months I have been using the Electrify America public charging infrastructure. Surprisingly that has not been expensive since Electrify America rates are low and it occasionally offers free charging (sometimes out of the blue for seemingly inexplicable reasons). A month of exclusive Electrify America charging came to a little over $100.

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