- Rising gas prices could be boosting California’s electric vehicle market
- Customers have been attracted to cheaper home EV charging
- UK analysts believe EV owners are ‘protected’ from fuel price increases
The conflict in the Middle East, now going on for more than a week, has caused energy prices to spike, with everything from oil to natural gas affecting both the cost of transportation fuel and domestic energy bills.
Some parts of the United States are feeling the effect more than others, and the average cost per gallon of gasoline rose to $5.20 in California on Monday, compared to $3.47 nationally, according to data from the American Automobile Association (AAA).
The reasons are quite clear, as the conflict has destroyed oil facilities that supply gasoline and diesel globally, while 20% of the world’s oil is shipped through the Strait of Hormuz, which has effectively been closed for a week.
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Even though President Trump claims that rising oil prices are a “very small price to pay” for global “peace and security” as the Iran war rages, some experts believe they will continue to rise.
On Sunday, Patrick De Haan, head of petroleum analysis at GasBuddy, estimated that there is an 80 percent chance that the national average price of gasoline will reach $4 in the next month. The US average currently sits at $3.45, according to AAA (via The Independent).
It’s a similar story in the UK, where petrol and diesel prices have risen steadily since the conflict began, with the RAC’s Simon Williams warning that the situation for UK drivers looks “increasingly bleak”.
Despite this, there are some researchers who believe that electric vehicle drivers remain “protected” from fuel price increases, and a new analysis from the Energy and Climate Intelligence Unit concludes that drivers of gasoline and diesel cars will have to pay significantly more for their vehicle’s fuel.
The study, which focuses on UK consumers, states that if the price of a barrel of oil rises to $120 a barrel, the price of petrol could rise to around 170 pence a litre, increasing annual fuel costs by more than £320 a year.
However, ECiU claims that electricity price caps until June in the UK will “protect EV drivers from the current crises”. Although it does recognize that the increase in gas prices will increase electricity prices starting in July.
Cheaper freight
Analysis by Compare the Market has shown that electric cars are £579 cheaper on average in terms of ‘fuel’ per year compared to petrol cars. Taking everything into account, the average running cost of an electric car was £1,264, compared to £1,843 for a petrol car.
This was based on the average annual mileage of a UK motorist: 6,700 miles (fewer people commute) and paying £1.62 per liter for petrol or 28p per kWh for electricity.
The gulf between the two would be even greater if it were charged through off-peak energy tariffs.
Any rise in oil prices will only lead to an increase in the average annual figure for owners of petrol or diesel vehicles, although energy suppliers in the UK have committed to offering cheaper off-peak rates from July.
The smart Octopus Go, for example, allows EV owners to charge for 7p per kWh during off-peak hours. Even with a standard variable tariff, it is still only about 25p per kWh, according to Ohme.
Compare the costs for a UK average annual mileage of 6,800 miles and petrol owners shell out £1,057, compared to standard variable rate chargers who spend just £437 and Intelligent Octopus Go users pay just £119 per year.
It’s a similar story in the US, where the NRDC says home charging costs between $500 and $1,200 per year, which is significantly cheaper than the annual cost of $1,300 to $2,500 or more to fuel a comparable gasoline car.
This will vary from state to state, depending on the price fluctuation of both gas and electricity, but even in the worst case scenario, it is generally cheaper to charge at home than to fill up at the gas station.
Charging at home is essential
The elephant in the room here is all those electric vehicle owners who simply can’t charge at home or at work, a group that will likely have to shoulder the rising cost of gas, which will likely be passed on to the consumer via the big companies behind public charging networks.
In the UK, electric vehicle owners have been clamoring for the government to reduce VAT on public charging, which would make charging cheaper and more accessible for those who cannot plug in at home.
Similarly, consumers are supporting the deployment of lower-power street chargers that offer low-cost overnight charging for parked electric vehicles.
In the US, the cost of fast charging is not as astronomically high as in the UK, with an average of $0.49 per kWh exceeding £0.80 per kWh, but it is still susceptible to the same market volatility.
Even though the Trump administration eliminated the $7,500 tax incentive for electric vehicles, some industry experts believe rising gasoline prices could spur another wave of electric vehicle purchases, particularly in areas that have been more exposed, such as California.
“We will likely see an uptick in the adoption of electric vehicles and, in particular, hybrids if gas prices remain high,” Sam Abuelsamid, an automotive analyst at Telemetry Agency, told the LA Times.
“The last time oil prices surpassed $100 per barrel was in early 2022 and that’s when we saw electric vehicle sales really start to pick up in the United States.”
While they are still not cheap to buy, the number of more affordable electric vehicles is increasing, particularly in those markets that have been receptive to newcomers from China.
In the UK and much of Europe, there are now more options than ever when it comes to modern electric vehicles costing £30,000/$30,000 or less.
The Trump administration has created a hostile environment for electric vehicles in the United States, eliminating tax incentives and putting up tariff barriers that have arguably reduced the number of options consumers have.
Despite this, there are still cheaper EV options, including the $28,995 Chevrolet Bolt, the $31,535 Nissan Leaf, the sub-$35,000 Hyundai Kona Electric, and Toyota’s popular bZ at $36,350.
Rising gas prices could be the incentive many American consumers need to switch to electricity, especially if they can free themselves from greater volatility with cheaper home charging.
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