Car rates

Gas prices are falling. Just like the interest in electric cars

What is surprising is that interest in “green” vehicles has dropped by an even greater percentage than gasoline prices.

“People have this knee-jerk reaction,” said analyst Ivan Drury, “but they acclimate a little too soon.”

Even when gasoline prices rose again in June, three months after the first price spike, interest in electric and hybrid vehicles grew., but has not reached those old levels. Consumers had apparently become accustomed to rising gasoline prices and their interest in paying for an electric or hybrid car had waned as the focus shifted to rapidly rising gasoline prices.

The percentage of car buyers looking at hybrid and electric vehicles on peaked at 25% around mid-March 2022, just as gas prices hit what was, at the time, a then high average price of $4.41 per gallon in the United States. Then, when gasoline prices fell in In April, interest in hybrid and electric vehicles also fell, but much faster than gasoline prices. Even when gasoline prices rose again to a new high of over $5 a gallon in mid-June, interest in hybrid and electric vehicles also increased, but less than before. At that time, the percentage of car buyers looking only reached around 22%.

According to the most recent data, average gas prices are only around 5% lower than in March A spike of $4.41 a gallon, but buyer interest in electric cars has fallen 32% since then, according to data from Edmunds tracked the types of vehicles people were looking for on the site and divided them into electrified – meaning hybrid or fully electric – and non-electrified.

According to Daniel Levine, consumer trends consultant and director of the Avant Guide Institute, a market consultancy. Car buyers are also influenced by automakers’ marketing campaigns, changes in government incentives and interest rates, he said.

But, even when the lines diverge from each other, the general trend of interest in electrified vehicle purchases still parallels gasoline price trends which rise somewhat when gasoline prices rise. It still indicates strong attraction, Drury said. It just got weaker after that initial spike in gas prices.

When gas prices began to climb sharply following Russia’s invasion of Ukraine in February, consumers have probably seen as a new phenomenon and we had no idea how high the prices might go, said Aleksandar Tomic, associate dean for innovation and technology at Boston College. This would have caused an increase in queries about electric vehicles. Once prices peaked and came back down, he said, consumers saw there was a limit and initial fears subsided.

“People were able to adjust to gas prices by driving less,” he said. In addition, companies have shown flexibility to allow employees to continue working from home, he said, which has reduced the pressure on the need to use gas.

Although it no longer correlates as directly with increases in gasoline prices, interest in electric cars is still about three percentage points higher than it was at the start of 2022, data shows. ‘

Buying interest doesn’t directly correlate to actual electric and hybrid sales, of course, especially not in today’s auto market constrained by supply chain issues, Drury said. Electric and hybrid vehicles still represent only 10% of new vehicle sales.

But the data indicates gas price shocks can unlock a new level of receptivity among consumers, he said.