Electric Vehicles Will Beat Gas Cars Because They Are Better, Not Because They Are Cheaper

Electric Vehicles Will Beat Gas Cars Because They Are Better, Not Because They Are Cheaper

If your phone company offered you a shiny new rotary-dial telephone, hard-wired to the wall, but with a lower monthly bill, would you trade in your iPhone or Android? Probably not.

People did not move to smart phones because they were cheaper. Consumers migrate to a new technology because it offers them benefits they appreciate, at a price they can afford and consider reasonable—not necessarily because it is cheaper.

Five dollar gasoline certainly gets folks’ attention and does help to sell electric vehicles, but it is not an essential ingredient. As I write this, the average national price of gasoline is $1.78, according to AAA, and many economists predict that it will be low for some time to come.

Oil is a classic boom/bust commodity, because it is hard to scale back production and there is relatively little storage capacity, compared to the huge volumes we produce and consume every day. When the price rises, the oil industry starts drilling and discovers all kinds of ways to unlock new sources or squeeze more oil from existing wells.

Eventually, supply outstrips demand and the world is so awash in oil that there is no place to put it. Prices crash. Higher cost producers shut down and a few years later the cycle repeats.

Because of electric vehicles and the increasing efficiency of gasoline cars, demand for oil may soon peak and start coming down. This could keep the price of oil low for many years to come. Fortunately, the case for EVs is a compelling one, even in a world of cheap oil.

EVs are a pleasure to drive. They are convenient (i.e. good-bye fill-ups and most maintenance). They clean up local air and prevent climate change. They build our national security by reducing dependence on foreign oil. They strengthen the local economy because you can gather your fuel on your roof, with the help of the neighborhood solar installer. And they open the door to all kinds of innovative technologies under development.

Don’t get me wrong, EVs need to be well-priced so that people can afford them and feel like they are getting value for their money. But with so many advantages, EVs will succeed, even with $1.78 gasoline.

Joel Levin
Executive Director
Plug In America