Wednesday, 2 March 2016

WILL CHEAP PETROL KILL ELECTRIC CARS?

NASDAQ, 19 February 2016loading
Mary-Lynn Cesar for Kapitall Wire 


High gas prices tend to be good news for electric cars and hybrids. In March 2012, gas  averaged $3.92 a gallon , bringing it uncomfortably close to the record $4-plus peak seen in 2008. That same month, Toyota (TM) and General Motors (GM) reported record sales for the  Prius hybrid and  Chevrolet Volt hybrid-electric car , respectively. Today, however, the nationwide average gas price for February is  below $2.00 per gallon . Now that gas prices are at record lows, the argument that these eco-friendly vehicles save consumers money at the pump seems weak.
A look at last year's car-sales data reveals that Americans are increasingly gravitating toward pickup trucks and SUVs, which, while improving their fuel consumption, are still less fuel-efficient than electric cars and hybrids. In 2015, car makers sold an unprecedented 17.5 million vehicles , up 5.7% from the prior year and 0.4% from the record set in 2000. According to Kelley Blue Book, more than half of all transactions comprised truck and SUV sales, driving up the  average sales price to $34,428 .

Several factors contributed to last year's uptick in car purchases: increased employment, low interest rates (which means better deals on auto financing) and cheap gas. Apparently, these trends haven't extended their benefits to electric and hybrid cars: per InsideEVs, overall electric vehicle sales declined year-over-year between 2014 and 2015,  falling 5.2% from 122,438 to 116,099 . According to data from HybridCars.com, hybrid sales plummeted 14.9% from 451,702 in 2014 to 384,404 in 2015.

December was a great month for electric cars. However, as HybridCars.com  points out , this is standard for the industry, as many consumers hurry to buy eco-friendly cars at the end of the year in order to qualify for tax credits. Per InsideEVs, a  record 13,699 electric cars were sold that month, a 5.1% increase from a year earlier. HybridCars.com reports that Tesla's (TSLA) Model S was responsible for the bulk of electric car sales in December, although the carmaker doesn't release monthly sales figures.

While low gas prices have allowed Americans to return to gas-guzzling behemoths, there may still be hope for electric cars and vehicles. If gas nears $4 a gallon in the future, history suggests consumers will once again flock to the Prius, Leaf, Model S and other electrified cars.

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