Are current oil prices a threat to the Electric Car?

BMW i, BMW X5 | March 5th, 2016 by 9
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Back in the 1990’s, the economy was booming, oil prices were low and Americans were buying up SUVs like Tic Tacs. Ford was selling about a bazillion …

Back in the 1990’s, the economy was booming, oil prices were low and Americans were buying up SUVs like Tic Tacs. Ford was selling about a bazillion (that’s a technical term) Explorers, Chevy couldn’t make Suburbans fast enough and even Land Rover was booming in the US. But it wasn’t just the US, the entire world was buying sports cars and SUVs, as gas was cheap. So BMW jumped into the party with the X5 and it instantly became a hit. Mercedes-Benz and Audi followed suit, so did Lexus and Acura. Every luxury automaker jumped in.

And then the recessions happened.

Oil prices sky-rocketed, causing people to dump SUVs and buy hybrids or EVs. So BMW, Tesla and the rest of the automotive world invested billions of dollars into hybrid and battery technology, trying to create EVs for our modern, oil-starved world. And they were doing well. Tesla launched the Model S, which sent the brand into super-stardom, BMW created the i Division, with the i3 and i8, which exploded in popularity. Things were looking good for EVs. Now, though, gas prices are falling, as oil becomes cheaper and cheaper, and people are starting to go back to SUVs and sports cars.

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At the moment, gas is cheap. If your car takes regular, it’s likely $20 bucks will fill your tank, probably even cheaper than that. It’s a good time to own a sports car or SUV right now (why wasn’t it this cheap when I was commuting?) and it’s having a serious effect on the global automobile market. Last year, BMW sold more X5s than 3 Series’ in Australia, and did incredibly well with SUVs across the globe. Sports cars are also doing well, as people aren’t afraid to spend money on superfluous fuel costs.

With SUVs and sports cars taking a rise in sales, as oil prices continue to drop, is this the 1990’s all over again? Or are we getting ahead of ourselves a bit?

It’s quite possible that oil prices will jump back up. A recent US bill proposal could raise the tax on oil by up to $10 per barrel. The bill’s intention is to use that money to invest heavily in a network of environmentally-friendly mass transit, such as high-speed rails and self-driving cars. However, there’s a good possibility that the tax increase could be felt by the consumer, with a possible 25 cent price bump per gallon. While we’re at record lows for our time, this would still be enough to get people thinking about electric cars again. Which is precisely the idea of the bill, actually.

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However, oil prices aren’t the only reason why people buy EVs and hybrids. Many customers want to keep up with the latest technology and feel that fossil-fuels are outdated. In a way, they’re right. EVs and hybrids are the future, whether that future be distant or not. Many customers would also rather stay environmentally friendly, regardless of oil prices, and reduce their emissions for the sake of the planet. Which is admirable. And automakers will have to continue to invest in hybrid technology, despite booming SUV sales, because of the ever-stricter growing emissions regulations across the globe.

But it is interesting to see what will happen in oil continues to stay inexpensive. As EVs become cheaper, which they will by as soon as 2022, and they become more prevalent, oil prices will likely fall even more. As the demand for oil drops, oil companies will have no choice but to lower their oil costs to keep people interested in dinosaur-sourced fuel. So is it possible that the continued decrease in oil costs could hurt the sales, and possibly even development, of electric and hybrid vehicles?

9 responses to “Are current oil prices a threat to the Electric Car?”

  1. Najeeb Ullah says:

    Well cheap oil wont b a threat to electric cars. If it was so the sales of ev should b decreasing with cheap oil but we have seen global sales of EVs risiing over 60 pc even when oil is around 30 usd a barrel. i think it will b the other way around as more people start using electric cars they wil not go back to gasoline cars as electruc cars are more efficient and also have smoother drive. This will cause a oil glut and could result most oil companies going out of business. Saying cheap oil will make electric car drivers to opt for gasoline cars is equivalent to saying as hoses become cheap car drivers will go back to iwn horse carts.

    • Saddam Najebudeen says:

      Maybe not in developed countries. But the rest of the world which comprise 80% of the market, in order for EV to succeed oil prices must be astronomical. As of now EV sales are stagnant because of low oil prices. Toyota Prius sales are at all time low as well as the other hybrid brands..

      • cros13 says:

        Hybrid aren’t EVs. Developed countries are unfortunately the only EV market that matters at the moment because the extra margin is needed for R&D spend. That’s a major problem for Chinese EV OEMs because despite reasonable sales the domestic EV market can’t provide enough profit to pay the R&D costs.

        The development path is the same a smartphones. High priced models sold in developed countries will pay off the R&D and later mass adoption will bring prices down for the rest of the world. I’m on my third EV. In all of 2010 there were two EVs sold in my entire country, last month alone that number was several hundred. I’ve never met an EV owner who would consider going back.

        EV running costs are usually 12-15 times cheaper than petrol here, “cheap” oil means it’s now just 10-12 times cheaper to drive an EV. By 2022 the EV powertrains will be cheaper to build than ICE… after that ICE don’t stand a chance.

      • Najeeb Ullah says:

        I dont think Prius is an EV, it is just more efficient ICE car. I would beg to differ about your stance on the electric car market in developing countries. The truth is that big developing countries such as China are going to be the driving force of EV adoption. India and others will follow due to their extreme urban air pollution levels. All the top most polluted cities in the world are in India Pakistan and Iran, so they will have no choice but welcome the EV revolution.

    • Elon-Bozo Musk says:

      Another EV troll/propagandist whose all over the Internet arguing with people about EV.. Get a life bud. 99.9 % of population will not buy what you’re selling for another 50 years. It’s just not practical and affordable. Soon there will be shortage of lithium ion too. Don’t even bother responding to me. I despise your kind..

      • Najeeb Ullah says:

        just see what happens on March 31st….Tesla model 3 will get atlaest >10000 preorders..

      • Najeeb Ullah says:

        Sure you buy whatever you want But you have no right to destroy my land. Probably you have no idea where am I coming from. While you guys keep trolling about climate change, we are facing the hazardous affects already. We are loosing our land and house in the mountains of Karakoram and Himalayas. Just for your info the largest concentration of glaciers are in the Karakoram Himalayan region, which are melting fast and over the last few years it has started threatening our very existence due to floods.

  2. […] When looking toward the future, BMW faced a paradox: The future cannot be predicted, no by any expert or scientist. However, there are future projections for the future that BMW must take seriously, so it can prepare for what consumers might need in decades to come. BMW wishes to create as holistic a view as possible for the future of mobility and also firmly believes that personal mobility will remain a fundamental human need. BMW feels that people will want to be able to control their own transportation and mobility for the foreseeable future and doesn’t buy into what anyone is saying about human interaction being eliminated from automobiles. […]

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