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Gas Prices Won’t Drive EV Demand, Battery Prices Will

Fuel prices alone are not enough to coax the electric vehicle market into full-scale adoption, say industry observers. But when EVs are the same price as their gas-powered couterparts, it’s game over for the internal combustion engine.

The battery and power connections inside an electric car.
Rising and unpredictable gas prices will not be the cause of a mass exodus away from the combustion engine — those price fluctuations have always come and gone. Ultimately, it will be more affordable batteries that will end the gas-powered car’s more than 100-year reign, industry experts believe.

“My general take is that gas prices aren’t going to do our work for us as a sector,” said Steve Koerner, vice president of Policy at BP Pulse. “The issue for EVs is really about the up-front price for the vehicles for most consumers. And until that bridges parity with the internal combustion vehicles, EVs are going to be just a fraction of new cars sold. That’s reality.”

Koerner joined other leaders from the EV industry during an end-of-year discussion with Jeff Allen, executive director of Forth, Dec. 13 to discuss the industry’s unprecedented growth. In just the last year, American consumers have rushed to buy the cars, despite supply chain shortages and other obstacles.

The electric car movement is further propelled by public policy, particularly the federal infrastructure package, which will help build out a nationwide network of high-speed chargers, among other developments. But also, the Inflation Reduction Act, a climate and health-care bill packed full of incentives to spur the domestic development of EVs and their batteries.

“That tipping point is going to come one way or another,” Koerner continued, recounting the trend of falling battery prices, the scaling up of electric car manufacturing and an increasing assortment of models to choose from. “We’re going to get to a point where the sticker price for the vehicles is going to be the same [as gas-powered cars.] And when that happens, it’s game over.”

Once that transition takes off, he added, resale prices for secondhand gas cars will nosedive, and even parts and service will be harder to access.

In the first nine months of 2022, more than 550,000 new electric cars were sold in the United States, according to Inside EVs, an industry trade publication, 57 percent more than a year ago.

“In response to high oil prices, the EV orders were going up 100 [percent] to 200 percent nationwide,” remarked Leslie Hayward, policy communications manager at Rivian, during the Forth panel, a clear sign gas prices are having some impact on EV sales. “People want electric cars, and they can’t build them fast enough.”

Perhaps this is why the charging infrastructure needs to be planned and put in place today.

“It’s not chicken versus egg stuff. The simple fact is, charging has to come first,” said Koerner, a point picked up by Garrett Fitzgerald, senior director of electrification at the Smart Electric Power Alliance.

“We absolutely need to put the stuff in place to have the charging infrastructure when that happens,” said Fitzgerald.

To get to what is needed in terms of charging infrastructure, the math works out to 80 DC fast-charging ports coming online every day, and 8,500 Level 2 chargers being installed every day as well, to get to the charging needed by the end of the decade, said Fitzgerald.

“We can do it. But it’s a lot of work,” he added, noting the federal funding will not be enough. “So it’s a good starting point. And we’re going to need to bring in more private-sector funding, and more state and federal funding, and look for alternative ways to finance this really rapid deployment.”
Skip Descant writes about smart cities, the Internet of Things, transportation and other areas. He spent more than 12 years reporting for daily newspapers in Mississippi, Arkansas, Louisiana and California. He lives in downtown Yreka, Calif.