The week of Thanksgiving in the United States is traditional a time to recount the things for which we should give thanks. From the standpoint of the world economy certainly close to the top of the thanks list this year should be the price of crude oil, which closed last Wednesday at $43.04 per barrel, down from a high of $108 as recently as mid 2014.
The lower cost of fuel has been a boon for consumers and for most manufacturers. It has been not so favorable for oil producers and related industries. One of the other industries that would be expected to
be hurt by low oil prices is the advanced battery industry and other companies working on technologies relating to light vehicle electric drive. But for several reasons that has turned out not to be the case.
While sales of light electric vehicles (i.e., ) in the United States have not boomed over the past year, they have also not declined. Despite crude oil prices falling by well over 50% from 2014 to 2015, sales of light electric vehicles have remained largely static. Light electric vehicle sales in October 2015 totaled 40,310 versus 40,445 during October 2014, according to the Electric Drive Transportation Association.
Moreover, 2015 has seen major automakers double down on electric drive technology rather than move away from it. General Motors announced that it will launch its new Bolt EV, the first 200 miles per charge
electric car priced in the midrange market, at the 2016 Consumer Electronics Show. Audi’s recent statement that it expects 25% of its sales to come from electric cars by 2025, was eclipsed only by
Geely’s assertion that new energy vehicles will make up 90 percent of its sales by 2020. Honda, Kia and Hyundai have all announced new PHEV offerings. And consumer sentiment in a favor of electric vehicles
continues to grow. The International Business Times reports that 80% of British 14 year olds expect their first car to be electric.
Automakers, who live in deep fear that an urbanized, technology savvy Generation Z will fall out of love with the automobile, are paying close attention. So what is going on? Don’t these people read the papers or the numbers on the gas pumps? The answer is both that the price of oil doesn’t matter to consumer adoption of electrified vehicles and
that it does.
As for the doesn’t matter side of the argument, Tesla Motors stands as Exhibit A. In selling the Model S as the car for the technology savvy (albeit the very well off technology savvy) Elon Musk
tapped in to a band of consumer sentiment that was broader and deeper than many ever imagined. That same consumer sentiment drives not only car purchases but also political pressure to regulate air emissions, a critical driver of vehicle electrification.