Fuel, EV Prices Headed In Opposite Directions

Historically high gas prices sparked consumer interest in electric vehicles but even though the price at the pump is slowly receding the cost for both new and used EVs continues to rise.

Research by vehicle sales and research website CarGurus.com reveals the average listing price for a new electric vehicle at the end of June stood at just under $60,000, a 13% increase since February. For used EVs the price increase has been much sharper—up 54% since February at just over $62,000.

Those figures are for electric vehicles sold through dealers and not direct to consumers which leaves brands such as TeslaTSLA
, Rivian and Lucid out of the mix.

It’s not just demand in the face of continuing production issues driving the cost higher for electric vehicles according to CarGurus director of industry insights and analytics Kevin Roberts.

“When gas prices started to go up the the most cost-effective EV s were quickly taken off the market and so the higher prices remain,” Roberts told Forbes.com. “Automakers are having to raise EV prices because commodity prices going up,” he added.

In some cases enterprising consumers are snapping up used EVs then reselling them at a profit, Roberts said.

Indeed, interest in EVs and fuel-efficient passenger cars ebbs and flows with the price of fuel. According to the AAA, the average price for a gallon of regular gasoline nationally on July 11 is $4.67, a 12-cent decline from last week and 32 cents lower than in June, but still $1.53 higher than a year ago.

Accordingly, CarGurus research showed consumer interest in new and used EVs beginning to dip just as gas prices started to retreat.

In its second quarter economic update released Monday, the National Automobile Dealers Association reported battery electric vehicles accounted for 4.8% of sales, hybrid vehicles, 5.9%, and plug-in hybrid vehicles (PHEV) accounted for 1.4% of sales through the end of June.

That’s an indicator of building demand for electrified vehicles but consumers may still find themselves stymied when trying to find one to buy. That means the chances of a wholesale shift to those vehicles might not mirror the rush to buy fuel-efficient small cars seen when gas prices soared during the last recession.

“For the industry it’s a difficult situation. They’re coming out with a lot of electrics in the market place but we’re having such production issues that it’s going to be difficult to meet that demand,” explained Roberts. “With used, we ‘re completely dependent on how many used vehicles are in the market and we just didn’t sell many electric vehicles compared to what’s out there. So it’s a pretty limited pool. Demand has gone up with gas prices but with such limited supply on the new and used front it’s difficult to see if there’s going to be a massive shift to EVs currently.”

Then again, as has been the case since the Covid-19 pandemic took hold in the U.S. more than two years ago, nothing seems to be normal.

The AAA reports the unusual fact that gas prices are actually declining despite increased demand for gasoline during the traditional summer travel season, explaining the price for oil, the main ingredient in gas, has fallen to about $100 a barrel. Cheaper oil generally means cheaper gas.

Will that trend accordingly lead to less demand for electric vehicles and lower prices?

It could happen, but as Kevin Roberts points out, strapped by inflation, the discontinuation of government stimulus cash and other economic pressures, despite lower inventories and fewer choices, “consumers are no longer interested in a vehicle at any price.”