As gas prices surge following Russia's invasion of Ukraine, car owners are likely looking for ways to save money by purchasing more fuel-efficient vehicles like hybrids and battery electric cars.
But they may have a much harder time finding them because the car market is much different than it was 10 years ago.
Historically, increases in electric car sales follow spikes in the price of gas. When the gas prices jumped 10% in January of 2011 there was an equal 10% spike in EV sales. A similar spike occurred in 2012.
This round of gas price spikes has a different backdrop. According to a December 2021 report from analytics firm IHS Markit, U.S. car dealership inventory levels are at their lowest since the global financial crisis of the late 2000s. Auto inventories began to plummet in 2020 as the global automotive semiconductors shortage hit the industry, depleting vehicle supplies and sales in the second half of the year, according to statista.com. The U.S. motor vehicle market also tanked amid the country's coronavirus outbreak in the spring of 2020.
Howie Charnitsky sells cars at Boch Toyota South in North Attleboro and like everyone else he was shocked when he came to work Monday and saw the price of gas. He said there hasn't yet been a rush of people showing up at the dealership looking for electric or hybrid cars.
“It's a little too fast to see people coming in right now. It's [the gas price increase] happened too fast to really have a pulse on it,” he said.
But when they do come in, as he expects, they'll face the inventory problem. “What are you going to put them in? That's the problem because we're a dealership that [usually] carries 300 to 400 new cars and we have six in stock today.”
Charnitsky said the shortage of new vehicles began last fall and it's only gotten worse. He expects that people may not be looking for EVs but looking to downsize — but that's also complicated.
“I mean, the guy who bought a Tundra might be like, ‘You know what? I love my truck, but I'm paying 95 dollars to fill it up,’” he said.
Charnitsky said a prospective buyer may settle for a smaller vehicle that gets much better mileage, but even then, due to the inventory shortage, they may have to wait a minimum of 8 to 12 weeks for a new car. So he tries instead to put them into preowned cars which are more expensive than they used to be, but at least are more readily available.
James Kemos, sales manager at the Balisa Honda dealership across Route 1, said he has seen an upsurge in interest in fuel-efficient cars as gas prices have risen sharply.
“Last week a lot more people were looking for hybrid vehicles, especially,” he said. “Suddenly, it seems every other sales call or sales inquiry has become about a hybrid type vehicle.”
Hybrids can usually stretch a driver an extra 15 to 20 miles per gallon, he noted. But, he again faces the inventory problem — hybrids, new or used, are scarce and the inventory crunch is not expected to ease until 2023.
John Paul, who monitors the electric vehicle market for AAA Northeast, said that so far people have shown more interest in hybrids rather than in all electric vehicles. “People still have range anxiety issues when it comes to battery electric vehicles,” he said. “People are still concerned about, where am I going to get electricity? Will I be able to charge at home?”
But when it comes to purchasing a new vehicle to avoid high gas prices Paul cautioned that it’s worth doing the math. “People have to keep in mind that they may have a car that is completely paid off, and maybe it's worth $15,000,” he explained. “But to go to either a hybrid or battery electric car, that may be a $40-to-$60,000 investment, and that $20,000 or $25,000 difference between the car that you're going to trade in and the car you are going to buy — It's going to take a lot of gas savings to make up for that.”
