On Monday, West Texas Intermediate (WTI) oil prices closed up roughly 15%, from $54.85 per barrel to $62.90. This uptick has increased car-shopper interest in electric vehicles (EVs). According to data from CarGurus, the share of searches for new and used EVs spiked in response to the news about oil prices.
EV Interest Factors
Consumers have been slow to adopt EVs. While several factors have slowed the EV adoption curve – including product offerings, price, and total range – the EV market has historically been driven by incentives and external benefits such as HOV-lane access. Outside of incentives, the other major factor that drives consumer interest is an increase in the price of gasoline. As EV search interest on CarGurus showed on Monday, September 16, a rise in oil prices leads to an increase in EV searches.
In a week-over-week analysis of searches run the weeks ending Monday, September 9, and Monday, September 16, on CarGurus, the share involving new and used EVs increased 11% and 12%, respectively. When analyzing calendar-year-to-date (CYTD) EV and plug-in hybrid searches on CarGurus, we found that used EV searches and oil prices have a strong correlation with one another and new EV searches and oil prices have a moderately strong correlation. It’s likely that new and used EV search interest will increase if oil prices rise.
EV Interest Varies by State
While interest in new EVs at a national level is clear, state-level interest varies. Florida, the third-largest state for vehicle registrations, saw a 23% increase in the EV and PHEV share of new vehicle searches. Compare that with California, which saw an approximately 4% decrease in new EV and PHEV interest.
Similar to new EV searches, the national interest in used EV searches was apparent. However, when analyzing the results at a state level, we saw some noticeable differences. New York and New Jersey both had Monday-over-Monday gains in new EV search share. However, for used vehicle searches, both states declined.
For New York, the decline in used and increase in new may be supported by New York offering a state incentive on new EVs. As for New Jersey, the state offers sales-tax exemption for both new and used EVs. However, this may not be enough to entice used EV buyers in New Jersey.
California, the state with the highest number of registered vehicles and registered EVs, decreased in Monday-over-Monday new EV searches but increased in used searches. The increase in used EV search share in California is not a surprise, because the used EV market in California is supported by state-offered incentives. California offers two different incentives on used EVs:
- The MCEv Program offers a $3,500 incentive for lower-income households.
- The Clean Vehicle Assistance Program (CVAP) Grant offers a grant of $5,000 to lower-income households.
The spike in oil prices on Monday, September 16, and the spike in EV searches suggests they are closely aligned. However, outside of the EV product offering, price and government incentives are the main drivers of EV sales. To help support both new and used EV sales, 38 states have implemented government incentives to assist EV sales. However, Americans may be slow to adopt EVs until the price of oil, and therefore gasoline, increases to a point at which Americans will do anything to avoid paying more at the pump.