The drop in oil prices to their lowest level in about two decades is unlikely to deter the small but growing number of consumers making the switch from gasoline to electric cars, analysts say, as tax benefits and the allure of zero-emission driving are expected to insulate demand.
Despite lower gas prices, electric-vehicle demand is expected to be sustained by changing consumer preferences and tax benefits.
The price of a tank of gas in the U.S. has fallen about 20%, compared with a month ago and 15% in the U.K., but auto analysts interviewed by S&P Global Market Intelligence dismissed oil market speculation that lower international oil prices could prompt would-be EV buyers to stick with gasoline for longer.
"I think that the overall effect on EVs is going to be much smaller than on [internal combustion engine] cars, because the people that are considering them these days are people who really want them, rather than budget-conscious buyers who just need something to get around with," said Germany-based Christoph Sturmer, global lead analyst at PwC's Autofacts consultancy.
Regardless of what trend transpires in EV sales in 2020, it will take place within a more worrying context. Overall global car sales are now forecast to fall by up to 20% year over year as coronavirus lockdowns shut both factories and dealerships, intensifying an economic crisis in the process.
While electric cars now straddle the line between niche and mainstream product, early adopters' eagerness to own a zero-emissions car capable of running solely on renewable energy should not be underestimated, particularly as a growing range of new models arrive to match differing requirements. Bayerische Motoren Werke AG on April 6 said it saw no reason to defer the EU's new stricter emissions goals, despite reporting a 20.6% year-over-year decline in first-quarter sales.
"I think lower oil prices will have a minor or minimal impact as those marginal buyers of EVs may hold off for a little while and drive what they have for a little longer. Dedicated EV buyers won't care about the low prices, and they'll buy no matter what," said Bill Selesky, a New York-based senior researcher at Argus Research.
"They want to make the world a better place with no [internal combustion engines]."
Fleet buyers are unlikely to shy away either as incoming new tax incentives in several European countries make low- or zero-emission cars more financially appealing. In the U.K., rules that entered into force April 6 cut to zero the amount of tax a company car owner will pay on a battery-electric model, and reduced the amount payable on a hybrid.
"The tax savings that these drivers make will far outweigh any potential benefit they would see from short-term low prices at the fuel pumps," said Germany-based EV market analyst Matthias Schmidt, who expects fleet sales to account for most registrations of new electric cars.