Despite huge taxpayer support, the electric car just can’t get off the ground.
Bloomberg New Energy Finance announced Thursday it reduced growth forecasts for electric cars by half due to low oil prices, prompting drastically lower sales.
The group reduced its estimate of the number of electric cars and hybrids purchased by 2020 from 1 million to 500,000, even though the market for cars is expected to grow substantially. Electric cars and plug-in hybrids combined represent less than 0.5 percent of all American vehicles sold since 2011. Market share for hybrid vehicles dropped by 15 percent in 2015 and fully electric vehicles experienced the first year without sales growth.
The price of oil would need to be above $350 a barrel to make an electric vehicle cheaper to operate than a conventional car, according to a study published Wednesday by the Massachusetts Institute of Technology. The average price of a barrel of oil today is hovering around $30.
Gas prices today are below $2 a gallon and likely to stay there, which makes buying an electric car a hard sell.
“We’d all like to save the environment, but maybe not when it costs hundreds of dollars per year,” Jessica Caldwell, director of industry analysis for Edmunds.com, told The New York Times. Low gasoline prices are leading even owners of electric vehicles to “defect” to gasoline cars.
The MIT study states that electric vehicles aren’t helping the environment either. Only 12 percent of conventional power plants are green enough that charging an electric car from them leads to fewer emissions than the gasoline power vechiles they replace.
Even though electric cars can be eligible for up to a $7,500 tax credit, the are still incredibly expensive. Bloomberg projections estimate that it will take until 2040 for electric cars to cost less than $22,000. There are still huge barriers to electric cars, according to a 2015 report by the National Research Council.