Cheap Oil Is Killing The Electric Car

teslaDespite 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, 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.


Comments (3)

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    David Lewis


    The electric car is an example of deploying a technology before it is ready. Currently the Achilles heel of electric cars are the batteries. These are too expensive. The only thing that over comes this is government subsidies. In addition, there are environmental costs to supplying the rare earth elements they require.

    With most of the electric grid power by fossil fuels, as the article pointed out, there is little environmental advantage to electric cars. In China, it is estimated that the emissions of the coal fired power plants that power the cars is greater than what a gasoline engine would emit for an equivalent car.

    Continued research is needed for the batteries. In the distant future when we run out of fossils fuels our descendants will probably be using electric cars powered by nuclear power plants.

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    When pushed to the limits, the Tesla Model S often ratchets down its power output in an effort to keep components from reaching critical temperatures.

    Therefore, it’s no surprise that the Model S couldn’t complete a full lap of the 14-mile Nurburgring under full power when driven at the limit .

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    A Tesla would take the average Chinese family at least 40 years to payoff if they spent 30% of their budget on it . Of course that doesn’t include maintenance and battery replacements .

    The tesla should be renamed 1 Percenter .

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