The Electric Vehicle Acceptance Tipping Point: $5-A-Gallon Gas

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It would be a disaster economically, upsetting family budgets and making the transporting of goods potentially next to impossible. But according to a new survey by Deloitte, it could take something as extreme as $5-per-gallon of gas to persuade most U.S. citizens to abandon gas stations and SUVs and buy electric vehicles. Do we have to destroy this village in order to save it?

For most of the last month, the national average gas price in the U.S. has nudged upwards every single day—it's now at around $3.83 per gallon. In six states, including New York, the average price is above $4, with Hawaii topping the list at $4.48 per gallon. And there are reports that a few stations have already hit the $5 mark. It's all thanks to a gradual but continuous rise in the price of oil on global markets—up 48% since last Labor Day. This upward creep is driven by many things, including market fluctuations, decisions about production made by OPEC, and the rise of civil unrest in the Middle East (especially in Libya, which has ceased its oil exports during the civil war). And yet, despite these growing costs, and the fact we know for sure that every mile we drive in a car that eats gas or diesel, we're actively contributing to global warming, many of us continue to drive cars.

What will it take to change the situation, pushing most Americans to ditch their SUV and buy an eco-friendly electric car? An arbitrary price limit, that's what—the point at which gas hits $5 per gallon.

That's what Deloitte found after interviewing 12,000 people worldwide, with more than 1,000 respondents in the U.S. The main conclusion of the survey is that the higher gas prices go, the more consumers favor the notion of electric vehicles. That seems like a no-brainer (even someone poor at math can imagine the increased cost of running a car as gas prices rise), but it's still an important conclusion given that gas prices are definitely increasing and unlikely to drop any time soon.

When gas hits $5 per gallon, 78% of Americans surveyed said they'd consider purchasing an electric vehicle. But U.S. consumers actually expect to have their cake and eat it: Over 50% aren't willing to pay any premium at all for an electric vehicle over a gas-powered one, and over 77% expect to pay less than $30,000. The average consumer also expects EVs to be able to cover 200-300 miles on a single charge, versus the current truth of around 100 miles. And 60% of Americans said two hours or less was the maximum they'd be prepared to wait for a full battery charge, (only 23% of responders said the typical overnight charge of 8 hours was acceptable.)

Mind you, the U.S isn't alone here—in Europe, the majority of potential buyers expect an EV to cost the equivalent of $20,000 or less and 67% expect a charging time of less than two hours—the figure rises to 81% for Japanese consumers. Everyone is going to be in for a rude awakening.

Can we explain these stats? Yes, perhaps a little. Europeans are already culturally more inclined to buy smaller, cheaper cars (it's the birthplace of the Mini and Fiat 500, after all) which explains why they're desiring lower-cost EVs. Short journeys are also more common in Europe, compared to America's long road routes and poorer public transportation, which explains U.S. impatience with the short range of current EVs. And the U.S. pride over the car, big engines and road trips is almost a defining national characteristic (American Graffiti, anyone?)—which explains why U.S. consumers could be disinclined to spend more on electric tech which lacks some of the old-fashioned, roaring engine pizazz of gasoline engines. Meanwhile Chinese buyers may be keenest to embrace the new tech because their government is moving to tax gas-engined cars based on the engine size—a situation that's also common in Europe.

In short, to get people around the world to go green and ditch the guzzlers, governments are going to have to spend a lot subsidizing the technology, and costs will have to rise to economically damaging levels. It'll take a crisis to avert a bigger crisis.

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[Top image via Flickr user NatalieMaynor; homepage image via Flickr user Michael Connell].

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