An EV sales surge is building—but not because of oil prices

Whenever oil prices go up, the mainstream press responds with a spate of articles about EVs. However, it’s not at all clear whether this corresponds to any substantial increase in EV sales.

The link between oil prices and EV sales has always been tenuous—and temporary. As Viet Nguyen-Tien, Gavin D. J. Harper and Robert Elliott point out in a recent article in The Conversation, media interest in EVs was kindled during the 1973 oil embargo, only to disappear when oil prices returned to “normal” levels. The cycle has been repeated several times since.

However, the writers argue that this time may be different. The main reason that high oil prices don’t cause EV sales to spike has been the substantially higher purchase price of EVs, and that price differential is steadily dwindling.

Battery costs have fallen 93% since 2010, The Conversation reports. EV industry cognoscenti have long predicted that a pack-level battery price of $100 per kWh would be the tipping point for widespread adoption. Battery prices in the US are now very close to that price (and far cheaper in China).

Technological improvement is not the only driver of plummeting prices—economies of scale and network effects have also played important roles. More battery production leads to lower costs, which leads to more production, in a virtuous cycle.

“This loop does not need an oil crisis to keep spinning,” write Nguyen-Tien and colleagues. In most markets, EVs reached total cost of ownership parity with legacy vehicles some time ago. Now they are approaching purchase-price parity.

And there are several advances on the horizon that could soon make going electric an offer vehicle owners can’t refuse. Chinese EV-maker BYD says its latest Blade battery delivers a range of 450 miles, and can be charged in 10 minutes. The company is already selling its moderately-priced EVs in Europe, and will enter the Canadian market this year. Vehicle-to-grid (V2G) technology, which could turn car ownership from a money pit into a source of incremental income, is making the transition from pilots to commercial deployments.

However, the Conversation writers argue, “The deeper reason this wave will not fade is not technical—it is economic. An EV is a platform. Its value grows as the network around it grows. Every charger built makes the next EV more attractive. Every software update raises the value of every car already on the road. Every recycled battery feeds back into the supply chain that makes the next one cheaper.”

The EV transition is underway—it doesn’t need high gas prices, and it no longer needs government subsidies. (Just ask Harbinger Motors—sales of its electric trucks have steadily grown since federal subsidies expired in 2025.)

The electrification of transport is making vehicles cheaper, cleaner, quieter and more fun to drive. One thing it won’t do, alas, is eliminate geopolitical risk. Today, EV supply chains mostly run through China, and neither governments nor automakers are doing much to rectify that situation. In the three traditional centers of the global auto industry—the US, Europe and Japan—denial, delay and downright delusion remain the norm.

Buckle up.

Source: The Conversation

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