Record gasoline prices have some U.S. consumers considering electric vehicles earlier than anticipated, but the surge has not roiled the industry or prompted the kind of seismic shift in buying habits seen during previous price increases.
In 2008, the cost of gasoline peaked at more than $4 per gallon, and consumers abandoned hulking SUVs and pickups in droves. Automakers scrambled to retool factories to produce smaller, fuel-efficient sedans.
Today — even with the national average recently topping $5 for the first time — there’s been no such panic.
Aside from a proliferation of electrified options, experts point to a significant improvement in the fuel economy of most internal-combustion vehicles, including large pickups and utilities. A 2022 four-wheel-drive Ford F-150, for example, is rated at 21 mpg combined, 50 percent better than a comparable 2008 model.
Although recession fears are mounting, the economy is in a much stronger position than it was in 2008. Unlike that time, top executives from Ford Motor Co. and General Motors say there’s robust demand for new vehicles, at a time when the global semiconductor shortage has kept inventories low.
“We’re in a very different situation now,” Ed Kim, vice president of industry analysis at AutoPacific, said in an interview. “We’re not in that dire downturn state we were in back in 2008. We have plenty of consumers that have money to spend, but the marketplace isn’t able to provide product.”
That likely won’t change in the near term.
Consulting firm AlixPartners last week said it expects supply chain issues to continue suppressing inventories through 2024. It’s unclear how long gasoline prices will remain high — prices dipped slightly last week, according to AAA, and President Joe Biden has asked Congress to suspend the federal gas tax for three months to save motorists about 18 cents a gallon. But most forecasters don’t envision a major impact even if the surge lasts.
“The story is really still this pent-up demand that sort of absorbs the depressing demand not only of gas prices, but inflation concerns,” Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, said in a media presentation last week. “Consumers remain in the mindset of, ‘Can I find one?’ and ‘Where can I find the best deal?’ They have the capacity to purchase.”
In a recent survey of 300 SUV owners, AutoPacific found that 72 percent would be open to either a hybrid, plug-in hybrid or electric utility vehicle, but only 17 percent said they’d downsize from the segment they’re driving now.
“Technology has enabled people to drive the SUVs they want to drive and has made fuel economy much less of a deterrent to SUV ownership than it used to be,” Kim said. “Everything from downsized turbo engines to direct injection are combining to provide significant improvements to fuel economy, even without electrification.”
Ford found success over the last decade with its EcoBoost line of turbocharged engines, which have all but replaced its old gas-guzzling V-8s.
Erich Merkle, Ford’s head of U.S. sales analysis, said previous gasoline price spikes led many customers to ditch their SUVs for smaller sedans, many of which are no longer on the market. Ford eliminated sedans in North America in favor of more profitable utilities, and Merkle said there’s been no sign of a shift into smaller crossovers such as the Escape or Bronco Sport.
He said Ford is seeing demand across its portfolio, regardless of vehicle size or powertrain.
“If you show me a vehicle that has inventory for a given month, I’ll show you it did really well in sales,” he said. “Because there’s so much pent-up demand out there, if there’s inventory of it, generally it’s gone.”
Dealers say high fuel prices are leading some shoppers to consider making the switch to EVs.
Ryan LaFontaine, CEO of LaFontaine Automotive Group, told NBC News that his dealerships’ EV sales have doubled. Gary Rome, president of Gary Rome Auto Group, told a Massachusetts news station his store has gone from selling zero EVs to about 30 per month.
Automakers argue that it’s more proof that their large investments and ambitious EV goals are the right decision.
“This adds further validation to our commitment and focus on an all-electric future that includes affordable products that consumers can buy today,” Steve Carlisle, president of GM North America, said in a statement to Automotive News, pointing to products such as the Chevrolet Bolt EV and EUV. “We’re beginning to deliver Cadillac Lyriqs to dealers and we recently made the exciting announcement that the Buick brand will be all-electric by 2030.”
At Ford, Merkle pointed to new electrified vehicles including the Mustang Mach-E, F-150 Lightning and E-Transit, as well as the F-150 hybrid and Escape hybrid.
“We have new products that will operate well in a high-gas-price environment,” he said. “We’ve been really broadening our portfolio to make it such that gas prices aren’t really as big of a factor in the types of vehicles people are going to purchase.”
Hannah Lutz contributed to this report.