Tesla Can Be Saved By $5 Gas.
Wall St. has turned negative on Tesla, and much of the media and people worldwide have begun to batter Elon Musk’s image for what they see as bad behavior. Simultaneously, Tesla’s sales and production have run into a barrier, just like the rest of the EV industry. However, $5 gas could drive Tesla sales much as it did for the Japanese in the 1970s
Gas Price News –What Makes Prices Soar
Car Values –What Happened To Ford?
Ward Auto, one of the most widely regarded car research firms in the world, issued one of the most in-depth reviews of the consequences of rising fuel prices in the 1970s. “Energy Crisis Aided Japanese Imports” Reviewing the gas price increases in 1973 and 1979, the authors pointed out, “Those were significant events for a number of reasons, not the least of which was that they solidified Japanese automakers’ market share in this country..Before the Arab oil embargo of 1973, the “Big Three” U.S. auto producers – General Motors, Ford, and Chrysler.”
Japanese Cars In 1970
In the 1960s and early 1970s, Japanese cars were considered cheap and poorly made. As Americans began to buy them because of their high gas mileage, they found that the cars from Honda and Toyota were also well made. Research quickly showed they were better made than their American competition.
Tesla delivered 386,810 vehicles in the first quarter of the year, below even the most pessimistic forecasts. At roughly the same time, major manufacturers began to retreat from their EV plans. They were led by Ford, which all but abandoned its flagship EV Mustang Mach-E and F-150 Lightning.BYD, China’s largest EV company, appeared ready to pass Tesla as the industry leader, as EV sales even slowed in China.
Losing Money On EVs
Unit sales have been only one of many financial challenges for EV companies. Price cuts have become a regular part of the sector as manufacturers jockey for market share in a business where most lose money on each unit they sell.
Sales of EVs are still hampered by the fact that a portion of the US population does not like the changing time of batteries, the number of charging stations, and the relatively high prices of EVs. However, $5 for a gallon or regular nationwide would be 55% higher than today’s price.
$5 Gas Coming
There is no solid research on how many miles various portions of the US population drive per day. However, $5 gas could add hundreds of dollars a year to the cost of filling up. People often look at vehicle operating expenses over several years. At that point, the price differential of $5 gas can move into the thousands of dollars.
$5 gas is based on $100 oil. Today, it trades just below $95. A rise in tensions, perhaps a war in the Middle East, and Ukraine’s attacks on Russian oil installations could send crude toward $120. This happened immediately after the Russian invitation to Ukraine in June 2022. A prolonged period of war in the Middle East is certainly possible.
Tesla may well make a comeback for some reason beyond $5 gas, but no set of circulations is more likely to drive an increase in sales.
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