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How Will Current Oil Prices Affect Tesla (and other FEV's)?

Discussion in 'Energy, Environment, and Policy' started by Carl Leermakers, Jan 12, 2016.

  1. Carl Leermakers

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    #1 Carl Leermakers, Jan 12, 2016
    Last edited: Jan 12, 2016
    When I reserved my Tesla MS, in 2011, oil was at nearly 140$ a barrel. Together with some tax incentives in Belgium, buying a Tesla made sense not only ecologically, but also economically (plus the fun/smart-factor, of course :)), compared to, say, buying a similarly loaded BMW 5-series (largely because electricity was so much cheaper than gasoline). At the same time, the IMF was predicting oil prices would be around 250$/barrel by 2022 (see this 2012 article).

    Today a barrel of oil is at 30$, and 2016 predictions mention 20$, 16$ or even 10$... Of course, when you're filling up at a gas station (for those who remember what that looks like), a liter of gasoline has not become five times cheaper since 2011 (and will obviously not become 14 times cheaper this year), but it is still, anno 2016, a lot cheaper than four years ago! And at the same time electricity prices are rising a lot more than inflation. The result is that charging a VW e-Golf in Europe is now more or less as expensive as filling up the tank of its diesel or gasoline equivalent (which your average VW dealer will sell you for a lot less money)...

    I'm not too worried about the Tesla MS or MX not being able to retain their current market share, and I'm also sure regulators will continue to be more and more strict on pollution, certainly in countries/cities where pollution is already very problematic and state regulators have the power and the wish to do something about it (e.g. China, which may well become the largest FEV-country in the next few years, but also the USA, and a lot of countries in Northern and Western Europe).

    I am worried, however, about FEV sales in general. I agree with others on this forum that a successful Chevy Bolt (and VW e-Golf and Nissan Leaf etc.) would be much better news for Tesla than a failed Bolt (and failed other FEV's).

    But I cannot believe this spectacular evolution of oil prices won't negatively impact FEV sales in the near future. One can buy a Tesla MS or MX out of passion for the ecological/smart/fun-factor, but why would anyone entering a GM dealership buy a Bolt, rather than a way less expensive ICE Chevy?

    Your thoughts?
     
  2. drinkerofkoolaid

    drinkerofkoolaid Active Member

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    #2 drinkerofkoolaid, Jan 12, 2016
    Last edited: Jan 12, 2016
    Every country except for the USA is increasing incentives for Electric Vehicles and increasing the taxes applicable to gasoline vehicles. In the USA, Electric Vehicles are exempt from sales tax in certain states.

    In China, within the next few years, it will be too expensive for most people to use a gasoline vehicle. India is also significantly increasing incentives for ALL Electric Vehicles and will probably increase the tax on gasoline vehicles. Even if gasoline is $1.50 a gallon in 2017, it will be less expensive and troublesome to own an Electric Vehicle, not to mention charging at a Tesla station will always be free.

    More SUV's and Trucks means states will need to spend more on road construction. The money needs to come from somewhere. I seriously doubt the next president (Bernie Sanders or Hillary Clinton) would allow the average price of gasoline to stay anywhere near $1.50.

    The Chevy Bolt and Nissan Leaf probably won't technically fail. My guess is the "big automobile manufacturers" will find ways of unloading whatever EV's they produce, to ensure their "sales" meet or exceed their "expectations". This is the same thing GM already does with many GM vehicles to create the illusion that demand for new GM vehicles is "above expectations". It was also part of the reason GM went bankrupt. :rolleyes:
     
  3. RDoc

    RDoc S85D

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    With the US government mandated fleet economy standards increasing, the manufacturers will have to do something, and EVs are an obvious choice.

    This assumes the Republicans don't win of course. If they do, there probably will be incentives for coal burning vehicles.
     
  4. 1208

    1208 Active Member

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    My reasons for wanting to buy an EV have nothing to do with cost of oil.

    1. Clean, no exhaust emissions better air quality.
    2. Self sustainability, refuel your vehicle via own means eg. Solar Panels.
    3. Better Technology, fewer parts to go wrong unlike ICE.
    4. Easier to drive, unlike geared ICE and smoother better response.
     
  5. Carl Leermakers

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    Would be good to fight unemployment though, as it means you would need in each car, besides a driver, also a 'chauffeur' (someone who continously fills the furnass for the steam engine with coal) :)
     
  6. jdw

    jdw Member

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    #6 jdw, Jan 12, 2016
    Last edited by a moderator: Jan 14, 2016
    Agreed - the higher cost of a Tesla is a wash (at best) compared to the cost of buying a similar but likely less expensive gasoline vehicle and the gas to go with it.

    For me it was the idea of not burning thousands of litres of gasoline, not having to stand around in freezing weather pumping gas as well as the acceleration/performance and quiet operation. That, and, once I drove the Tesla, the BMW interior looked like an Alienware laptop from 1998 come to life. I couldn't get around that.

    I bought the Tesla because I felt it was a better car.
     
  7. Vger

    Vger Active Member

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    As others have said, the simple-minded economics are only part of the story. An increasing number of people (especially after COP21) understand that the only way we avoid climate disaster is to avoid burning a great deal of the oil still in the ground. The current low price of oil has both to do with oversupply, but also with demand starting to top out. Eventually oil will be almost worthless, even if it is still available, and the price will fall even further.
     
  8. rays427

    rays427 Member

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    #8 rays427, Jan 12, 2016
    Last edited: Jan 12, 2016
    The data doesn't support the idea that consumption is dropping. The US EIA shows the following daily consumption (in millions of barrels per day): 2014 92.42, 2015 93.77, projected 2016 95.19, 2017 96.61. Developed countries are reducing their use but developing countries are more than offsetting it.
     
  9. rays427

    rays427 Member

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    The cost of gasoline is currently low primarily because of the boom in US shale oil. In addition when it was above $100 per barrel a lot of expensive projects were started. This includes deep water, oil sands, etc. Right now all oil companies are cutting back on capital spending and laying off employees. They will complete current projects where they have already spent considerable dollars but will not start many new ones. Since it takes many years to develop some of these projects once they are shut down it will take a long time to get them back on track especially with fewer employees. Typical decline rate on a oil field is about 8% per year. So at current consumption (93 million bpd), the yearly decline is about 7 million barrels per day. So as the oil companies reduce their spending the decline will eventually soak up the over production and prices will go back up.
     
  10. brucet999

    brucet999 Active Member

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    "Every country except for the USA is increasing incentives for Electric Vehicles and increasing the taxes applicable to gasoline vehicles.…"

    beware of statements beginning with "every". Denmark has eliminated its tax break for electric cars and Norway is planning to gradually reduce EV incentives starting this year.
     
  11. roblab

    roblab Active Member

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    Interesting. I had heard many places that Mideast Oil was trying to pump oil as fast as they could, so that as countries started to back off on oil usage they wouldn't get stuck with stranded oil, in the ground, no place to sell it. Since they are flooding the market at cheap prices, the US producers have no choice but to lose money or quit pulling oil out. Mideast refuses to slow oil availability to keep prices up.

    As oil (and natural gas) gets more credit for climate change, and renewables increase, oil will get even cheaper. It's interesting to me that rather than get behind solar and wind, they want to pretend there's a huge market for oil and that prices will soon increase.

    We'll see, won't we?

    That may be part of the reason there are so many nagative articles being pushed against EVs. I've been watching this since 2002 and it seems to fit.
     
  12. nwdiver

    nwdiver Active Member

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    IMO... (hopefully)... we've reached a point where fuel savings are no longer the primary motivation to getting an EV for enough people. They're simply a better car. The torque is better. The handling is better. Fueling at home is better.
     
  13. David99

    David99 Active Member

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    I don't think the drop in oil prices are going to be as much of an issue. The general move from burning gasoline to going electric is on it's way, one way or another. Most countries already support EVs and will further help by increasing taxes on ICE car or gasoline. Oil prices have already dropped massively but it has not hurt EV sales or their demand.

    What I'm more concerned with is how greedy power companies especially in Europe are. The price for electricity is much higher than in the US for example with a clear trend to go higher. Germany is a good example. Their decision to change their entire energy sources to sustainable has pretty much given the power companies permission to raise prices as they please. The justification is, 'it's the price to go with sustainable energy. In general, Europeans are fine paying higher prices when it comes with an eco-friendly label. Just as much as the oil companies had everyone by the balls at the gas pump, the big power companies will have the power to set prices at will once we are all driving EVs. We have to be very careful about not going from one energy dependency to another.
     
  14. Zythryn

    Zythryn MS 70D, MX 90D

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    EVs are simply better than comparably priced cars.
    It doesn't matter if it is a Leaf, Bolt, or Tesla.

    Granted, a Tesla is a heck of a lot more fun than a Leaf or (I'm guessing) Bolt.
    However, the Leaf and Bolt are a heck of a lot more fun than an ICE of similar, or cheaper price.

    For those with a garage, it is a heck of a lot more convenient as well.
     
  15. scott jones

    scott jones Member

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    BEST LINE YET! I too believe Republicans will try to screw the EV world if they control the Presidency, along with the house and senate, (which they already have).
    Also, anyone else think the DROPPING oil prices could be part of an attempt to kill or strongly curtail the rise of the EV. After-all, even large SUV sales are going way up again.
     
  16. Carl Leermakers

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    I can imagine the USA, together with some other non-OPEC countries, are doing a concerted effort to curtail the revenues of certain Middle East regimes which fund terrorism (and that the USA are doing a good job at that, today!). I wouldn't think killing FEV's is part of that story - but, obviously, the potential harm to FEV sales is there.
     
  17. Armadillos

    Armadillos Member

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    I think EVs will be just fine with the low price of gas and oil. I think the younger generation of people who will be looking at buying a new car in a few years are going to want an EV for a ton of reasons. They like that it's quiet, that they don't have to go to a gas station, and that it's better for the environment. This change will not happen overnight, but we're already seeing the gradual change from ICE to BEVs.
     
  18. BigAirHarper

    BigAirHarper Member

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    Why the association that any republican elected will suddenly switch to remove incentives from electric vehicles? We don't all love burning fossil fuels ya know. Such generalizations aren't needed.
     
  19. GoTslaGo

    GoTslaGo Learning Member

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    Very true, especially in most states electricity is a regulated monopoly. Key word is monopoly.
     
  20. Adm

    Adm Active Member

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    The low price of oil should encourage people to buy an EV. Just watch how our "friends" are hurt by the low price of oil. Price should stay this way forever! That will make our "friends" think twice how they spend their money.
     

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