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Will the continued low price of gas affect EV (or Model 3) sales?

Discussion in 'Model 3' started by Config, Feb 27, 2016.

  1. Config

    Config Member

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    Can't help but speculate the low price of gas isn't going to help Tesla gain the Model 3 reservation numbers they need or expect. Thoughts?
     
  2. tga

    tga Active Member

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    Prices have bottomed and are heading back up in my area. Sub-$2 gas won't last long.
     
  3. ZAKEEUS

    ZAKEEUS Member

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    Once the production of oil in other countries slows down, the price will go right back up. But who know when/if that will happen any time soon. I think when Tesla gets the price of the batteries you won't be looking at paying a premium to drive an electric car, you will paying roughly the same price for a comparable ICE and getting a better vehicle. The model 3 being almost 2 years from production is probably a good thing. Gas prices could be back to where they were in 2005 by then.
     
  4. techmaven

    techmaven Active Member

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    On a side note, doesn't it make sense to have an automatic algorithm on a monthly basis that increases taxes as the price of gas drops below $2.50/gallon, and lowers it as it goes over $2.50/gallon? Or choose your price target. But that way we can build up transportation funds when the price of gasoline is low and take some of the pain out when it is high. Kind of like following RSI when buying/selling stock and politicians wouldn't be stuck trying to raise taxes - it's automatic, either on a monthly or quarterly basis. Obviously, it would have to have a minimum level even at the highest prices and a cap at the lowest prices, but some automatic adjustment algorithm makes sense.
     
  5. vjason

    vjason Member

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    Personally (and speaking for the US only), in the near term no but +12 months and beyond who knows.

    The longer gas stays cheap, the more time it takes oil shale producers (those who absolutely require a certain per barrel price to make money) to reestablish full scale production. The longer OPEC keeps prices down the better (for them) as it may mean less competition when prices do go back up as there will be fewer suppliers to compete against.

    Additionally, cheap gas sold a ton of new vehicles. Vehicles people are (largely) locked into for 3 years at the minimum, 5 years on average, and 7-8 years on the extreme end (just my guesses). That pushes out a lot of potential buyers. The longer gas stays cheap (still going down where I live), the more of these vehicles people will buy. I'm assuming gas will creep up in price leading up to summer as it always does, but I can't say by how much without looking at historical data.

    I am fortunate that a Model 3 will come out when my Prius is around 5 years old, paid off, and will have around 85K miles on it. My daughter will probably need a car by then, which means I can easily justify a new car for myself. I really won't save any money buying a M3 as I max out a local grocery store fuel program to get $1 off each gallon of the gas I buy (paid 65 cents/gallon for my last fuel run), but I do have personal reasons for reducing gas use.

    Right now there is enough pent up demand to sell through probably the first 6 months of Tesla M3s, if not more than that. Again, these are pure guesses on my part, but they are based in part on the feeling that it will take Tesla time to ramp up their manufacturing capacities.

    It will be 2018 if not 2019 by the time this even matters. I have a feeling gas will be up by then unless the economy is in shambles and people can't afford to drive anywhere.
     
  6. wdolson

    wdolson Active Member

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    I suspect oil prices will be low for a while. The US and Saudi Arabia is in an oil price war with Iran and Russia who's economies both depend on the price remaining high.

    EV sales slumped a bit last year, but Model S sales grew by a fairly good margin. At the end of the year, total EV sales in the US were less than 2014, though the world market was stronger where oil prices have not dropped as much (a good chunk of the price drop is the growing strength of the US dollar).

    Tesla has produced a car that people want, not because it's an electric, but because it's a great car. Other EVs, not so much. The eco buyers and people enticed by big incentives will be the only customers for EVs and most hybrids for a while, but if the Model 3 is as appealing as the Model S and X are, Tesla will likely have a backlog of orders for some time after the Model 3 is introduced.
     
  7. Josh the German

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    #7 Josh the German, Feb 27, 2016
    Last edited: Feb 27, 2016
    Hi folks,

    I think there is a growing number of people that want to leave the fossile age behind forever. Mankind has to make a decisive step forward. And this can only imply EV´s in case of individual shifting. Of course there is still a general behaviour to use and buy "fuel to noise converters" but decreasing, maybe slower decreasing because of low oil prices, but there will be a steady decrease.

    Best regards from Germany

    Josh
     
  8. flankspeed8

    flankspeed8 Member

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    Regardless of where gas prices are heading, I find it hard to believe that low prices do not have a significant demand in the mid-range level. Obviously those who are making 6 figures are less price sensitive.

    In the end, EV's are the right way to go. But we have a long way to go before the average "Joe" will pay more simply because EV's are better for the environment.
     
  9. Candleflame

    Candleflame Member

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    people who buy a 5 figure sum car dont generally care about gas prices
     
  10. widodh

    widodh Model S R231 EU

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    I don't think they will. I just had a conversation with a man in Norway (on vacation with the Model S there) and he saw how my Model S plowed through the knee-deep snow without any issues.

    Long story short, he will probably buy a Dual-Motor Model S. Not because it is electric persé, but just because it performs so well.

    This news item adds to it even more: Another Oil Crash Is Coming, and There May Be No Recovery - Bloomberg Business
     
  11. cman8

    cman8 Member

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    I dont think it will affect it. Funny thing that I have always hated with gas is that it takes a very long time for gas to go down, pennies at a time, but then all of a sudden it goes up 30 40 cents at a time. never found that reasonable IMHO
     
  12. Twiglett

    Twiglett Single pedal driver

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    Personally I don't care - I don't use the stuff :)
     
  13. Zythryn

    Zythryn MS 70D, MX 90D

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    I don't think that will ever happen.
    EV sales will continue to grow because they have better performance, a higher quality drive, more convenient for many and are simply safer.

    With higher gas prices sales would grow faster, as that prompts more people to look into alternatives. But even with low gas prices sales will still grow, simply because EVs are better in most ways.
     
  14. DougH

    DougH Active Member

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    Exactly. My purchase of a Model S had nothing to do with gas prices or footprints or anything like that. it was because the car is damn sexy.
     
  15. Spidy

    Spidy Member

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    It's very likely he knew about EV initiatives in Norway. The reality is most people there could never afford such an expensive car if it had the same taxes as ICE cars. I think the equivalent would be somewhere at $200,000
     
  16. gregincal

    gregincal Active Member

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    In the BMW 3 series and A4 market performance matters as well. Reasons to buy an EV's aren't just to save money or save the environment. They also provide far superior performance characteristics to a gasoline engine. While the Model 3 demand will be affected by gas prices, it won't be nearly as much as other EVs.
     
  17. Canuck

    Canuck Active Member

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    I don't think there's any doubt that if gas was at $90/barrel or higher, there would be more sales or reservations for the Model 3 -- but I think the lost sales is in the single digits, percentage wise. I doubt it's all that significant.
     
  18. cman8

    cman8 Member

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    To that point though, the OP stated if it would affect the model 3 sales which will be more affordable to the masses, in which case gas prices do matter
     
  19. GoTslaGo

    GoTslaGo Learning Member

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    Interesting explanation on cnbc (older but seems like a nice explanation for the forces at play; sorry if there's a stupid ad, I had to pause it to read).

    http://www.cnbc.com/2014/12/04/gas-and-oil-prices-why-havent-gasoline-prices-fallen-faster.html
     
  20. EVNow

    EVNow Active Member

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    Probably.

    Those who are just looking at operating cost rationally - aren't accounting for psychology.

    One thing to note - even at these low oil prices, operating an EV feels expensive. I spend about $25 on electricity per month on my car. Recently had a ICE loaner, had to fillup once in 10 days paying about $45 per fill - which felt expensive. Most people will not feel the operating expense of EVs as it gets combined with home electricity bill. But gas is something people pay at the pump and they know how much it cost them to fill every time they swipe the card.
     

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