When gas was near $4 per gallon, many consumers looked to hybrid and electric cars as a way to save money. At the same time, major automakers significantly increased their offerings of fuel-saving vehicles.
But with gas prices falling alongside oil prices over the past few months, will the trend reverse itself or can the electric car weather the storm of lower gas prices?
Unlike a few years ago, there are enough electric vehicle models today that most everyday consumers could find one that meets their needs.
Buyers looking for smaller, less expensive cars can look at the Mitsubishi i-MiEV, Nissan (NASDAQOTH:NSANY) Leaf, Ford Focus Electric, or Volkswagen e-Golf. Those looking for larger sedans can look at General Motors' (NYSE:GM) Chevrolet Volt, which has a gas engine as a backup.
For October, GM reported a 28.8% drop in Chevy Volt sales. While some of this may come from falling gas prices, it's also worth noting that GM plans to begin selling a second-generation version of the Volt next year. With electric car buyers looking for the latest technology, some may be waiting for the next model, putting a dent in current sales.
On the other hand, sales of the Nissan Leaf are moving higher, with year-over-year October sales increasing nearly 30% and Leaf sales from January to October 2014 already passing the total for the year 2013. As gas prices have slid further in November and look set to follow oil even lower, it will be worth watching whether this continuing slide will rain on the Nissan Leaf's parade or whether sales can continue growing.
At Toyota, RAV4 EV sales have totaled about 2,000 since the vehicle's launch. However, it's tough to blame this on lower gas prices, since the RAV4 EV was more about compliance with regulations from the California Air Resources Board, or CARB, and beta-testing new technology than it was about selling a large number of vehicles.
From the information available, sales of the Tesla Model S seem to be holding up despite lower fuel prices. While Tesla does not publish monthly sales figures, estimates from InsideEVs.com show monthly sales staying within the same range as last year.
Worth noting is that Tesla buyers tend to be more affluent than buyers of most other EVs due to the significantly higher price of the Tesla Model S. Because of this, Tesla buyers are more likely to be buying their cars for the performance or environmental benefits rather than to save on gas.
Based on the figures compiled by InsideEVs, overall sales of electric vehicles have held up fairly well since gas prices began to drop, with only minor changes when compared to sales from 2013. This would imply that this recent drop in gas prices is not enough to significantly curtail EV sales, although there is the possibility it will slow EV sales growth.
The road ahead
Keep in mind that gas savings are only one of many reasons buyers choose electric cars. Many enjoy the performance of these cars, their environmental benefits, or just avoiding trips to the gas station.
But at the same time, gas prices are continuing to slide and this could put further pressure on EV sales growth. At this point, EV sales seem to remain healthy, but industry followers should watch the sales numbers to see if a larger slide in gas prices begins to cause problems for electric vehicles.
Alexander MacLennan owns General Motors Class B warrants, General Motors Class C warrants, and shares of Tesla Motors. He has the following options: long January 2015 $40 calls on General Motors, long January 2016 $10 calls on Ford, and long February 2015 $15 calls on Ford. The Motley Fool recommends Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.