At the household level, we’re all delighted to see gasoline going for less than $2 a gallon.
But what does it mean advanced fuel-efficient vehicles?
There’s been a lot of coverage out there about whether lower gas prices will steer consumers back to gas guzzlers and away from plug-in vehicles.
But over the longer term, we know that few things are more volatile than gas prices and not many observers believe prices will stay this low forever.
Take a look at this chart from the Natural Resources Defense Council for a longer-term perspective on the cyclical prices for gasoline compared to electricity. (We know the chart is hard to read, but click on it for a bigger view.) It makes it pretty clear that plugging in will likely offer significant savings over the multi-year life cycle of a typical car.
In addition, no matter what they’re charging for gas at the pump, manufacturers will still have fuel-economy and greenhouse gas standards to meet, so they’re going to continue to invest in electric vehicles.
"While low fuel prices are the hot topic right now, we all recognize the long-term need to reduce CO2 emissions," Mike O'Brien, Hyundai vice president of corporate and product planning for North America, said in news reports.
In the same story, Mercedes Benz chairman Dieter Zetsche noted thatwhile companies had to respond to consumers less concerned about fuel costs, he acknowledged that the industry has to improve, because Europe and even Asian countries are pressing them on CO2 emissions, in addition to the US fuel targets. "At the end of the day, we will not have sufficient oil," he said.
Tesla Motors CEO Elon Musk, who draws media attention wherever he goes, also came to Detroit to talk about how low gas prices wouldn’t stop innovation.
Car companies “must accelerate the development and sale of electric vehicles” despite the drastic decline in oil prices, Musk said in a speech to auto executives at the Automotive News World Congress.
According to a story in the Detroit Free Press, Musk, whose company jolted the industry with its Model S, played down the effect that Tesla can have on its own in reducing emissions from fossil fuels, “and urged the rest of the industry to move more urgently with EVs to counter climate change.”
He warned against the temptation to see low oil prices as a reason to slow down.
“We can’t rely on scarcity to drive the price of oil and gas and rely on that to be an adequate forcing function” to speed adoption of EVs, Musk said, according to the Free Press report. “So we have to figure out how to do it without high oil and gas prices.”
What’s in it for Michigan? Tesla would eventually need factories in other states and countries if its sales continue to grow. Asked by reporters whether he would consider Detroit for a factory, he responded: "It's not out of the question. Maybe Michigan shouldn't stop us from selling cars here. That would be a nice gesture."