With gasoline prices setting records across the U.S. and oil topping $100 a barrel, consumer interest in electric vehicles and other clean energy technologies is speeding up.
Gasoline prices, which hit a nationwide average record high of $4.33 on March 11, are about $1.35 higher than they were a year ago, according to AAA. Every dollar of higher gasoline prices adds more than a $50 increase in households’ monthly expenses, according to Northern Trust.
That has more consumers looking for an alternative to the gas-chuggers that make up most U.S. sales. In the week that ended March 13, one-quarter of shoppers on Edmunds.com considered a hybrid, plug-in hybrid or electric vehicle, a 39% increase from the previous week and an 84% surge from the same week in February.
More than two-thirds of Americans surveyed by consumer-tracker Piplsay said in a report last week that they are nervous about rising fuel prices, and 49% said the running cost of a gasoline-powered vehicle isn’t affordable. Nearly half of those surveyed said EVs could provide a viable alternative to internal-combustion-engine cars, Piplsay found.
Shoppers considering an EV purchase said gas prices were the most important factor followed by the environment, according to Edmunds. Customers not interested in buying an EV remained concerned about high EV prices, limited charging infrastructure and the vehicles’ range capacity, Edmunds said. EVs are also in short supply, with some buyers having to wait a year or two for delivery.
Shares of EV companies, which fell from their record highs in late 2021 amid waning congressional support for the Biden administration’s clean-energy proposals, reflect the shift in consumer interest. Tesla Inc. is up more than 20% in the past few weeks, though it remains about 25% below the high it reached in early November. Plug Power Inc., which makes hydrogen and fuel-cell systems, is up more than 50% since the 52-week low it hit in January.
EVs have been gaining momentum as more major car makers offer them at increasingly lower prices, reflecting a steep decrease in the price of batteries, which account for about 30% to 40% of the vehicles’ cost. In 2021, world-wide EV sales more than doubled to 6.6 million, representing 9% of the global car market, compared with 4.1% the previous year, according to the International Energy Agency.
While oil and gas inflation is driving more interest in EVs, inflation in the materials of EV batteries could put the brakes on the transition. The price of lithium—a key component of the most popular rechargeable batteries—is up about 500% from a year ago, according to Benchmark Mineral Intelligence, which tracks the global battery supply chain.
The price of nickel, another key component, surged to record highs in recent weeks amid fears that supplies from Russia, a major nickel producer, could slow or get cut off entirely.
Other clean-energy technologies are getting more interest as fossil-fuel prices hover near record highs, especially in Europe, where natural-gas prices hit records due to Russia’s war on Ukraine. The German economic ministry in February announced plans to speed up wind and solar projects as it seeks to curb its dependence on Russia for energy. The country suspended the Nord Stream 2 natural-gas pipeline after Russian President Vladimir Putin prepared to launch the invasion.
Germany gets more than half of its gas imports from Russia. On average, European Union countries get about 40% of their gas from Russia, according to Eurostat.
Financial markets reflect the potential shift. The iShares clean-energy exchange-traded fund is up nearly 20% in the past month, driven by gains in holdings such as Danish wind-turbine maker Vestas Wind Systems, which is up more than 30% since late February, according to FactSet. Ørsted AS , one of the world’s largest developers of offshore wind energy, is up nearly 30%.
“The Europeans understand much more than Americans the existential threat of Russia today,” said energy economist Philip Verleger. “I think they’re going to move much more rapidly.”
Write to Scott Patterson at scott.patterson@wsj.com
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