The present article dwells on today’s increasing demand for electric cars in the market as a response to the ongoing gas price increase and uncertainty surrounding gas supply to the US from Russia due to the recent Russian invasion of Ukraine and sanctions related. In the article, the author addresses the analysis of the modern market for electric vehicles and the gap associated with rapid growth in demand and impediments in the production of fuel-alternative cars (Popli, 2022). Essentially, the sudden change in customer priorities in the automobile market has led to the need for modification of resource allocation and expanded electric vehicle production in the near future.
According to the article, over the past few months, the customer demand for electric vehicles has become unprecedently high. Indeed, the CarGurus report demonstrates that since February 2022, the number of customers who expect to own electric vehicles in the next five years has grown from 32% to 40%:
In this context, the notion of the “consumer sentiment” index stands for the measurement of how confident the customers are when assessing their financial situation and the likelihood to commit to a certain product. Such an evident increase in consumer sentiment demonstrates that people, while aware of the potential challenges related to conventional vehicles, seriously consider a shift in their behavior and encourage the whole auto-manufacturing industry to reclaim their objectives. According to the article, Google electric car-related searches reached a record high in March 2022, implying some unavoidable changes to the industry.
However, despite the conversation about the challenges of gas pricing and gas availability in general, the electric vehicle industry faces a series of changes related to the unexpected spike. The fundamental law of supply and demand implies that the demand for the products meets the consumers’ expectations if the pricing and availability of the product are balanced. Currently, electric vehicles remain a premium product for the majority of consumers, which means that the consumers who were initially driven by the idea of purchasing an electric car are now weighing the prospects of sticking to regular vehicles. Moreover, the article implies that the electric automobile industry currently faces some issues with the supply chain, as the shortage of vital items creates a long waitlist for potential consumers (Popli, 2022). However, when analyzing the gas market, the electric car manufacturers realize the long-term price-increasing industry and, thus, are unwilling to minimize the manufacturing and market costs.
Instead, their business strategy is to expand the manufacturing of premium products and profit from the unprecedentedly rising gas prices. If the forecasts are correct, such a strategy will be beneficial for the electric vehicle market leaders. First, they would steadily promote leadership in the automobile market. Second, the consumers will have more interest in long-term financial investment in fuel alternatives. However, the experts reveal that based on the 2008 financial crisis, consumer behavior can change as quickly once the government creates a way to stabilize the gas supply with the help of alternative sources. Considering today’s commitment to refusal from Russian gas, such a process may take longer than expected, so electric car sellers should use this time as a business opportunity to encourage more consumers to change their driving habits. Additionally, they can systematize the supply chain process and eliminate the exclusiveness component of purchasing a fuel-alternative vehicle.
Reference
Popli, N. (2022). High gas prices are pushing electric car sales to a tipping point. Time.