As oil prices rise, a familiar narrative returns. Higher fuel costs will drive the shift to electric vehicles. But this mistakes timing for cause.
The economics of driving have long since shifted. The Tesla Model 3 Long Range, for example, consumes about 25 kWh per 100 miles. At an average electricity cost of 17.5 cents per kWh, that is about 4.5 cents per mile. For a 38 miles per gallon petrol car to match that, fuel would need to be at about $1.70 per gallon, which is a level far below where prices have traded in recent years.
US petrol prices climbed above an average of $4 a gallon this week for the first time since August 2022, according to the American Automobile Association. At today’s prices, the existing cost advantage of EVs becomes significantly more pronounced.