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Gas prices are spiking — don’t expect sales of electric vehicles to follow

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On March 7, 2022, high gas prices were displayed at the Shell station in Los Angeles.

Mario Tama | Getty Images News | Getty Images

While Russia invades Ukraine, consumers are attempting to change to all-electric vehicles or fuel-efficient cars. gas prices to record highsYou will be out of luck.

The combination of supply chain problemsPent-up demand, record-low inventory levels, and a high level of vehicle sales mean that many new cars and trucks (including EVs) are being sold before they even reach dealership lots. The most common vehicles available include large pickups or SUVs as well as crossovers. This is because many automakers in recent years have dropped small car production and made way for higher margin vehicles.

“Even for people who want to switch to electric, they have nowhere to go,” said Jessica Caldwell, executive director of insights at Edmunds.com. “Anything you’re looking to buy, you’re on a waitlist … or even if you’re looking to downsize your purchase, you’re paying top dollar. “It doesn’t make financial sense to move now.”

Since Russian President Vladimir Putin’s invasion of Ukraine two weeks back, gas prices have risen dramatically. AAA reports that the average national gallon of gasoline is now $4.06, an increase in gas prices by 45 cents over a week, and $1.30 higher than last year. In response to Russia’s invasion, the U.S. and other nations imposed sanctions on Russia. These included bans on or reductions in Russian oil imports.

This uncertainty and scarcity may continue to be a problem at the pumps.

Meanwhile, customers face months, if not yearsThere are a few waiting periods before you can purchase EVs. Although luxury models can be found more easily, there aren’t many discounts available right now.

Morgan Stanley analyst Adam Jonas stated Wednesday, in a note addressed to investors that “EVs are wonderful if you can obtain them (and have the means),”

Cox Automotive reports that the U.S. has a 60% drop in vehicle inventories compared to a year earlier and a 70% decrease from 2020 to approximately 1.1 million cars. According to Cox Automotive, EVs/hybrids represent only 2.4% of the total supply as of February 21st.

Michelle Krebs, Cox Automotive’s executive analyst, said, “If you plan to switch to an electric vehicle (EV), a hybrid, or even small car, then good luck.” They are few and far between.

The Ram 1500 pickups and the Chevy Silverado pick-ups are two of the most popular vehicles. Jeep Grand Cherokee L SUVCox reports that the Ford Escape, Mazda CX-5, and Ford Escape crossovers are all available. The Kia Telluride, Subaru Forester SUVs and the Honda Civic sedans are both the least readily available.

Automobile manufacturers have changed their production focus to high-demand. high-profit trucksFor more than one year, supply chain disruptions and parts scarcity have caused havoc in the auto industry.

Many automakers have been selling what they can, as a result.

“People will buy what they can get,” said Jay Joseph, American Honda Motor Co. vice president of marketing & customer Experience. People don’t have a lot of choice. “We’re now seeing more people accept availability.”

Joseph indicated that approximately 60% of Honda vehicles have been sold by the time they reach dealer lots. According to Joseph, 75% of Honda vehicle sales were made on-site prior to the current inventory shortage.

Even at record highs, industry experts can’t predict how gas prices will affect long-term decisions about what Americans drive. If anything, the spike at the pump may change the amount they choose to drive — at least until gas prices stabilize at a lower level.

Joseph stated, “We can see the temporary shifts.” The long-term is American are adaptable to fuel price fluctuations. This is not dependent on the price of fuel, but how long there will be availability.

—CNBC’s Michael BloomContributed to the report.

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