Falling Gas Prices, Driver Apathy Torpedo Obama’s Electric Vehicle Sales Goal

Does the name Thomas Parker ring a bell? He electrified the London Underground more than 100 years ago and is generally credited with inventing the first production electric car back in 1884. Gasoline-powered combustion engines would eventually seize the day, and despite recent efforts to return to an era of electric powered vehicles, including those by President Barack Obama, the market for such things isn't yet ready to make the switch.

In 2008, gas prices were hovering around $4 per gallon with no signs of letting up. Then in 2011 during a State of the Union address, Obama announced his goal of putting one million electric vehicles on the road by 2015. His vision was to "break our dependence on oil with biofuels" and lead the global charge by having the U.S. become of the first country to have a million EV cars on the roads.

Electric Car

Despite major government investments towards reaching that goal, we're less than halfway there with only around 400,000 electric cars sold to date. Even more disheartening is that sales are moving in the wrong direction -- even though the auto industry made available 30 plug-in models, sales dropped 6 percent to 115,000 last year.

One of the reasons for the decline is the cost of gas. As Ford CEO Mark Fields pointed out last week, electric cars "are a tough sell at $2 a gallon." The average cost of gas today is $1.87 per gallon, according to AAA, which notes that "tumbling crude oil prices" are responsible for sending the national average price for gas down to its lowest point since February 2009.

In addition to falling gas prices, the technology for electric cars isn't where it needs to be for mass adoption. Electric cars tend to be comparatively expensive to their gas guzzling brethren, and driving ranges are shorter, as well.

"If gasoline was $8 a gallon, consumers would amortize the costs of an electric vehicle pretty quickly," said Bob Lutz, former GM vice chairman who lead the development of the Chevy Volt. "But at $1.50 a gallon, who is going to be willing to pay an $8,000 or $10,000 premium?"

Despite the current state of things, development on electric cars continues. One reason is because gas prices will inevitably go up again at some point. At the same time, several states are rolling out zero-emission vehicle mandates, with California calling for 1.5 million zero-emission vehicles by 2025.