High gas prices are displayed at a Shell gas station on March 7, 2022 in Los Angeles, California.
Mario Tama | News Getty Images | Getty Images
Consumers hoping to switch to an all-electric or more fuel-efficient vehicle while Russia’s invasion of Ukraine pushes gasoline prices to record highs are largely out of luck.
A combination of supply chain problems, pent-up demand and record low vehicle inventories means that many new cars and trucks, including electric vehicles, are already in demand before they reach dealers. The ones that are readily available are most often large pickup trucks, SUVs and crossovers, as many automakers have scaled back or phased out small car production in recent years in exchange for higher-margin vehicles.
“Even those who want to go electric have nowhere to go,” said Jessica Caldwell, chief executive of Edmunds.com. “Anything you want to buy, you are on the waiting list… or even if you want to reduce the size of your purchase, you are paying big money. It just doesn’t make sense to do anything right now.”
Gas prices rose after Russian President Vladimir Putin invaded Ukraine two weeks ago. The national average for a gallon of gasoline is $4.06, according to the AAA, up 45 cents for the week and $1.30 more than a year ago. The US and other countries responded to the invasion with sanctions against Russia, including bans or cuts on Russian oil imports.
This uncertainty and potential shortages may continue to surface at the gas station.
Meanwhile, customers have to wait months, if not years, to buy electric vehicles. Luxury models are easier to find, but now there are practically no discounts.
“EVs are great if you can (and can afford) them,” Morgan Stanley analyst Adam Jonas wrote Wednesday in a note to investors.
U.S. vehicle inventory levels are down about 60% year-over-year and 70% from 2020 to about 1.1 million vehicles, according to Cox Automotive. As of Feb. 21, electric and hybrid vehicles account for only about 25,100 units, or 2.4% of total shipments, according to the company.
“If you’re considering moving to an electric vehicle, hybrid, or even a small car, good luck,” said Michelle Krebs, executive analyst at Cox Automotive. “There aren’t many in stock.”
Among the most affordable vehicles are the Ram 1500 and Chevy Silverado pickups, the Jeep Grand Cherokee L SUV, and the Mazda CX-5 and Ford Escape crossovers, Cox said. The least accessible are the Kia Telluride and Subaru Forester SUVs, as well as the Honda Civic and Toyota Corolla sedans.
Automakers have shifted manufacturing priorities towards high-demand and profitable trucks and SUVs as supply chain disruptions and parts shortages have plagued the auto industry for more than a year.
As a result, and with problems expected to worsen due to Russia’s invasion of Ukraine, many automakers are essentially selling everything they can produce.
“People will buy what they can get,” said Jay Joseph, vice president of American Honda Motor Co. for marketing and customer service. “People don’t have the inventory to have a choice. We see that people agree with accessibility.”
Joseph said that about 60% of Honda vehicles are already sold before they reach dealers. Prior to the recent stock draw, he said, approximately 75% of Honda sales were made locally.
Industry experts do not foresee that gas prices, even at record levels, will cause long-term changes in what Americans choose to drive. If anything, a surge at a gas station could change the amount they choose to drive — at least until gas prices stabilize at a lower level.
“We are seeing these time shifts,” Joseph said. “In the long term, Americans adapt very well to fuel prices. It depends on how long the price of fuel remains high; it depends on how long availability stays the same as it is now.”
—Michael Bloom of CNBC contributed to this report.