Gas price graphs look like sheer cliffs. Employers are finally summoning white-collar workers back to their offices and their commutes. Nations all over the world have banned Russian gas and oil following the country’s invasion of Ukraine. Plus, the ever-worsening climate crisis demands that humanity keep every possible bit of carbon out of the atmosphere (and even pull some out) —Although transportation accounts for nearly a quarter of global emissions.
Gee, it sure would be a nice time to own an electric vehicle.
A bunch of people apparently agree. The car-shopping company Edmunds says that searches for hybrids, plug-in hybrids, and battery electric vehicles jumped nearly 40 percent over the past month — up 18 percent in the first week of March alone. Environmentalists and security wonks are in. Last week, a senior attorney for the Natural Resources Defense Council called for Americans to ditch their gas-powered rides, arguing, in a case that moved beyond this month’s terrifying events in Ukraine, that “drivers have been held hostage to the whims of petro-dictators for too long.” The Russian war has reinvigorated Carter-era calls for “energy independence.”
Too bad it’s a terrible time to buy a car — especially an electric one. Pandemic supply chain woes, production crunches, and congressional waffling about the future of electric subsidies have crashed into new challenges tied to the economic sanctions of Russia. “We do not have enough batteries and auto manufacturing capacity to meet the demand for electric vehicles today, which is missing a prime opportunity,” says environmental economist Mark Paul of the New College of Florida. Plus, for the people most pinched by the rising cost of gas, going electric likely remains out of reach. The average transaction price for a new EV was $ 60,054 in February, almost $ 15,000 higher than the one for all new vehicles, according to Edmunds.
Gas prices were already inching skyward in the US thanks to increasing demand, brought on by the country’s “post” –Covid recovery. Meanwhile, the nations that control global oil and gas supplies had not yet ramped up the production they cut during the depths of the pandemic. Then Russia invaded Ukraine. Global sanctions on Russian industry have put enormous pressure on the petroleum market, pushing up prices everywhere. The US gets just a small slice of its oil and gas from Russia, but still, the national average retail price for gasoline hit $ 4.33 per gallon on Monday, according to the American Automobile Associationand $ 5.74 in California — highs that have not been seen since the 2008 recession.
But the same calamities that have upended the gasoline market have upended the auto world, too. Demand for semiconductors was already climbing before the pandemic, as silicon chips are now stuffed into an increasingly dizzying array of products: toys, light bulbs, industrial machines. The auto industry is no exception. Even the most basic new gas-powered car might require 100 chips to power its engine, safety, and infotainment systems; advanced EVs can have more than 1,000. But supply shocks owing to the global reach of Covid-19 made it even harder for automakers to find the chips that make their cars go. Now, analysts project the crunch will get even worse because Ukraine is a major producer of neon gas, which semiconductor makers use to power the lasers that write on computer chips. Experts say efforts to ramp up chip production in the US won’t bear fruit for years.
Largely because of the chip crunch, US sales of vehicles may hit only 15 million this year, 2 million below a normal production year, says Warren Browne, an automotive veteran who now runs his own supplier consultancy. “The chip shortage overwhelms everything,” he says.