Record-high fuel prices will have a greater impact on the shape of the automotive industry this year. It will also increase the operating costs of your business vehicles and could accelerate the shift towards cleaner and more efficient transport alternatives such as hybrid vehicles and electric cars.
First, petrol prices have been steadily increasing over the last years due to supply chain issues caused by the COVID-19 pandemic. Retail petrol prices are dictated by several economic factors but primarily revolve around the global wholesale price of crude oil which increased from US$24.01 per barrel in March 2020 and rose to US$82.81 per barrel by October 2021.
When the price of crude oil increased at the beginning of the pandemic, the New Zealand national average fuel price dropped to a four-year low in 2020 to 192c/L. This was a result of lower demand as consumers were driving less while working from home during lockdowns, forcing retailers to lower their margins in order.
But that wasn’t sustainable. And, as the country began lifting restrictions petrol retailers gradually began lifting the retail price in line with the rising global crude oil price.
For starters, electric vehicles range in efficiency—that is, how far they can go on the same amount of electricity. For an EV, efficiency is measured by how many kilowatt-hours (kWh) of electricity it consumes per 100 miles—similar to a gas-powered car’s miles-per-gallon stat. (A lower kWh/100 miles rate is better.) The 2022 Tesla Model 3 RWD leads the pack in efficiency, with 25 kWh/100 miles. But the more budget-friendly 2022 Chevrolet Bolt EUV is comparable, with a 29 kWh/100 miles rating. So make sure to consider this when comparing shopping.
Batteries account for a third of the cost of building an electric car. For EVs to achieve widespread adoption, one of four things must happen:
1. Governments must offer incentives to lower the costs.
2. Manufacturers must accept extremely low profit margins.
3. Customers must be willing to pay more to drive electric.
4. The cost of batteries must come down.
i) Courtney .L (2022) Electric vs. Gas Cars: Is It Cheaper to Drive an EV?