While EV owners are saving money for themselves, they are also contributing to saving money for everyone else, because they are helping to lower the demand for gasoline, driving down its price.
As we all know, a reduction in demand for most products results in the price of that product going down. If you’ve gone toy shopping in January, you understand the idea. The supply of toys is still there, but because fewer people are shopping for them the demand has significantly dropped. To keep moving merchandise, stores need to cut prices.
A similar dynamic will occur as EV usage grows. Oil companies already have their producing fields and won’t be able to curtail production just because fewer people are driving gasoline-powered cars.
This will cause the supply of oil to outstrip the demand for oil, and the price of oil (and then gasoline) to fall.
Based on historical precedent and market analysis, the Rapid Substitution Team predicts that once the number of EVs on the road reduce oil demand by around 5 percent (or about 126 million EVs in service) the price of oil will fall by about 50 percent. While that replacement will likely happen more rapidly than conventional analysis predicts, it will still take several years. Smart policies like EV subsidies and funding for charging stations will accelerate the switch to EVs helping us reach the 126 million EVs needed to crash oil prices.
In the meantime, each additional EV on the road means a little less demand for gasoline, making your trip to the gas station a little less costly than it would have been without that EV. Since fuel costs are a major component of most consumer goods, EVs also make those goods cheaper.
As EVs reduce the price of gasoline, goods will get less expensive. This will happen slowly at first and then dramatically once EVs lower oil demand by 5% and crash oil prices. So EVs will save everyone money, even people who don’t drive.
Bottom line: Electric vehicles lead to cheaper gasoline. They will save money for EV owners, gasoline-powered vehicle owners, and anyone who buys pretty much anything.
It’s already happening to a limited extent as everyone who switches from a gasoline-powered vehicle to an EV is lowering demand for gasoline. However, once EVs start to really displace gasoline-powered cars oil prices will plummet, like toy shopping in January.