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How is the fuel crisis affecting electric car sales?

19 April 2023

Fear of fluctuating gasoline and diesel prices is a daily reality for many drivers. A similar fuel crisis occurred in the 1970s, and in many countries led to the replacement of oil with cheaper gas. As current sales data show, more and more drivers today are choosing to buy electric cars, which are much cheaper to operate than internal combustion engines.  

Fuel crisis in 2022 – what caused it? 

The main cause of the fuel crisis is the current geopolitical situation. The restrictions imposed on Russian oil imports by the European Union and the G7 have led to serious problems in the energy sector. European <union is most affected by the fuel crisis, which, due to its geographic proximity, has been most dependent not only on Russian oil supplies, but also on gas. In 2022, most European Union countries also stopped importing Russian natural gas, which they managed to replace with liquefied natural gas (LNG) imported mainly from the United States. A major problem, however, is still the shortage of oil coming from Russia. Due to its properties, it cannot be replaced by US crude, especially in the diesel fuel production sector, which is essential for heating homes or powering diesel cars.

The energy crisis and its consequences 

As a direct result of the 2022 fuel crisis, electricity and heat prices have risen. As a result, industrial production costs in all sectors have increased. The limited availability of expensive energy resources has translated into high inflation, which is further exacerbating the difficult economic situation for both businesses and individual consumers in Europe and around the world. An indirect consequence of the 2022 fuel crisis is, as it was the case in the 1970s, the search for alternative fuels. In many countries, attempts are being made to replace gas and oil with traditional hard coal or to increase atomic energy production. However, as many experts emphasize, the long-term solution would be to opt for energy from renewable energy sources, which are available locally and allow independence from external hydrocarbon supplies. 

Fuel crisis one of the consequences of the energy crisis 

One of the main manifestations of the energy crisis is the limited amount of fossil fuels needed to fuel various means of transport, both personal and freight. Since fuels are primarily required to heat buildings, their availability to the transport industry is decreasing. High fuel prices result in an additional increase in the market price of transported goods and inflation growth. The decline in the value of money drives up the prices of fuels, raw materials and goods, and so a "vicious circle" is created. For this reason, especially today, it is becoming necessary to consider the use of electric cars in the transport sector, powered by energy obtained from common, renewable sources, such as the sun or wind. Another solution could be hydrogen cars. Vehicles powered by hydrogen fuel cells are currently an interesting alternative to electric ones, but the technology requires the development of an appropriate infrastructure. 

The aftermath of the energy crisis, that is, the rise in the price of gasoline and other fuels – fuel quotes 2022

Oil and gas are the raw materials that "fuel" our civilization on a daily basis, so any turbulence in these markets is severe for all consumers. Before the war in Ukraine, the price for a barrel of oil settled around $90. In 2022, both WTI and Brent crude oil reached as high as $130 per barrel, thus approaching the historical record of 2008, when the value was $150. Gas prices also rose sharply, from just under 90 euros per MWh to 119 euros per MWh after the news of the attack on Ukraine (that is, by 35%). Thermal coal prices also skyrocketed, which despite this, is still the cheapest alternative to gas and oil. 

How to solve the fuel crisis? Are electric cars one of the ways to address rising energy prices? 

Both the current and previous fuel crises have shown that the dependence on raw materials from politically unstable regions of the world in the energy and transport sectors can lead to serious problems. In the 1970s, OPEC's embargo on countries supporting Israel in the Israel-Egypt war led to an energy revolution and the development of gas- and nuclear-based technology. Today, the rate of transition to green, renewable energy sources is also increasing. For example, more and more drivers opt for electric cars, which are considered the future of automobiles, and European Union policies are finally heading toward the end of the diesel era. A mass replacement of internal combustion engine vehicles with electric ones could reduce demand for gasoline and diesel, which would translate into lower hydrocarbon prices. However, it should be remembered that a sizable portion of electricity is still produced using coal or gas. For this reason, investment in expanding green energy infrastructure is still needed. 

Electric car versus diesel – a comparison of utility costs 

 Rear-seat section made of EPP.
Rear-seat section made of EPP.

Electric cars are cheaper to operate than internal combustion engines for several reasons. Charging a battery from a home outlet generally costs less than filling up with diesel at the station. Of course, price levels for the two fuels can vary depending on the country, government subsidies or electricity generation technology. An analysis by the Transport & Environment federation found that in Germany, for example, where electricity is mainly produced using gas, the costs of charging a car's battery and filling up with diesel were comparable in 2022. But already in Spain, electric car drivers were able to save up to 117% in costs, and in Poland, up to 170% compared to combustion car users. Of greater importance, however, is the fact that the electric engine has a much higher efficiency than the combustion engine. For an electric unit, it is 80-90%, and for a diesel engine – up to 45% at most. Driving 100 km in an electric car can be up to four times cheaper than in an internal combustion engine. In addition, electric cars are less complex and less often require expensive visits to the workshop. Such cars of the future use modern plastic car parts (including foamed polypropylene) that reduce their weight, extend their ranges and provide a high level of comfort. 

The fuel crisis and the sale of electric cars – how do the sales of electric cars develop during the current crisis? 

All this means that despite the difficult situation, sales of various types of electric cars not only did not decline, but even set a new record. According to the latest data from ACEA, in the last quarter of 2022, cars with alternative propulsion systems accounted for 53.1% of total sales, and the total number of registrations of this type of vehicle reached 1.3 million. So-called full hybrids were the most popular, followed by BEVs. The share of the latter increased significantly compared to 2021, from 9% to about 12%. Between October and December 2022, 406 thousand such vehicles were registered in the European Union, which clearly shows that Europeans are choosing electric cars. The largest increases in BEV sales were recorded in Germany, France and Sweden. At the same time, the market for internal combustion cars, especially those with diesel engines, is shrinking. Given that in some cities there are restrictions on driving such cars, they will gradually give way to near-zero-emission and zero-emission vehicles. 

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