News•December 10, 2014

West Coast States Rule Electric Vehicle Adoption in U.S.

When it comes to states where people buy environmentally friendly vehicles, there’s the West Coast and Hawaii, and then there’s everybody else.

A new U.S. Energy Information Administration report out Wednesday shows that California, Washington and Hawaii lead the nation in the adoption of electric vehicles. Joining them at the top of the list is a more unexpected mix: Oregon, Georgia and Maryland.

Credit: U.S. Energy Information Administration

The reasons these states rule in buying electric cars? Buyers’ love for new technology and a small carbon footprint, as well as tax incentives passed by state legislatures.

The report shows that even during a year when plunging crude oil and gasoline prices make driving gas-guzzling pickup trucks and SUVs economical again, sales of electric vehicles nationwide are actually increasing. Still, they make up only a tiny fraction of total U.S. vehicles on the road today.

California, Washington and Hawaii lead the nation in electric vehicle adoption, with electric vehicles representing more than three of every 1,000 total vehicles on the road in those states. Georgia, Oregon and Maryland follow, with electric vehicles making up two or three out of every 1,000 vehicles, EIA data show.RELATED‘Catastrophe’ Claim Adds Fuel to Methane Debate
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Of the roughly 226 million vehicles cruising America’s highways in 2013, about 174,000 of them were either battery electric vehicles or plug-in hybrid electric vehicles. New sales of these cars this year have increased to 0.7 percent of total new vehicle sales nationwide, up from 0.6 percent last year, the report says.

About half of all those plug-ins are in California, which plans to have 1.5 million zero-emission vehicles on the road by 2025. That’s the year California wants 15 percent of all new light-duty vehicles sold there to run on electric power or fuel cells. A light-duty vehicle seats 12 passengers or less.

Falling oil prices are making the economics of buying an electric vehicle more complicated as gasoline prices drop. Gasoline averaged $2.78 per gallon nationwide on Dec. 1, the lowest average gasoline price since October 2010, EIA data show. The nationwide average cost of a gallon of regular unleaded on Friday was $2.65.

For those buying a Nissan Leaf, which the automaker says gets the equivalent of 126 mpg on the highway, because of the fuel cost savings it provides, it will take more years to realize the fuel cost savings when gasoline prices are low.

EIA economist Nicholas Chase said it could take four years longer to pay off that vehicle based on fuel savings when gasoline is $2.80 per gallon than it would when gasoline costs $3.75 per gallon when crude oil prices are high.

A Tesla car is powered using electricity.
Credit: Windell Oskay/flickr

“It’s quite a long payback for a number of these vehicles,” he said.

But most people buying electric vehicles today are early adopters more interested in new technology and reducing their carbon footprint than they are about the economics of driving them, Chase said.

Many states are still offering ample incentives anyway, according to the report.

Georgia, the electric vehicle leader in the South, provides a 20 percent tax credit on the cost of a zero-emissions vehicle, up to $5,000. In Washington, electric vehicles are exempt from sales tax, and the District of Columbia offers a tax credit of 50 percent of the incremental cost of an electric vehicle, up to $19,000.

Exactly how oil prices will affect the market for electric vehicles given the incentives offered by many states still isn’t clear, but buyers of expensive electric vehicles, such as Teslas, aren’t likely to be deterred by cheap gasoline, Bloomberg reported Tuesday.

Those electric vehicle customers tend to look beyond the price of crude oil and gasoline, Chase said.

“It’s falling now, but who’s to think that oil prices aren’t going to go back up in the future?” he said.