Electric Vehicles: More people are inclined to buy an EV as gas prices soar, CarGurus says

Cargurus.com Director of Consumer Insights Madison Edwards sits down with Yahoo Finance Live to talk about the best states to drive an EV in, consumers' inclinations to buy an EV, gas price incentives, the EV market, and U.K. laws to allow TV viewing in self-driving cars.

Video Transcript

DAVE BRIGGS: Welcome back. If you're in the market for an electric vehicle, you may want to take into account where you live. A new study outlines the best and worst states for driving an electric vehicle based on the available number of charging stations. Now, Vermont tops the list for easiest state to charge an electric car with an average of 485 stations per million people. That's according to "Forbes Advisor." The Green Mountain state is followed by Washington, DC, California, Massachusetts, and Colorado.

Louisiana leads the list of hardest states to charge an EV with about 30 stations per million. It's followed by Mississippi, Alabama, Indiana, and Kentucky. The Southeast not a good place for an EV, Brad.

BRAD SMITH: Oh, well, with gas prices at high levels, new research shows more and more drivers are considering going electric. We're getting into an exclusive look at "Car Gurus'" 2022 Electric Vehicle Insight Report highlighting some of today's top car buying trends.

And joining us now, we've got Madison Edwards, "Car Gurus" director of consumer insights, as well as Yahoo Finance's senior autos reporter Pras Subramanian. Great to have you both here with us today.

First and foremost, we've got to think about the delta that's taken place between the first report when this started back in 2018 and now. What are some of the biggest differences that you're seeing?

MADISON EDWARDS: Well, we've been tracking people's sentiments around electric vehicles for several years. And we've seen quite an increase since 2018 through 2021 in people's excitement about EVs and their expected adoption in the next 10 years. We actually saw a slight moderation in that trend in February of this year when we did our annual study one more time. But we decided to keep trending over the course of the next several months as we saw what was happening with gas prices.

So then as gas prices were increasing in March and moderating a bit from their highs in March to April, we saw that people's expectation to own in the next 10 years started increasing once again.

PRAS SUBRAMANIAN: Hey, Madison. Pras here. Are you a little surprised that five or 10-year horizon is still kind of low? I think five years is 40% people are looking to buy an EV. And then 10 years down the line, it's only 60%. I thought it'd be more than that.

MADISON EDWARDS: Yeah, I think consumers know that EVs are the future. However, they are not sure that they're worth the high costs today. So you guys just talked about charging range and charging availability by state. Those are major barriers to adoption in addition to cost parity with internal combustion vehicles. And a lot of smart shoppers know that EVs are quite expensive today, even despite that fuel-independence.

PRAS SUBRAMANIAN: So turning to gas prices, last year when I saw your guys' survey on this, I was quite surprised by that percentage of people that would consider an EV and gas prices were $5 a gallon, which is 56%, and then $6 a gallon would have been 71%. But this year, those numbers came down dramatically. $5 a gallon was 27% of people would consider an EV. And then $6 was only 47%, which I thought was quite low.

And I'm trying to understand why that happened when we saw how bad the gas prices were earlier this year.

MADISON EDWARDS: Yeah, well, you did the hard part for me in describing all of the data. So thank you for that.

But what I would say is that $5 a gallon became a much more realistic possibility to consumers when they were seeing gas at already over $4 a gallon. And that makes it much different to think about would I go right now and buy an electric vehicle if gas was $1 higher than it is today?

So I think we just saw that the bar became a little bit higher for what gas prices would need to be to cause people to go out and buy an EV today. However, we do see that, once you get to $8, $10 a gallon, you get to really high adoption levels, around 90%. And that was true both this year and last year.

BRAD SMITH: Well, I guess the interesting thing about this too is that you're not necessarily always just going out and buying an EV. You're often going out and placing a deposit on an EV that may get to your driveway months later, as Pras has brought this up multiple times before. How might that kind of bring down the number of people that are looking at it and opting out but going into maybe a hybrid or sticking with a combustion engine vehicle? And I guess on the other side, the better question is, how might that tick up the actual sales of EVs in that instance?

MADISON EDWARDS: Yeah, we do see that, in addition to changing people's perceptions or plans to buy an EV, we see that people are looking for more fuel-efficient vehicles today. And they're trying to drive differently today. They're doing things like placing more orders online instead of going to the store in person. So there's lots of ways that people can respond to higher gas prices.

You asked about the ability to kind of order and then finally get your electric vehicle. And I will say that we see much higher consumer interest in new EVs versus used. But the used vehicles are out there too. On our site, we've seen increased interest in both new and used but especially for new. So I think that's an alternative for some consumers who are really ready to move to EVs but don't want to wait to order one.

Obviously, the used inventory is restricted by what's been sold before as new and whether those people are getting out of their vehicles today. So there's always an inventory restriction to used.

PRAS SUBRAMANIAN: Hey Madison, just one last question here. So what are your respondents telling you about what brands they like and how that's changed over time? Like, what cars do they want to buy?

MADISON EDWARDS: Yeah, clearly, Tesla's always top of mind when it comes to electric vehicles. And in every study that we've done when we ask what brands people would be most likely to consider, Tesla is at the top of the list. But Tesla's lead has been shrinking.

So today, when we look at brands, we actually see that Toyota gets a lot of credit for having been an early innovator in the hybrid space. People are very likely to consider Toyota for a hybrid but also for an electric vehicle. And not too shy off of that is Honda, Ford, BMW. We've heard about some of the other vehicles that are coming out as competitors to Tesla or in other spaces, like the Ford Lightning.

So I think it's still Tesla for now. But we'll see down the road.

BRAD SMITH: Madison, we certainly appreciate the time and the insights here this afternoon. We're going to have to continue to track this space, as we know you will as well with some of that data married together as well. Madison Edwards, who is the cargurus.com director of consumer insights, thanks again, Madison.

DAVE BRIGGS: All right, let's go from electric vehicles to the whole next generation, which is fully autonomous cars. And so many questions about that space, not just in the technology, but in the governance of them.

And we want to continue the conversation with Pras, because this new rule in the UK actually says you could watch television when behind the wheel of an autonomous vehicle. Why would they allow this? And are there any cars that actually allow you to do so?

PRAS SUBRAMANIAN: In the States, no car allows you to do that, except a Tesla would sort of allowing you to do that in an underhanded way. And they have to change that, right?

But you know? I think that's the future, right? They are looking ahead to when cars can actually drive, when actual seats are turned towards one another. Why not allow people to watch TV there, right? This is like five to 10 years down the line.

BRAD SMITH: So why though, do we need to watch TV in the car is what--

DAVE BRIGGS: That's a whole other argument.

BRAD SMITH: I mean, are we so just attached to this device of being able to consume content anywhere we are, which we can already do with our phone. But you don't want to have your phone in your hand while you're driving. But again, in this case, you're not driving. It's autonomous.

PRAS SUBRAMANIAN: Yeah, I mean, I was in traffic two weeks ago, driving to Baltimore. It would have been nice to watch some TV, watch a ballgame or something like that. So I think this is the future. I think it's going to be, your car is an extension of your living room.

We talked about BMW having that theater screen in the back of that 7 Series. Apparently, it allows you to watch the show you're watching at home. And Netflix will actually stop where it was, and it'll start playing in the back of your car.

DAVE BRIGGS: In the back! Big distinction between not being at the wheel. And what if you need to make an adjustment? What if you need to take over?

And I have not been in one of these autonomous cars, but it just begs the question that if you do get a situation that the autonomous car can't handle, where is your attention?

But here's the bottom line for this. You can't have a phone in your hand in the UK. You cannot, by law, have a phone in your hand when behind the wheel of an autonomous vehicle. But you can watch television if it's part of the car. Please, explain that hypocrisy here.

PRAS SUBRAMANIAN: Well, when these cars are able to drive by themselves, which they're not right now, that would be a nice use case, right, to be able to watch TV. Now, I agree with you right now.

Phones, no good when the cars can't drive themselves, right? But in that future, not too distant hopefully, it's your living room, man. You can watch what you want to watch.

DAVE BRIGGS: It is a scary future, man. I don't know if I want to be on the roads with everybody watching "Bridgerton" while they're heading down Fifth Avenue, man.