Cheap Gas Makes Electric Cars Harder to Sell, BMW Warns

January 19, 2015 By Elisabeth Behrmann - Bloomberg

Cheap gas may make electric cars an even harder sell, according to BMW AG, the German luxury automaker that’s aiming for plug-in versions of all its top models.

Sales of the zero-emission vehicles will probably dip in some countries, including the U.S., Ian Robertson, BMW’s head of sales and marketing, said today on the sidelines of the DLD-15 conference in Munich.

“There are some short-term changes that will occur in some countries,” Robertson said. “There would be some moves toward some bigger-engine vehicles.”

Gas for less than $2 a gallon has made a comeback. U.S. pumping at the fastest rate in more than three decades, combined with the Organization of Petroleum Exporting Countries’ refusal to cut supply, helped drive the price of oil down 40 percent in the past 12 months. Consumers are turning from more expensive eco-friendly vehicles with hybrid or electric powertrains toward bigger models with conventional motors.

In the U.S., sales of hybrid and electric cars totaled 570,475 vehicles last year, down 3.7 percent compared with a year earlier, according to the Electric Drive Transportation Association. Carmakers including BMW, Daimler AG and General Motors Co. (GM) are building electric cars to comply with tightening emissions regulations.

In 2014, BMW delivered 16,052 of its i3 city car as well as 1,741 of the i8 plug-in hybrid sports car. Combined, the two accounted for 0.8 percent of the vehicles BMW, the world’s largest maker of luxury vehicles, sold last year.

A short-term shift away from cars like the small and zippy i3 won’t change BMW’s strategy, Robertson said. Up next is a plug-in hybrid version of its X5 sport-utility vehicle.

“The legislative framework in the U.S. and Europe, China and Japan is clear, and it’s not going to change,” said Robertson. “The advent of zero-emission cars is coming, so our strategy remains on that track.”