Why Oil Prices Shouldn’t Matter (But Might) To Tesla Buyers


Gas prices in the U.S. have hit a four-year low in the past week, which some are pointing to as the cause of slowing green car (but not plug-in!) car sales. But as Bloomberg so pointedly makes clear, anybody rich enough to afford a Tesla Model S probably isn’t too concerned with gas prices.

After all, with a starting price of $71,000 the Model S is well beyond the means of the average American. While it is certainly cheaper to operate to a comparable conventional car (or just about any car really), unless it is literally your job to drive, it’s difficult to make a cost-savings argument for the Model S. Simply put, if you can afford to buy a brand new Tesla, gas prices probably aren’t much of a concerns.

Unfortunately for Tesla, investors don’t quite see it that way, and low gas prices have spooked investors, sending the TSLA stock spiraling down towards $200 a share (as of this writing TSLA sits at $209 a share). For some this is the long-awaited burst of the inflated Tesla stock price; for others though it’s seen as a chance to buy up some hot stocks for cheap.

Bloomberg is right in a sense, but they shouldn’t underestimate the persuasion of a lower operating cost either. Rich people usually don’t get that way by spending frivolously, and Norway has proven that generous cash and driving incentives can get people into electric cars more willingly than talking about their environmental credentials. Lower gas prices could make the Cadillac Escalade a more tempting proposition versus the Tesla Model X, especially when the latter has a waiting list of close to two years even if you put in your order today.

When you take those incentives away, plug-in car sales are bound to fall, and I’m not sure Tesla will be entirely immune from the consequences of lower gas prices.


Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.