Gas prices soaring after sedans and compact cars disappear
Record gas prices are striking after years of Americans ditching compact cars and sedans for larger, less fuel-efficient SUVs and pickups.
Why it matters: Drivers are left with few options to save on fuel in the short term, as automakers have discontinued numerous small vehicles in recent years after consumers abandoned them.
- Ford and General Motors axed virtually all of their small cars in recent years, except for a few performance models like the Ford Mustang and Chevrolet Corvette. Gone are small cars like the Chevrolet Cruze, Ford Focus, Toyota Yaris and Honda Fit.
- “When consumers now want to go back and buy a cheap gas-efficient car, they’re not finding any,” Jesse Toprak, chief analyst for Autonomy, tells Axios. “They’re just not around.”
Reality check: Automakers discontinued small cars for a reason.
- Cars represented 56.2% of new-vehicle sales in July 2008 — when the nation hit its previous gas price record — compared with 20.5% in February 2022, according to data supplied by Edmunds.
- "History shows that the U.S. buyers simply do not like small vehicles in large numbers," Toprak says.
Keep in mind: Electric vehicles are poised to replace gas-engine vehicles, as most automakers have committed to phasing out internal combustion engines over the next 15 years or so.
- The Tesla Model 3 costs an average of $1,534 in electricity to operate for five years, working out to an average of less than $26 a month, according to Kelley Blue Book.
But, but, but: EVs remain less than 10% of car sales globally — and the ones that are available are expected to sell quickly in the weeks and months ahead.
- The spike in gas prices to a record national average of $4.25 on Wednesday is leading to “the highest level of interest in EVs” ever, Toprak says. “There’s a surge there.”
In the short run, Americans eager to save on gas may have to settle for older, used cars. But the surge in used car prices during the pandemic won't make that a cheap endeavor.
The bottom line: The increase in gas prices will hit Americans harder than it would’ve had they stuck with smaller rides. But EVs should ease the pain in the long run.