A Shift to EVs Would Lower the Price of Gasoline, Study Finds

Why It Matters

Lower gasoline prices improve consumer purchasing power while cheaper battery storage can reduce electricity costs, amplifying the economic case for rapid EV deployment. Policymakers and automakers must weigh these ancillary benefits against regulatory rollbacks that could stall progress.

Key Takeaways

• 2035 EV share could reach 80% with current policies
• Gasoline prices may drop about 4% due to reduced oil demand
• Battery cost declines could lower residential electricity bills
• Federal rollback could slow EV adoption, keeping fuel prices high

Pulse Analysis

The study’s projection that electric vehicles could dominate 80 percent of new sales by 2035 hinges on two policy pillars: the Biden administration’s stricter fuel‑efficiency standards and California’s zero‑emission vehicle mandate, now adopted by 17 states. By curbing the demand for crude oil, a massive EV fleet would depress wholesale gasoline prices, translating into a modest 4 percent reduction at the pump. This price effect, while seemingly small, compounds over millions of drivers and can offset a portion of the higher upfront cost of EVs, making the transition more financially palatable for a broader audience.

Beyond the direct fuel‑price impact, the surge in EV adoption is expected to catalyze rapid improvements in battery chemistry and manufacturing scale. Lower battery costs not only make EVs cheaper but also enable utilities to deploy more grid‑level storage, smoothing renewable intermittency and potentially lowering residential electricity rates. For businesses, reduced electricity bills improve operating margins, especially for energy‑intensive sectors, while consumers benefit from lower household energy expenses. The interplay between vehicle electrification and grid modernization thus creates a virtuous cycle of cost savings across the energy ecosystem.

Geopolitical volatility, exemplified by the recent closure of the Strait of Hormuz, underscores the strategic importance of diversifying away from oil dependence. Energy shocks in the 2020s have already spurred heightened consumer interest in EVs, a trend likely to accelerate as fuel price uncertainty persists. Policymakers who maintain or strengthen emissions standards can leverage these market dynamics to achieve both environmental and economic objectives, while any rollback could stall progress and keep gasoline prices elevated, eroding the ancillary benefits highlighted by the study.