High gasoline prices tilt operating costs in favor of EVs. But soaring electricity prices eat into that math.

By Wolf Richter for WOLF STREET.

The average price of gasoline in the US has spiked by 57% so far this year, to $4.58 a gallon on Monday, and far higher in some places, such as California, the EV capital of the US, where many gas stations are now hawking their regular for over $6.

And so demand for EVs has taken off in the used vehicle market despite already very high EV prices, and prices jumped for the second month in a row.

Prices of used EVs sold at auctions where dealers buy to replenish their inventories jumped by 3.4% in April, to $29,453, after having already jumped by 3.9% in March. Year-over-year, EV wholesale prices jumped by 7.8%, according to the Manheim Used Value Index.

The wholesale price index for EVs is now nearly $10,000 higher than the index for ICE vehicles, which, at $19,897, was nearly flat in April and up 1.9% year-over-year.

Supply at these auctions comes from rental fleets that sell vehicles they pulled out of service, from finance companies that sell their off-lease vehicles and repos, from corporate and government fleets, etc.

EV prices spiked majestically in 2021 to mid-2022, when gasoline prices more than doubled and used-EV prices also more than doubled, amid stories of “Tesla flipping,” where people bought a new Tesla and flipped it as a used vehicle for more money, yup, craziest times in the car business ever.

Those crazy times when overall used vehicle prices had exploded by 50% in two years are gone. And an even bigger gasoline price spike is unlikely to produce a similar EV price spike, now that there are plenty of new EVs on the market. But it does show that triggered consumers can change their buying patterns.

The surge of EV wholesale prices is not because consumers are “squeezed.” Given the high EV prices, it cannot be that these consumers are splurging on used EVs because they’re “squeezed” by high gasoline prices – as the crisis-press likes to say ceaselessly. But can it be that they’re just sick and tired of getting ripped off by the US oil and refining industry and that they’re looking for alternatives?

High gasoline prices tilt operating costs in favor of EVs. But rising electricity prices, driven up by data center demand and other factors, undo some of that math.

Gasoline prices are very volatile, soaring and falling over the years, while electricity prices are largely regulated and don’t fluctuate up and down that much; and under the impact from demand for power from data centers and other factors, electricity rates that consumers are paying have just rocketed higher.

The Consumer Price Index (CPI) for electricity has soared by 41% since January 2020, compared to the 70% increase for the average price of gasoline since January 2020:

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