Summary of article

This article is aim to explain the sales of electric cars will not effect by the
oil price. Compare to traditional diesel cars, the electric cars are very expensive and cannot
be afforded by the majority However, it indicated that the electric cars customers
who are not care a b o u t m o n e y a n d t h e y h a v e p l e d g e t o p r o t e c t t h e
e n v i r o n m e n t , s o t h a t t h e y would more likely to choose the electric cars in its
place of diesel ones. Furthermore, there are other disadvantages such as low
maintenance cost ands u p p o r t . I t m a y e n c o u r a g e t h e e l e c t r i c c a r s t o develop
in the future. at present, from long term point of view, electric cars are facing many
problems, which have not solved yet, and they are negative influence to limit the
development of electric cars. The challenges faced by electric cars are lack
of infrastructure and establish a second hand market to replace the electricity
battery, w h i c h c o u l d e f f e c t o n t h e c u s t o m e r d e c i s i o n m a k i n g t o p u r c h a s e
a n e m o t i o n a l c a r. Therefore, it can conclude that oil price decrease has no significant
effect on the sales of electric cars. For electric cars, it required for high technology
so that it cause high initial investment, which is most anxious by customers.

Microeconomic concepts
Firstly, if we presume electric car is a substitute product of normal gasoline ones ,the oil
price will definitely to effect on the sales of electric cars. #e are able to apply market
equilibrium theory to analysis . then the oil price decrease and w i t h o u t c o n s i d e r o t h e r
factors , the demand of gasoline cars will increase and
i t because the cost of car , which support more people to purchase a car and the people will h
ave more purchase power specially for price responsive customers. More and more customers
will prefer to have a gasoline car.

he would notice the decrease of oil price. Therefore, according to demand and supply curve,
hewill be asking selling price in order to balance the market to avoid lack of supply or
supply surplus. In this situation, if more demand on the g a s o l i n e c a r s , i t w i l l
n e g a t i v e e f f e c t o n t h e s a l e s o f e l e c t r i c c a r s . H o w e v e r , i n t h e r e a l i t y,
electric car is not a substitute of normal gasoline cars. Due to the
g o o d t e c h n o l o g y growth and eco environment, it encouraged electric cars to develop,
which
will beneficial to the environment but the cost to produce electric cars are very high. Indirectl
y the selling price of electric cars is high, which is huge investment to the
customers. Contrast to the initial cost of gasoline car and electric car, the cost
of electric car is much higher than gasoline cars, which is not widely affordable
by public. Thus, if customer who have limited purchasing power ,when the oil
price increase to effect the cost increase on the gasoline cars, he will not consider to buy
electric cars to instead and secondly, according elasticity theory, there are several
determinants to the price elasticity of demand. It stated that if there are more substitutes of
the current product, i t w i l l h a v e m o r e e l a s t i c d e m a n d . t h e n t h e o i l p r i c e
decrease, if there are many substitutes for oil, its price elasticity of
demand so it enables the customers. That indicated that change of
d e m a n d i s g r e a t e r t h a n c h a n g e o f p r i c e a n d t h e r e s u l t i s & . However,
according to the above options there is no substitute of gasoline cars, its price elasticity
of demand is low , which means change of demand is lower than the change of
price and result is below &$Havana, Isobar . In the short term analysis, it is hard to
examine the influence of the oil price to sales
of e l e c t r i c c a r s . H o w e v e r , f o r l o n g
term analysis, along with technology and sociald e v e l o p m e n t , t h e c u

stomer purchasing power will be increase, their purchase.

D e ma n d a n d s u p p l y.
These are the two forces used for interaction.
price elasticity is the. F u r t h e r m o r e , c a r i s n o t a necessary product for the
human daily life. Without car, the people can choose public transportation or other ways
such as by walk or bicycle. Car can be considered as luxury product to the
human life and more and more people are aim to buy a car to show off their
lifestyle. Thus, demand of car wont influence. Because the price elasticity is
also low.1o matter of gasoline cars or electric cars, demand is hard to influence by any
of price factor in generally. the articles mentioned that, for the electric car s consumers,
they are not care about the price so that they are the less price sensitive people.
they decide to buy an electric car instead of gasoline one, they consider more on environment
protection. It supported by 3ave, Hendrickson. Therefore, for electric car itself, it can be
identified as price inelastic product and it is possible to skew to perfectly inelastic, which
means no matter price increase or decrease changes on the "quantitative of demand. For the
future development, we know the significance to protect the environment. That is the reason
to explain the government support the development of electric cars.2 s t h e a r t i c l e s
mentioned, the government provide subsidies for the electric cars
owners. Free parking for electric cars in some urban areas will attract some customers to
consider it as one advantage. Furthermore, in china, the government has heavily
restricted petrol powered cars, which also encourage the consumer to
consider electric c a r s a s o n e o p t i o n w h e n t h e y a r e w i l l i n g t o p u r c h a s e a
c a r . 3 i e v e n conducted a study to indicate the customers who are will
to buy electric cars in Germany. According to the study
The supply has changed according to the tax the government can design the d i f f e r e n t t a x
policy according to petrol powered cars or electric cars. For
p e t r o l powered cars, the luxury brands are very expensive especially for certain model,
which is different. Is the selling point to promote the business? For
t h i s g r o u p o f l e s s p r i c e sensitive customers, it will require for more tax if they choose
to buy gasoline cars. its a strategy to turn some people to consider purchasing electric cars.
Tax can be used as a t o o l t o a d j u s t t h e d e m a n d a n d s u p p l y o f p e t r o l
powered cars form customer
and while, it is able to apply in the company side. For the gasoline
c a r s producers, they are re"uired for more tax in order to take responsibility for the air pollu
tion, which definitely to influence in the selling price of gasoline cars. It will effective to
enable customers to buy as their choice, as the government may not impose high taxes.
Diagram description
The diagram provides conceptual demand and supply curve stating various.
carsc o m p a n y w i l l i n c r e a s e t h e i r s e l l i n g p r i c e t o s e c u r e 7 / d e m a
n d t o t h e m a r k e t . 9therwise, if the company maintains the same
s e l l i n g p r i c e 8 & , i t w i l l r e s u l t t h e company to produce more care to achieve 7: to
fulfil the market. However, Car can identify as price inelasticity of demand product so that it
indicated that greater change in price than demand. Therefore, the oil price decrease
will lightly influence on the market.

Demand of the rang of price increase is larger than the quantity increase
from. If the electric cars as substitutes of petrol powered cars, the sales of
electric cars will be effect and it will result the sales of electric cars
decrease. However, the sales of electric cars has no effect by the oil
price decrease because its not a luxury which is not depend on price factor.
and influence by other factors such as government policy,
development of infrastructure and electric battery recycle issues. Therefore, in
the future electric cars development, government involvement and
technology improvement will influence the most in publicity of electric
cars.
Figure; demand and supply of 5asoline cars

Reference

http://www.businessdictionary.com/definition/market-equilibrium.html.
[Accessed 27 October 15]

 2015 web finance, Inc. 2015. Web finance. [ONLINE] Available at:
http://www.businessdictionary
R .Glenn Hubbard 2015 Pearson