Fuel prices in Latvia are approaching levels that have historically triggered a significant increase in interest in electric vehicles. If prices remain high throughout the winter, the transition to electric cars could accelerate, according to an analysis by Citadele Bank.
The bank’s calculations suggest that significant changes in the automotive market begin when the six-month average price of petrol reaches approximately 2.05 euros per litre and diesel reaches 2 euros per litre, expressed in today’s prices.
Currently, the six-month average price of diesel stands at 1.92 euros per litre, just eight cents below the identified threshold, while the corresponding average price of petrol is 1.85 euros per litre.
In mid-October, petrol prices in Latvia reached 1.94 euros per litre, while diesel climbed to 2.07 euros per litre, representing annual increases of 26% and 36%, respectively.
Citadele Bank’s chief economist, Kārlis Purgailis, points out that
rising fuel prices affect not only motorists’ daily expenses but also their long-term decisions about purchasing a vehicle.
He explains that the bank’s analysis identifies a price level at which buyers begin choosing electric vehicles significantly more frequently, while demand for petrol and diesel cars declines.
If fuel prices remain elevated during the winter, this transition could accelerate further.
Meanwhile, electric vehicle registrations in Latvia have already increased considerably.
During the first nine months of this year, 1,836 new fully electric vehicles were registered, representing a 46% increase compared with the same period last year.
The share of electric vehicles in the new car market has risen from 7.1% to 10.5% over the past year. In the third quarter, approximately one in every six newly registered cars was fully electric.
The opposite trend can be observed in the traditional vehicle segment.
Compared with the first nine months of last year, registrations of new diesel cars declined by 21%, while petrol car registrations fell by 5%.
Their combined share of new car registrations decreased from 79% to 74%.
Meanwhile, registrations of plug-in hybrid vehicles increased by 11%.
As the total number of new car registrations has remained unchanged over the past year, the growing popularity of electric vehicles is occurring almost entirely at the expense of petrol and diesel cars, according to the bank.
A similar trend is evident among Citadele Leasing customers.
During the first nine months of this year, the proportion of electric vehicles among financed cars almost doubled,
recording the fastest growth of any powertrain category.
In the third quarter, electric vehicles accounted for 17.5% of financed cars, an increase of 3.6 percentage points compared with the previous year.
The share of hybrid vehicles rose to 19.6%, while plug-in hybrids accounted for 12.7%, representing a decline in their share.
The bank also highlights the growing difference between petrol and electricity prices.
Over the past year, petrol prices have increased by 26%, while household electricity prices have risen by approximately 6%.
Purgailis predicts that if fuel prices remain high throughout the winter, the cost of petrol and diesel alone could become a major factor encouraging motorists to switch to electric vehicles, even without additional government incentives.